Ideological Capture and the Death of the Functionalist Capitalist State

Marx and Engles once famously quipped in an obscure text somewhere that “the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.” In modern theory this economistic and functionalist rendering of the state has been widely rejected for reasons I will not bother to outline here.

As a first cut theory of the modern capitalist state I, however, had always thought it was rather an astute observation. Business owners have collective needs they can not or will not independently provide and yet require these goods and services in order to conduct their affairs. They need independent courts to police and enforce private contracts, they eventually figure out they need a common currency, a reliable system of roads etc, etc. The solution to this collective action problem is the state. Indeed much of the history of liberalism can be read as a conversation about what the proper functions of the state ought to be and how to protect it from being hijacked by the popular classes to provide for their collective needs. That is why in that same obscure text Marx and Engles called for the extension of the vote to non-property owning individuals. What a Radical Idea!

What strikes me, however, about the latest wave of austerity sweeping through the advanced capitalist zone is the degree to which the state is failing to act as the executive committee of the bourgeoisie. When you read Keynes’ General Theory it is palatable the degree to which he was frustrated by the state’s failure to do its job and save the capitalist class from itself. In our contemporary period of growing myopathy economists like Paul Krugman seem gobsmacked on an almost daily basis at the failure of the present administration in the US to act accordingly. What Paul and many others do not seem to be able to figure out is why?

I think the failure of the state to act as the committee for managing the general affairs of the capitalist class is rather simple: both the bourgeoisie and its representatives—politicians—have been consumed by the ideology they have been selling.

Neoliberalism was about making the world a better place to be a capitalist. As such, it was also about getting citizens to internalize the needs of business as their own. Everyone and every institution were asked, prior to making any practical suggestions to ask themselves what would a business person do? So successful was the campaign to get citizens across the world to internalize the needs of capital that even the elites ended up drinking the cool-aid they sold. Put differently neoliberalism moved from being the Noble Lie to the prize winning Noble Truth.

I am going to coin a new term here and call this phenomenon “ideological capture”; which no doubt, in the case of the US is reinforced by an almost complete “regulatory capture.” Indeed so complete has this ideological capture been that it appears as though instead of individual states acting on behalf of the collective needs of the entire bourgeoisie individual states are rather acting as the executive of a single capitalist firm and viewing the societies they govern as one giant business enterprise. This in train is leading to a whole host of jumbled thinking not the least of which is the package of compositional fallacies and outright contradictions masquerading as fiscal prudence.

In another post perhaps I will take the time to catalogue them all. But of course all of this is a rather moot point. Even if the managers of the capitalist enterprise called the modern state woke up and decided that they would save capitalism from and for the capitalists it is not at all clear how they would do it. Let us say for argument sake I agree with people like Krugman and think that fiscal expansion across the capitalist zone coupled with a real effort on the coordination on international imbalances—as opposed to the bizarre spectacle that was the G20 meeting in Korea—would go some way to stop the haemorrhaging. The fact remains the neoliberal growth model is a failed experiment. A reset back to 2005 will not do the trick; nor 1996; nor 1985; nor 1976; nor the summer of 68.

There are in fact three resets and not one that have to be pulled-off. To meaningfully deal with international imbalances we are going to have to deal with both the class and the environmental imbalances (that was euphemistically put). These are all massive problems with very politically complex solutions to be worked out. Neoliberalism has served to hyper accelerate all three imbalances and there is nothing I am seeing from the Very Respectable People (VRP) like Krugman that betrays any sense of what is really required. To make matters worse VRP are on the outside of the debate which gives a good indication of just how far off is a meaningful consideration of the immensity of the tasks at hand given they are only one quarter of the way there and sitting on the benches.

Marx and Engles quipped somewhere in an obscure text second only in obscurity to the Bible that Capitalism creates its own gravediggers. Some good irony then that the state is busy performing this historical mission that was once bequeathed to the working class.

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