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The nihilism growing in America manifests in many ways, but three are particularly worrisome. Two, Neoconservatism and the religious right, will get chapters of their own because they reflect the major forms nihilism takes while battling the cultural and spiritual corrective that emerged during the 60s. However, both of these groups are made more economically and politically viable by the institutional nihilism that dominates big corporations and defended by Neoliberal economists.

The relationship between markets, corporations, and liberalism is complex.  Pure market economies result from institutionalizing liberal values.  They arise from freely made exchanges between people. When clearly defined property rights are widespread and secure, and individuals free to exchange or combine them whenever they think it advantageous, the amount and flexibility of knowledge and insight that can be effectively deployed within a society expands enormously. Money makes these transactions still easier by helping coordinate the plans of diverse people with diverse values because while we may not easily find a person willing to barter what they possess for what we have, we can usually find someone willing to pay money for it.  In many ways people’s freedom over their lives is greatly enlarged within such a context.

Markets are hardly new. But the relatively free markets liberals established transformed human life by enabling so many to participate within these rapidly expanding exchange networks.  The resulting creativity and productivity unleashed made the poor a minority group for the first time since the rise of agricultural civilizations thousands of years ago.  This is the standard classical liberal argument in favor of markets, and as far as it goes it is true.

For example, years ago I started a small business to finance writing my dissertation in Political Science.  For some years I profitably sold my art work printed on stationery, envelopes, and cards.  My business eventually grew to include wholesaling all over the American West, and having a pay roll.  My experience was a good example of the classical liberal view of the market as constituting a realm of freedom.  So long as I remained profitable enough to stay in business, I had a wide range of alternatives open to me as to how I ran itIn this context prices served as important signals indicating that my business was doing well, or that it was entering a potentially perilous situation requiring me to act differently if I wanted it to survive. I was free to make trade-offs between making money and serving other values, like writing a dissertation.

But the economic coin of the realm also has a darker side.

Money prices are signals for what is or is not a wise exchange in market terms. By replacing face-to-face negotiations with market prices markets become increasingly impersonal systems of exchange, coordinated by anonymous systemic signals that are not the same as personal negotiations and agreements. Money is a pure means to obtaining other things. Lacking that quality it has no value.

As economic exchanges became more and more mediated by money alone, increasingly things within the economy became valued only for the money they would bring upon being sold.  The market economy developed new organizational forms that took advantage of this impersonality and of money as a universal means for exchange.  The modern joint stock corporation is the most successful example of such organizations.

Corporations are not like my small business.  They are created to respond only to market incentives, valuing acquiring money over every other value.  Shareholders may not agree as to how they want to spend their share of corporate profits, but all want the company to make a profit, generally the bigger the better.  Control is oligarchic not democratic, and proportional to the amount invested in shares.  Insofar as profit is a shareholder’s only concern there is complete harmony of interests between small and large investors.

Any CEO who allows other values to impede maximizing share value will not be serving the financial interests of the company’s shareholders.  Share values would therefore be lower than if the company put profits before every other value.  Consequently such a CEO would run the risk of being ousted in a hostile take-over by people believing the company’s shares to be under valued.  For this reason corporate leadership has a powerful incentive to push the company to seek as high a share value as possible.  In this respect corporations are fundamentally different from normal human beings who act within a far more complex field of motivating values.

So long as shareholder power is strong, corporate managers are not free as I was to allow other values to override their decision-making. They must focus on share value. Unlike me and my business, they do not act in a realm of freedom but of powerful constraints.

For better or for worse privately held companies reflect their owner’s character. This independence and freedom from having to serve pure market values can last even after they go public, so long as their shareholders trust their ultimate judgment.  Howard Schultz, founder of Starbucks, believes in providing good health care policies for his employees.  His personal values explain Starbuck’s generous medical coverage, coverage they kept even when the company entered into some stressful economic times. [1]  But over time publicly held companies erode the influence of owners’ character from entering into business decisions.  Once Schultz retires, these unusually generous health benefit programs will go.  For a typical manger that money is better used to pump up shares than benefit employees.

Within the operational logic of the corporate world everything is either a means for making money, an impediment to it, or irrelevant. Insofar as they put other values ahead of profit, the personal values of managers are irrelevant or a hindrance.  They are likely to be punished when their values impede profit maximization as reflected in share price. To the degree this has happened, and it has happened to a very large degree among America’s largest companies, there is little freedom for managers or lower level employees.

And what of the corporation’s owners?  In a very real sense it has none.

 

The end of ownership

In corporations ownership as Locke and many other liberals conceived it has disappeared. Ownership fused control with responsibility.  I control what I own, and am responsible for it. This is why opponents to slavery argued that a human being could never be property, as I explained in chapter three.  The ‘owner’ was never held responsible for the actions of his slave, whereas he was for those of his horse.

‘Owners’ of corporate shares are not personally responsible for its actions, and few of the largest corporations have even a majority shareholder. In many cases corporate shares are owned by mutual funds, and in these instances many human ‘owners’ have no idea what they ‘own.’  Even if they did, these ‘owners’ have no appreciable power over a corporation’s actions, usually do not know what those actions might be and have no ability to contact other ‘owners’ to try and bring them to a halt if they did know.

In response to this observation a Neoliberal or Classical liberal economist might argue that any ‘owner’ who discovered unethical behavior could sell his or her shares in protest.  But those shares would be purchased by others either ignorant of what was happening or who did not care.  Selling a share would usually not lead to any increase in pressure to change corporate behavior.  If the unethical behavior is profitable, which it normally is, selling shares imposes a financial loss on ethical shareholders who sell in protest while enabling less ethical or knowledgeable shareholders to make an even greater financial gain by taking advantage of lower share prices if many protesting shareholders sell all at once.

This kind of ‘ownership’ rewards unethical behavior. It is the opposite of what we normally mean when we say someone “owns” something.   Over time the moral dimension to human action is squeezed out of corporate decision making as a direct result of market incentives in the context of corporate governance.  ‘Ownership’ is concentrated in the hands of people not bothered by this. The more impersonal the process becomes the more quickly the human dimension is squeezed out.  Today many corporations have apparently entirely freed themselves from the world of human values.

Instead corporations are responsible to market dictates and seek to act in harmony with its incentives.  People come and go, but the market dominates what companies do on pain of being taken over by other companies acting in greater harmony with market incentives. Shareholders are not so much owners as they are employees rewarded by the market to the degree they encourage companies to act in keeping with its values. In this context only money matters, and money is valuable only because of the power it enables the possessor to exercise over the things in the world. In the process whether consciously or not, shareholders and top managers alike embrace nihilism as their fundamental operating value in business.

If a human being regarded everything and everyone as a means to his or her purposes, and otherwise without value, they would be classed as sociopaths: profoundly defective human beings without consciences. Corporations are institutionalized sociopaths without the personal weaknesses and legal responsibilities that often bring human sociopaths to grief.  The more they are subject purely to market feedback the more true this observation becomes, and a corporation is organized to facilitate the maximum impact of market feedback.  Prices cease being signals to owners, and become commands to administrators and bureaucrats who will be ousted if they do not ceaselessly seek to maximize corporate profits as reflected in share prices.  Private property has been expropriated not by government but by the market.  “Owners” simply follow its orders, or are gradually relieved of their wealth which is transferred to those who can better serve the market’s values.

When the Supreme Court ruled that corporations had the political rights of people, and so were free to influence politics as they willed, they enabled both parties to be dominated by institutions that, if they were human beings, would be among the worst examples of our type. Sociopaths with neither conscience nor moral capacity. Institutionalized sociopathy creates a second problem intrinsic to America’s large publicly held businesses.

 

The Character of CEOs

When a person is chosen to manage a business organized to act like a sociopath.  The more sociopathic a CEO, the more at peace he or she will be in making the decisions needed to keep or enhance their position.  Such people will have a competitive edge over others of equal talent but less ruthless. Feeling more comfortable acting within the nihilistic corporate decision-making matrix than will most of us, sociopaths will tend to flourish.

I am not describing an invariant law.  Even in long existing organizations with records of extreme ruthlessness, remarkable individuals can occasionally rise to the top.  The Russian Communist Party ultimately gave us Mikhail Gorbachev, who proved to be a deeply humane man. The standards for success as a corporate CEO are fairly unambiguous and decent people will often have difficulty maximizing them. But the very simplicity of the criteria for judging corporate success or failure and the ease by which a leader’s success or failure can be impersonally assessed, may make the rise of a man such as Gorbachev more difficult within a corporation than within a authoritarian political party.

Consider a recent example I have taken from the pharmaceutical industry.

Progesterone is a drug for preventing miscarriages and premature births in higher risk pregnancies.  It has been available for years.  The drug was made by compounding pharmacies  and has long been widely employed.   During this time it has been available for around $20 a dose, administered weekly.  ”Progesterone is so cheap to make and we never had a problem with the compounding pharmacies making it.” says Dr. Jacques Moritz, director of gynecology at St. Luke’s-Roosevelt Hospital in New York.

Progesterone recently won FDA approval to be marketed in the US as “Makena,” exclusively for seven years by K-V Pharmaceutical of St. Louis. FDA laws prohibit pharmacies from making FDA-approved products. K-V then announced a price hike on this long-used drug: from $20 to $1500 a shot. [2] And no, neither $20 nor $1500 is a typo. It also sent letters to pharmacies threatening them with FDA punishment if they compounded their own version of the treatment, as they had for years.

For obvious political reasons K-V’s people began saying they would act to make Makena available to poor mothers.  But the only reason for the price hike is to make as much money from families as the company believed the market will bear while not provoking a political backlash.  Middle class mothers and insurance companies would not be so fortunate.

In this case the usual reasons pharmaceutical companies give for high drug prices do not hold water i.  This treatment has existed since 1956.  Progesterone has long been made by doctors using already existing pharmaceuticals, and the FDA’s tests on its effectiveness were paid for by NIH, that is, by the American people.  Dr. Kevin Ault, associate professor of gynecology and obstetrics at Emory University School of Medicine, observed, “All the upfront development of the drug was done by the National Institute of Health. You and I paid for that with our tax dollars, it’s not like this pharmaceutical company is trying to recoup its investments in research and development, as is usually the reason for the price of new drugs.”

The price increase from $20 to $1500 boosted the treatment’s total price to the average recipient from $400 to $30,000.  It guaranteed serious sacrifices by many young families, a huge increase in insurance rates for programs covering pregnancies, and an increase in miscarriages, as many people would choose to do without and hope for the best.  Sometimes the best does not happen. Only a person with a vestigial to nonexistent conscience or an ability to rationalize anything would impose such a price hike for a treatment whose sole reason for existence is to save the lives of babies.  K-V is managed by such people.

As it happened, K-V  miscalculated. Political outrage led to the FDA’s decision to allow competition, dashing K-V’s plans. Sherrod Brown (D-OH) and Amy Klobucher (D-MN) along with medical and patients’ groups led the push for a change in FDA policy.  In late March, 2011, the FDA announced “In order to support access to this important drug, at this time and under this unique situation, FDA does not intend to take enforcement action against pharmacies that compound [Makena] based on a valid prescription.”  While the FDA has the authority to crack down on compounding pharmacies it is not obligated to do so.

The Los Angeles Times wrote that after the FDA announcement “K-V said it would do more to make the drug affordable, but did not say it would lower the price.”  As K-V put the matter.  “Based on feedback the company has received, we are currently exploring additional ways to help provide affordable access for all patients who are prescribed Makena.”[3]

From the standpoint of increasing share value K-V acted completely rationally.  A CEO who did not do this when he had the opportunity would become vulnerable to a group seeking to take over the company, oust current management, and then impose the price increase.

These kinds of sociopathic actions are regarded as rational by economists because rationality has become a free-floating concept linked to expanding income by minimizing costs and maximizing profit.  All that matters is acting with maximum efficiency, which means treating everything and everyone as resources, impediments, or irrelevant.  Goals are not rational. Only the means to attain them can be more or less rational, and we evaluate rationality through maximizing efficiency in attaining goals defined in monetary terms.  Mainstream economics promotes nihilism.

To refer back to chapter 3,  efficiency serves power by diminishing everything’s capacity to avoid being used as power dictates.  It is why dictatorships are often said to be more “efficient” than democracies because they get “the trains to run on time.”  When we take efficiency as a good in itself we weaken everyone but the powerful. Nihilism facilitates the rule of power when we have no ultimate values, and efficiency becomes a good in itself.”

Mafia capitalism

In such a framework the distinction between corporate culture and organized crime becomes increasingly thin, the main difference being that often corporations get the laws changed so they can do what was once forbidden, and do it profitably.  When someone gets in the way, their tactics resemble those of the Mafia.  Consider the Bank of America and the United States Chamber of Commerce.

Wikileaks may or may not have possessed documents proving Bank of America acted illegally and unethically.  Revealingly, however, Bank of America’s management reacted with considerable alarm to the possibility they did, and began working with three military contractors, Berico, HB Gary, and Palantir , to devise means for discrediting Wikileaks. This occurred with and through the cooperation of the US Justice Department whose General Counsel recommended the law firm Hunton and Williams to Bank of America to handle the crisis. This firm is a major player in Washington’s lobbying and other politics and employs over 1000 attorneys.  Hunton and Williams served as the intermediary between Bank of America and Berico, HB Gary, and Palantir. The U.S. Department of Justice aided a major corporation in defending against a threatened exposure of illegal behavior.

The tactics proposed by these contractors included spying on families, threatening people’s careers, using malware computer viruses to steal private information, using fake documents to embarrass critics, and creating fake identities to infiltrate their targets.[4] As of this writing, long after the news became public, Hunton and Williams has still refused to comment on the issue whereas the others involved issued the usual denials.

The United States Chamber of Commerce was also discovered to be deeply involved in similar plans to attack progressive groups such as Think Progress. Again Hunton and Williams was involved.  The Chamber’s own words condemn them all.  In suing the Yes Men for their satirical performance art at the Chamber’s expense in 2009  (the Yes Men had claimed to be Chamber of Commerce officials) the Chamber argued they[5]

deceived the press and public….These infringing and fraudulent acts are antithetical to public debate on important issues, because they prevent the public and the press from knowing the true position…. In short, such conduct is destructive of public discourse, and cannot be tolerated under the law.

 

Referring to the Chamber of Commerce’s activities, Richard Clarke, who had served in high level positions for both Democratic and Republican presidents, including a stint as George W. Bush’s  “cyber security czar,” remarked “I think it’s a felony, and I think they should go to jail.”[6]  But in an increasingly corporatized America, the biggest crooks never do time.

Beyond the legal implications of these plans we can explore what they say about BofA’s and the Chamber’s leadership, as well as of top Justice Department officials.  These plans included fraudulently attacking not just people with whom they disagreed, but also otherwise uninvolved family members.  Research sent by Aaron Barr, HB Gary’s chief executive, reported of one target  “They go to a Jewish church in DC,” and “They have 2 kids, son and daughter.” [7] These plans read more like a stakeout by organized crime than America’s public business ethos, and if Clarke is right, it is organized crime, but by corporations and the government, not the Mafia. Or maybe the level of sociopathy at the top has made government, corporate, and Mafia leadership ethically indistinguishable.[8]

In their New York Times account of the scandal Eric Lipton and Charlie Savage report[9]

Jonathan E. Turner, who runs a Tennessee-based business that gathers intelligence for corporate clients, said that companies nationwide relied on investigators to gather potentially damaging information on possible business partners or rivals. “Information is power,” said Mr. Turner, former chairman of the Association of Certified Fraud Examiners. He estimated that the “competitive intelligence” industry had 9,700 companies offering these services, with an annual market of more than $2 billion…

John Perkins served many years as in his terms “an economic hit man” for the financial industry in its activities overseas.  As he defined the job he did for years, and continues to be done by others[10]

Economic hit men (EHMs) are highly paid professsionals who cheat countries around the globe out of trillions of dollars.  They funnel money from the World Bank, the U.S. Agency for International Development (USAID), and other foreign “aid” organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet’s natural resources.  Their tools include fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder.  They play a game as old as empire, bt one that has taken on new and terrifying dimensions during this time of globalization.

      I should know; I was an EHM.

Nor might the distinction between the corporate and financial elite and the Mafia be all that great. The level of cooperation between the biggest banks and organized crime is very high, and when they are caught at it there are no significant sanctions applied.[11]

In 1944 Karl Polanyi, Michael Polanyi’s brother, observed that a financial system without serious regulation always devolved into what he called “Mafia capitalism.”[12]  What we can now add is that we can no longer clearly distinguish between Mafia capitalism and the American government.  The hybrid monstrosity of Mammon/Efficiency has found men and women sufficiently depraved to serve it devotedly.  It rewards them richly in the coin of its realm.



[1] Howard Schultz with Jeanne Gordon, Onward: How Starbucks fought for its life without losing its soul, (NY: Rodale 2100). 213-4.

[2] Courtney Hutchison, Price of Preventing Premature Births Skyrockets, ABC News/Health, March 10, 2011, http://abcnews.go.com/Health/WomensHealth/price-preventing-premature-births-skyrockets-drug/story?id=13104588

[3] Andrew Zajac, FDA opens up competition for pregnancy drug, Los Angeles Times, March 31, 2011.

[4] Eric Lipton and Charlie Savage, Hackers Reveal Offers to Spy on Corporate Rivals, New York Times, February 12, 2011, A-15. http://www.nytimes.com/2011/02/12/us/politics/12hackers.html?_r=1&partner=rss

[5] Anne C. Mulkern, U. S. Chamber Sues Activists Over Climate Stunt, New York Times, October 27, 2009, http://www.nytimes.com/gwire/2009/10/27/27greenwire-us-chamber-sues-activists-over-climate-stunt-50982.html

[6] Lee Fang, Richard Clarke Says U.S. Chamber of Commerce Committed A Felony By Cyber-Targeting Political Opponents, Think Progress, March 24, 2011. http://thinkprogress.org/2011/03/24/richard-clarke-chamber-hacking-scandal/

[7] Lipton and Savage, op. cit.

[8] As is apparent in Glenn Greenwald’s More facts emerge about the linked smear campaigns, Salon, Feb. 15, 2011. http://www.salon.com/news/opinion/glenn_greenwald/2011/02/15/palantir/index.html

[9] Lipton and Savage, op. cit.

[10] John Perkins, Confessions of an Economic Hitman, (NY: Penguin, 2004). xi.

[11] Ed Vulliamy, How a big US bank laundered billions from Mexico’s murderous drug gangs, The Observer, April 3, 2011. http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs

Michael Smith, Banks Financing Mexico Gangs Admitted in Wells Fargo Deal, Bloomberg, June 28, 2010. http://www.bloomberg.com/news/2010-06-29/banks-financing-mexico-s-drug-cartels-admitted-in-wells-fargo-s-u-s-deal.html

[12] Karl Polanyi, The Great Transformation, (Boston: Beacon, 2001). Quoted in Chris Hedges, op. cit., 201.