Crackpot Realists and Permanent
by Ann Berg
While economic pundits point fingers at
loose lending for the malodor in the housing market that is now
filling the noses of financiers, they miss the primary cause:
permanent war. Permanent war has caused the nation's institutions
- political, social, and economic - to be organized into an impervious
structure without which war could not be tolerated or financed.
Although 9/11 pushed the war machine into
high gear, political centralization and the structuring of American
society around war first gained a foothold during World War II.
In 1956, five years before President Dwight D. Eisenhower warned
in his farewell address of the ascendancy of the military-industrial
complex (a phrase that originally included the word congressional),
the anti-imperialist C. Wright Mills described the triad of power
in his book The Power Elite. Stressing how the military entered
the political and economic spheres only temporarily during the
First World War, he related how modern warfare and its need for
massive industrial capacity - along with support from the technological
and scientific communities - propelled the military to new heights
of influence. Wrote Mills:
"For the first time in American history,
men in authority are talking about an 'emergency' without a foreseeable
end. The only seriously accepted plan for 'peace' is a fully
loaded pistol. In short, war or a high state of war preparedness
is felt to be the normal and seemingly permanent condition of
the United States."
The sheer scale of the war machine's supply
and service sector called for new cooperation among the military,
corporate, and political prongs of power, resulting in what Mills
called an "interlocking directorate." Since cooperation
expanded the power and prestige of its members, the directorate,
according to Mills, would remain slavishly devoted to war in the
face of all contrary facts and logic. As if speaking today, Mills
said of the power elite, "They have no image of what 'victory'
might mean, and they have no idea of any road to victory."
He recounted an interview between Gen. James Van Fleet and a reporter
over the stalemate produced by the Korean War:
Reporter: "How may we know, General,
when and if we achieve victory?"
Van Fleet: "I don't know, except
that somebody higher up will have to tell us."
Mills' prediction of the increasing integration
and institutionalization of this ruling trinity is manifest today
in the actions of congressional Democrats, who are as keen on
military intervention as their Republican colleagues. They cannot
resist earmarks for more military spending, because power and
its attendant prerogatives are their only interests. Their constant
lookout for future wealth and privilege has rendered the lessons
of the past - or any talk about them - irrelevant. Could any of
these Democrats articulate before the electorate how territorial
fragmentation has been the trend of nation-states since the collapse
of four empires during WWI (and thereby expose our interventionist
nation-building policy as folly)? Would they dare acknowledge
Orwell's insight that conquests and occupations were doomed to
failure by the middle of the 20th century (so we need interchangeable
enemies)? They would be branded by the media as fringe. Mainstream
America - desirous only of an endless tableau of "human interest"
stories - would discard them. Their power and prestige dissolved,
the dissidents' book deals, lobbying posts, and celebrity engagements
would forever shutter.
According to Mills, the corporate elite,
or men "controlling property" (in the modern sense of
assets), soared in influence during the 1950s as "the coincidence
of interest [grew] between those who controlled the means of production
and those who controlled the newly enlarged means of violence."
But even Mills could not have foreseen the astonishing rise to
power of corporate moguls 50 years later.
The corporate elite has amassed and centralized
power in a mirror of the central government and military establishment.
While workers occupy the lowest rung, shareholders - contributing
what Mussolini once described as "anonymous floating capital"
- have scant power to determine the pay or policies of the top
decision-makers. CEOs and upper management, like generals and
political appointees, not only evade accountability but also get
the monetary equivalent of the Medal of Freedom with multi-million-dollar
payoffs for egregious incompetence. Not by coincidence, CEOs stock
their boards of directors with politicians and military men who
lend an aura of integrity and eminence to their decisions - especially
decisions concerning their own compensation.
The corporate stranglehold on the mind
of the polity is on full display in the ongoing charade of televised
candidate debates. Dressed up as folksy town-hall meetings or
other such democratic exercises, these debates are nothing more
than mindless distractions until the new president is installed
at the helm of the dreadnought. While propagating notions of psychic
and material well-being to the masses, the corporate organism
continues to gorge at the trough of subsidies, depletion allowances,
and tax gimmicks. Between intervals of shining allurements, the
corporate media still saturates the airwaves with serial mediocrity,
"synthetic celebrities who make virtue out of cultural poverty,"
further grinding the individual into what Mills called "the
spectator of everything but the human witness of nothing."
But it is in monetary policy that the
political-military-corporate triad has achieved its most stupendous
success. No longer compelled by the discipline of the gold standard
(snuffed by the debts of the Vietnam War), the power elite has
turned the biblical fishes and loaves narrative into a real-life
story. Because of global market integration, the unchecked growth
of complex financial products, and the ballooning money supply,
the financial sector has been able to extract billions out of
millions. The sheer size of the phenomenon has no precedent. Leverage,
they call it. (See here, here, and here.)
To appreciate how complexity has clouded
monetary thinking, recall a simpler time when Argentina and Brazil
experienced hyperinflation in the 1980s. It was a monetary phenomenon
caused principally by the IMF's recycling of Mideast petrodollars
into loans for the two countries. The increased money supply flowed
directly into wages and prices for one reason - it had nowhere
else to go. These countries lacked stock, bond, derivative, or
real-estate markets that could have absorbed the flow of funds.
The IMF naturally blamed the inflation on "poor investment
choices." Hyperinflation exists in Zimbabwe today just as
it did in Germany, Austria, Hungary, and Russia during the inter-war
period as the result of massive fiat money printing together with
undeveloped capital markets.
Today's ultra-complex financial markets
have enabled the Federal Reserve for the last 20 years to perpetuate
one of the greatest hoaxes of history. By systematically eliminating
from its inflation index any goods and services that registered
price increases, such as food and energy, the Fed has declared
inflation tame while simultaneously increasing the money supply
by multiples. While creating a mirage of prosperity for the "ownership
society," this legerdemain has delivered gargantuan gains
to the financial industry and to the Fed's own private share-holding
banks - all with the fulsome obeisance of Congress. How handy
the creation of this grand sea of liquidity has been to the power
triad! Up until mid-August, when the tide offered up a great shoal
of rotting fish, the sea has washed the electorate in cheap credit
and - above all - kept the war machine speeding at full throttle.
Not surprisingly, last week in an I-feel-your-pain kind of moment,
the Fed chief eased the discount rate for his banking chums, a
move described by a Financial Times economist as "socialism
In The Power Elite's last chapter, "The
Higher Immorality," Mills condemned the mindlessness and
blunted moral sensibility of men of affairs for whom power, wealth,
and celebrity trump knowledge, culture, and principle. They are
second-rate minds "in command of the ponderously spoken platitudes."
Mills called those in charge "crackpot realists," explaining,
"in the name of realism they have constructed a paranoid
reality all their own; in the name of practicality they have projected
a utopian image of capitalism."
So as the treacherous sea of liquidity
now threatens to capsize the utopian image of state capitalism,
it is no wonder that the crackpot realists are readying for ever
more slaughter to sustain their paranoid reality of permanent