Of course, some may quibble and with previous description of the United States as a state-capitalist regime--and with good reason. But we only used it as a characterization of how many people at the time, radicals especially, perceived it that way. Others may say it was accurate for the time but is no longer accurate considering the Reaganite Neoliberal Revolution. There is truth to both views. But of course its still true today that the state plays a major role in the functioning of the US economy; as one article sarcastically put it: "It's Not State-Capitalism When America Does It"
It was observed by not a few capitalists and bourgeois writers that the US economy after WWII had become dependent upon the government particularly the war economy. Indeed, some economists and industrial designers argued for planned obsolescence on the basis that only an consumer economy where the American consumer bought and bought (with encouragement through constant advertising) constantly consuming the products of industry as fast as they could--because, indeed, they had to as the products they depended on were deliberately designed to break, to become obsolete etc. While this was designed to simulate the wartime atmosphere where vast amounts of equipment was bought to be used up and discarded in battle in a civilian atmosphere it never had quite the same effect as state-military spending as a form of economic stimulus. Indeed, US defense spending never returned to its low pre-War percentage of less then 1%:
During the 50s through 1972 it was generally between 15-8% of US GDP similar to Nazi spending on defense prior to WWII. As recently as 1988 it was 5.5% in spite of the end of the Cold War it never dropped below 2.9% and despite the War on Terror as of 2015 is 3.3% according to the World Bank. It doesn't take much to realize that a 10% annual national GDP expenditure is quite a stimulus package no matter what you choose to spend it on--but the real impact is much larger then how a simple statistic appears on paper. Paul Sweezy observed that in the aftermath of WWII the military-industrial complex played a certain role in bolstering the large industrial monopolies: chemical syndicates, steel corporations, electronics companies, aerospace monoliths etc. Directly or indirectly these corporations were at the beating heart of the American economy and held sway over the commanding heights and should they suffer a crisis the nation would collectively suffer a crisis. For Sweezy the crisis of the 1930s was mainly a crisis of overproduction too much was being produced without enough customers to consume it and the monopoly capitalists were willing to placate the consumptive drive of the ordinary consumer but not at the expense of having to sell of their goods at firesale prices or worse as in the Depression. For Sweezy the Keynesian economists were wrong to abandon the thesis that the United States had become a "mature" economy simply on the basis that the post-war and 80s boom occurred. In fact, he went further then Kliman and argued that American capitalism never exited its terminal crisis of the 1930s but has merely displaced it becoming a general crisis that has only been averted through persistent state-spending, and, as he emphasized more frequently in his later work, financialization. Bolstering his case is the fact that Defense-related industries are some of the most profitable, and that the military employs a vast number of Americans both civilian and military, directly and indirectly. A fact seldom noticed about the "Gold Age" of capitalism in the United States is that successive wars mobilizing large segments of the young male working class population (with a draft in each) existed through much of it: WWII, Korea, Vietnam. American industries were booming due to America's position of supremacy on the world market which had been created and facilitated by shrewd geopolitical maneuvering and clever utilization of government finance-capital (as Hudson documents) in conjunction with a booming war economy and a military octopus grabbing up whatever impressionable young laborers it could get its tentacles around and effectively sucking out the "slack" in the labor market that capitalists find so much to be in their interests.
This was going on at a bad time for the capitalists as more then 1/3 of American workers were in unions and many were in coops as a result of Depression and War-time era organizing efforts and even the red scare had not completely nixed that though it did blunt the labor movements radical edge and paralyzed labor from the waist down with the Taft-Hartley Act. This had the effect of hobbling effective action mounted by organized labor or the American working class. In comparison to the Union busting efforts of a later era this is often nostalgically viewed as a time of rather enlightened tolerance for labor on the part of the capitalist class. When one considers Keynesianism critically one wonders how, outside of perennial government-mandated minimum wage increases, it is that Keynesians would ensure that the income received by the working class would go up alongside productivity? After all, don't Keynesians also prefer to leave the means of production in the private hands of individuals? Would it be the government's duty to provide jobs to the unemployed even when the economy wasn't experiencing a recession? How would that be financed and achieved? Since the Keynesian prescription was so niggardly in both theory and in practice it makes sense that Unions should be given some toleration and encouragement (as long as they didn't challenge capitalism) after all how would workers wages and standards of living rise faster then inflation in a free market if some private agent could not safeguard its interest. Labor Unions then emerge as a sort of Labor Inc. the workers answer and compliment to the unions of collective interest and ownership embodied in the modern corporation.The problem with a business union, and most unions in America were and are business unions, is exactly that: they are businesses. While it is no problem for capitalism that part of the profits derived from union dues may go into the pockets of union bureaucracy or that bank accounts where cash intended for strikes or union campaigns is made available to the financial system it is a problem for the capitalists themselves as not only does some portion of the profit that would've accrued to their capitals end up going into the pockets of the Union organizations but where the Unions win better standards of living for their workers that typically means lower profits for the capitalists themselves. Lower profits rates mean that capital accumulates slower and thus so does reinvestment, and of course this would occur even if the capitalists themselves did not stand in the way of investment (even if they directed funds away from consumption to investment) but often the capitalist class responds to business conditions that they do not view as being to their liking with a capital strike. It is not a surprise then that as profits began to fall in the late 60s and early 70s that the capitalist class increasingly found the deals that they had worked out with the yellow unions less and less to their liking and pushed hard for de-unionization across the board where possible and lax labor markets.
But unions have little to do with the state-function in this case as private unions in cooperation or contention with private capitalists would hardly seem outside the pale of the vision of a private free-market economy if we take the proponents of such an ideal at their word. What matters is that the supposed "support" for unions in this era courted by the state were, intentionally or unintentionally,
bolstered by America's state-capitalist economy as the enlarged state spending, especially military spending, to say nothing of the wars, put workers and therefore unions in a unique position to bargain with management. War, Depression, greater regulations on finance-capital had reduced the debt load of the average American family and while creditors were eager to load them up with debt where possible, interest rates were relatively low and since wages kept growing and inflation was a constant feature of Keynesian era the burden of debt and its reaccumulation was probably slow in being noticed. From WWI onwards American governments had used the taxes they'd raised by taxing the capitalists and workers alike in order to chain other states through state-debt, to increase circulation of the dollar in the global economy, and to act as the banker of choice on a global scale. As mentioned before bankers had deliberately been kept away from negotiations about the post-war economic order and this had been done not only due to the bad reputation that private international bankers had accrued during the Great Depression, which was when they had great power owing to the traditions of private banking that had emerged from 19th century capitalism but also because they had wielded great power over the state. It was of much greater import to the American leaders that loans issued by the state in this period benefit industrial and agricultural capital primarily in the United States--buyers of industrial goods had to be found to prevent a crisis of overproduction, and to most American politicians the threat weighed heavily in their mind that the average GI might get home and be unable to find a job and from there foreign peace may have been won but domestic turbulence would be assured. There was another reason that the American bourgeoisie seemed to snub private finance in their negotiations and that was because after the War no private financial powerhouse existed that was capable of financing the economic recovery necessary to get the wheels of the global economy moving again--it was an effort that would need hundreds of billions of dollars, and no private banking house had the muscle, neither Rothschild, nor Barings, nor even some combination of what was left in the ruble. This is one aspect that Hudson misses in his analysis of American government finance-capital as he feels they willfully pushed aside the banking class of Wall Street in their pursuit of global hegemony but this completely misses the point, US government-capital had to conquer Europe and the World because Wall Street was not big enough on its own to do so and because American industry was not competitive enough to monopolize the world market on its own accord either. As with the case he cites of the minor tussle between Wall Street and Washington after WWI where the US government was leaning hard on its debtors whereas American bankers were calling for more leniency towards Europe (particularly Germany) because the bankers were lending money out the ass to Germany at the time this was a case where the supply (American inter-state credit) created the demand (German debt taken out from Wall Street in order to pay the Entente which in turn paid America). A simple case of good cop, bad cop--American bankers never turned against the state for shaking down their clients abroad because to a large extent (but not completely) their public indebtedness served their own interest. Politicians may have tired of relentless and reckless Wall Street huckstering and their attachment to deflationary monetary policies that served their own interests but to a large extent while the state got big in the realm of finance in the international sphere private finance capital was still left in place and went relatively unmolested so that it would play its role in the post-war order.
What's interesting about the topic of state-capitalism in America is the way the state interlocks with private, typically corporate, power as Paul Street truly writes:
In classic capitalist fantasy, the “private” marketplace is a land of liberty and the state is a dungeon of oppression. Modern social democrats have tended to invert the formula, upholding the state as a force for social protection against the tyranny of the capitalist market. The truth is more complex than either narrative allows. As Marxists and other leftists have long known, “free market” relations and the state combine to impose class oppression on the working-class majority under capitalism.Indeed, what's most interesting about this period of intensified state-interference and economic activity is what didn't change: in most of the industries that counted power remained in private hands producing freely what they wished to for market-exchange for profit, inconvenient state rules and regulations aside. The Keynesian and other social democratic theories popular in the US and other developed countries held that private ownership of the means of production was, in the main, a good thing and therefore although the state had a bigger role and was arguably more susceptible to populist demands then previously it still retained much of the role it had previously--as the watchdog of private property defining what is lawful and unlawful and protecting the rights of property both domestically and internationally. No wonder governments guided by Keynesian philosophies had the same troubles as those driven by the (neo) classical liberal Enlightenment policies of the past. Even the larger state-role which provided a consistent stimulus intended to keep either the capitalist class, the mass of workers, or both, from losing their shirts during economic crisis or the daily travails of capitalism failed to prevent economic crisis--at best it could be said, that they made them briefer and less damaging. Few Western capitalist countries and especially not America took Keynes up or the Left-Wing of the New Dealers up on their offer that the government should just invent jobs out of thin air should private capitalism prove unable or unwilling to provide it. It was as Stalin said the capitalists would never consent to the elimination of unemployment as it is one of their primary, if not the primary weapon that they utilize against the working class. As government expanded in the United States expanded to tax-farm the funds from the American taxpayer that were necessary for the expensive task of saving capitalism abroad both through international "aid" programs and militarism what is again interesting is precisely what didn't change: the nature of money in the post-war era. It remained debt-based and dependent on the rubber-stamp of private individuals from the capitalist class in the form of the bondholder; it even retained its dependence on the "golden calf" to use Keynes words of the Gold standard for sometime--though we certainly shouldn't underrate the US governments efforts to avoid paying out the gold it owed whenever possible. The gold standard broke but not the practice of state-borrowing to use its own money as shown by the fact that interest payments alone account for 1/3 of US tax revenue.
The US designed the Post-War economic institutions so that other nations would not easily be able to utilize the printing press as a way out for paying down state debts (often owed to America) or to use it to get the edge in trade wars but readily claimed this power for themselves. But although America claimed this power it had its limits as only so much of the inflation that came from running the printing press could be exported abroad and therefore the policy of keeping the printing press running-- a "state-capitalist" measure intended to keep the private sector flush with the cash it needed to keep its dominance over the world market in motion, thus ran into the opposition of the ruling class and was put to a brief, but decisive halt, with the Volcker Shock of 79 when interest rates jumped to an unprecedented 20%. It maybe said that one of the motivations of using government capital to fill the role of private finance-capital after WWII was that no bank was big enough and Europe, as well as world capitalism in the periphery, was to big to fail. Had the situation been left to the market its likely that the world would not have only suffered recession but also skyrocketing interest rates as lenders scarce on capital would have to charge high interest rates to draw in the necessary capital to lend to consumers and governments willing to pay any price to get on the road to a peaceful recovery. As it happened an unprecedented rise in world interest rates came about as a result of the US governments spendthrift approach to its management of its monetary hegemony and its desire to play international banker and the result was not only recession at home and abroad but an unprecedented shift back in favor of private finance capitalists who were still heavy hitters whatever left-liberal hagiographies of the golden age of capitalism desire us to believe. Consequently, the expansion of private capital and the diminution of the state's ability to raise revenue meant that the US would have to diminish its military spending as a percent of GDP but in no way chose this willingly and has only slowly done it over time; it remains to be seen what the tax-cut happy and spendthrift policy proposals, especially in military spending, here and elsewhere he has promised to deliver fresh meat to the mouths of hungry capitalists.
The Western Heritage: Enslavement to Private Creditors
In Hudson's groundbreaking work on Babylonian economics he analyzes the rise of credit he shows that credit arose in the Ancient World as a way of handling the disconnect between the initial needs and wants of commoners and the long-gaps between Harvest times. Interest rates tended to be based not around any market for credit like in modern capitalism, indeed in Babylonian times it was the state temple to which commoners typically owed their debts, but simply on the base number of the counting system. For the Babylonians it was 20 thus their interest rates came to an eye-popping 20%, for the Phoenicians it was 10 and therefore the rate was 10% and for the Romans it was 8 and again therefore 8% the lowest rate of all in the Ancient Mediterranean World. But such interest rates meant that exponentially increasing debts owed rapidly outran the ability of the people to pay and their economies to sustain. Anyone who considers it seriously would know that an 8% interest rate would cause a great deal of trouble for modern capitalist economies driven as they are by the imperative to attain constant exponential growth and therefore Ancient economies which did not experience such rapid and consistent exponential growth would be put in dire straits. One study done by modern economists has found that the growth rate for European economies since the birth of Christ in the long-view has been a paltry .2%; it is certain that the rise of European capitalism over the past few centuries stacks the deck some in that figure. Whatever we think of the dynamism of pre-capitalist society in the aggregate agrarian pre-capitalist societies were unlikely to experience anything more then 2% annual growth. The answer to persistent debt crises in Ancient society was therefore debt-writedowns, debt-abolitions, emancipation of debt-slaves etc. This was the foundation of the practices of Biblical Jubilee when after 49 years all land would be returned to its original owners, all debt would be cancelled, and in a set would be set back to "zero"--perhaps uncoincidentally that was the stated goal of the terrorist efforts of the organization led by the protagonist of Fight Club (1999). Ancient and medieval economics centered around the fact that usurers capital reaped without sowing and worse then that was both unproductive (as in the cycle of usurers capital money produces more money with no direct production in between) and expanded by degrees that were not typically seen in sustainable animal husbandry or agriculture. But it is interesting that lending at interest in the Ancient World was never subject to a complete ban and I would speculate that was due to the control that the Ancient state typically had over the supply of credit, and the practices of debt-amelioration practiced by states. Threats from rival dynastic families and rival governments as well as popular uprisings must have created incentives for governments to offer debt amelioration.
But something strange happened in the Roman Empire, there the powers of credit creation were mostly in the hands of private individuals and safeguarded by a republican code of law intended to protect the property of its citizens, and therefore the deck was stacked uniquely against the debtor. Debt slavery was a common punishment for citizens who could not pay their debts and so was the enslavement of family members of debtors. So the low-interest rate of the Roman Empire turned out to be a mixed blessing, or even a bad thing, as at least in the cultures with more usurious rates debt amelioration was a serious possibility. There had been campaigns to tackle this problem such as those of the Gracchi Brothers or the program of Caesarian reforms but it seems that the Roman oligarchy in the main fought these campaigns tooth and nail where possible and took pains to try to make sure they would never happen again. Hudson argues that the majority of the Roman population was still free towards the end of Roman times but the inability or unwillingness of the Roman oligarchy to deal with the issue brought about the Dark Ages and the formation of feudalism in Europe. Graeber suggests no reason for why Roman elites were so opposed to debt relief and had such stringent laws regarding debtors compared to other Ancient peoples and my inclination would be that the root of their harsh approach would be the slave-mode of production upon which Ancient Roman society rested. The scale of Roman slavery was so monumental that scholars estimate that at a minimum 100 million people were enslaved throughout the history of the Roman Empire. It is likely that debt was both an important domestic source of slaves and an important driver of the slave trade as it created the economic incentive to grab and sell more slaves lest a merchant or a Patrician fall subject to the fate of bankruptcy or even enslavement oneself. It also must've been an important form of social control for those who were born free--either work or serve in the legions or risk the prospect of enslavement yourself. While Hudson and some others find that slavery is "overstated" in the economy and life of Ancient Rome I would disagree it was both the foundation of great wealth that produced the great inequities of the credit-driven and mercantile huckstering economy for the "free" but was also an instrument of control over subject people. Roman tax-farming over subject areas follows a similar pattern as the private creditor-debtor relationship--what after all were Roman taxes but a debt owed to the Empire from subject people for the crime of not being Roman? One either paid them or saw one's community driven away in shackles or sometimes entirely massacred and replaced by Romans (as was the case in Romania)--sometimes paying them didn't even help.
For Roman elites, the thing that stood out wasn't just Rome's conquest of the known world wasn't just their conquest of the "known world" but the fact they had created the world's greatest domain for the free trade in commodities. Slavery as a system of production, applied the logic of commoditization to human beings and was thus instrumental in the development of a higher form of commodity production and class society then what had grown out of the division of labor with the rise of civilization. It is little surprise with the Empire collapsing and Roman elites confronted by a militant Christian culture and drastic changes in outlook and mores that the way the sacred debt was preserved was the feudal system, which eliminated the usurious element of society but at the cost of transferring the debt from the pockets of the creditor or the private slave-owner into that of the landlord. Thus slavery in a sense became universalized for Europe's peasant population and serfdom became the condition whereupon a semi-slavery was legislated by the landholding class. As God's Lieutenants on Earth the Church and the aristocracy extracted the rent due on the land which belonged to God (in theory) therefore the need to work the Lord's manor became the result of mankind's debt, the result of its fallen position. During the Dark Ages as international trade fell by the wayside the Church demanded that bullion be returned to the Church to glorify the Lord--this was a return to the virtual credit accounting system of Babylonian society, which thus made the ideal and prospect of lending out money without cost and keeping debt at allowable levels possible. In Graeber's account debt became a more manageable and communal affair and its interesting that such "cashless" credit and trade that we saw with the rise of credit and debit cards isn't as unique historically as we thought it was. But this system only worked so long as hard currency and international trade wasn't a requirement for a Kingdom's or Manor's economic life. Indeed, medieval communes were remarkably self-sufficient and trade played occupied small role in a Peasant family's daily habits of sustenance and it occupied a low-portion of their surplus output. But slowly things began to change...
The Medieval Kingdom of Capital
It's no exaggeration to say that state-formation and stability was in a really bad way after the collapse of the Roman Empire; this maybe the closest thing we have to a complete "reset" when it comes to the state in European or even World History. As the centralized Roman state fell apart control on the ground quickly fell to local Warlords, the budding Catholic Church and small petty Kingdoms. It stands out as an interesting historical example for those interested in the relationship between class domination and the state, in this particular example, the state of the Roman elites passed away but the class that it represented didn't. More accurately, it might be said that the slave-owning class "fell" with it and transformed itself into a new ruling class that ruled on a new basis of production which had both profound differences and similarities with the last one. It can also be said that the Roman state died because it had no other way of governing aside from the slave-based class rule that it had long-known and depended on. So both statements are true there was a crisis of the state itself and a crisis among the ruling class in Rome but the rule of the Patrician slave-holding class and its creditor allies was not replaced with a society free from class oppression but rather a radical new type of class oppression constituted on a new basis. The Marxist position that the state is outgrowth of class contradictions and, that to destroy the state for good you need to resolve the class contradictions of society first and foremost, is confirmed by this historical example. Slavery in Europe survived the Roman Empire and while it definitely declined and was replaced by the feudal system and a new class of feudal landlords this was a gradual process. Some elements of the Roman ruling class died outright; others joined the newly emergent feudal order stemming outwards from the barbarian borderlands and helped in this reconstruction of class relations across the European subcontinent. The Roman super-state died but was replaced by petty warlords and a pan-European religious organization striving to make itself into the king-maker of Europe and to keep Rome in control of the real, and indeed only possible Empire, during this time of collapse: The European Mind. Out of the bandit clans and petty landlords emerged great warlords and from them Dark Ages Europe's first Kings. The King in this time was merely the greatest or most ruthless warlord-landlord and ruled through his raw power, ties to organized religious, and numerous oaths and alliances cut with other landlords, who he often contended and collaborated with. Well into late medieval times, the lord of the manor considered himself to be a kind of King in miniature with his own law of the land and even his own courts, he often yielded his own armies and in this way we see a situation somewhat analogous to the private police of 19th century company towns or the security/mercenary forces of today--members of the ruling class create their own armed forces when they find the state to be non-existent or lacking in either its ability to enforce the law or support their interests. Faced with the absence of a Roman state, the ruling classes of the former Empire created their own states, and this largely happened on a local decentralized on-the-ground level. The slave-mode of production itself had grown out of the growing inequalities resulting from the expansion and development of the division of labor that occurred in Ancient communities, which as Engels went to great pains to emphasize, were free communities. The tyranny and despotism of the Ancient world and Ancient civilization grew precisely from the freedoms of Ancient societies; power for Engels grew precisely from the economic foundations of a society and not vice-versa.
But while the newly formed "patchwork of feudalities" (to use Westra's phrase) may have been more efficient/effective in responding to the on-the-ground problems of the chaotic late and post-Roman Europe they lacked the considerable central powers and fundraising abilities of the Roman state. Most of the wealth and productive capacities of Europe were controlled by the aristocracy, who were naturally averse to taxing their own wealth; trade, especially international trade, had declined which removed another potential source of revenue. Kingdoms were generally limited to either subsisting off the revenue of lands physically owned by the King or forced into the position of being secondary exploiters of the peasants and serfs of other lords by either demanding tribute/tax from the lesser-aristocracy or skimming or levying taxes upon the peasantry as a whole. The first option was likely to make the aristocracy rise in revolt against a King in defense of both their personal and collective class interests, despite the religious sanctification of monarchy, heaven was no obstacle to sacrificing another member of the ruling class to preserve their own interests. As Michael Hudson points out, the Norman state had been uniquely centralized as a way of tabulating and keeping track of their pillage, this was all collected in the holy grail of early medieval records: The Domesday book. Douglas Valentine gives an excellent description of the Norman Conquest that verges on poetry:
This tactic of exterminating the indigenous aristocracy was replicated in later British colonial adventures, such as the English colonization and settlement of Ireland that resulted in the creation of the hated Anglo-Irish landlord class. But destroying the Anglo-Saxon ruling class did not result in the dissolution of the feudal relations of Dark Ages England but rather an immense acceleration in its development with a rather unique result: the Norman state was highly centralized and efficient. In order to better exploit their colonial subjects the Normans ended up putting an immense proportion of the Kingdom's land in the hands of the state and imposed ground-tax and tribute upon the population in lieu of private rent. The result was that William the Conqueror, as head of state, became immensely wealth clocking in as the third richest person of all time with a fortune estimated at 209 billion dollars when adjusting for inflation, historical context, etc. etc. But William wasn't the only medieval tycoon in the new Norman England, the previously cited top 20 list contains the names of a handful of other super-wealthy Normans who either took part in the Conquest or were descendants who inherited the fruits of that Conquest with wealth estimates ranging between 77-134 billion dollars. Naturally, as the conquest came to the close and new land for partition or positions in the government began to dwindle, the Barons and Dukes who were the inheritors of bloody colonial conquest of England set their sights on dismantling one of the few results of the conquest that had been historically progressive its state-ownership, its ability to efficiently evaluate and tax the population to raise funds that could provide for the common good, and its power to restrain the heirs of the Norman Conquest. The machine they had built was so effective and all-powerful that they felt themselves trapped and constrained by it--so in 1215 they took action in a way that would change the face of Western, particularly Anglo, civilization:After the bloody Battle of Hastings in 1066, William the Conqueror’s army of Norman invaders buried its fallen comrades, but left the mangled corpses of the Anglo-Saxon defenders to rot in the fields. Wounded defenders were mutilated.William’s “Shock and Awe” invasion quickly turned into a brutal occupation. The pacification strategy, like America’s today, was to eliminate the enemy’s leadership and terrorize the civilian population into submission. Colonization is murderous work.Anglo-Saxon lords had their eyes plucked out and their hands and feet cut off, and were left in chains in front of their castles for the peasants to behold. Others were castrated and thrown into the dungeon in one of the hundreds of castles William built across the countryside to defend Norman interests.The pacification campaign took 20 years. During that period, an estimated 300,000 indigenous peoples were murdered and starved to death (one fifth of the population) and an equal number of French and Norman entrepreneurs and bureaucrats were planted in England in vacant positions of authority.The entire Anglo-Saxon nobility was exterminated. William took all their property and gave it to the Norman upper class. By the time William repented his sins on[…]” (The CIA As Organized Crime 479-480)
Two decades after the Norman Conquest in 1066, for instance, William the Conqueror ordered compilation of the Domesday Book (1086). This tributary tax came to be privatized into ground rent paid to the nobility when it revolted against the greedy King John Lackland (1199-1216). The Magna Carta (1215) and Revolt of the Barons were largely moves by the landed aristocracy to avoid taxes and keep the rent for themselves, shift the fiscal burden onto labor and the towns. The ground rent they imposed thus was a legacy of the military conquest of Europe by warlords who appropriated the land’s crop surplus as tribute. (Hudson, Michael. Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy)Thus the stage was set for the brutal War of the Roses and English Civil War as the aristocracy usurped the long-term interests of their state in order to bolster their private power leading to a long-term crisis of the English state that inevitably had to be resolved by the bourgeois revolutions of the 17th century. Like the marauding finance capitalists of our time the Norman aristocracy turned to the weapon of privatization to bolster their class power in the face of a real or perceived crisis of power. The War of the Roses pitted the powerful independent-minded Dukes and Barons of medieval Britain and all the claimants to the throne against each other in what historians have described as an apocalyptic culling of the British aristocracy. Surprisingly, the common people were harmed less by this war then the aristocracy which ended up dying in huge numbers as a result of their huge overrepresentation in the military as a result of the particularity of their class rule. Not surprisingly, the War of the Roses was a major fixation of Shakespeare's history plays and a common-thread in his body of work was that this war set in motion the decline of the happy "Merry Ole England" of feudal times as the top representatives of the ruling class killed each other off disturbing the equilibrium of that orderly society, in its place stepped the Turdor Kings, the town-dwelling "Citizen" and the degenerate "aristocracy" of the present which was just as power-greedy and money-hungry as the most uncouth merchant or peasant. So, for Shakespeare, following Roman and Greek ideals of a Golden Age and heroism, a Golden Age of feudal times once existed but its representatives suffered from a terrible flaw, usually hubris, and entered into a cycle of violence and destruction that could not be undone. If the British aristocracy had "fallen" according to this narrative the real power and terrible behavior of the aristocracy in the present remains to be explained, so it is by the implication that the aristocracy of today are mere degenerate shadows in comparison to the Guardians of the Realm of the past, the heroes of Medieval myth. Thus citizens could safely disregard them as long as they paid fealty to the King and the State Church, the latter was considerably diminished in power thanks to the privatization of lands held by the Catholic Church and dissident strands of Protestantism that the newly Protestant authorities had little power to control. But in Shakespeare's universe while redeeming values were found, at least in-text, to Queen/King and country, the Italian plays, many of his comedies, as well as the well-known Tragedies of Hamlet and MacBeth deal openly and quite radically with the question of Republicanism.
Let us return again to the close of the lower Middle Ages, exactly at the same moment as the aristocracy in England and the rest of Europe was consolidating their class rule and making it ever-stronger, a new, dissident counter-power emerged: money, specifically, the long-cankered fingers of the usurer, who had so traumatized Ancient society that the proposed penalty by Christendom for his trade was death. For Graeber and Westra alike the engine of turbulence for medieval society was the reintroduction of hard bullion-based currency with the discovery and opening of silver mines across Europe in the middle and late medieval period being the most decisive turning point. For Graeber, this undermined the networks of virtual credit and communal-debt provision and regulation that had arisen from Dark Ages Europe. For Westra, the opening up of these new precious metals allowed aristocrats and government officials to escape the need for physical presence on their lands in order to collect rent and salaries, they began to move to cities, where they were joined by a nascent middle class that emerged to cater to their needs and the numerous poor. The question is why couldn't they bend their credit systems and relations of dominance-subordination that had existed previously to make it possible to live outside of the land. After all, absentee-landlords who lived in urban centers weren't exactly new they had populated the urban centers of Ancient Rome, Democratic Athens and numerous other Ancient and Medieval civilizations. Both Graeber and Westra peg the declining reliance on virtual and communal credit systems and money with the rising presence of foreign trade in later medieval civilization. Although both ascribe certain fantastic powers to it, neither make foreign trade the center-point of this change, perhaps, because it opens up even more questions. Why is credit/fiat money good enough for trade within a Kingdom or even with the neighboring Kingdom but not for international trade? The simplistic answer: because Islamic merchants and those operating on the European end of the Mongol controlled silk-road had little interest in what Europe could commodities Europe could bring forth to trade and preferred bullion as the object of exchange. More questions: why did Islamic and Eurasian traders prefer silver and gold when European merchants could be contented with fiat currency? Why did those civilizations, both ancient and medieval, that were the most prone to the use of markets and bullion-based cash in day to day life fail to develop capitalism? It was a question posed by Marx that those developmental theorists who ascribe the rise of capitalism to the mere rise of money, markets, and urban centers have failed to explain: why did Western Europe become the home of the capitalist system when Byzantium next door was far more mercantilistic with a vibrant cash-based economy? Ancient Rome was likewise more market-driven then medieval Europe, it too used a bullion-based currency but as Graeber observes Romans traded Roman coins for the same-value that authorities ascribed to it despite the ever-lower quantities of bullion in the coins as a result of dilution and coin-shaving. So, the key point is not bullion or fiat-money, though Graeber correctly associates bullion with war and so it is unsurprising that it makes a reappearance with the re-emergence of European colonial expansion. China makes a good counterpoint as they operated a vibrant market-economy with a surprising amount of international trade using a fiat-based paper-currency monetary system.
Here we have some problems, and I have never said that I believed that the Marxist analysis and debates over the transition to capitalism and pre-capitalist social formations were complete, as those things were not Marx and Engels foremost concern, nor that of the revolutionaries that came after them but rather it was the capitalist system. It is clear that while restrictions on usury existed in all major religions and especially the Abrahamic ones, that usury survived the emergence of Christianity and prohibitions on it elsewhere. The Romans and Greeks analyzed usury and their foremost thinkers found that it was a threat to the stability of their slave-based economic system but only registered short-term victories against it. Here we should see that it is quite superficial to explain the collapse of the medieval order around the victory of "inhuman" market-based economies over communal, "human" based economies as Graeber and Westra see it. As Stalin argued regarding feudalism we should seek the strength of the lords and the development of the aristocracy not in their raw force and conquests but as an outgrowth of the feudal mode of production itself. Interest did not disappear in even the most extreme example, Christian Europe where the Church fought what seems to modern eyes as an absurd crusade against the existence of coins and trade/possession of precious-metal based objects, because it developed with the birth of commodity production as a method of dealing with the gaps between exchange and delivery of payment that resulted from gaps in production-time resulting out from the mode of production itself. When international trade had dissolved and money and credit creation moved back into the hands of Kingdoms, the Church, and peasant communities it is no surprise that Christian debates about usury died down tied as they were to the conditions of antiquity and the late Roman debt crises. Barring the last crisis or in situations where governments deliberately decide upon inflationary policy as remedy for economic maladies one is hard-pressed to find a situation where governments and private creditors are willing to lend money with a long-delay in back-payment for nothing; indeed, even if the provision of credit for nothing could be done there would have to be limits to it. The extension of credit is a solution for the alienation that exists between the producer of a commodity and its consumer it steps in to fill the gap between human needs and desires and the limitations of the money economy. While it steps in to help balance the account of the disconnects between money (fiat or precious) and humans needs and desires it produces its own inhuman results of its own accord which we analyzed with the discussion of Ancient discourses about usury. Because, the core of Ancient class societies was based on exploitation (either through slavery or rent-based feudal extraction) of the peasantry, the literary and popular discourses of economic thought recorded by the ruling classes do not get to the core of the economic problems that caused usury and its nasty results. Aquinas and the other Churchmen who formulated "just-price" theory, which Hudson describes as an "incipient labor theory of value", in response to the popular anger against bankers and merchants did not extend the logic of the scamming behavior of merchants and bankers to that of landlords and the state. Since the private industrialist was hardly a force, especially outside some tiny late-medieval/renaissance Italian city-states, we can hardly blame them for not making a thorough analysis of the private-industrial capitalist mode of production which did not exist at the time.
It took some time before European thinkers started becoming aware of the symmetry between ground-rent and interest. But it was realized that the price-gouging of medieval merchants was of a similar nature as usury and therefore it was an issue that a titanic battle was fought over in Shakespeare's England and later that goods be sold for a "just-price" on the open market. Merchants monopolies like the East India Company and other Royal chartered firms were attacked during the bourgeois revolutions of the 18th century. Out of these debates within bourgeois society "free trade" soon came to be seen as the most practical way to resolve the issue as the small would always work to undermine the big, if there was profit in it, and the state did not attempt to stand in the way of this process. The benefit that all would gain from this new bourgeois society, based on barely disguised anti-Christian principles, was that costs would be reduced for all. The Enlightenment simultaneously on the question of usury had a double-drift of loosening restrictions on the dealing of credit, interest, etc. while promoting looser penalties on debtors, attempting to put the burden on the banker when it comes to risk of lending and to move towards productive investments rather then predatory consumption-based loans. Many argued that the state-should take up banking where possible either to pay for essential services where possible or to more effectively, less burdensomely meet citizens demand for productive credit. This actually parallels the process of how finance-capital began to be increasingly accepted in a hegemonic Christian society, and ironically, this process begins during the most militant phase of Catholic Christianity: the Crusades.
In Europe, the two ethnic groups that specialized in usury according to Westra were the Jews, and the Lombards. The Lombards, Visigoths etc. could be described as false or partial converts to Christianity and hence they dominated the business of private usury since their respective tribes had no prohibition on usury; Judaism, does have strictures against usury, according to Hudson but like the minority of Christian usurers they could defend this on the basis of the ambiguous attitude towards towards usury in Deuteronomy that Westra draws attention to. Talmudic Judaism is another matter and its unclear if Hudson is referring to Old Testament Judaism, which only a minority of Rabbis say is even worthy of study or Talmudic Judaism with regards to restrictions against usury--he only cites the biblical tradition of Jubilee as proof. Even the most eloquent defenders of Judaism admit that the Jewish tradition after Christ is in part a reaction to the doctrine of Jesus and his followers and hence one assumes his anti-usury and anti-authoritarian messages as one has to be brain-dead to assume that theological debates of the Ancient world had no rooting in real world practice. Assuming that it really becomes no mystery why Jews came to dominate private usury and some mercantile trades, in fact, according to Westra, medieval Kings recruited Jews to raise money for them via the usury trade and turned on them when convenient. A medieval British saying goes: "The Jews fleeced the subject of the realm as the King fleeced them." this is in itself an interesting phenomenon--the unique relationship between Christian Kings and Jewish usurers as it breaks down the rigid divide between the state and civil society that we have been analyzing. Perhaps the most radical innovation in finance during the Middle Ages was not made by Jews (though who knows how many Jewish converts were among them) but by Christians. The Templars, for instance, specialized in bills of exchange and foreign currency transactions; they never lent money directly to anyone. Yet, they became an international financial cartel without parallel in history hitherto, in their defense they always claimed that there goal was a spiritual one and the immense sums of money was merely the means to an end: the reconquest of Jerusalem. War was a globalizer.
Like with the Jews in certain nations their wealth was inevitably gobbled up by the cash-starved monarchs of the era. Soon came the banking cartels of the late-medieval and early renaissance city-states, the Medici and other families that held sway in the republican city states of Italy beyond the reach of the Vatican's effective power. They made their fortunes by lending money to monarchs either for the Crusades or waging war in Europe itself but this always carried the risk that the reckless monarchs would default on what they owed. The practice of lending to states was one way to get passed the obstacles that that Church limitations on usury caused and in this way the incestuous marriage between the public power of the state and private creditors began to make headway. But the real revolution was slow in coming to fruition and it occurred in a dark lagoon off the Adriatic--Venice, that satanic beast bent on engorging everything in sight. In the 12th century, in the middle of the pressing burdens of fighting the Crusades (amidst other wars of aggression) Venice issued the world's first government bond: the prestiti. The wealthy citizens of Venice, and really those were the only true citizens of Venice, were forced to invest their money in the war effort with the promise that they would be paid off at interest. But after the initial prodding the bonds not only took on a momentum of their own and became widely traded amongst the Venetian elite but soon became coveted even by foreign investors who apparently had few qualms about investing in a foreign state; the feeling was not mutual as the Venetian council had to meet to approve the ownership of Venetian bonds by a private individual. The Venetian state itself became a capitalist institution raising cash through taxation and conquest to pay off the elites who had thrown their cash into the collective pot for the good of the republic but the fruits of the efforts of the Venetian state belonged to the bondholders and not to the people. In its time, Venice was a militarist-slaving-colonialist colossus that bossed the Mediterranean and monopolized its trade routes at its pleasure; its major competitor Genoa, home-town of Christopher Columbus, was not cut from a different cloth. Marx observed that every mercantile nation of medieval and Early Modern times was essentially founded on a colonial system, typically the slave-trade, and did not radically alter the class structure of Europe but rather were embedded in the pores of its structure. Venice, the German Free-Towns of the Hapsburg League, and later Amsterdam played the role of centralizing trade and financial structures that would flow in from and out-to the feudal core of Europe largely in alliance with the great decaying social structure of the time. The nobility of Europe constituted between 1-8% of the population in most nations and thus as the wealthiest citizens as the recipients of sweat of the peasantry in the form of rents, were the best customers and therefore the most able to afford the vast array of luxury goods that constituted much of the long-range trade of the time. Since they were well-endowed with an regular stream of other peoples money we shouldn't be surprised that in general they did not protest too much when getting scammed out of a few pounds on some commodity from Asia Minor. The structure of feudalism gave rise to the bourgeoisie and, unsurprisingly, capitalism.
We should not be surprised that Early Modern Kingdoms became increasingly dependent on trade for taxes and bourgeois civil servants to staff the government in this periods well. Indebted feudal monarchies sought to free themselves from their creditors where possible or even to expropriate their creditors assets where possible but nonetheless raising taxes became a racketeering scheme that used the might of the state to pay back its creditors, much like a bourgeois republic, unlike the bourgeois republics prior to 1789 this was largely done completely without the consent of the governed. The strength of the creditor over the Ancien Régime flowed precisely from the weakness of the state in its ability to raise money and which flowed precisely from the strength of the private power of the aristocracy, who, in seeing themselves as the divinely elected leadership of the state, were naturally directly represented in it. The newly founded medieval institutions of the Public Debt, the National Bank etc, which Marx keenly observed were exclusively republican institutions in this era represented an approach to finance more in line with how the bourgeoisie saw the world. The genius of the Venetian invention of government bonds was not only were they remunerative asset that could be bought, traded, and sold, and which overtime promised to make the elite even richer but that they tied the Venetian elite intimately to state-solvency. The Venetian republic had gambled that in expecting their interest payments that the Venetian elite would pay their taxes, throw good money after bad by investing in new bonds, take an active interest in new colonial/commercial adventures, or simply go out of their way to enforce the tax laws against the ordinary citizens or to pass new tax laws against them. The acceptance of private banks based on fractional reserve principles in Christendom also came about because they did most of their banking with Kings and did not really lend to any private man but to sovereigns--these were also to be found in republics such as the Medici banking family of Florence. Although these banks later collapsed they served as important models and according to some historians like Hobsbawm ended up exporting capital to budding new financial-mercantile centers like Hollande, which ruled surpassed the Venetians and the other Italians in raw mercantile power and later played its role in sending its capital to bolster Britain. The Dutch rebels against the absolutist Spanish monarchy later issued their own state-bonds not long after the prestiti died out in Venice--they too were Republicans much like their Italian counter-parts but in this case they were Protestants influenced by the meritocratic teachings and free trade current in protestant thought that was high-lighted by Marx and Engels but made into full-on cultural theory by Max Weber.
Like Venice, Hollande became the place that the European 1% came to dabble in finance and build up their fictitious wealth through ownership of state bonds, deeds to Dutch land was widely traded and speculated on abroad, and Hollande became a commercial mecca replicating what the Venetians had done in the Mediterranean on a global scale. Like Venice, Hollande fit quite well into the European feudal system, even if the argument could be made that it was not truly of it. Hollande's aristocracy had been relatively weak due to the particular conditions of the Dutch marshland which required considerable peasant effort to maintain, so like the Venetians, the geography of the land drove them towards trade and the sea. But what is emerging here that is critical for our purposes is a stable stratum of private capitalists that had a source of revenue of last resort in the form of the nascent bourgeois state. Like today, government bonds can be seen as a stable, safe investment of last resort which yields profit to its possessor, in some sense it resolves key problems between a state that needs tax revenue and the wealthy classes (whether bourgeois or aristocratic) who disproportionately control society's wealth and yet naturally disdain high and/or effective tax. But more importantly is its position as an investment avenue of last resort for capitalists as certain fields decline in profitability or are deemed to risky, it is natural that bonds become a way of utilizing society's spare investment capital whether its due to legitimate lack of opportunity, desire for a rainy day asset, or lack of information about new markets/investment opportunities. Thus this becomes one way that the contradictions of capitalist investment become overcome and this is certainly important in this age where the bourgeoisie was rising and thus a stable investing class needed to be created and cultivated that could counter-act the dominant feudal elite of the time. This was enforced by the force of arms of the state of the time and its ability to raise taxes from the citizens and thus it yields up a profit to those capitalists who put their money in the coffers of the state. In the Absolute monarchies it was the bourgeoisie, the peasantry and the nascent working class who paid this price and in the case of the fiscal crisis of the French Monarchy they were driven with single-minded purpose on a collision course that would destroy the aristocracy and its state entirely. After their second bourgeois revolution in a decade the English also installed a national bank, and though they did not declare a republic the second time, they took a typical republican move and issued state-bonds to cover the short-falls in their treasury. This move cemented the fact that any British state that came after would have to be amenable to trade and the "right" to make a profit. The Bank of England did not have the effect that the English bourgeois hoped it would have--providing low-interest/interest-free loans to businessmen for trade and industrial improvement but it was an effective method of financing War. It had been this way with Venice and Hollande, these new financial-instruments that in effect treated the state itself as a capitalist endeavor had mainly been created in order to wage wars and mainly was put to use for just that end. In all three cases the wars had been used to guarantee mercantile supremacy and to extract wealth via Empire and monopoly over trade and in all three cases slavery had been considered a remarkable business and trade. And indeed, it could be considered a case where there was a consistent element in all three societies in favor of "deregulation" and "free trade" in this particular industry.
It should be noted that the state had to be particularly activist in the realm of Empire since any other move into state-controlled production would be opposed by the bourgeoisie or denounced as the old monarchial habit of stepping into private economic affairs like with the French guild system, new taxes were likely to produce anger, resentment, and revolt regardless of which class it was placed on, and running the printing press indefinitely certainly wasn't an option. The state was thus in the business of opening up new business-opportunities for the Early Modern bourgeoisie and thus had gotten them to agree to taxation via the actions it took to safeguard their steady stream of profits by keeping that and the economy overall healthy states were able to raise continually expanding revenues which was good since both the needs of a modern capitalist society were ever-pressing and there was a sea of hungry investors expecting regular payment on capital advanced to the state--getting richer, it appears, was just the side-effect of good patriotism. That system truly comes into its own after the French Revolution and the rise of the Rothschild family who were the first to connect all the dots and create a truly international government bonds market. That family which was connected to the reactionary British-led alliance of the monarchies of Europe against republican France and aided in financing it was thus in a position to help determine the financial future of Europe in the aftermath. Since states had surprisingly little power to raise their own funds according to Ferguson it was the Rothschilds that stepped in as the true international financiers providing capital to the governments of Europe. The Rothschild family in the early days did surprisingly few loans except to wealthy clients according to Ferguson and most other services their bread and butter was government bonds, and the financing of state-debt. If the figures in Ferguson's book are correct and are adjusted for inflation carefully then it was quite likely that the Rothschild family had a working capital of over a trillion dollars in the early 19th century. Much like the Blackwater firm today it can be said that they managed an enormous amount of capital even if they weren't necessarily entitled to the fruits of all of it--even if they were exceptionally rich by any standard. Heinrich Heine, the great poet and a friend of Marx, once opined that "Money is the God of our Age, and Rothschild is his profit." According to Ferguson:
Heinrich Heine went further in calling Rothschild a revolutionary on par with Robespierre, because: 'Rothschild...destroyed the predominance of land, by raising the system of state bonds to supreme power, thereby mobilizing property and income and at the same time endowing money with previous privileges of land. (House of Rothschild: the World's Banker 1849-1999, pg. xxiv)He goes on to explain the importance of the Rothschilds innovation in this sphere to economic history:
Without doubt, the Rothschilds' most important contribution to economic history was the creation of a truly international bond market. There had, of course, been cross-border capital flows before: the Dutch had invested in British government bonds in the eighteenth century while the Rothschilds' rivals in Frankfurt, the Bethmanns, had marketed large issues of Austrian bonds in the same period. But never had a country's bonds been issued in multiple markets with (as in the case of Prussia in 1818) such alluring conditions as denomination in sterling, payment of interest at the place of issue and a sinking fund. (Ibid.)It had been called "Finanzbonaparten" with some justice and true to the spirit of the Holy Alliance it was remarkable how the Rothschilds' innovation combined elite ruling class internationalism, begrudging acceptance of a democratizing Europe and elite activism. The bond market effectively became a referendum on the faith that the capitalist class placed in their own governments so that it was not completely unjustly that various writers whether republican or monarchist accused the Rothschild family of being the true King-makers of Europe--they at least aided in designing the machinery that would decide that, with or without them. It is interesting that in this era where the private capitalist ruled so effectively and was so freshly victorious that it scarcely received challenge that the state provided such a key support to this system even despite the significant private efforts that typically do not receive notice in the history of European imperialism or the fact that state-expenditure in lassiez-faire Britain made up a surprisingly low 5% of economic activity. This private appropriation of the profits yielded from this peculiar form of state-capitalism has by and large not changed in Western capitalist societies, regardless of greater regulation or less regulation, nationalization or privatization, welfare or austerity, etc. This perhaps explains to a large degree why the recession of Post-War welfare capitalism and state-ownership in economies across the world has not been followed with the recession of the state itself, rather the state seems to do most of its time avoiding any obligation towards the common laboring citizen. But if we understand that even if the state cannot be abolished without fundamentally changing the class relationships of society then we know that these semi-anarchist projects are just a rejection of an old form of state and the imposition of new one. The "fetters" that Post-War welfare capitalism and Soviet socialism, and later revisionist state-capitalism placed on the super-rich of the capitalist system have largely disappeared or worn thin. Again, we have noted previously that the fetters presented by this type of capitalist government (especially in the West Bloc) was not such a great impediment to the accumulation of great wealth as even radical analysts are inclined to think. The proof is that social democracy began in force in the interwar period, especially the Depression, and that it had deeper roots in 19th century reformism and these remained astoundingly unequal societies regardless of widespread agitation for reform with various levels of success and effectiveness. While New Deal America, to use an example, may have been more equal and less painful for the proletariat then it otherwise would have been had non-progressive legislation remained in force, it nonetheless was unequal and crisis-ridden enough to create America's first sustained wave of mass communist agitation which is why it was dubbed "the red 30s" in capitalist circles. As we noted before the Depression and WWI had a leveling effect and so its hard to say how much of the newfound relative equality was related to the social democratic reforms and how much was related to the War/Depression induced economic "medicine" and the same is true of the post-war era. Having saved the wealth of the investing-class and the super-rich with a massive and unprecedented state-capitalist injection of free money into the financial system in order to save the "free market" and the capitalist system it is fair to say that had Herbert Hoover been in the driving seat in 2008 all that fictitious capital would've been wiped out and the result would've been a painful but real leveling nonetheless--along with an unprecedented super-crisis.
Few capitalist politicians and economists could have reconciled themselves to allowing such a "conservative" approach to the problem of inequality to be won at the cost of blood in the streets and even more widespread anti-capitalist sentiment and action across the planet then what occurred. Of course they know what good Marxists know which is that the problems of capitalism isn't just inequity but mainly its systemic crises, but neoliberals typically present the public and their opponents on the Left with a Devils dilemma: do we maintain a healthy capitalist economy with high-growth that incurs benefits to all, or do we maintain or increase policies intended to stop the exacerbation and suffer the costs of lower growth and job creation? The truth is that that is a false dilemma--neither can be done. Another false debate presented to us by the bourgeoisie just like the false debate of the Cold War that continues to this day: Market or State? Private or Public? No capitalist system can exist without a market without some degree of private-operation/ownership and thus the question of the market is one of degree, that is why market-socialism, stateless or state-oriented, is based on a false premise--the anarchy of production that corresponds to an unplanned market economy creates contradictions that lead to the regulation of production according to profitability, the reinstitution of the capitalist mode of production, no matter how many "worker-owned" stickers you slap on your coop. Likewise, the recession of the state from the public sphere of production, regulation, and distribution did not lead to the end of state-capitalism but rather created a new type of state-capitalism. And in this type of lassiez-faire economy the banks took on the role of Central Planner in the economy just as they had been during the 19th century, only in this case of private capitalism industrial/agricultural capital didn't loom over finance or strike a mutually-beneficit alliance with it as things had been during the maturing phase of capitalism in the 19th century but rather finance established its hegemony over every other competitor. But in the end not even the most sophisticated financial instruments could solve the contradictions of capitalism and so where possible in the West the state came to the aid of the financial-corporate oligarchy where possible. Social democratism did not die out of existence either, much to the chagrin of right-neoliberals, but has been repurposed. Even in 19th century England a welfare system existed that had been inherited from the Middle Ages and reinstated by the revolutionary bourgeois governments of the 17th century. This system provided substantial aid for the time and kept the agricultural working class alive as Marx pointed out when the wages paid out weren't high enough to do so. In this sense, the welfare state became not a gradualist opponent of capitalism but an accomplish to the worst kind of capitalist exploitation. In 19th century Britain, again, free-traders went so far as to establish state-run utilities and roads because they realized if these things slipped into private hands they would create such large costs for private industry that it would snuff out competition by unduly burdening the smaller firms and slowdown growth via an enormous monopoly rent-burden. Not a few Marxists have noticed amid the hubbub about basic income that some of its strongest proponents are the rabidly pro-market bourgeois economists and the purpose of this is to do away with the old patchwork welfare state put together over centuries of reformism both inspired from above and the local level and also to deregulate the labor market, so that the new app-based start-ups like Lyft and Uber become the normal experience for Western workers in the 21st century rather the exception. This massive expansion of the welfare state is to be universalized across the population and not targeted towards those who are the most impoverished and really need the money, they will likely suffer a decline in their real benefits, while the employment codes and regulations designed precisely to keep the worker from falling into such a position of disposability that he becomes a real threat to the community will be done away with. The consensus is with the planned automation they expect won't need to use as much labor time from the average worker and thus keeping a worker full-time or even the normal part-time hours established in the 20th century is onerous. That is why the American business-community has taken a page from the Uber playbook and has made 95% of all new jobs created since the Great Recession part-time. It is likely the new reforms planned are more radical than this but how many hundreds of billions, even trillions of dollars will be shelled out every year by the state to keep this a "livable" arrangement? And, will they be, just like the reforms of the "statist" social democratic reformist movement of the 20th century-- paid with money issued and backed with capital raised from bondholders?
At this point we see that the expansion of the market-economy makes possible the expansion of the state and that the expansion of the state can make possible the expansion of the market. It does not have to be zero-sum rather both sectors dependent on the blood and sweat of the proletariat. The new "state-capitalism" of the Post-War World made possible the expansion of the markets in the neoliberal era and, indeed, if bond markets are taken to mean anything then you would expect that this order was predicated on the fact that the market would expand, as it did. We will attempt a thorough explanation of this era in another post after a more in-depth reading and gathering of research materials has been attained. It should be noted that post-gold Keynesian policies abolished the raison d'être of post-war state-capitalism in the West in some respects, which was that hemmed in by monetary policy, politics, and its own internal contradictions, capitalism needed state support and distribution to resolve its problems. But with the removal of the gold cover and the revving up of the printing press the incentives to keep state-owned utilities or national industries decreased as the money could simply be printed from thin air and given to private provider. It should be noticed that criticisms of this policy from the perspective of efficiency are generally well-founded but that what is meant by efficiency from the perspective of capital is simply profitability. Another point that should be made is that if the state took the upper-hand in the relationship (and that is to overstate things) after WWII this can generally be explained by the post-War legislation against trusts and monopolies and the fresh burst of competition arising from all the destroyed capital values and rise in the rate of profit if the state stepped in the place of Wall Street or GM in certain places that was because they also run the state itself under capitalism. And, using the State could be an effective way to raise capital (as we saw with the last post) and to gain monopolies over certain markets and industries. The weakening of private monopoly-capitalism in the face of two world wars, a super crisis, and the rise of revolutionary movements across the planet, could be circumvented by the rise of monopoly-state capitalism to fill that vacuum. Eventually the incestuous relationship between corporations and the state came under attack in the 60s and culminated in the anti-politics whether genuine or artificially-induced that came to gain cultural hegemony in the 70s and 80s and the replacement for state-monopoly capitalism was a more private monopoly capitalism which was precisely what the Western bourgeoisie had desired and been used to all along. Private capital was let off the leash, though it never really been chained, more like fenced into a large dog park; its important to note that the state itself had been instrumental in nursing this wounded dog back to health and was never truly the threat to it that it been made out to be. The state had filled its role in preparing the Western corporate elite to compete against the Soviet revisionist bourgeoisie and its followers in the East Bloc, as well as the newly unchained capitalist economies in the Third World who were loath to listen to lectures from the colonialists on why their markets should be completely free so that the private corporations and capitalists that grew so fat under colonialism could retain or earn further advantages. Private capitalism remained King though we can't say its from lack of trying from the Eastern and post-colonial bourgeoisie that often preferred state-capitalist measures, rather, they too were effected by the contradictions of capitalism and had to maintain higher growth rates to compete effectively with the West due to a lower starting point. As the collapse of Soviet social-imperialism showed the dream of a better managed, more egalitarian capitalism with a human face had proven to be a false dream. And, indeed, it was taken to show that social democracy across the world (which had always been based on the premise of private ownership and the freedom to get rich, just not "too much" or at the expense of the workers) was also a futile dream but that raw capitalism should rule, because it must rule.
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