Megacapitalism: an Alternate Theory of the State

 

What is the purpose of the state?  What is the purpose of government?

Philosophers and political scientists have attempted to answer these questions in various ways.  Some say that its purpose is safety, or the securing of individual rights.  Still others say that government exists to represent and enact the consent and desires of the governed.  Or that its purpose is the common good of the people, which itself may be variously defined: as the "greatest good for the greatest number," as Utilitarians say, or at least the least suffering, as Popper puts it, ("negative utilitarianism" as it's sometimes called) and so on.  Some understand government in the framework of a social contract, for the mutual benefit of the governed.  The Aristotelian tradition provides a quite different answer: that humans are an organic part of their (city-)state, which exists to promote virtue and excellence.  The Constitution of the United States provides a list of potential purposes of government: "to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity."

But let us consider a different conception of the purpose and goal of government: that is, that the purpose of the state is to create and maintain a large - preferably, the largest - capitalist investment firm.  I call this the ideology of megacapitalism.

The purpose of the state is to create and maintain a large - preferably, the largest - capitalist investment firm. 

I am not saying that I endorse this view.  In fact, let me be clear: I do not.  But it is worth being taken seriously. 

And indeed, although I am opposed to megacapitalism, I'm going to try to write this is in something like a neutral style, to objectively consider the appeal and real benefits of megacapitalism, as well as its potential challenges and problems.  

In a megacapitalist system, it is not necessary that the government has an absolute monopoly - that is to say, it is not necessary that a megacapitalist state is the only capitalist enterprise.  There may be other corporations, including other investment firms.  But of these, the government will strive to be the largest.

In any capitalist system, there are bound to be larger and smaller firms.  But almost by definition, there will be a firm that is the largest.  In a megacapitalist system, we call this largest investment firm the state.  Or, more precisely, we can say that the largest investment firm and the state overlap - one may partially include the other, but they need not be identical.  Indeed, there may be a quite complex system of "public/private partnerships".  The very large investment firm that is built and maintained by the state I will nickname "MegCap".

And just because the state strives to be the largest investment firm does not necessarily imply that it will always succeed.  There may be quite stiff competition from other corporations in some areas.

Incidentally, the objection may arise here that what is being described here is not an ideology but a de facto process.  But couldn't we return that ideology is material - that it is instantiated as a set of practices and relations in material institutions, which, at a substructural level, shape how individuals understand and relate to their conditions of existence?

We can categorize megacapitalism in a more refined way: there could be various kinds of private megacapitalism - absolute monarchy might be one example.  There could also be democratic megacapitalism.  In democratic megacapitalism, the people have some ability of oversight over the largest investment firm, even if they cannot directly control the other firms in the market.

 

Trump and the Intel Deal 

I'm writing this in response to President Donald Trump's recent decision that the United States Federal Government should own 10% of Intel.  Much has been written about this as a major precedent, but in truth this is not the first time in US history that the government has owned a stake in corporations, or even taken them over, outright.  Eminent domain, conservatorship, and asset forfeiture are all fairly common realities, and have been for a long time: eminent domain, in particular, is older than the United States, and goes back to Grotius.  It was allowed for explicitly in the Fifth Amendment, mostly written by Alexander Hamilton, though he insisted that the government could not take private property for "public use" without "just compensation."  In the response to the 2008 economic crisis, President George W. Bush signed into law, as part of the Emergency Economic Stabilization Act, the Troubled Asset Relief Program (TARP), which allowed the government to "bail out" corporations in various ways, including outright purchase - sometimes with the famous claim that they were "too big to fail".  Things were much more drastic in times of war, notably World War I and World War II, when the government seized entire industries.

When Trump made his famous deal with Intel this year, he was building on already-existing economic infrastructure developed during the Biden administration as part of the CHIPS Act: the government had already awarded, but not yet paid, $5.7 billion - this payment was now raised to a total of $11.1 billion, but now in the form not of grants but of equity, giving the government a partial stake in ownership of the company.

So megacapitalism is not merely the purview of either the Republican Party or the Democratic Party.  It is clearly a bipartisan effort.  For that matter, it might be said that megacapitalism is the dominant ideology of every government on Earth, and even every major party of every government on Earth, as I will discuss below and in following essays.

 

Why is it called "Megacapitalism"?   

Obviously, the etymology is simple - I've taken the word "capitalism" and added "mega," which means "great."  Thus, "great capitalism."

Capitalism is characterized by the concentration of wealth, power, and the controlling interest and ownership of the forces of economic production into the hands of a few.   

I use the term "megacapitalism," because, under a megacapitalist system, there is an even greater concentration of wealth, power, and control than in the pure "free market."  Wealth, power, and ownership of the forces of economic production are concentrated among an even smaller group of people.  Statistically speaking, we could say that if a plot of ownership of forces of production follows a Gaussian normal distribution curve, shifting to an effective megacapitalist framework decreases the standard deviation, resulting in a narrower curve.

You can think of megacapitalism like a laser-beam, focusing forces of production on specific goals. 

 

Advantages of Megacapitalism 

It's not hard to see why people would want some control over the largest investment firm. 

First of all, it gives power to people, which can be seen as a check on the power of other corporations.  More than that: MegCap, simply virtue of its size (as well as, hovering in the background, its coercive power) will be able to marshal, to guide, to influence, and perhaps to some degree to determine some of the standards and practices of its competitors.  Although it may be in competition with them, it will be the largest vendor and the largest customer of many third parties, which will inevitably adapt the nexus of their commerce to cater to this massive client, and its competitors will have to behave in a compatible way to stay competitive.  Thus it can "set the tone" and establish norms.  And many would argue that no society can exist without norms.

In addition, and perhaps more importantly, it allows for the opportunity of major projects: building projects, welfare systems, medicine, defense, education, roads and transportation, mail, the most advanced research in pure science, applied technological advances, expansion and modernization of industrial forces of production, energy supply, utilities, funding for the arts, aeronautics, deep sea exploration, space exploration, firefighting, crime prevention, and much more.  In particular, nowadays, there must be some way of addressing environmental concerns, such as global climate change and mass extinction.

Beyond these rather obvious advantages, there are some more subtle, if not obscure, arguments for megacapitalism - namely that, although it obviously isn't identical, you might say that it "rhymes" with certain other political ideologies.  Take, for instance, anarchism - or at least certain strands within anarchism.  Anarchists are famous for opposing the state, but they don't always oppose all functions of the state equally.  I remember speaking with an anarchist once who wore a t-shirt that read, "It will be a great day when our schools have all the money they need, and our air force has to have a bake-sale to buy a bomber," which is apparently a quote from Universalist Unitarian minister Robert Fulghum.  Indeed, anarchists are often opposed to certain functions of the state, such as the way that police enforce structural racism and class privilege through prejudicial profiling and police brutality, or imperialist wars and military adventurism, but not as critical - or even supportive - of other functions of the state, such as funding for the arts, education, healthcare, welfare, and even space exploration.  In other words, the programs that can be funded by MegCap might be separated - at least conceptually, if not in practice - from the coercive, violent actions of the state.  

There's an interesting political bifurcation that can be made: on the one hand, you have the "minarchists," who only support what they see as the vital, necessary aspects of the state, which usually include the police and military - the "night watchman state," as it is sometimes called.  Ayn Rand would apparently be an example of a proponent of such a system.  On the other hand, you could have something like an anarcho-pacifist ideology, which might be expected to be almost the photo-negative of the "minarchist" position, in that the very functions of the state that the minarchist defends - its coercive, violent functions, such as the police and military - are the very functions of the state that anarcho-pacifists would detest.  Such a pacifist might, under certain circumstances, be susceptible to persuasion in favor of a form of megacapitalism, a state-run investment firm, so long as the MegCap, the investment firm in question, is under democratic control, and invests in projects for the greater good.  After all, MegCap can, through trade and investment, become quite wealthy and powerful, and, if its investments are sufficiently wise and profitable, perhaps even self-funding - and thus it could provide great benefit for humanity without resort to violence. 

There is, of course, one more argument for megacapitalism - it works.  Unlike so many political ideologies, there are many examples of it functioning in the real world.  This takes discussion of the relative merits of political ideologies out of the airy realm of pure speculation and drags it back down to the real world, and the real, knowable, historical record.

Indeed, there is a kind of intellectual vanguard these days, pioneering new ways of interpreting and understanding MegCap as it currently exists.  I am thinking, in particular, of MMT - the modern monetary theory of economics, represented by economists such as Warren Mosler, L. Randall Wray, Stephanie Kelton, and Bill Mitchell.  But they would be the first to tell you that they are not proposing a new capability or structure for the government or the economy, but simply accurately describing what is already happening, without ideological blinders.  Nor is the theory of megacapitalism limited to MMT.  We can see, for instance, a vast and diverse array what amounts to megacapitalist theorists and policy-makers gathering every year at the World Economic Forum in Davos.

 

Megacapitalism as the Dominant Ideology on Earth

This brings us to our final point for the present essay.  As already indicated, although Trump made headlines by negotiating for a 10% in Intel, this was far from the first time that the federal government took an active, indeed commanding role in the economy.  The question these days is not "Should the government get involved in the economy?" but rather "For whose sake?"  The government is not shy about intervening - on behalf of capitalism and the capitalist class.

But this is by no means limited to the United States.  Essentially every government existing today is, whether it advertises this fact or not, a megacapitalist government.