The rise of capitalist elites Central to Smith's model of a market economy was the condition that all buyers and sellers must be small. In this way, prices could not be influenced by individual actors, but would reach a fair and reasonable level - through fair competition between sellers, and comparison shopping on the part of buyers. In Smith's model, very large producers - who had the power to dominate markets - were specifically forbidden. The dynamics of capitalism, on the other hand, lead naturally toward monopoly. While Smith's arguments helped pave the way for capitalism, it is the natural dynamics of capitalism which have prevailed, not the enlightened dynamics which Smith prescribed. If one central principle could be identified, which best characterizes the essence of the Industrial Revolution, that principle would be 'economy of scale'. That's what factories, and steam engines, and mass production are all about. By concentrating lots of equipment, resources, and workers all in one place, it is possible to produce more and cheaper products than with many small operations. In a large operation one can use more powerful and efficient equipment; one can demand discount prices from suppliers; one can set up an efficient distribution system - and there are many other advantages as well. Unless there are sufficient regulatory restrictions placed on the size of an operation, the natural tendency is for the large to gobble the small, and the larger to gobble the large, '...and so adinfinitum'. And this is exactly what has happened, right up to the current day - with its mega retail stores, global fast-food chains, transnational corporations, and the increasing concentration of world commerce into the hands of a small number of huge operators. In order to understand the dynamics of capitalism, recall the capitalist paradigm: 'wealth accumulation through initiative & innovation'. Building factories showed one kind of initiative, and lobbying for new economic policies showed another. The entrepreneur and the investor, in pursuit of greater wealth, must always ask themselves the following question: 'Given my available assets, what strategy will bring me the greatest future returns?' The answers to this question are as varied as the human imagination, and it is that 'creativity in pursuit of ever-greater wealth' which has guided the course of history ever since capitalism took hold. Industrialists, bankers, and financiers formed the core of the capitalist community, and as such they were clearly an important and influential segment of society. Governments looked to this community when financing was needed for wars and other government endeavors, and it was from this community that Finance Ministers and other important government officials would usually be selected. The interests of government and the interests of capitalism became intertwined, and government policy increasingly came to favor the further advance of capitalism - and the further concentration of wealth and power into fewer hands. This is the scenario that unfolded first in Britain, and later in every other nation which adopted capitalism. Today, with globalization, we see this trend in its ultimate form: the establishment of a centralized world government (the WTO, IMF, etc.) which is totally dominated by the interests of global corporations. The strategies - which capitalists have used to increase their wealth - have included imperialism (and its necessary wars), government subsidies, favorable tax regimes, sweetheart government contracts, and many others - leading ultimately to today's neoliberal globalization. Capitalism can be best understood not as an economic regime, but rather as an elite political movement. Economic regimes, under capitalism, have varied considerably, depending on market conditions and political circumstances. Often, when political pressure from below threatened to shift the balance of political power, capitalist elites have responded with semi-socialist economic regimes, in order to co-opt the political threat. We saw this under Franklin Roosevelt with his New Deal, and we saw it after 1945, with Labor governments in Britain, and socialist governments in Europe. But during such defensive intervals, capitalist enterprises continued to grow nonetheless - and when pressure from below subsided, the economic regime began again to pursue its inevitable evolution toward today's rampant hyper-capitalism. In the final analysis, capitalism amounts to the usurpation of political power by a particular species of wealthy elite. Unlike aristocracies of old, which sought primarily to _rule society, capitalist elites seek always to _change society in order to create ever-more ways to increase their wealth. From their point of view, societies and populations are simply a means to an end. For this reason, the history of capitalism includes frequent episodes of coldly-calculated genocide. Whole populations have been intentionally decimated, because their continued existence was considered counter-productive to capitalist development. The mass-slaughter of Native Americans and Australian Aborigines are the classic examples, but there have been many others, such as in East Timor. In Guatemala, the murder of indigenous populations is underway at this very moment - as mining is being developed by foreign operators. In Sub-Saharan Africa, a pattern of wholesale genocide is unfolding as the IMF intentionally destabilizes economies, the CIA stirs up civil wars, and pharmaceutical companies use WTO rulings to prevent the distribution of AIDS medicines. From the point of view of capitalism, people have value only if they contribute to the wealth-accumulation process. And if they have no value they are expendable - subject to being cleared away to make room for development. One of the most recent capitalist innovations has been the privatization of national water supplies, implemented by means of conditions attached to IMF loans. In the year 2000, twelve nations, mostly in Africa, were subjected to water privatization in this way. Water prices have subsequently risen dramatically, threatening the survival of the poorest segments of society. The net effect of this innovation is to deny water to 'valueless' locals, and make it available to export-oriented agribusiness operators. Once again, in the capitalist equation, populations must perish so that wealth accumulation can continue. -- ============================================================================ Richard K Moore Wexford, Ireland Citizens for a Democratic Renaissance email: •••@••.••• URL: http://cyberjournal.org A community will evolve only when the people control their means of communication. - Frantz Fanon "One cannot separate economics, political science, and history. Politics is the control of the economy. History, when accurately and fully recorded, is that story. In most textbooks and classrooms, not only are these three fields of study separated, but they are further compartmentalized into separate subfields, obscuring the close interconnections between them" -- J.W. Smith, The World's Wasted Wealth 2, (Institute for Economic Democracy, 1994), p. 22. 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