The Takeoff Toward
a New Corporate Society

excerpted from the book

Friendly Fascism

The New Face of Power in America

by Bertram Gross

South End Press, 1980, paper

Daniel R. Fusfeld
As long as an economic system provides an acceptable degree of security, growing material wealth and opportunity for further increase for the next generation, the average American does not ask who is running things or what goals are being pursued.

During the war [WWII] thousands of businessmen, political leaders, military officers, and their professional, scientific, and technical aides had grown. accustomed to working together on national and world affairs. Some of them were consciously preparing for the "American Century." As the war ended, they won the quick support of major elites in Western Europe and Japan in reconciling the contradictions among capitalist countries, fighting communism and socialism in a more unified manner, and moderating the capitalist business cycle. This is how it happened that they converted a bleak and squalid system from a catacysmic failure in the 1930s into a formidable, if faulty, "engine of prosperity." Without returning to classic fascism, they developed a new, expanding, and remarkably flexible-even to the point of sharp internal conflicts-structure of business-government partnership. If in the process constitutional rights had been thoroughly suppressed in many dependent countries, civil rights and civil liberties (although not all) were at the same time considerably expanded not only in America, but also in America's newfound allies, the former Axis powers.

As American leaders-political, economic, military, and cultural- were preparing for the American Century, they rushed in to extend a protecting arm over the major capitalist countries, fill the vacuums left by their departure from former colonies, and seek decisive influence over all parts of the globe up to (or even across) communist boundaries. In response to each extension of communism, American leadership strove to integrate the noncommunist world into a loose network of constitutional democracies, authoritarian regimes, and military dictatorships described as the "Free World".

For conservative commentators, the word "empire" is more descriptive. It emphasizes the responsibilities of imperial leadership with respect to protectorates, dependencies, client states, and satellites, without suggesting the Marxist connotations of "imperialism."

... If this be empire, it is very different from-as well as much larger than-any previous empire. First of all, the "imperium" (to use another word favored by conservative observers) is not limited to preindustrial countries. It also includes the other major countries of industrial capitalism: Canada, Japan, the countries of the North Atlantic Treaty Alliance (including Belgium, Britain, Denmark, France, Greece, Iceland, Italy, Luxembourg, the Netherlands, Portugal, Turkey, and West Germany), Spain, Australia, New Zealand, and Israel. In turn, instead of being excluded from America's preindustrial protectorates, the largest corporations in most of these countries share with American corporations the raw material, commodity, labor, and capital markets of the third world.

Then, too, U.S. imperial control is exercised not by American governors and colonists, but by less direct methods (sometimes described as "neocolonialism"). This has involved the development of at least a dozen channels of influence operating within subordinate countries of the "Free World":

* The local subsidiaries or branches of transnational businesses, including banks

* U.S. foreign military bases, which reached a peak of more than 400 major bases (and 3,000 minor ones) in 30 countries

* The C.I.A. and other intelligence agencies

* U.S. agencies providing economic and military aid through loans, grants, and technical assistance

* U.S. embassies, legations, and consulates

* The local operations of U.S. media (radio, TV, magazines, cinema) and public relations and consulting firms

* The local operations of U.S. foundations, universities, and research and cultural institutions

* Local power centers and influential individuals, friendly or beholden to U.S. interests

* Local armed forces, including police, equipped or trained in whole or part by U.S. agencies

* Subordinate governments-like Brazil, the Philippines, and Iran under the Shah-capable of wielding strong influence in their regions

* Transnational regional agencies such as NATO, the European Economic Community and the Organization of American States

* Agencies of the United Nations, particularly the World Bank and the International Monetary Fund

While these channels of influence have frustrated the efforts of any U.S. ambassador to establish personal control and have pushed final coordinating responsibilities to the level of the White House and the president's National Security Council, the net result has been a remarkably flexible control system in which competing views on strategy and tactics make themselves felt and are resolved through mutual adjustment. When serious mistakes are made, they can be corrected without injury to the dominant sources of a system that can adjust, however painfully, to the loss of any single leader, no matter how prominent. During the Korean War, when General Douglas MacArthur erred in driving through North Korea toward the Chinese border (which brought the Chinese into the war and lost the U.S.-occupied portion of North Korea to the capitalist world), he was promptly replaced. When President Lyndon Johnson erred in overcommitting U.S. troops and resources to the Indochinese war, he was pressured into retiring from the 1968 presidential campaign. Moreover, when new conditions call for new policies, the leaders of transnational corporations may move flexibly where political and military leaders fear to tread-as with corporate initiatives in commercial relations with the Soviet Union, China, and Cuba.

Moreover, the economic functions of subordinate countries now go far beyond those described many decades ago by Hobson and Lenin. Many Third World countries have become, or are about to become.:

* Markets for raw materials, particularly wheat produced in the United States, Canada, and Australia

* Sources of trained technicians and professionals who may then move through the so-called "brain drain" into the skilled-labor markets of the major capitalist countries

* Channels for mobilizing local capital which may then be invested locally under foreign control or repatriated to finance investment in the industrialized countries

* Sources of low-cost labor for transnational subsidiaries which then manufacture industrial goods that are marketed in the major capitalist countries as well as locally.

This last point bears special attention. There used to be a time when industrialization-often referred to by the magic word "development"- was seen as the road to economic independence. As it has emerged, however, industrial development has usually been a process of converting preindustrial dependencies into industrial dependencies. Previously, many left-wing revolutionary movements aimed to throw off the yoke of imperialism by joining with the native capitalists in "national revolutions." What has often happened however, is that the local capitalists have supplanted the old landowning oligarchs in trying to cooperate with, rather than break with, foreign capital. Instead of "ugly Americans" or Europeans meddling in their affairs, many Third World regimes are increasingly manned by Americanized Brazilians, Anglicized Indians and Nigerians, and Westernized Saudi Arabians and Egyptians. As dependent industrialism grows, moreover, its roots spread deeply into the state bureaucracies, in the universities and among the managerial, technical, professional, and intellectual elites. As this happens, military control or the threat of a military takeover becomes somewhat less essential and the military themselves became more civilianized, if not even subordinate to corporate economic interests. Thus a huge infrastructure of dependency is developed which Susanne Bodenheimer sees as "the functional equivalent of a formal colonial apparatus." In fact, external controls are now internalized in domestic institutions, and the new infrastructure may be more powerful than any previous colonial apparatus.

Thus, with the old oligarchies pushed aside by industrial development, the sons and grandsons of the preindustrial chieftains and feudal-aristocrats leap from landowning to stockholding, from the protection of ancient privileges to the glory of new privileges as the local agents-at times, even junior partners-of the new industrial oligarchs of the "New World" empire. The lands they still own allow them to keep one foot in the past, thus easing the transition, or better yet, allowing them to move into the new world of chemically fertilized, supermechanized, and superseded agribusiness.

Oil, of course, is the biggest issue. In Venezuela, nationalization of currently developed oil reserves, previously scheduled to come into effect by 1983, was completed in 1975-under terms that proved a bonanza to the foreign companies. Similarly, nationalization moved steadily forward in the Middle East, with Libya and Iraq taking the lead and Saudi Arabia and the smaller sheikdoms trailing behind. But there is little prospect that the nationalization of oil would promote socialization in other sectors, any more than it did during the decades after Mexico's expropriation of foreign oil companies. On the contrary, it seems likely that the bulk of any additional money obtained from the larger share of oil profits will be plowed into private enterprise at home and abroad. This is one of the strange lessons of the oil embargo and price increases of 1973-74 and the spectacular rise since then in the oil income of the oil-exporting countries. Although the embargo was widely regarded as an anti-Western move inspired by the Russians, its long-range effect has been to bring the Arab countries more fully than before into the world capitalist market as well as to foster dependent industrialism in the entire Arab world.

Long before World War II, the larger capitalist corporations spread around the world in their efforts to obtain raw materials and sell manufactured products; a few developed manufacturing facilities in other countries. But they did these things in the context of deadly struggle among capitalist nations. After World War II, they reached an entirely new stage of international development by transcending the old limits on the location of activity. They learned how to do almost anything, any place-to engage in manufacturing and service enterprises in former colonies, to use foreign subsidiaries to vault over or under trade and credit barriers, to mobilize both equity and loan capital in other countries. The modern transnational corporation not only internationalized production, it became the only organization with resources and scope to think, to plan, and to act in developing global sources of raw materials. This wider scope of planning has given the transnationals the advantage of escaping whatever inhibitions might be imposed by national policies on currency, credit, trade, and taxes, and of allowing them to play national currencies and governments against each other. It has also put them in the strategic position of encouraging and profiting from the larger markets made available through the European Economic Community and other regional arrangements. Within these larger markets the transnationals have worked together (while also competing) to contain left-wing movements, subvert left-wing regimes, and maintain the integrity of the "Free World" empire.

The flexibility of the larger transnationals is enhanced by the fact that most of them have become conglomerates. No longer limited to specific sectors, their business is to get money and power, not make specific products. Competence in producing this or that specific product need no longer be built up over generations; it can be bought.

Some of these capitalist complexes are tightly organized, some remarkably loose. Most find ways of using public funds, contracts, or guarantees as an essential part of their operations. All of them have blurred older distinctions between "public" and "private". All have developed increased power by co-opting, or incorporating as valuable appendages, regulatory agencies presumably established to control them, and by influencing research institutions that might otherwise subject them to embarrassing scrutiny. Large transnationals like General Motors, it has often been pointed out, have total annual sales volumes larger than the annual GNP of medium-sized countries. What has been less noted or understood is that the multinational automobile-highway-petroleum complex (within which General Motors plays a vital role) controls far more money, scientists, and technicians than provided for in the entire budget of any capitalist country's national government, including the United States itself.

The emerging reality of the Golden International is concretized in a myriad of private, public, and international organizations. The growth of the European Economic Community and its many offshoots has triggered the parallel creation of such powerful business organizations as UNICE (the Union of Industries of the European Economic Community) and FBEEC (the Banking Federation of the European Economic Community). These operations, in turn, have necessitated more active cooperation among First World governments. Thus, in the field of international currency, the Group of Ten finance ministers-representing the United States, Canada, Japan, Britain, West Germany, France, Sweden, Italy, the Netherlands, and Belgium-has been negotiating to establish a new monetary system in which, as Sylvia Porter put it quite a while ago, "our proud but overburdened dollar will remain a key currency of the world-a first among equals-but . . . will not longer be the sole pivot money around which all other currencies revolve." To those who mistakenly see the international value of the dollar as an unmistakable indicator of American capitalism's strength, this may look like an American retreat. For the American transnational corporations, however, who operate in all the world's media of exchange (including the International Monetary Fund's special drawing rights), this is an advance. Together with their European and Japanese brethren, they provide solid support (and more than occasional guidance) for the complex efforts of the IMF in setting up the new multicurrency, and also aid the World Bank in promoting conditions for profitable capitalist investment in the Third World.

David Rockefeller and other banking leaders designed an organization of "prominent citizens" rather than governments, and limited the geographical scope to what they called the "trilateral world" embracing North America (the United States and Canada), Japan, and Western Europe. Thus the Trilateral Commission came into being in 1973. The commission's membership is mainly high-level bankers and industrialists supported by a sprinkling of enlightened and reliable politicians, public officials, intellectuals, and even union leaders-sixty people apiece from each of the three parts of the trinity. A smaller executive committee has been hard at work organizing task forces and behind-the scenes discussions by top corporate and government leaders. Its basic task has been to formulate top-level strategy for the leaders of the First World's establishments on such intricate matters as monetary policy, energy, control of the high seas, trade, development, and relations with both communist nations and the Third World. It can do this because, as a Newsweek journalist pointed out, it is not "merely a rich man's club" but rather a "remarkable cross-section of the interlocking establishments of the world's leading industrialized nations."

James O'Conner
"Both welfare spending and warfare spending have a two-fold nature: the welfare system not only politically contains the surplus population but also expands demand and domestic markets. And the warfare system not only keeps foreign rivals at bay and inhibits the development of world revolution (thus keeping labor power, raw materials and markets in the capitalist orbit) but also helps to stave off economic stagnation at home."

The term "welfare state'' ... contains a germ of truth. Under pressure from communist regimes and movements, the governments of all major capitalist countries have out-Bismarcked Bismarck in taking over socialist demands and enacting a host of programs to provide state-ordained floors under living and working standards. In a broader sense, however, the "welfare state" idea is fundamentally misleading. The welfare provided is not the general well-being of the people. It is welfare, rather, in the narrow and restrictive sense of public assistance to the poor and other programs (usually financed by the lower and middle classes themselves) to take the rough edge off capitalist exploitation, promote docility among the exploited, and thereby help form a more perfect capitalism.

Although it is perfectly true, as conservative economists insist, that "there are no free lunches," there are scores of corporate "free lunchers" who manage to get other people-via government intervention-to pick up all or part of the bill. Although new forms of this fine-tuned intervention are created every year, some of the more conspicuous examples in the United States are:

* The Federal Reserve system, which supports bankers by maintaining high interest rates and bailing out bank failures.

* The nominally progressive federal tax system, which has become a labyrinth of special loopholes that provide many billions of "tax expenditures" (indirect subsidies) for specific companies or groups. For fiscal year 1980 these tax expenditures amounted to over $150 billion-more than 20 percent of direct budget outlays for the same year.

* The Treasury Department, which maintains huge interest-free deposits in large banks while at the same time paying the bank's interest on money lent to the government.

* Billions in direct subsidies that are paid to airlines, the merchant marine, agribusiness and others.

* Federal expenditures for scientific research and development, which have subsidized the growth of capitalism's technological reserve.

* Government guarantees that protect many billions of bank mortgages and foreign investments against losses.

* Government regulations that give the large banks control over the investment of the pension funds of most labor unions.

* So-called regulatory commissions, which help maintain the oligarchic power of the communication media, public utilities, and major transportation interests.

* Government forays into wage-price controls, or "incomes policy," which are used to keep wages down or squeeze out business competitors.

Kenneth Boulding
With the coming of science and technology, it is fair to say that we can get ten dollars out of nature for every dollar that we can squeeze out of man.


The two oldest business commandments- "buy cheap, sell dear" and "let the buyer (or borrower) beware"- had to be expanded to a full decalagogue which included the following: (3) risk other people's money, (4) make money out of shortages, (5) use only those new technologies that are more profitable, (6) shift social costs to others, (7) conceal assets and income, (8) squeeze workers as much as possible, (9) buy political influence, and (10) help build a powerful establishment. Each of these maxims. of course, operated under the umbrella of "anything goes if you can get away with it."

During World War II many corporate planners learned how to get away with much more than had previously been imagined. After the war, corporate planning and control became the central focus of attention for hundreds of colleges or departments of business administration, thousands of management articles and books published every year, and hundreds of thousands of students participating in undergraduate and graduate programs and "management development" or "advanced management" seminars, conferences, and discussion groups. With or without the direct help of such formalities, the leaders of the largest corporate institutions became not inert organization men but adaptive innovators in the more rational and unconstrained pursuit of money and power for the owners and managers of large-scale private property.

The pressures of World War II unleashed a new burst of technological creativity. The Nazis succeeded in fueling planes and tanks through gasoline made from coal and in developing advanced rocket technology. The U.S. success with the atom bomb was matched by a whole spectrum of less spectacular achievements, including radar, jet propulsion, computers, and operations research. Instead of subsiding with the war's end, technological inventiveness thrived in the ebullient atmosphere of "Free World" integration and corporate expansiveness. With massive support from military and civilian agencies of government, Big Business once again devoted itself to what Karl Marx has called "revolutionizing the means of production." As had already happened in nuclear physics, theoretical and applied scientists were caught up within a complex network of technological research and development. They became valuable resources to be funded, nurtured, and honored by those who saw the possibility of distilling new power or capital from their findings.

The result was "a new technological revolution" in the methods of collecting, transforming, storing and moving almost all forms of energy, matter and information. There has been a veritable chain reaction in atomic energy: hydrogen bombs, nuclear-powered submarines and icebreakers, electricity production through nuclear fission. Important research is underway on electricity production through nuclear fusion and through the more direct use of solar energy through photovoltaic cells that convert sunlight into electricity, tapping the geothermal heat of the earth itself, and, above all, converting grains and other agricultural products into alcohol and other substitutes for gasoline. Also, as Alvin Toffler reports, "scientists are now studying the idea of utilizing bacteria capable of converting sunlight into electrochemical energy." There have been continuing advances in production of energy from fossil fuels and its instantaneous transmission over vast distances through electrical grids, superconductors and the more spectacular means of lasers and microwaves.

Materials are no longer limited to those found in nature. They are now being created de novo either to substitute for such traditional materials as textiles, rubber, steel, aluminum, or paper, or to create entirely new materials, both inorganic and organic. "Just as we have manipulated plastics and metals," reports Lord Ritchie Calder, an eminent science commentator, "we are now manufacturing living materials." Medical technology has been developing new capabilities for eradicating contagious diseases; for facilitating or preventing childbirth; for replacing parts of the body. The new "genetic engineers" have been discovering how to reprogram DNA molecules.

Still more revolutionary changes have been taking place in successive generations of information technologies. The collection of information is now possible through increasingly sophisticated systems, including the more ominous forms of remote electronic surveillance. The processing of information through fantastically rapid computers now facilitates the kind and quantities of calculations never before possible. The transmission, storage and retrieval of information is accomplished in new ways

by the widespread advances in telecommunications and electronic coding. Finally, and most disturbingly, the means of control over this great mass has been developed to such a degree that centralized systems can keep tabs on incredible amounts of information over long sequences of widely dispersed and decentralized activities.

This technological revolution is embodied in the plans and actions of industrial, military and political leaders. It is institutionally orchestrated and financed. One strategic objective has been to maintain the military and economic superiority of the United States and its "Free World" allies. Another has been to nurture the economic health of the largest "Free World" conglomerates, clusters, constellations and complexes by staving off the stagnation that always threatens in the event of a decline in innovation. Whether intended or not, a major result has been to help knit together the leading corporations of the technologically advanced countries and buttress their domination of technologically inferior countries.

The scientists and technologists have become an informal "technointernational" whose members (funded from establishment sources) keep in constant touch with each other and hold frequent international meetings. Having more common interests than the managers and owners of corporate wealth, they play a vanguard role in transcending national boundaries and helping make all corporate kings kin. They draw the new generations of Third World scientists and technologists into the First World culture, thereby fostering a Third World brain drain that turns out to be a continuing brain gain for the Golden International.

These activities are helped immeasurably by a euphoric vision- widely shared among the "knowledge elites", as Daniel Bell calls them- that any problems or crises created by new technologies can be coped with, if not solved, by some new technology. The euphoria is nourished by technological thrusts and feints in myriad directions, with thousands of technologists or scientists plunging far beyond the realm of what may be immediately feasible. There is thus built up a huge stockpile or reserve of embryonic, nascent, semi-developed techniques, devices, inventions, theories and methodologies-a sort of reserve army of available but unused technologies.

Although the technology reserve is huge and growing, it is no cornucopia from which benefits quickly or automatically flow to meet the needs of humankind. The great bulk of the new innovations are those fostered by the Establishment's "master magicians"-namely, innovations responding to demands for more destructive weapons more profitable products and more labor-saving processes. In these areas, there is some relevance in Goethe's fable of the sorcerer's apprentice, in which the brooms and water pails take off on their own and run wild. In Pentagon-supported innovation, almost anything goes. For the first time In history, military leaders have escaped the traditional fixation on armaments used in past wars and are creatively at work on the weapons of the future. Side by side with this perverse form of creativity, untold billions are still spent on increasingly obsolete weapons of the past-such as tanks and aircraft carriers, both of which are sitting ducks for the new anti-tank and anti-carrier missiles.

In contrast, however, there is only a small amount of research on nutrition, health promotion (as contrasted with disease treatment), physical exercise, home building, mass transportation, the recycling of waste products, energy conservation, total energy systems, and the full use of agricultural products, including wood, in the production of alcohol and other fuels.

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