What’s “Next” After Liberal Democracy

Which AI vendor best represents my values?

Amazon founder, Jeff Bezos, announced a plan yesterday to invest $2bn in a pair of initiatives. One will operate tuition-free, Montessori-style academies in underserved communities. The other will fund local efforts to relieve homelessness and hunger. This generous donation represents about 1% of Bezos’ net worth.

Bezos’ announcement is notable not just for its size, but for its emphasis on replacing failed public functions. His announcement also references his other investments in public infrastructure, like his space exploration company and what he calls his “stewardship” of the Washington Post. In his announcement, Bezos promises that in his new schools, “the child will be the customer.”

Philanthropy is nice. Smart, responsible government might be better. Perhaps we should just be grateful to be batting .500.

What’s coming Next after the decline of liberal democracy? No organized, intentional rival is yet apparent. No Adam Smith, John Locke, or Karl Marx has emerged with a manifesto or blueprint for a new system. All we can see of Next is a post-democratic environment taking shape, full of unanticipated new strains on our social order, lacking any coherent plan on our part for a purposeful replacement. Liberal democracy, communism, socialism and fascism all emerged from environmental demands that rendered older systems, like monarchy, inadequate. Here’s a rough outline of Next, as an environment awaiting our adaptation.

Where liberal democracy prized human rights, Next is favoring economic rights. Instead of equality, Next emphasizes competition. Where we once elevated elections and representation as the vehicle of personal expression, Next is channeling those energies through transactions in free markets.

Rule of law is being nudged aside in favor of atomized contractual relationships. Civic duty is declining in favor of transience, as citizens shed their burdensome attachments to place, institutions, duty, and inherited (unchosen) relationships. Next is a civilization of consumers rather than citizens, a world of utility divorced from duty.

Value in the old, industrial democratic order was measured in productivity. Economists watched statistics like employment rates and GDP. Value in the Next order is governed by Moore’s Law. Data processing, not the production and consumption of trinkets, will determines wealth, success, and power. Winners in the industrial age owned raw materials and the means of production. Winners in Next own data and the means of computation.

Journalism in Next is just another business, dependent on customers for its survival. Journalistic outlets will deliver news their customers want to hear, or they will fail. There is only a very narrow market for unpleasant realities, so professional journalism will be increasingly constrained by the prerogatives of the entertainment industry. Whatever authentic journalism in the classical model survives in Next will owe its survival to wealthy patrons and public donations.

It is likely that some form of private journalism may develop, to uncover real conditions for those who still thrive on dissonant information – corporate leadership. Their work-product is likely to be proprietary, available only to insiders, closer to the work of private investigators than to the reporters of the past. Whatever public journalism survives independent of a patron, will be refined to compete with movies and video games.

The most powerful people in a monarchy are aristocrats. The most powerful people in a liberal democracy are elected heads of state. The most powerful people in Next will probably be global corporate management and celebrities. In the spirit of parallel processing and competition, there will be exponentially more of them than the number of aristocrats in a monarchy, or elected leaders in democracies. Even without public elections, a form of balance of power may be achieved in Next, influenced by the choices of billions of consumers. Liberal democracies limit concentration of power through laws and civil rights. In Next, concentration of power is limited by competition and innovation. Where governments fail to stop Uber, a new driverless car competitor might succeed.

Our public mythology is already evolving under pressure from Next. Public monuments once venerated generals or presidents. Our declining attachment to public institutions mean the next generation of heroes might be entertainers, sports stars, inventors, or ordinary people who achieved some Kardashianesque notoriety. As the influence and importance of public institutions declines, people will run for Congress and win just to promote their Netflix show or their YouTube channel. They might not even bother to go to DC to take their seat. Idiocracy will likely swamp our highest electoral institutions. Many public policy alternatives that might have mitigated the negative outcomes of Next will be wrecked by the dysfunction enveloping electoral politics.

How might we combat the descent of public institutions into Idiocracy? One simple, if troubling solution might be handing more public power to the entities thriving in Next. Imagine if the CEO of GE ran for Congress? Or perhaps more realistically, imagine if United Healthcare or Oracle, or local consortiums of companies hired employees specifically to run for office and funded them directly. Instead of a Congress in which corporations trip over each other with donations and lobbying efforts to influence Congressmen, what if corporations just got their own employees elected? Picture a Congress in which 50-70 members got their primary income and their direction from their employer? This may sound like a terrible future, but we’re mostly there already.

Vice President Dick Cheney, during his term in office, made far more money from Halliburton than he earned from his meagre federal salary. It should come as no surprise that he accomplished far more for Halliburton than he did for us. Our current president still runs a largely secret business than profits directly from his political position. Governors of Florida and Illinois are also billionaire former CEO’s who continue to profit from their capital investments. Their political policies reflect their capital interests, which are still worth hundreds of times their salaries.

Eddie Farnsworth is a state legislator and political entrepreneur in Arizona. He’s about to earn $30m selling public schools back to the state by essentially laundering the facilities through the charter school program. Farnsworth’s scheme is particularly galling, but politicians using their position for profit isn’t unique.

The median US Congressman is a millionaire. If half of them were officially paid employees of a corporation, at least they would have some formal accountability to a sane institution with rational interests. A Congress in which many members were corporate employees might be less corrupt, smarter, more responsive to genuine public needs, and more broadly effective than our current representatives. Perhaps most importantly, corporations are already accustomed to offload many routine decisions to algorithms. Representatives drawn from their ranks will likely be more comfortable with the inevitable pivot away from decision-making based on the democratic process toward decision-making built on science, data and AI-based computation. And whether it’s a good idea or a bad one, formalized corporate representation looms as a likely outcome as companies seek to remove the inefficient political middleman. The Chinese are already doing it.

Tencent is the largest corporation in Asia, and one of the largest in the world. Its founder and CEO, Ma Hauteng, was “elected” to China’s National People’s Congress. Dozens of other corporate leaders hold positions in Chinese government. Most of the country’s senior leadership are billionaires through their business roles. This is a pattern in both the authoritarian and democratic nations of Asia. As those governments look to leverage the parallel processing capabilities of private institutions, they must bring them into roles of formal government power. Prominent corporate figures already take on roles of official public leadership and corporations have formal input in public decisions. If Jeff Bezos is going to influence public life through “stewardship” of the Washington Post and a network of charitable entities, would it be better or worse for him to be accountable through a formal public office?

Corporate power has already developed into a vital hedge against Idiocracy in the US, as our political system is swamped by nutjobs and opportunists. Corporations have played decisive roles in fighting bigoted legislation in major US states with a strong business presence. In states like Mississippi, with little offer big businesses, there’s been nothing to stop the descent into Idiocracy. As Next gains steam, we are likely to see businesses step in to shore up failing public institutions, blurring a once-sacred boundary in liberal democracies between political and economic power.

Next is likely to be a system in which older liberal democratic institutions continue to exist, but stripped of their former purpose, influence and power. Real decision-making slips ever farther out of the hands of public institutions into not just corporations, but toward other ad hoc organizations like Southwest Key Programs that pop up to solve a problem for cash. As citizens are replaced with consumers, power shifts out of politics and into the marketplace, placing decisions of central public importance in the hands of unelected experts with a keen eye on the bottom line.

Monarchies still exist, they just don’t matter. This is likely the fate of democratic institutions as Next takes shape.

***

This post is part of a series exploring what’s next after liberal democracy and what we should do to prepare. Much of this material was covered in The Politics of Crazy, though from the perspective of a more optimistic era. The work fits better as a whole, but reading through a 6000+ word piece on a computer seems impractical. When these are complete I’ll gather them into a series of links on a single page.

22 Comments

  1. So today tow fascists got together in Washington. One played the flattery card about building a permanent base in Poland and naming if after the puppet tyrant.

    Typical madness, until the puppet tyrant showed his hand, when he said that “He would pay the United States, meaning Poland would be paying billions of dollars for a base,” Trump said. “We’re looking at that more and more from the standpoint of defending really wealthy countries.”

    How does this fit into the business model of the future Chris, where the U.S. military is now explicitly a hired gun? The military has always been about protecting U.S. business interests, but this is NEXT step stuff.

  2. Yea, whatever Karl. You’re a hundred miles and many decades past that flattened gate.

    Now what?

    Hi Chris
    If you think that YOUR PARTY has already taken the USA so far from Democracy that there is no way back then you should be working on fixing it
    “I welcome our corporate overlords” – is an extreme example of “sour grapes”

    1. First, let me say that my comment was snippier than it needed to be. Sorry about that.

      Second, the “YOUR PARTY” bit is more interesting than it might at first appear. Almost all of my family and my friends from early in life live in the South, so I have lots of opportunities to hear from people who voted for Trump. Something interesting is starting to dawn on me. Politics is a system, like an ecology; a garden. That’s especially true in more representative systems, but it’s also true in others. Learn a few key demographic details about someone and you can predict their politics with 90+% accuracy. No one’s party put us here. GW Bush didn’t do this to us. Politics is an organic system.

      Contrast that with the competing notion that there are good people and bad people, and ergo, good political outcomes happen when the good people win. It’s really a short hop from there to Stalin’s “no man, no problem.” There are choke points in the development of a political system when some rotten wood needs to burn, and we’re probably coming up on one of those moments, but containing the blaze depends on maintaining focus on a goal.

      My party didn’t put us here. A system put us here. Yes, the GOP has been off the rails for a long time, as detailed by the last decade of my writing, but they are not kings or demons. And even if their power here in the US has been more than it should be, their actions don’t explain the rise of parallel political movements globally. The Clintons presided over the rise of the prison industry, de-regulation of the financial system, and the dismantling the welfare state. Obama did nothing to punish the banking fraud that nearly destroyed capitalism and failed to bring relief to those devastated by financial fraud. Republicans didn’t vote for Brexit, didn’t put fascists in charge of Hungary and Poland, launch the war in Syria or put smart-dressed neo-Nazi’s within striking distance of power in Germany. Instead of attacking people, who are essentially just plants in this garden, we need to understand and address conditions that are distorting their development.

      This organic view of politics is important first of all because I think it’s more accurate. Second because it’s more humane and measured. And it saves us from the blood-thirsty delusion that we can solve political problems by figuring out who needs killing. You can’t run a healthy political system without some level of violence, but it should measured, contained, purposeful and rare. Staying focused on the organic conditions that give rise to the moron down the street with the Trump sign and the Blue Lives Matter flag will make it easier to weaken the parasites and pull the weeds.

      Marx has been dead for a very long time. So has Adam Smith. Almost everything that either of them could do for us has already been incorporated into our political systems. The rest of it largely proved a failure and should probably be abandoned. My premise with these pieces is that old assumptions of what’s good and what’s bad, based on our inherited alignments to dead philosophers is probably not going to help us map a way forward.

      Instead, borrowing lessons we’re learning from evolution and from the growing power of artificial computation, we should try to look at our political arrangements with new eyes. Start with first principles and build up. Take theoretical solutions and explore ways to graft them into existing institutions. Avoid the utopian errors of those who sought to destroy a society and rebuild from scratch, but when destruction happens, as it will at times, seize the chance to create new institutions.

      Republicans, Democrats, Tories, Christian Democrats, Social Democrats, we’re all woven into a fabric.

      1. Chris,

        I have been really wanting to participate in this thread, but haven’t had the time to do it justice.

        However, I agree that no one party is responsible and it is doubtful anything could have been done to significantly change the outcome.

        Most people would label me a “bleeding heart liberal”. Furthermore, I grew up in a blue-collar household that was very pro-union. “My party” was definitely anti-immigrant and rather blatantly racist.

        Trying to blame the Republicans for this is just not supported by the facts.

        Yes, I think Hillary would have been a better choice for President but, realistically, there is a good chance things would have ended up much worse that with Trump.

        At least with Trump, it is more difficult for thinking people to accept it as good.

        Chris, I admire your attempts to rise above the partisanship.

        You may be right about corporation overlords taking power but even you understand that has happened before and it will probably be just another phase humanity has to live through.

      2. Dfcord: We must have been in two different “bleeding heart liberal” camps….Mine was not anti-immigration and definitely not racist. I was always and still am, pro-union. Both parties have set bad examples from time to time depending upon leadership (or lack thereof); however, I disagree with Chris on the degree to which the Republican Party has flagrantly ignored and used (badly) the democratic process – in the last decade. This party’s malfeasance to its elected responsibilities to serve as a check and balance on the executive branch has been despicable. What’s more, the GOP doesn’t care enough to even go through the motions.

        We can point fingers in many directions but this liberal is more proud of her party with all its shortcomings than I suspect most traditional Republicans are of theirs. The real question that Chris is exploring is not who is to blame but where does this lead? At the grassroots level, I can attest to the fact that Democrats have been energized in their efforts to restore responsible governance. Younger people (than myself – I’m ‘old’) are getting involved in the political process, learning how to make it work and why it is so important. That isn’t a step backwards, that is a giant step forward.

      3. Disagree – we still have to bear in mind the problems pointed out by Marx and especially by Smith

        The USA has major problems because in the beginning you went away from the proven Parliamentarian system – as a cynic I would say that was because the leaders of the revolution were the biggest pirates EVER!

        Other nations do have problems – but they are for the most part surface issues

        The core problem is that while we have been successful in reducing the extremes of world poverty we have allowed the very rich to steal most of the wealth that should have gone to (and was produced by) the 90%

        As an optimist I believe that even the USA is only one administration away from implementing some long term fixes

        (1) – a Universal Basic Income
        This would have the effect of changing the power balance – when people are not totally reliant on their employers then the balance changes
        IMHO this would lead to a massive increase in lowest wages – and give your economy a good boost
        As a side effect a UBI would almost require universal bank accounts – the Post Office? – and this would also help a LOT

        (2) – Voting – making the voting day a national holiday – would be easy and make a difference
        You could also use the mechanisms for a UBI to give an easy voter registration system

        (3) Universal health care – medicare for all??

        These changes would make your system much fairer and more stable in the long term

      4. I don’t want to create any misunderstanding about “rising about partisanship.” The GOP is utterly broken, dysfunctional, and sick. America needs the Republican Party to be destroyed by whatever means necessary.

        What I’m trying to express with this fabric metaphor is where that sickness comes from. It is systemic, not personal. That asshole down the street with his Blue Lives Matter flag is not the origin, the source, the root of the sickness flowing through him. Very few people make the slightest effort to have informed, deliberate political opinions, just like practically no one makes an affirmative decision to become a fan of a particular sports team. They are vessels of a culture. Nazis didn’t just independently decide to become Nazis. They responded to a cultural movement based on their programming. Yes, they are responsible. Yes, they were mostly garbage humans. But the attitudes and choices expressed by a society’s garbage people are a function of that society more than of those individuals. Our shittiest quarter or so of the population are the finest litmus test of our social health.

        Want change? At some point we have to think about the structure of our culture, what we tolerate, what we elevate, what we ignore. That’s why those Confederate statues are important, even though not one law changes when they come down. It’s something conservatives understand at a fundamental level and seems less intuitive for liberals. Culture drives politics. Society is a garden, a fabric. Passing laws is a process that occurs at the end of a very long causal chain. If you’re forever out in the streets, working on the next election without rebuilding the social and cultural pillars of the country, you’re just putting a finger in the dyke.

      5. This discussion about culture is reminding me of a quote from Patrick Moynihan: “ The central conservative truth is that it is culture, not politics, that determines the success of a society. The central liberal truth is that politics can change a culture and save it from itself.”

      6. To Mary…

        It might help you to understand my outlook to know that on May 4th, 1970 I was sitting in a high school classroom when we were told that school was being cancelled .

        My high school was less than 10 miles from Kent State.

        The adults in my Blue Collar, Democratic neighborhood were unanimous in their opinion that the students killed deserved what they got. Some may have changed their minds after the details were determined, but their lack of even trying to see the big picture was disturbing even if not surprising.

        Democrats in unions were vocal in their insistence that the government had no business in trying to integrate unions (or schools, for that matter). And, woe to anyone who tried to defend Japanese car manufacturers.

        I consider myself a wanna-be flower child who grew up into a pro-choice, pro UBI, healthcare-for-all bleeding heart liberal.

        While it is my hope that democracy could evolve and accomplish this for the US, I am trying to separate my desires from what is realistically likely.

  3. OT, but barring a last minute turnaround, the Ignoramus-in-Chief is set to fire a whopping $200 *billion* of new tariffs at China – most of them aimed at “internet technology products and other electronics, printed circuit boards and consumer goods including Chinese seafood, furniture and lighting products, tires, chemicals, plastics, bicycles and car seats for babies.”

    Needless to say, if you’re planning on getting a new computer or TV, you’ll probably want to do that soon. Buckle up.

    https://www.reuters.com/article/us-usa-trade-china/trump-likely-to-announce-new-china-tariffs-as-early-as-monday-source-idUSKCN1LV0OB?utm_campaign=trueAnthem:+Trending+Content&utm_content=5b9da8ba04d301710f7bc684&utm_medium=trueAnthem&utm_source=twitter

  4. How are what salesforce and amazon doing different than Andrew Carnegie spending his fortune building public libraries around the country? Or Rockefeller founding the U. Chicago and the Rockefeller Institute? I ask because none of these philanthropic efforts — major efforts in their day — led to a wholesale reduction in liberal democracy.

    Also, I still am not convinced companies these days actually have an interest in these issues beyond virtue-signalling to their customers and employees. It’s nice that Amazon is concerned about the homeless. How about the plight of their warehouse workers? Their compassion curiously seems to stop at those doors.

    I point this out because I still believe that corporations will involve themselves with the government as much as necessary to ensure their economic health / competitive advantage, but they have no interest in running the government for the rest of us. Sure, the Treasury Secretary is now a position wholly owned by Goldman Sachs. Does that mean GS is now suddenly going to also task their high-level executives to solving inner-city crime? Or that they’ll also capture HHS and run Medicare for us?

    Liberal democracy may die off, but I don’t see corporations having any interest whatsoever in filling the void, even if — as you assert — they might be better at it. Rather, they’ll continue to do what they’ve always done: capture the parts of the govt necessary to ensure their business success, and let the rest of the govt and society hang. Bring a hundred brilliant engineers from Google into Congress, and maybe they’ll sort out our telecoms and tech policies (or more likely, merely ensure their competitors die off), but do you think they’ll really care about (or have the background to intelligently address) urban poverty? Foreign policy? Dairy subsidies?

    I realize you’ve said before that you’re not necessarily saying corporations will do a better job than enlightened government, merely that that may be what we’re stuck with. But my argument is:
    1) even if the world descends into chaos, corporations have no interest in addressing anything beyond their narrow economic interests. They will not step into the void. Something / someone else will have to.

    2) Their economic interests are very narrow, not nearly as broad as you think. Yes, salesforce was instrumental in getting Indiana to drop their bathroom ban. And maybe their CEO, Benioff, is genuinely interested in addressing social issues. My cynical take is, again, this is virtue-signalling in their competition for talent, but I’ll give him the benefit of the doubt. But he’s an exception. Just like Carnegie and Rockefeller were exceptions in the Gilded Age (they were ruthless in business but at least had some notion of giving back). There have always been exceptions. I don’t see the sea-change in corporate attitudes that you’re saying is happening.

    Even in the touchy-feely world of ultra-liberal (socially, at least…) Silicon Valley, who else is talking about social issues? What have Facebook, Apple, Twitter, SnapChat, Netflix, Microsoft (aside from Gates’ personal foundation) done that’s comparable to Salesforce? And not a single one of those companies, Salesforce included, is talking about anything else besides social issues. Is that all there is to public life? You once astutely noted that even if we elect 100 Ocasia-Cortez’s to Congress, Goldman Sachs would have no problem tying them up with debates about transgender rights and the proper use of the term Latinx. IMHO, that’s exactly what Salesforce and Amazon’s efforts amount to. Not a genuine interest in solving the nation’s problems.

    1. I

      The Carnegie comparison is apt. So, what makes this situation different from the late 19th baron/donors, or for that matter, the Roman patronage system? What Bezos is doing is how public works got accomplished in a pre-democratic world and the early days of the US.

      When Carnegie created the public library system and founded universities, those were not government functions. State universities began to take shape after the civil war, but didn’t take on their current missions (beyond their focus on AG/industrial training and educating teachers) until mostly the early 19th century. Carnegie et al were nudging the political system toward a more active role (though that wasn’t their intent). Having democratic governments assume responsibility for these functions was a step toward creating real representative institutions. Having a new wave of 21st c. barons claw back these functions from the public square is a very big step backwards.

      II

      Do companies have an authentic interest in these issues, or are they merely mounting publicity campaigns? To take it further, are companies likely to invest real thought, effort and energy in a persistent way toward problems of public interest, or will they just splash money around and make bold statements?

      This may need a whole piece because the more I think about it the more interesting and complicated it gets. Honestly, I hadn’t really thought it all the way through until your comment (again, the reason I love this little corner of the Internet).

      Why will companies take on a public role more significant than Carnegie scattering coins around or Marc Benioff making grand, off-the-cuff pronouncements? Companies will coalesce around a more active, engaged political program for the same reasons that people do – to promote their threatened class and identity interests. Those class and identity interests happen to line up to a large extent with the interests of middle-to-high-income knowledge workers and more affluent non-white voters largely left behind by the GOP’s slide toward white nationalism.

      To get where I’m heading with this you have to recognize something that I think gets lost in conversations about corporate power – corporations, like people, are not all the same. But like people, they have a peer cohort and rivals. And it don’t mean “rivals” in the sense of competitors. In this context, my business competitors in the marketplace will mostly be my class compatriots, like the way the steel-worker standing next to me in line to get picked up for day-labor is both my competitor and my “comrade.” My rivals are defined by their identity, and just as in the development of class consciousness among voters, there’s a process (I think happening now) of companies coming to recognize their authentic interests and class identity in politics, apart from just jostling with competitors for a few regulatory concessions. All companies are not the same. Some of them really suck. Some of them don’t. Some have been well-represented in politics. Some of have been under-represented. I’m positing that there is a large, powerful class of corporations who are under-represented in politics, share class and identity interests, and are increasingly frustrated about the advantages enjoyed by their rivals. They may be the emerging force that makes a post-democratic order take shape.

      III

      Let’s start with a look at the pathetic frustrations of the world’s under-powered corporate giants. Take a look at this interview with former Cisco CEO John Chambers.

      https://www.washingtonpost.com/business/2018/09/14/former-cisco-ceo-john-chambers-wants-make-america-start-up-nation-again/

      Pay careful attention to the tone of his comments. He’s just dripping with ecstasy talking about his interactions with world leaders. Just listen to the douchebaggy thrill running through his anecdote about Shimon Peres’ personal advice to him. I mean, what advice have YOU received from Shimon Peres? Executives in our biggest and best corporations see the power they perceive as being wielded by their inferiors in public life and they want that. As of yet, they don’t have it and they haven’t quite figured out how to get it.

      Then think about Google’s decision this month to give the US Congress the middle finger by offering to send a minor executive to a Senate hearing on tech bias. Senators insisted that Google send their CEO and Google basically said f-off, he has a much more important job than explaining big words to monkeys. They dared those morons to issue a subpoena and the US Senate backed down, mostly because Senators were terrified of what Pichai might say on national television if pushed. Worse yet they worried how stupid they would look when he just ignored the subpoena and everyone discovered that the Senate doesn’t have the power to make the CEO of Google do anything at all. Senators railed and yelled and stomped their feet and the president made ugly statements. Google hasn’t said a word about it. They’ve just ignored them. Because those idiots don’t matter.

      The wealthy engines of the 21st century have a love/hate relationship with political power. Companies like Oracle and Cisco and even consumer companies like Nike are under-represented in politics compared to their class rivals. Will corporations fill the gap left by the decline of liberal democracy? Yes, I think they will. They’ll be engaging in a broader public policy role because it’s the only way to preserve their other priorities, including some basic human priorities that we all share. It will happen because those institutions are the last man standing, the last institutions with the power and coherence to act in that fashion, and their political engagement will be necessary for their class survival.

      Why will they be in this position? Because our social environment has changed in ways that disadvantage the kinds of small, voluntary, participatory institutions on which our earlier system of democratic government was based, in other words, because our system is steadily disadvantaging and de-incentivizing citizenship (the premise of Politics of Crazy). It has in turn created new rewards for profit-making institutions that interact with the public in a vendor/customer model. Democracy is dying because we don’t want to be citizens anymore. We prefer to be customers.

      Organizations built to thrive in that environment will grow more powerful, and they will have political needs. They will engage in the political system to meet those needs. The logic here is not that corporations=good and government=bad. The logic is that evolutionary demands dictate evolutionary outcomes, and our environment is evolving in ways that favor profit-centered entities like corporations, and possibly new forms that we haven’t even envisioned yet, like Southwest Key Programs which is formally a non-profit.

      IV

      First, which corporations are likely to move into a more public role? Not all of them. Some of them are already occupying an outsized public role. Many of them are likely to shrink away as the relevance of their model declines and the power of the new knowledge/entertainment/consumer giants expands.

      Exxon is a very different institution from, say, Starbucks or Proctor and Gamble. Exxon doesn’t have customers. It’s a dinosaur holdout from the days of war capitalism, built around resource extraction and labor exploitation. Sure, they hire some engineers and they perform some research, but they don’t make money off of innovation or talent. They’ll make their next dollar and their last off of grabbing access to more resources, not innovation or customer service.

      Exxon doesn’t give a shit whether Florida sinks into the ocean and they never will. By the way, Exxon and the last remaining companies like it will probably die off in the next couple of decades. Yes, they are a profit-oriented corporation, but like liberal democracy they are built for a bygone age. Their collapse will be sudden and surprising, but certain and soon, because the pure exploitation model on which they exist is losing its power to deliver returns on investment.

      Exxon is a little government, complete with its own army and diplomatic corps. And when needed, they can call in help from US and other militaries. They’ve even been credibly accused of having their own torturers. Exxon and the other oil and mining companies are a particularly ugly example, but the model extends to class industrial age businesses like the big automakers and old-school manufacturers. Their model is extractive rather than creative or innovative.

      Think about Ford makes money. Now think about how YouTube makes money. YouTube can’t make one additional dollar by squeezing, harassing, or coercing the people who develop their content. They can’t make one more dollar by seizing and holding a patch of land. Change the way value is created, and you’ve changed the incentives that make a political system work, just like the development of industry changed the politics of agrarian societies.

      Exxon is a class rival to companies like MSFT and Amazon. They hate each other the way Serbs hate Croats. When Google looks at a panel of Senators, they see a bunch of crooks in suits who work for GM and Goldman Sachs. Google isn’t planning to buy a spot on that panel next to Exxon’s Senators. In true Silicon Valley style, when they wake up to their “class consciousness” they’ll destroy that institution and replace it.

      V

      There are other kinds of companies out there besides the extraction extraction/exploitation model and the talent-driven innovators. Three major categories matter here and I only have time to dive into two of them right now: Small businesses, shit-companies (like the Trump org), and finance. Finance is just too big to tackle right now.

      Small businesses are our biggest employer. They are the small restaurant chain, professional groups like doctors’ or accountants’ offices, dry cleaners, auto repair shops, and so on. They are legion in number and modest in influence. At local levels they tend to be relatively well organized through networks of chambers of commerce, etc. They are interesting to this discussion because they could form a bridge across which the emerging talent companies make their assault on the political system. Or not.

      This class of corporations are currently aligned with the dinosaurs in national politics because that’s how you survive. Notice how Chamber of Commerce orgs across the country have lined up behind Republican politics even as the GOP has devolved into a hive of idiots. The general perception of these business owners is that they only retain their (critical) local political leverage by remaining aligned with the corporate dinosaurs nationally. That alignment is creating declining returns, but the arrogance and disdain of the talent class companies will make collaboration difficult. I don’t know what’s going to happen there. We won’t see shades of where that’s going until the talent companies start to mobilize more aggressively and openly in politics. This class of companies will never risk anything in politics. Nothing. Ever. They will slide under the wing of whatever institutions appear to be the winners.

      Then there’s the shit companies, the true jackals of the corporate jungle. Private equity vultures. Secretive family trusts. Shell companies within shell companies within holding companies in partnership with offshore real estate investment trusts. Networks of pure parasitism, producing nothing, not even barrels of oil, while hiding and often laundering money for rich rentiers. Most mid-sized farming businesses are organized this way, starting with an extractive business model (grab land and squeeze it), then surviving on government handouts that provide them with cheap inputs like water and transpor along with direct subsidies so they never take a loss. Real estate business like the Trump Org are the poster-children for this class of businesses. Their political influence is absolutely pervasive. Our entire present economic order is built around their interests. It’s important to note that in economically backward places in the South, and especially in Texas, the political power of the shit-company/extraction-company axis is entirely unrivaled. There is simply no other organized political force. When you think about the relative attractiveness of a future political system dominated by companies like Red Hat and VMware, it’s a mistake to compare that future to some imagined democratic version of the present. Instead, for citizens across much of the country, you have to compare that future to what life looks like under the complete dominion of Chevron and a bunch of local shit companies.

      Between the shit companies and the old-fashioned extraction companies you have the rivals to the rising order. Let’s take a look at one of the ugliest shit companies in the US.

      VI

      JG Boswell is a farming company, sorta. Technically it’s publicly traded (pink sheets), but organized in a manner that lets it operate in secret. It has to, because it’s a corrupt shitshow. Boswell was built by a sort of corporate rapist who earned his first fortune helping to destroy California’s Lake Tulare, converting it to cotton production. Like most mid-sized corporate farm companies, it is an organization built on resource extraction, developing no contribution to human knowledge or technological progress. And the business would have died long ago without the enormous contributions of government in form the water-management infrastructure and direct public transfers of welfare dollars into their coffers. Cotton companies in California’s central valley alone collect roughly $300m a year in federal subsidies. Boswell alone took in $10m in direct subsidies over the past 20 years.

      https://farm.ewg.org/top_recips.php?fips=06000&progcode=cotton&regionname=California

      Thanks to grabbing control of the real estate under Lake Tulare, Boswell now also sits on billions in potential water rights. They contribute nothing to the economy that couldn’t be better delivered by another kind of entity, while collecting rents for their small collection of shareholders who grow richer without working, mostly on inherited assets. Boswell is an economically worthless entity that diverts an enormous amount of public value to its shareholders purely through its outsized political influence. In essence, Boswell, like most companies of its class, is a political action committee with an attached business.

      Companies like Boswell or Exxon or Arch Coal are economic parasites. Almost everything economically useful they do could be replaced by machines or robots and the economy wouldn’t notice. Things would just cost less and work better. Along with these companies is a thick tier of shell companies and private equity entities that exist to obscure asset ownership and move money around. It’s the corporations that make of the world of the Trump family, the Madoffs and Martin Shkrelis who make money from manipulation, deceit and outright theft. Put these categories together and you have the average liberal’s mental picture of “corporate power.”

      VII

      So, what happens in the boardrooms of Facebook, Twitter and Google when they receive a request from the US Senate to appear on some kangaroo panel? Twitter and Facebook enthusiastically comply and walk into a cluster-fuck. Google defers. Why?

      First, revisit those comments above by Jack Chambers. The first generation of Silicon Valley CEOs are almost all like that. They have a kind of reverence for political power that’s weird and creepy. At a personal level, almost all of them are white, hyper-privileged, and despite their emerging corporate class rivalries, remain at a personal level aligned in class relationships with the Senators and other political dignitaries under whole leadership they chafe. The second generation of creative company leadership is starting to produce a different kind of executive.

      Facebook and Twitter are run by folks who fit the first-generation model, like Chambers. Sheryl Sandberg and Mark Zuckerberg walked into that Capitol Hill shitshow because they remain more attached to their personal class identity than to the class interests of their company. Sandberg is trying to become a white Oprah. Zuckerberg seems to think he has some kind of future in politics, which is just adorable though a looming disaster for his company and its shareholders. They’re both hyper-privileged, East Coast white people lacking the slightest shadow of awareness of how our political system really works.

      Dorsey at Twitter is an awkward case. A truly brilliant innovator who isn’t good other things, like running a company. He’s only in charge at Twitter because the company came so close to collapse that he, as the founder, was their last shot. It still isn’t clear whether it will survive. He looked like a deer in the headlights and clearly has no clue what was going on or what he was walking into.

      Then there’s Google. Google was built by immigrants and currently run by immigrants. They aren’t privileged white people who went to Harvard on dad’s money. There are some hard mf-ers who run a very large, complex business. They aren’t interested in the thrill of receiving personal advice from Shimon Peres. Like much of this emerging second generation, Stanford, not Harvard or Yale, is the intellectual center of their world. They aren’t as white as the G1 folks and they don’t have the legacy social attachments and social inadequacies of the white nerds in G1. They have an adversarial relationship with the US political establishment both at a personal class level and at the level of this emerging business/class identity.

      When they look at political power, they don’t see something shiny and glamorous that they don’t have. They see enemies in suits. They also see their inferiors in talent, drive, achievement, and grit. They see vulnerable dinosaurs. And they’re right.

      Silicon Valley’s G2 is not made up of the white suburban computer nerds from the 80’s. These folks are hungrier, far more talented, less white and even less male than their predecessors. A much larger chunk of them are immigrants and their climb was much tougher than what Bill Gates or Steve Jobs faced. Microsoft was built by G1. Google was built by G2. And along with Google is emerging a wave of AI and data companies with a very different relationship to established political and class power in the US (G3?).

      Mark Zuckerberg wants what those Senators have. This new generation of innovators don’t feel the same attachments to older indicia of class and power. They are far more hostile and disruptive in their posture toward government.

      When Trump was elected, Uber CEO and white tech-bro Travis Kalanick, eagerly joined the president’s tech council. The company’s CTO, Vietnamese refugee Thuan Pham, took a very different stance.

      https://www.businessinsider.com/uber-cto-internal-email-donald-trump-deplorable-2017-1

      Kalanick is gone, replaced by the Persian-American former Expedia CEO Dara Khosrowshahi. Kalanick is a throwback to Silicon Valley’s G1. G2 is taking over.

      VIII

      So, will companies start to take on a larger political role? Yes, I think they will. And the most powerful political force of the coming generation is likely to be a political realignment, in which under-represented talent/creative companies take on the over-represented dinosaurs of the industrial age and the hyenas of money laundering and exploitation that run our present system. The question for voters is, which side do you want to be on in that looming power struggle? How can voters organize themselve to steer the outcome of that fight? Because that’s what we’re really talking about.

      Wealthy business interests have always held a lot of sway in our political system. We’re facing a future in which those political institutions themselves are losing their power and relevance, their capacity to influence outcomes. The question isn’t whether that’s a good or a bad thing, or whether companies will step up or not. They’ll be forced to take on a larger role to protect their class interests. The awkward and perhaps chilling question we face now is which companies best represent my political interests. Who do we want to win this fight over the remaining chunks of functioning government?

      Forget about Republican or Democrat. Do you want to be represented by an alliance made up of Google, Nike and Lyft, or Exxon and JG Boswell?

      1. Do you want to be represented by an alliance made up of Google, Nike and Lyft, or Exxon and JG Boswell?

        NO – Never

        They need to have their power REMOVED – all of them!

        We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both. — Louis D. Brandeis

        And that includes large companies as well as rich individuals

        If the benefits of scale mean that certain manufacturing operations NEED to be large then they also NEED to be controlled by the people

      2. Chris, that is one monster read. I would imagine you are spent for a few days. Way too much to comment about intelligently, so I will ask just one question. (OK, maybe two)

        How do you see these G2 and G3 companies taking over, or rather, stepping up filling the gaps as liberal democracy falls apart? What kind of timeframe?

        Democracy takes decades to evolve when it replaces an autocracy. Autocracy, on the other hand, can replace a democracy in months, or one presidential term.

        But you are talking about something that is neither. How long will this evolution take?

  5. Hi Chris
    There are about 50 Liberal Democracies in this world and they are doing OK –
    DESPITE the US system interfering with them on one side –
    The Russians poking on the other side
    And the hordes of refugees caused by the USA and Russia

    Despite those very negative influences the world’s “Liberal Democracies” are doing fine – could be better? – of course – but overall OK

    Monarchies
    A Constitutional Monarchy like the UK has one great advantage over every other political system

    The person with the actual power – Prime Minister – has to meet with the Monarch, bow before him or her and explain the Governments plans and actions every week

    While the Monarch has no actual power I do believe that it is good for the soul of the Prime Minister to meet with his/her “Boss” – and also good for the rest of us to have his or her ego trimmed on a weekly basis

    The USA in contrast is a basket case – and turning it into a “plutocrat kleptocracy” will NOT stop the idiots from being in charge
    Most of (95% +) the very rich have simply inherited their wealth – Trump is much more representative of the very rich than people like Musk
    There are more bloody idiots among the very rich than among the poor – and you see the same in corporate structures
    The level of intelligence drops dramatically at Vice Presidential level

  6. There is very much an alternative model, even if it doesn’t have publicly published intellectual support. The model is plutocrat kleptocracy, where a small elite of extremely wealthy oligarchs takes control of the media and the government, using the media to maintain control of the government and the government to extract enormous sums of money from the country, which are used for the necessary payoff and for personal enrichment. This is the model for Russia, China, Hungary, and Ukraine, OTTOMH, with a partial example in Berlusconi in Italy. Bezos fits into this model, as do the Kochs, the Mercers, and Bloomberg, and probably some other lower-visibility groups.

    At present our right-wing is almost completely controlled by these people while the left-wing is still only being influenced, not controlled, which matches up with the pattern in countries which have advanced further along in this system than we have. Left-wing policies aren’t a natural fit for the plutocrats. In all the countries where there’s been a complete takeover it’s been from the right, and the left has been, um, left to play the role of ineffectual opposition (mostly honestly, I suspect, although there has been some false flagging too.)

    Bezos is not a fix for this, because he *is* this, although competition between oligarchs could potentially allow the rest of us leverage to keep them all down. Having a country run by Bezos or Bloomberg would be a lot better than one run by the Kochs or the Mercers, but it would still be highly undesirable. Oligarchs vary in their innate evil but at the same time there is definitely a “power corrupts” aspect. I note that Orban (of Hungary) didn’t seem so bad in his first pass at power, and even Putin seemed much less bad at first.

    1. I hesitate to call that a model. It’s what happens in the vacuum created by the absence of a model. There’s no manifesto, no intent, no construction in that Russia/Hungary/Egypt approach beyond what it takes to build a good-quality mafia. And no one really wants it. Honestly, I doubt that it’s even what Putin was trying to accomplish when he set out. It’s what happens when plans and models fail. It’s a breakdown.

      1. There is definitely intent and construction. The oligarchs are putting a lot of money and (hired) time into making this work. In several cases, there has been deliberate subversion of existing, working models. The best example is Hungary, where the financial crisis put Orban’s party in power with a large enough majority to amend the constitution, which they promptly did in ways to give them permanent power.

        I agree it’s *possible* Putin didn’t set out to do this. There is a rumor that in the early oughts, before which he had only engaged in garden variety corruption, he called the oligarchs in to speak to them and said hereafter he expected a cut of everything. He then made examples of several like Berezovsky and Khodorkovsky who didn’t give in or didn’t give enough. Was this always his plan, or did he realize around then “wow, I can do almost anything now!”? Nobody can really know besides Putin.

        This wasn’t started by an intellectual movement, but there are certainly academic-quality intellectuals working for these people now. If nothing else, Putin is actively trying to set up friendly regimes using this method in most Western countries – the Republican party, 5-star in Italy (divergent lefty model there), the Front National in France, AfD in Germany, etc.

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