The Political and Business Institutions as Obstacles to Civilization's Resilience: Part I

Hong Kong at night (Photo credit: Sharon Ang)

No society becomes and remains dynamic without its entrepreneurs, the energetic, creative, and influential characters who take risks in connecting the rest of us by goods and services.[i] They build the railroads, canals, and highways, string the electrical lines, forge steel and erect skyscrapers, and finance these ventures. They “wave the magic wand” of prosperity. They destroy traditions as they create new worlds. Harnessing their power is like reigning wild horses, and it has been government’s role to help steer them towards the society’s goals.

In most complex societies, the economic and political institutions grew together in complexity and power, and when one of them failed, the two collapsed together.[ii] Sumer, the Chou, Rome, the Mayans, the Aksum of Ethiopia, the Aztecs, the Ottoman Empire, and in the 20th century—Nazi Germany, the Japanese Empire, the Soviet Union, Haiti, Somalia, and Zimbabwe, to name a few: in all these systems, the political and economic institutions imploded together.[iii]A complex economic system requires a stable political environment.[iv] Investment, production, and trade thrive only where person and property are protected from bandits, pirates, and other organized violence.[v] Business is a risky enough endeavor without these added threats. Additionally, the political institution can facilitate a healthy economy by insuring open access to the system, a legal environment that regulates transactions, a standard money system, and a transportation and communication infrastructure.[vi] And given that finance capitalism is grounded on institutionalized debt, the global economy now depends completely on the coercive powers of the political institutions to enforce payment of contracted obligations. The state can also raise taxes and subsidize businesses in order to achieve society’s goals. In the evolution of societies—from headless clan to village chiefdom, feudal fiefdom, monarchy, and nation-state—the last of these has proved to offer the most stable environment for large-scale business.[vii]

The historian Charles Beard argued that this is actually the state’s central function. The U.S. constitution, in his view, was a prototypical document (written by the educated and wealthy) designed to create a stable state that fostered a free market.[viii] James Madison, Alexander Hamilton, John Jay, and George Washington were among the many vocal aristocrats, bankers, and businessmen whose concern for a strong new nation had little to do with civil rights.[ix] The ambitions among these elite citizens lay in forging a healthy economy that would simultaneously further their elite interests.[x] In favor of their position, Francis Fukuyama argues two hundred years later that a “strong hierarchical government” is the most important factor in producing wealth. “Poor countries,” he wrote, “are poor not because they lack resources, but because they lack effective political institutions.” [xi] Echoing this sentiment, Acemoglu and Robinson write in Foreign Affairs, “One must-have for successful economies is an effective centralized state. Without this, there is no hope of providing order, an effective system of laws, mechanisms for resolving disputes, or basic public goods. Although countries like Somalia or the new country of South Sudan do have internationally recognized governments, they exercise little power outside their capitals, and maybe not even there… Call it Somalia’s law: Without a central state, there can be no law and order; without law and order, there can be no real economy; and without a real economy, a country is doomed to fail.”[xii]

The state provides both the military muscle to maintain the status quo, and—if there exists some sort of representational “democracy”—the vote confers legitimacy to the whole system.[xiii] According to the logic of these systems, all conflicts can be, and therefore should be, resolved within the democratic process. However, even in the United States, once considered the paragon of democracy, 74% of Americans feel “dissatisfied” with the federal government,[xiv] 80% “can’t trust Washington,”[xv] and 83% to 87% feel that “big business,” financial institutions, and PACS and lobbyists “have too much power.”[xvi] This reveals a stunning distrust by Americans of their political and economic systems.[xvii]

And for good reason. Economic inequality in America has reached record highs, and poverty has both broadened and deepened in the past decades.[xviii] The Gini coefficient—a measurement of income inequality within a country—placed the United States 42nd in the world in 2012, the worst among industrialized nations. Russia, Iran, Nicaragua, and Vietnam all have greater equality. These are countries, by the way, against which the U.S. has spent vast military resources to subdue and great media energy to denounce. We now keep company with the likes of Rwanda, El Salvador, and Argentina and all sorts of oligarchies and economic basket cases. As America’s once powerful unions and its fabled middle class ebb away, those counted as having “low incomes” make up nearly one-third of our population.[xix] In the first three years of the Great Recession (from 2007 to 2010) Americans lost forty percent of their assets, wiping out twenty years of accumulated wealth, according to the Federal Reserve.[xx] At the same time, corporate profits reached record highs.[xxi] Between 1979 and 2005 America’s top tenth of one percent netted not just as much, but half again as much, of the country’s income as its lowest sixty percent.[xxii] That is, 300 thousand people “earned” one-and-a-half times the after-tax income as 180 million Americans. And America’s most affluent one percent—some three million blessed souls—have a greater collective net worth than the 270 million American citizens who comprise the “entire bottom 90 percent.”[xxiii] According to a 2014 OXFAM report, “In the US, the wealthiest one percent captured 95 percent of post-crisis growth since 2009, while the bottom 90 percent became poorer.”[xxiv]

Source: http://www.cbsnews.com/news/why-is-congress-a-millionaires-club/

And politically? Academic research finds that in the United States, legislation is “fairly responsive” to the interests of the wealthy and “virtually unrelated to the desires of low and middle income citizens.”[xxv] Even the traditional and staid polling institutions such as the Pew Research Center, Gallop Poll, Harris Interactive Poll, and ABC-Washington Post find that 90% of Americans believe—each time they are polled on the issue—that genetically engineered foods should be so labeled; 88% think that solar power should be developed and utilized; 90% believe that the gifting of Congressmen by registered lobbyists should be prohibited; 93% want full disclosure of campaign contributions.[xxvi] In 2007, an Associated Press-Ipsos poll had showed that 70% of Americans opposed sending more troops to Iraq, but in the following year the Bush administration sent another 30,000 troops anyway.[xxvii] For a nation where 51% agreement is considered a mandate, these numbers speak of rare unanimity. Yet, none of these mandates have been honored.

REFERENCES

[i] Naess, A. (1995) Deep Ecology for the Twenty-Second Century, pp. 463-467 in George Sessions (Editor) Deep Ecology for the 21st Century, Shambhala, Boston.

[ii] Tainter, J.A. (1988) The Collapse of Complex Societies, Cambridge Univ. Press, Cambridge, U.K

[iii] Wallbank et al. (1962), Braudel (1984, 1987), Tainter (1988), Fernandez-Armesto (2001), Yoffee and Cowgill (1988/2003), Diamond (2005), Ward-Perkins (2005), Schwartz and Nichols (2006), Acemoglu and Robinson (2012). Scholarship has been demonstrated that collapse rarely entails a complete dissolution of society (for example, Yoffee and Cowgill (1988/2003) and Schwartz and Nichols (2006)). Indeed, sometimes the rural farmers and peasants may experience little change in their lives. However, the urban centers usually experience great turmoil, and the disintegration of stabilizing institutions creates insecurity and physical hardship.

Wallbank, T.W., Taylor, A.M., Bailkey, N.M., Jewsbury, G.F., Lewis, C.J., and Hackett, N.J. (1962) Civilization Past and Present. Scott, Foresman and Company, Glenview, IL.

Braudel, F. (1984) The Perspective of the World, Volume III: Civilization and Capitalism 15th-18th Century, Translated by Reynolds, S., Collins, London.

Braudel, F. (1987) A History of Civilizations, Penguin, New York.

Fernandez-Armesto, F. (2001) Civilizations: Culture, Ambition, and the Transformation of Nature, Simon and Schuster, New York.

Yoffee, N., and Cowgill G.L. editors (1988/2003) The Collapse of Ancient States and Civilizations. The Arizona University Press, Tucson.

Diamond, J. (2005) Collapse: How Societies Choose to Fail or Succeed, Viking, New York.

Ward-Perkins, B. (2005) The Fall of Rome and the End of Civilization. Oxford Universtiy Press, Oxford.

Schwartz, G.M., and Nichols, J.J. (Editors) (2006) After Collapse: The Regeneration of Complex Societies. University of Arizona Press, Tucson, AZ.

Acemoglu, D., and Robinson, J.A. (2012a) Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Crown Business, New York.

[iv] Sachs (2005), Fukuyama (2011).

Sachs, J. (2005) The End of Poverty: Economic Possibilities for Our Time. Penguin Press, New York.

Fukuyama, F. (2011) The Origins of Political Order: From Prehuman Times to the French Revolution, Farrar, Straus and Giroux, New York.

[v] Smith, A. (1776/2009:901) The Wealth of Nations, Bantam Dell, New York. As an example, the period in the American colonies before nationhood (Beard, C. (1913/2004:52-53) An Economic Interpretation of the Constitution of the United States, Dover Publications, Mineola, NY.

[vi] Braudel (1984), Johnson and Earle (2000), Cameron and Neal (2003).

Johnson, A.W., and Earle T. (2000) The Evolution of Human Societies: From Foraging Group to Agrarian State. Stanford Univ. Press, California.

Cameron, R. and Neal, L. (2003) A Concise Economic History of the World: From Paleolithic Times to the Present. Oxford Universtiy Press, New York.

[vii] Fukuyama (2011).

[viii] Beard (1913/2004). Also see Holton, W. (2007) Unruly Americans and the Origins of the Constitution, Hill and Wang, New York.

[ix] Hofstadter, R. (1948) The American Political Tradition. Vintage, New York.

[x] Beard (1913/2004), Hofstadter (1948), Chomsky (2002), Holton (2007). Indeed, the Bill of Rights—the legislation for which Americans are most proud—were tacked onto the constitution as the first ten amendments only after the constitution appeared to have no chance of passing without such civil guarantees.

Chomsky, N. (2002) The Common Good. Odonian Press, Tucson, AZ.

[xi] Fukuyama (2011;13-14).

[xii] Acemoglu, D., and Robinson, J.A. (2012b, July/August) 10 Reasons Countries Fall Apart. Foreign Policy.

[xiii] Fukuyama (2011).

[xiv] Gallup (2008) Trust in Government Remains Low.

[xv] Pew Research Center (2010) Public Trust in Government: 1958-2013.

[xvi] Harris Interactive (2010) Business Divides: Big Companies Have Too Much Power and Influence in DC, Small Business Has Too Little.

[xvii] As further evidence for the eroding trust in the American institutions, see the New York Times (2011) poll, which, granted, was taken after three years of economic recession, where, “Not only do 89 percent of Americans say they distrust government to do the right thing, but 74 percent say the country is on the wrong track and 84 percent disapprove of Congress…” (Zeleny, J., and Thee-Brenan, M. (2011, October 25) New Poll Finds a Deep Distrust of Government, New York Times.

[xviii] United States Census Bureau (1996, 2000, 2011), Saez (2009), Center on Budget and Policy Priorities (2012).

U.S. Census Bureau (1996) Current Population Reports: A Brief Look at Postwar U.S. Income Inequality.

U.S. Census Bureau (2000) The Changing Shape of the Nation’s Income Distribution. Available at http://www.census.gov/prod/2000pubs/p60-204.pdf. Accessed June 21, 2012.

U.S. Census Bureau (2011) U.S. Neighborhood Income Inequality in the 2005-2009 Period. Available at http://www.census.gov/prod/2011pubs/acs-16.pdf. Accessed June 21, 2012.

Saez, E. (2009) Striking it Richer: The Evolution of Top Incomes in the United States, Working Paper Series, Institute for Research on Labor and Employment, UC Berkeley.

Center on Budget and Policy Priorities (2012) A Guide to Statistics on Historical Trends in Income Inequality.

[xix] Campbell, A.L. (2012, September/October) America the Undertaxed: U.S. Fiscal Policy in Perspective, Foreign Affairs, pp. 99-112.

[xx] Mui, Y.Q. (2012, June 11) Americans Saw Wealth Plummet 40 Percent from 2007 to 2010, Federal Reserve Says, The Washington Post. These numbers simplify a complex economy. For example, much of this wealth was in homes whose value had unrealistically risen in the preceding decades with the real estate bubble, homes that people were planning to live in and not sell for decades yet, perhaps.

[xxi] Rampell, C. (2010, November 23) Corporate Profits Were the Highest On Record Last Quarter, New York Times.

[xxii] Hacker, J.S., and Pierson, P. (2010:3) Winner-Take-All Politics: How Washington Made the Rich Richer—And Turned Its Back on the Middle Class. Simon and Schuster, New York.

[xxiii] Kristof, N.D. (2012, November 21) A Failed Experiment, New York Times.

[xxiv] Oxfam (2014) Working for the Few. Oxfam Briefing Paper 178.

[xxv] Hayes, C. (2012:146) Twilight of the Elites: America After Meritocracy. Broadway Paperbacks, New York.

[xxvi] Solar and wind power—ABC News/Washington Post Poll (2011, April 14-17). Lobbyist—ABC News/Washington Post Poll (2006, Jan. 5-8). Transparency—NYT CBS News Poll (2010, October 21-26).

Similarly, in Australia, according to Beder (2002) “a Sydney Morning Herald/AC Nielsen-McNair survey, conducted in November 1997, found that 90 per cent of Australians are concerned about global warming, 83 per cent believe it is a serious threat to humans and the environment, 79 per cent said that Australia should sign a treaty to cut emissions, and 68 per cent said that economic concerns should not prevent the Government from signing such a treaty.” Yet the Australian delegates at the 1997 Kyoto climate conference were one of the major obstacles to a meaningful treaty, won significant compromises that increased their allowable emissions, and, even still, did not ratify the treaty until 2007 (Hamilton, C., and Reynolds, A. (1998) Land-Use Change in Australia and the Kyoto Protocol: A Presentation at the Fourth Conference of the Parties of the Framework Convention on Climate Change, The Australia Institute, pp. 1-23.)

Beder, S. (2002) Casting Doubt and Undermining Action, Pacific Ecologist, v. 1, pp. 42-49. Accessed March 27, 2017 at https://ep.probeinternational.org/2002/03/01/casting-doubt-and-undermining-action/.

[xxvii] AP/Ipsos Poll (2007), USAToday (2007), Duffy (2008).

AP/Ipsos Poll (2007, January 11) Americans Oppose Sending More Troops to Iraq.

USAToday (2007, January 11) Poll: Americans Oppose Sending More Troops to Iraq.

Duffy, M. (2008, January 31) The Surge at Year One, Time.