Corporatism vs free market capitalism

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Subprime JD's picture
Subprime JD
Status: Platinum Member (Offline)
Joined: Feb 17 2009
Posts: 562
Corporatism vs free market capitalism

Here are some links to some great articles that make the distinction between corporatism vs free market capitalism.

Many people confuse free markets with corporatism. These articles break down the key differences between the two. Some important distinctions are: corporations dont die (unless they go bk) while real persons like us actually do and pay death taxes. Also, corporations have "limited liability" while business owners are not afforded the same protections. Even the small S corps popping up all over the place do not have the protections that big C corps do.

I always saw big corporations as socialist/fascist entities. What I hated the most was the strict rules of conformity when you work at these places. If you act a certain way your gone.


Good reading. Enjoy

strabes's picture
Status: Diamond Member (Offline)
Joined: Feb 7 2009
Posts: 1032
Re: Corporatism vs free market capitalism

I'll add my article from a while back...


Given the recent Supreme Court decision (Citizens United vs. Federal Election Commission) to remove limits on corporate spending in federal elections, the time has come to reconsider the entrenched American belief about corporations before they kill off the free market for good.  The gap between belief and reality on this issue is profound.

In the destructive left vs. right paradigm of American politics, the right loudly proclaims the benevolence of corporations fueling freedom’s cause.  I subscribed to this ideology as well—that is until I actually experienced corporate reality.  The right seems to equate corporations with the fundamental essence of America and the ideals of life, liberty, and the pursuit of happiness.  Thomas Jefferson would be stunned. 

On the other hand, the left instinctively feels that spending one’s days controlled by MBAs in power suits, who in turn work for financial oligarchs on Wall Street, is servitude (oddly, they do not understand that being controlled by a few lawyers and MBAs wearing power suits in DC is the same thing, but that is a topic for another article). 

Even chief cheerleader for the establishment right, Rush Limbaugh, agrees with the left.  He talks about how he despised the controlling nature of the system when he was part of it.  Yet somehow in the abstract world of ideology, he proclaims the benevolence of corporations.  As usual with ideologues, his beliefs do not match his own experienced reality.  Most likely this is because he does not comprehend the money and banking system, as almost nobody does, so his head can believe the false theory that corporations create freedom while his heart knows they create servitude.

Our guts know which perspective is correct as we lament the lack of time for our kids, our endless commutes to jobs we hate, our inability to get ahead financially no matter how hard we work, our zombie existence in cubes staring at a computer, our lack of community connection, and so many other social ills. But our heads are powerfully indoctrinated to believe the opposite of what our internal radar tells us. 

The false ideology of neoclassical economics is behind this indoctrination.  It has many severe flaws, the primary one being that it ignores the ramifications of our debt-based monetary system.  But on the issue of corporations, another flaw is that it ignores the difference between the traditional privately owned business serving the community on Main Street vs. the multi-national corporation serving capital controllers on Wall Street. The former is essential to a local community of free people.  The latter extracts wealth and control from an otherwise free local community, transfers it to the controllers, and puts local people in a dependent relationship.

This is a primary reason why the American republic with autonomous states has been converted into a monolithic empire.  It is a primary reason why communities across the United States have been destroyed over the last 50 years.  It is why Americans will find themselves helpless if the corporate system breaks down.  Most of us can no longer provide for ourselves like our grandparents could in the Great Depression.  Dependency is not freedom.  It is servitude. 

Centralized Control and Dependency

The origin of the corporation is found in royal families’ incessant quest for control.  The Dutch East India Company, the first corporation in history, was chartered by the government of the Netherlands for the Dutch royal family to establish monopoly control over a commodity and strip a portion of the merchant class’ wealth. This is diametrically opposed to the classic merchant working within his local community as described by Adam Smith.  Other European empires likewise used corporations extensively to colonize the world and expand their spheres of control. 

We still see this happening today as control is being increasingly centralized, while communities have fewer and fewer local shops, banks, and farmers to provide their needs.  The lower classes in countries that have been conquered by corporations and have had their natural resources privatized are quite clear on the question of whether they create freedom or servitude.  Americans do not have such clarity—yet.  The coming global deflationary decline will clear things up. 

Since modern corporations create dependency and centralize control, they are inconsistent with the free market.  They are really just extensions of the financial empire on Wall Street.  If Wall Street oligarchs are the modern feudal lords, corporations are their feudal knights out conquering territory, which is why they are organized in top-down command and control hierarchies like the military.  They are mini command economies with no connection to geography, community, or nationality. 

The PR Culture and The Loss of Relationship

In order to relate with employees, customers, partners, and the broader public, corporations use smooth, pedigreed, PR-managed CEOs and sales and marketing staffs.  This is the frat-boy class.  Plenty of women are in this group, but it is very much a boy’s club when it comes to those who hold the power.  Their facade makes you feel connected even though their only goal is to program your mind (marketing) or figure out how to use you to help them make money (sales).  They claim to be relational, but their interest in relationship disappears if you cannot help increase their paycheck.

Behind this outer layer is an internal team crunching the numbers, perhaps working for the COO, and an informal network of the CEO’s “go to” people monitoring the hierarchy.  This is the robot-in-a-suit class.  As long as the company is meeting Wall Street targets, some people may never realize their power.  This group rallies around each other, while everyone else including the population outside the company is considered expendable (empathy for the outsider is the reason I left the corporate world despite my benefit from being an insider).  The end, managing earnings per share (EPS), justifies any means to this internal team. 

Each company also has a CFO who is responsible for maintaining the company’s dependent relationship to the central Wall Street funding and governance system.  Every three months, they have to report whether they met the bankers’ EPS goals.  CFOs manage the numbers, i.e. engage in legal and sometimes illegal chicanery, to ensure the report looks smooth every quarter.  They even have teams that schmooze the banks and manage the PR façade presented to them rather than letting the truth speak for itself—another job for the frat-boy class.  As in most aspects of corporate life, PR replaces real relationship. 

Exponential Growth

As an extension of the banking system, corporate institutions are obligated to grow exponentially.  While old Main Street businesses could maintain a steady state, modern corporations must perpetually conquer more economic territory, i.e. capture more profit and drive up EPS.  So corporations are a major source of the increased centralization, scale, and velocity we see in the world and experience in our lives. 

Since political boundaries are obstacles to exponential growth, the corporate governance system eventually co-opts and replaces the people’s political governance system.  This is why state boundaries were effectively eliminated long ago.  Now national boundaries are the obstacle, and they are being eaten away.  This has already happened at the financial level as reflected in the global bond market, and it is only a matter of time before the microeconomic level completes the globalization process.  The idea of a nation-state will then be superfluous. 


Only ivory tower theory and political ideology could claim that much of what happens today in the corporate world is based on free market forces.  A book would be required to fully illustrate this, but it became most evident in the government’s response to the crash of 2008.  CEOs of supposedly free market corporations, especially banks, were waiting in line at the US Treasury for handouts.  When markets stumble as a result of deflation, CEOs blame the market and petition the government to bail them out.  As Wendell Berry has said, “nothing so excites the glands of a free market capitalist as the offer of a government subsidy.”1 On the other hand, when the markets are doing well as a result of the banking system’s inflation, salespeople get deals, CEOs make their targets, and they love to claim personal responsibility to justify their paychecks. 
Corporate CEOs and employees do not understand the monetary system any better than anyone else, so naturally they credit themselves and their teams for “creating value” when in fact they are simply riding the rising tide of credit inflation.  The monetary system does all the work. As long as it is steadily inflating, they get a reliable paycheck even though they may wonder what real value they add.  The truth is besides the core manufacturing or engineering teams, most corporate employees get paid for very little value creation, if any, while people outside the corporate system work significantly harder to provide real value for less pay.

Both Ideologies of Left and Right Serve the Empire

Establishment conservative ideology, which labels this free market capitalism, is a belief system inconsistent with the facts.  It only partially applies to microeconomics as retail level consumers are free to make choices based on prices, and workers have a degree of job choice.  But it completely ignores macroeconomics.  Ever since the Federal Reserve Act in 1913 establishing the permanent Wall Street cartel and the debt-based money hierarchy we have today, the American system has evolved into financial oligarchy, akin to monarchy, anathema to a free market.  The more credit that is pumped from the banking system to fuel corporate growth, the more the oligarchy is propped up while local businesses are devoured and the middle and lower classes are pushed down, even though on a nominal basis their bank accounts may appear to be growing.  Thus, a 2-tiered society characteristic of feudalism is being created right under our noses.

As opposed to conservatives, establishment liberal ideology considers big national government the solution to this problem. Sadly, like establishment conservatism, this is false and results in people being fooled into voting for the very thing they oppose—the big government which serves the corporate empire. It is entirely destructive of the classic liberal ideal of local community.

Systemic Vulnerability

Since the monetary system has been repeatedly propped up to ensure corporate empire growth for the last 100 years, people are now extremely vulnerable.  Main Street businesses, family farmers, and small banks are gone and local governments are bankrupt.  Rather than being part of a bottom-up community that provides for its own needs, people are now completely dependent on the top-down trickle from large banks, mega corporations, and big government.

Notwithstanding Republican diatribe, this means people are no longer capable of providing for themselves.  Republicans think this is true only of the lower classes they blame for being lazy or irresponsible.  They call them hippies, free loaders, or yes, the French!  It is ironic that some of those who most loudly make that claim will be the ones most incapable of providing for themselves the next time the system burps like it did in 2008, let alone crumbles.  With just-in-time inventory systems, store shelves could start emptying in two days.  Upper middle class bourgeois who eat out every night and rely on last-minute jaunts to the store to meet any momentary need would suddenly be faced with the struggle of real life.

This system has distanced us all from real life and destroyed real community.  It is therefore no longer a healthy system.  Unlike during the Great Depression, almost nobody in the developed world today has the ability to survive without being attached to the big corporate nipple or the big government nipple—two sides of the same engine that has sucked much delight, rest, and joy out of life.  The coming unwinding of this situation is going to be a disaster. 

At the dawn of the 21st century, it should be clear even to hardened ideologues that corporate empire is not synonymous with freedom.  People in Africa, much of South and Central America, India, Mexico, Indonesia, Iceland, and other areas where the corporate system has taken control are fully aware of this already.  Americans must listen to them, wakeup to this fact, and reconstitute their local communities before it is too late.  And we should certainly work to increase the American voter’s voice in politics by reducing the empire’s control of both establishment parties, despite the views of the United States Supreme Court.

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