The Indispensable Enemy,

Johnson Launches a War,

The Politics of Special Privilege,

The Monopoly Economy

excerpted from the book

Indispensible Enemies

The Politics of Misrule in America

by Walter Karp

Franklin Square Press, 1993, paper

[originally published - 1973]


The Indispensable Enemy

When the 1936 elections were over, Franklin Roosevelt and his Administration stood at a unique pinnacle of power and promise. The President's victory was so great it overrode all sectional distinctions; in only two of the forty-eight states did he fail to win a plurality of the vote. Moreover, his victory was not a merely personal one. The voters that year sent 331 Democrats to the House of Representatives and 76 Democrats to the Senate, reducing the Republican contingent in the new Congress to an impotent rump. That reform of a broad and democratic kind would soon be forthcoming few people had cause to doubt. Although Roosevelt had offered no detailed program during the course of his campaign, he had expressed Populist sentiments which Americans had not heard in high places in many long years.

What happened shortly after the 1936 elections is well known. The apparently invincible President suddenly found himself blocked at every turn. An overwhelming Democratic majority, seemingly eager to follow his lead, split into warring factions; a coalition of Southern Bourbons and obstructionist Republicans, although numbering together no more than some 130 members, swiftly seized the legislative helm and blocked virtually all further reform. At the very height of its power and prestige, the New Deal came to a dead stop in one of the most remarkable reversals in American history.

Twenty-eight years later, another Democratic President, Lyndon Johnson, won a landslide election victory and found himself with yet another Congress dominated by lopsided Democratic majorities; 295 Democrats in the House, 68 Democrats in the Senate. He, too, had promised broad and sweeping reforms, among them no less a goal than a "war to end poverty" as well as a turning away from distracting foreign entanglements: he would not commit "American boys to fighting a war that I think ought to be fought by the boys of Asia to help protect their own land." Behind the President's evident wish to take care of the "unfinished business of the nation" lay, in fact, a great deal of unfinished business. Since the end of the New Deal in 1937 there had scarcely been a single major reform enacted in twenty-eight years-one-sixth the entire history of this Republic. During that period the Southern Bourbon-Republican coalition, which had arisen phoenix-like in 1937, had dominated Congress. It had frustrated Truman and Kennedy with apparent ease. It had subjected the Eisenhower Administration to the most muted criticism. It had given its full approval to just two major public policies since l938-national defense and a forward foreign policy.

'What happened? A few months after the election, Johnson's "Great Society" was deep in an Asian war; after a brief spate of trumpery legislation-the "poverty program," for example-Congress became balky and unmanageable. In 1966, Johnson's great legislative majorities were reduced and the Great Society was dead, the victim of the Vietnam War. Another reform President, another landslide election, another landslide Congress, another stunning reversal.

... there is a political reason for a reform President frustrating his own pledged reforms. It is none other than the ruling political principle in modern American politics-the preservation of party power, that power whose sole foundation is organization control of the political parties.

... the essential and inherent danger to party power is independent political ambition, the presence in public life and public office of men who ignore the interests and defy the dictates of party bosses and oligarchies. To preserve their power, party organizations must try constantly to eliminate the political condition that breeds independent ambition. That condition, in general, is the free political activity of the citizens themselves, their own efforts to act in their own behalf, to bring into the public arena issues that interest them and to encourage their activity the independent ambition of public men. The political activity of the citizenry, whether within or without the major parties, whether it be as local as a village election, is always a danger to organization control of parties, and precisely because it strengthens independent ambition. There is in this Republic, however, one great wellspring animating citizens to act in their own behalf: their own understanding that by means of politics and government what is wrong can be righted and what is ill can be cured. In a word, political hope.

The very opposite condition, the condition safest for party power, is public apathy, gratitude for small favors and a deep general sense of the futility of politics. Yet there is nothing natural about political apathy, futility and mean gratitude. What lies behind them is not "human nature" but the citizens' belief that politics and government can do little to better the conditions of life; the belief that they are ruled not by the men whom they have entrusted with their power but by circumstances and historical "forces," by anything and everything that is out of human control; the belief that public abuses and inequities are somehow inevitable and must be endured because they cannot be cured.

The condition of public apathy and futility, however, is swiftly undone by reform and even by the convincing promise of reform. Every beneficial law reminds the citizenry anew that the government-which is their government-can help them remove evils and better the conditions of life. Every law which remedies an abuse reminds the citizenry anew that other abuses can be remedied as well. Every beneficial law rips the cover of inevitability from public inequities and rouses the people from apathy. Reform in America does not bring passive contentment to the citizenry. It inspires active hope.

... What is more, the national party that enacts the reforms does not benefit at all by the hope its reforms arouse. Far from it. The reforming party would find itself, among other things, attracting active citizens, ambitious men and hopeful idealists to every tight little political club of the party in every town and district and neighborhood. Such local incursions of the citizenry (which do not have to be great in size so long as they occur in many places at once would seriously threaten and even destroy organization control of local parties. The reform party would gain in strength and election victories, but the party bosses would endanger their own power. This they have no intention of doing voluntarily. It is precisely to avert this fundamental danger that both major parties in America have a reform wing and an obstructionist wing; the one to promise, the other to betray.

... the creation of what political observer Marvin Gelfand has termed "the indispensable enemy," the opposition required to prevent you from doing what you must appear to want done.


Johnson Launches a War

I have tried to show both by general considerations and by several examples)that the grass-roots political activity of the citizenry is a sharp threat to party power. I have shown too that landslide Congressional majorities pose a threat to party power and I have shown in the specific cause of Franklin Roosevelt what a President who represents the party oligarchs will do to avert a major danger to their interests. Consider the situation which Johnson and the party oligarchs faced in 1964.

Long before election day it was clear that Johnson would win a signal victory over the egregious Barry Goldwater, whom the Republican oligarchy nominated with every intention of sending him to defeat. Johnson was certain to have the public hopes of the nation, reviving after so many years, focused directly on his second Administration. Indeed hopes had crystallized around him from the moment Kennedy was shot, and he dared not blast them until he was safely nominated and elected, for he had been deeply distrusted by liberal Democrats and the country at large.* He was certain to have strong legislative majorities to enable him to fulfill those hopes. He was certain to face the first important grass-roots citizens' movement in thirty years, namely the democratic movement arising from and centered upon the black people's struggle for civil and political equality. The dangers this movement posed can scarcely be exaggerated. Not only were its numbers great and its membership varied, not only was it going from strength to strength and from success to success, it was, most importantly, one that united citizens around a republican principle and armed them with the authority of the Constitution itself. Neither an elite nor a mob, neither "left wing" nor "right wing" but a genuine coalition of free citizens, from sharecroppers to Back Bay ladies, the civil-rights movement was giving the Republic back its voice in the affairs of the nation. Party power, in short, faced its first major peril since 1936 and Johnson was assuredly a faithful party servant. Before he had become President through Kennedy's assassination he did not even have a fake reputation as a reformer. It was no secret that he had been the servant and beneficiary of the Bourbon wing of the Texas party. It was no secret that the Senate Democratic oligarchy had made him Majority Leader because it needed his superb parliamentary skills to ride herd on the Senate Democrats. It was no secret that as Majority Leader he had continually stifled reformers in the Senate and muffled their opposition to the Eisenhower Administration. He was the beneficiary and servant of the national Democratic machine and that machine was in peril in 1964, imperiled by what Johnson had spent his whole Senate career obstructing, namely reform. 'When the elections were over, the peril had become greater yet. At the sight of lopsided Democratic majorities in Congress'-295 Representatives, 68 Senators-hopes for reform ran high, and the civil-rights movement was more clamorous, more extensive, more determined than ever. The presumption is strong, therefore, that Johnson prepared for war in 1964 because he knew this would happen and that he launched it in 1965 because it did happen. The presumption is strong, that is, that Johnson launched the Vietnam War because he hoped the war would kill reform, that it would split and then reduce his Democratic majorities, that it would distract the citizenry from domestic concerns, that it would kill a grass-roots republican movement, that it would provide the means to suppress dissenters and insurgents in the name of wartime unity.

That the Vietnam War in fact put an end to Johnson's promised struggle for "liberty and abundance" there can be no doubt. Johnson's ability to pass reform legislation scarcely lasted six months, and most of the measures enacted were either trumpery or poorly enforced. By the summer of 1965 Congress was already balky. In September the apparently invincible President suffered his first "defeat" in Congress on his proposal for self-government for the capital city. In October the House voted against appropriating money for a rent-subsidy measure it had enacted in June. There was a war on and, perforce, Congressional leaders had to call a halt to further "experimentation." After mid-1965, as Wicker points out, there would be no more Great Society speeches from Lyndon Baines Johnson. In the 1966 elections, Republicans gained forty-seven House seats and the danger of reform was once again averted.

That Johnson knew this would be the result of his war can hardly be doubted. Throughout modern political history, rulers have started wars to suppress dissent and distract their subjects. War had certainly done this for Woodrow Wilson in 1917, mere war talk had done this for Roosevelt after 1937-as Johnson certainly knew. He himself told his advisers that he would lose support if he sent American troops to Vietnam. To suppose that Johnson sincerely believed that he could have a major war and major reforms is absurd. It is certain that Johnson launched the war in full knowledge that it would achieve the political results it so swiftly achieved.

Johnson had been the enemy of reform throughout his career; he launched a war that thwarted reform when reform was imminent. The conclusion, it seems to me, is difficult to avoid, and again I must refer to Lincoln's House-Divided speech in drawing it. We cannot know for certain, but we find it impossible not to believe that Johnson launched a bloody, brutal and needless war in Vietnam to thwart reform, to kill his Great Society, to reduce his landslide majorities, to stifle a grass-roots political movement, to blast political hope and protect the party oligarchs in yet another moment of political peril.

Why then has America been in Vietnam? Because the party oligarchs, through their elected representatives, control the government of the United States and use their control of the government in order to maintain themselves and their power. The protection of party power is no trivial matter of patronage and endorsements. It determines the actions of government throughout almost the entire range of government. It has shaped the most decisive events in our recent history: the defeat of a seemingly triumphant reform movement in 1937; the waging of a bloody and unjust war in Vietnam. Because of party power, Congress has been rigged and rerigged so that the enemies of reform control legislation and prevent the nation's highest representative assembly from representing those who elect its members. The blighting of public hope through the prevention of reform, however, is but one aspect of the oligarchs' unremitting effort to retain their great power. The party oligarchs are by no means wed merely to the status quo. To preserve their power, the collusive and self-serving party oligarchs actively promote in every way they can every kind of corruption, degradation and special privilege that strengthens their hand and stifles the citizenry.


The Politics of Special Privilege

Men rightly recognize the abuse of power in America. They ( see billions wasted yearly to sustain a bloated military establishment while millions are begrudged for the most ordinary amenities. They see poverty maintained in the midst of unparalleled wealth and wars declared for the most farfetched reasons. They see bureaucracy expand while public services decay. They see a thousand obstacles impede the simplest improvements while gross / betrayals of the public trust are accomplished in a trice.

... party organizations do wield great political power, for they control most of the nation's elected officials. It is the party oligarchs who provide our oligarchy-approved Presidents, Congressional leaders, Congressional committee satraps and most of our governors and state legislative leaders. It is the party oligarchs who groom the promising young politicians and provide the government with its elder statesmen. It is the party oligarchs who can now decide, for the most part, what issues will appear in the public arena.

... party organizations will use their political power to maintain their political power, will make momentous public decisions-will send men to their death-in order to do so in moments of peril. It remains to show that party power is perpetually and radically imperiled in this Republic, that the oligarchs' self-serving under these conditions abundantly accounts for the grave abuses of power in America; that to understand why things happen as they do in our times we must look precisely where the prevailing political ideology tells us not to look: at the party oligarchy itself.

The central fact about the American party system is simply this, that party power is power usurped from a self-governing citizenry, for it consists precisely in the ability of the party oligarchs to hold the citizens' elected representatives in thrall. From that fact of usurpation and what must be done to secure it, all the compelling reasons that underlie party politics ultimately spring. Because party power is usurped power it is great in proportion as the citizen's public voice is weak. Like two protagonists on a seesaw, the one cannot flourish save at the other's expense. Whatever strengthens self-government ... weakens party power; whatever muffles the voice of the citizenry strengthens party power. That power and the liberty of self-governing citizens are inherently at odds. The capacity of free men to enter politics freely, to bring easily into the public arena issues of concern to them, to keep the avenues to public office and public renown open to other than party organizations, is, at one and the same time, the condition of republican self-government and a dire threat to the party organizations. In short, the radical and perpetual danger to the party system in America is the exercise of political liberty.

Yet the party oligarchs cannot destroy the essential conditions of political liberty, for these derive from and are secured by our republican foundations themselves. The party oligarchs cannot disenfranchise the citizenry (though they might if they could-witness the disenfranchisement of black people and poor whites in the Southern states); they can impair but they cannot destroy the right to free speech, a free press, the right to assemble, to petition and to all other constitutional immunities that secure against usurping government officials the citizen's permanent capacity to act in his own behalf. They can impair but they cannot destroy the Federal separation of powers, the autonomy of state governments, the local politics of self-governing communities, all the great constitutional forms and municipal liberties which make it difficult in this Republic-and in this Republic only-for any usurpers to monopolize politics entirely. The party oligarchs cannot destroy the essential conditions of political liberty because it would be suicidal for them to do so. The foundations of the Republic are the sole source of all legitimate authority; adherence to constituted forms is the sole reason Congressional enactments have the force of law and any elective office any authority at all. Were the foundations fragmented everything would crumble, including the party system itself.

The abiding strategy of American party politics is set by this inescapable condition. Unable to destroy the perilous forms of political liberty, the party oligarchs can only try-have no choice but to try-to empty those forms of substance, to reduce in any way feasible the ability of the citizens and the willingness of the citizens to act for themselves. It was, said Lincoln, the essential task of free men to uphold and enhance equal political liberty, to see that it is "familiar to all, and reverenced by all, constantly looked to, constantly labored for, and even though never perfectly attained, constantly approximated." It has been the abiding bipartisan principle of the party oligarchs to do the very opposite, to suppress whatever enhances liberty and to promote whatever weakens it. The grave abuses of power in America are the results of (that unremitting effort) an effort to despoil what cannot be destroyed, an effort which might well be called the Hamiltonian tradition in America, after the first man of power in the Republic who tried to establish a permanent oligarchy in the teeth of political liberty.

The first and primary abuse of power which follows from that central effort is the oligarchs' favoring of special interests in general and their creation of the monopoly economy in particular.

The reason for both is rooted in a political truth first boldly applied in America by Alexander Hamilton himself-that a political oligarchy could survive in this Republic only if it could bring into its camp a substantial portion of the wealth and social influence existing in society at large.

By allying wealth to oligarchic rule, the oligarchs would have money at their disposal for all the varied political ends that money can serve. For Hamilton, perhaps, this was less important than it is for the present-day party oligarchs. For them its importance is great. Party organizations it is worth repeating, have no binding authority over their members; party bosses have no legal power to command and party members no compulsion to obey. American party organizations are, in Walter Bagehot's phrase, "jobbery parties" of self-seeking individuals. What renders party members submissive to party oligarchs in the end is the expectation of reward for loyalty and the fear of reprisal for independence. By commanding a substantial portion of the nation's political money, party organizations can dispense it abundantly to those who have proven their fealty and withhold it from elected officials who have proven themselves dangerous to the organization's interests. Whether the wealth takes the form of campaign funds or such equivalents as lucrative sinecures, legal fees, consultant positions, insider business deals and the like, the ability of party oligarchs to disburse it as they choose among party members adds greatly to the arsenal of rewards and punishments without which a party boss would be the boss of nothing but a handful of clerks and cronies.

... in late 1 969 ... the two party syndicates openly united against the peace movement. As soon as they did so the movement's supply of philanthropic money dried up with extraordinary rapidity. Under present-day party power, few wealthy philanthropists will support for long what both party organizations are determined to crush.

... the wielders, or would-be wielders, of oligarchic power do not automatically have the wealth and influence of the wealthy at their disposal. They must take active steps to bring wealth and influence into their political camp. The means of doing so are probably as old as politics itself. The wielders of corrupt power must make wealth and influence dependent on special privilege, must make corrupt privilege the very source and foundation of wealth and influence. The political reason for this is clear. 'Whatever form a special privilege takes, whether it be a private monopoly, an unjust subsidy, a loophole in the tax laws or any other politically created source of unearned wealth, a special privilege is a privilege granted at the expense of the many. It can be safely dispensed-and protected-only by those whose power is unaccountable to the many. In a free republic it can only be dispensed and protected by those who wield power usurped the citizenry.

Privileged special interests do not exact the privileges they enjoy, they are given special privileges because the dispensers of privilege find it politically useful to dispense it. There is only one special interest in this Republic which enjoys political power and that is the party oligarchy itself.

The most important point about the politics of special privilege is that it is a policy of active corruption, a policy which requires for its success that the sources of wealth and influence be made as directly dependent on corrupt privilege as possible. This is well illustrated by the policies of Hamilton, who tried to ally to his political faction what he called the "considerate" people, chiefly affluent city merchants. At the time, many of them were fearful that extended political liberty would put their fortunes at hazard. Fearful though they were, however, Hamilton knew that the bare promise to protect them from the depredations of the have-nots would not render the "considerate" subservient to oligarchy. A merely passive policy would not provide them with a sufficient stake in corrupt political power, and since their fears were essentially ill founded, they would soon lose what stake they had. Knowing this, Hamilton proceeded to carry out at enormous political risk policies which actively bestowed on the "considerate" new corrupt windfalls at the common expense-by redeeming at face value, for example, government bonds which the "considerate," i.e., speculators, had purchased at one-tenth the price; by giving them shares in monopoly enterprise through the creation of a privately owned Bank of the United States, and so on. It was by virtually creating privileged wealth for them that Hamilton hoped to render the "considerate" the permanent allies of a permanent oligarchy. To put it in moral terms, Hamilton tried by his policies to engender and satisfy active greed as the buttress of oligarchic power. The party oligarchs, his sole true heirs, do the same thing for the same reason.

It is understood by those who depend on corrupt privilege-whether oil magnates or numbers runners-that the dispensers of favor expect payment in return, since what they dispense they can always withhold, or dispense to a rival. That is the tacit threat and there is exceedingly little that the threatened interest can do except pay. To fight against the party oligarchs is impossible for a privileged interest, for who else but the party oligarchs can protect corrupt privilege at all?

The politics of special privilege is also a policy of maximum corruption, for the more corrupt a privilege is, the more dependent on corrupt power are its recipients, the more readily cooperative they are. In consequence, when two privileged interests conflict-as special interests will inevitably do-the one which the oligarchs prefer to favor is the more corruptly privileged one.

Because the politics of special privilege is a policy of active, maximum corruption, it can only be carried out by means of two-party collusion. There is no way for one party syndicate to dispense corrupt privilege unless the other party syndicate agrees to connive at it. Since the politics of special privilege helps usurpation in general, the collusion, as always, springs up automatically between the party hierarchies. Only intense public pressure or the most glaring public scandal will prod one party oligarchy into reluctantly attacking its partner. Historically, nothing reveals the necessity for two-party collusion more graphically than the swift ruin of Hamilton's grand design for oligarchy. Lacking a fake opposition party organization to connive at his bestowal of corrupt privilege, Hamilton had to face a large number of free men hurt by and opposed to his policies. When a free coalition against him was organized by Madison and Jefferson, the Hamilton oligarchy crumbled forever. A durable one-party national oligarchy is impossible in the American Republic. It takes two collusive party syndicates to manage the inveterate abuse of power which the usurpation of power requires.

... To avoid the suspicion of fundamental collusion, the party oligarchs like to pretend, for example, that the Democrats favor the trade unions while the Republicans favor the corporations. Actually both parties favor and protect both giant special interests. That the corporations are more likely to finance the Republican hierarchy and the trade unions the Democratic machine signifies nothing except a fair splitting of the loot; neither party organization stands to gain if the other party organization is impoverished. Before the trade unions became wealthy on a national scale, privileged trusts and banking interests had the burden of financing both party syndicates.

[The] continuing policy of active corruption ... is not carried out by the party oligarchs through simple preference. Such an active and continuing policy is absolutely necessary to oligarchic power. The wielders of usurped party power must entangle all the major sources of wealth in corrupt privilege and corrupt every new source of wealth with new corrupt privilege, for otherwise the politics of special privilege would be futile. It does little good for the party oligarchs to command a large quantity of private wealth and influence if a great deal of wealth and influence is not under their command. In that case, they would have their auxiliary supports, but so would those who oppose them. They would have wealth at their disposal but they could not withhold it from free politics. They would have social influence on their side, but many channels of influence would not be so disposed, and if influence is not uniform it is no influence at all. It is merely the clash of articulated opinion and the public arena would remain free. It would shed light without color, so to speak.

There is in modern times, however, only one way to make all wealth-producing activity dependent on corrupt privilege and beholden to corrupt power. That is to turn all wealth-producing activity into monopoly enterprise. And that is the reason we have a monopoly system today. It is the economy deliberately created by the party oligarchs in the interests of oligarchic power.


The Monopoly Economy

Should an industry be monopolized by a single firm or a few collusive firms-the typical condition today ...the most important single fact about monopoly is that it depends absolutely on massive government support and protection. What the government must protect a monopoly from is competition. It must be protected from the incursion of new firms into its field; it must be protected from outbreaks of price competition within its field; it must be protected from competition engendered by technical advances-(as J F Kennedy protected AT&T's overseas communication monopoly by giving it control of the communications satellite system developed by the government at public expense. Every monopoly, for its survival as a monopoly, depends on an enormous range of special privileges, privileges involving corporation law, patent law, government regulation, tax policy, monetary policy, tariff policy, antitrust policy and so forth. All wealth derived from monopoly-and today there is no great fortune which does not derive from monopoly enterprise-is absolutely privileged wealth, for the market worth of any monopoly, the value of its stocks and bonds, consists largely of the expectation that it will remain a monopoly. This assurance only an irresponsible, privilege-dispensing government can give.

... To prevent competition from breaking out within a monopolized industry due to competition within a related industry, the oligarchs make sure that the basic industries-power and transport-on which the monopolists depend are themselves organized monopolistically. This task the oligarchs accomplish through the Federal regulatory agencies, which have become, contrary to their professed purpose, "protectors of industry against the rigors of competition, particularly price competition" ...

... It is just because monopoly is absolutely dependent on special privilege that the party oligarchs first created and today sustain monopoly, for all the wealth in the country that derives from monopoly wealth is privileged wealth, wealth allied to those who can dispense and protect special privilege. This is the reason Theodore Roosevelt saved the U.S. Steel Corporation from financial ruin in 1907 by secretly helping it to buy out a competitor; this is the reason the party oligarchs saved the Standard Oil monopoly from independent rivals by passing oil legislation in the 1930s that "amounted," according to Baran and Sweezy, "to government enforcement of monopoly prices." This is the reason Franklin Roosevelt set up the NRA to enforce price-fixing when the panic-stricken monopolists were crumbling under the pressure of their perennial nemesis - price competition among themselves.

By supporting policies that destroy competition and foster monopoly, the party oligarchs not only transform wealth into privileged wealth, they accomplish at the same time another fundamental goal of oligarchic politics: the creation of private power, hidden from unaccountable to the citizenry.

... It is obvious ... that those who wield party power, or would consolidate party power, have compelling political reasons of their own to foster monopoly and no political reason of their own to sustain an economy of small competing producers. We should expect to find in the history of monopoly capitalism the oligarchs' determined effort to engender monopoly and destroy competition-and that is what we do find. We should expect to find that effort strenuously opposed by the great majority of Americans-and that too we find. What we will not find is what conventional history tells us to look for, namely the "triumph of laissez-faire," for the history of the formation of monopoly capitalism is history of deliberate government intervention to further monopoly.

... what the majority of Americans once clearly understood-that behind every monopoly stands the government and, by extension, the party bosses. The notion that the monopoly system developed through autonomous economic processes is an ideological myth.

... the majority of large American corporations did not grow; they were created by outside promoters - J. P. Morgan preeminently - through consolidation. Though varying greatly in detail, the basic operation consisted of a promoter financing a new corporation-a trust or holding company-through which he would buy several competing firms and place them under central financial control. The U.S. Steel Corporation, which consolidated more than one hundred steel firms, is a classic example of combination.

There is ... one agency that can assure future monopoly profits, namely the wielders of usurped political power, for every monopoly is absolutely dependent on corrupt privilege for survival. The act of combination cannot take place, ten J. P. Morgans could not make it take place, unless all parties concerned were convinced that the wielders of political power would guarantee that monopoly by every possible means ...

If the political powers wanted to block a particular combination, no major public action would have been required. The mere whisper of their antipathy to that combination need only pass along Wall Street and the combination could not be effected; sellers would not sell, investors would not invest. The financial "colossi" of Wall Street could no more combine an industry in defiance of the government than water can flow uphill by itself.

... economic combination would not have comeabout if, among other measures, the ruling oligarchs had not deliberately altered the corporation laws to facilitate combination. In both the common law and early Supreme Court decisions, a corporation was essentially an association created and authorized by the state for the purpose of accomplishing some public good-the building of a road, a canal and the like. Legalizing a holding corporation meant chartering corporate entities whose sole purpose was to gain financial control over other corporations. This is not only not a public good - the antitrust law virtually defined it as a public evil-it does not serve a public purpose. Combination, however, was the purpose of the oligarchs, which is why they altered state corporation laws to help achieve it.

Even where consolidation was not the basis of monopoly, the role of corrupt government was indispensable since most noncombination monopolies were monopolies based on the oligarchs' corruption of patent law. A temporary patent monopoly is granted by constitutional provision to encourage the application and diffusion of new knowledge-a temporary privilege for the common good. In a series of decisions after 1896, a corrupt judiciary completely subverted this constitutional purpose and began transforming a temporary privilege into a virtual property right and consequently the basis of a permanent corporate monopoly. In 1908, when the Supreme Court upheld the right of a patent holder to suppress a particular patent, all links with the Constitution were severed; a provision set down to encourage invention had virtually become a private right to bury one. Finding judges with that kind of brazen effrontery is one of the abiding tasks of the party oligarchs.

According to Arthur Burns, author of the classic 1936 treatise The Decline of Competition, the new corporation laws and the corrupted patent laws were two of the three main factors in the creation of monopoly capitalism. The third factor, according to Burns, was the oligarchs' use of the antitrust laws, not to break up combinations in restraint of trade but to prevent small firms from trying to break monopoly combinations, which suggests in itself the lawless lengths to which the party oligarchs have gone to further monopolization. None of Burns' three major factors are economic; each was a political act intended to produce an economic result, namely monopolization. The chief role which "laissez-faire" played in all this was that when the citizenry demanded government intervention to undo the results of the oligarchs' intervention, the were met with laissez-faire arguments out the impropriety of intervention.

Another political factor in the formation of monopoly was the raising of protective tariff barriers, which had the effect of fostering monopoly in competitive industries. This economic effect of protection was not widely recognized by politicians until the 1880s, a decade when American industry as a whole no longer needed protection from foreign competition. At that very moment, the Republican party oligarchs raised the now unnecessary tariffs higher than ever before and kept them that way for forty years, helped by the traditional low-tariff Democrats, who soon began to ease their opposition to protection. By 1913, when they controlled the central government under Wilson, the Democrats made only pro forma efforts to eliminate the protective system. High tariffs, a partisan issue when it reflected sectional interests, became effectively bipartisan when its monopoly-fostering effects made it useful to both party hierarchies.

Behind all the many acts of government designed to foster monopoly was the essential precondition for consolidation and monopoly: the concentration of surplus wealth in the hands of a few speculators and promoters. This, too, did not come about through any autonomous economic process. For the most part, it was deliberately and swiftly accomplished by sweeping government edict, through the chartering of railway corporations. The story of the railways is familiar by now. The government state or Federal, would give a corporation gotten up by a railway promoter a charter to build a road. Along with the charter, the lawmakers would give the promoter enormous tracts of public land, large grants of public money and guarantees of additional help. With these extraordinary bonanzas in hand-the original corporation usually having no assets of its own except bribe money for the legislature-the promoters would then sell millions of dollars' worth of stock to investors, thus converting public wealth into private wealth, much of it lodged in their hands. Overnight, the railway promoters became richer than Americans had previously dreamed possible.

... between the Civil War and World War I, half the wealth invested in American industry was invested in the railways. More significantly, it was a political act of bestowing special privilege and of concentrating wealth by means of corrupt privilege that probably has no parallel in history. It was largely by dispensing windfall privilege on such a lavish scale (and "taxing" the recipients in money and services) that party organizations in state after state gained ascendancy over state parties and politics. That would-be party bosses could dispense such corrupting privilege before securing corrupt power was due to one essential fact-railway building, initially, was universally popular. By the time Americans realized what had been done-it took only a few years-party regulars had already gained ascendancy.

... corrupt government stands behind every American monopoly and every great American fortune. Without intervention and encouragement of the party oligarchs, monopolization could not have taken place; without the protection of oligarchic power, no monopoly would survive even today. For all its far-reaching consequences, the monopoly system is no more, essentially, than the monumental culmination of the politics of special privilege.

Indispensible Enemies

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