Core vs. Predator (State)

The Market helps those who help themselves. The free-market faithful, upon hearing Its name, cross themselves, then help themselves to the public purse without fear of judgment for breaking the rules. They swept away the old ones and wrote their own, which they disregarded.

In his just-published “The Predator State [1],” economist James K. Galbraith argues that the free market fundamentalism ascendant for the last thirty years has spawned a Predator State which sees “the economic activities of the government … merely as opportunities for private profit on a continental scale.” To that end, it co-opts public policy to serve its purposes (at the expense of public ones) by loosening controls on corporate avarice.

For the United States to prosper in the 21st century, Galbraith argues it should reconsider three ideas that have fallen into disrepute. It should resurrect planning – to address energy supplies and climate change, specifically – that markets cannot do, even when they work. Second, it should reassert standards lost to the deregulation that gave us the savings and loan and subprime mortgage crises. “A functioning structure of regulation,” Galbraith asserts, “is the competitive instrument of the more progressive part of the business community, which wishes – for its own advantage – to force everyone to play by a common set of rules.” Finally, the U.S. should reassert itself through economic and technological, rather than military leadership.

Defense analyst Thomas P.M. Barnett makes a parallel argument in his 2004 bestseller, “The Pentagon’s New Map [2].” Barnett (then a professor with the Naval War College) collaborated with international debt trading firm, Cantor Fitzgerald, on the New Rule Sets project. They examined the risks globalization presents for national security, energy, money and environmental damage. The project was cut short by 9/11 – Cantor Fitzgerald occupied floors 101 to 105 of World Trade Center One. Barnett [3] argues for expanding the rule sets that define international security, political and business relationships in the developed world (the “Functioning Core” states, in Barnett-speak) into third-world “Gap” states disconnected from the global economy, states where hopelessness and poverty breed instability. Corrupt, thuggish Gap states operating outside international norms find it hard to attract risk-averse foreign direct investment that brings development. Making globalization truly global – turning Gap states into Core states – would raise living standards in the world’s disconnected places and reduce the potential for violent conflict.

Both Galbraith and Barnett lay out what Barnett dubs “a future worth creating.” Their approaches differ – Galbraith argues for enforcing domestic standards, Barnett argues for international ones. Yet both emphasize how a “common set of rules” promotes stability. Which is why freshman business law texts are three inches think and why Moses returned from the mountain with ten regulations carved in stone.

Planting democracy in the heart of the Middle East was one of the Bush/neocon rationales for the Iraq invasion. Extending and enforcing rule sets should be at the very heart of a U.S. foreign policy supposedly based upon the theory that capitalism and democracy go hand in hand. Yet, bending international norms (or evading the law entirely) is what defines the Iraq occupation, as well as the political and corporate corruption we see at home. Instead of encouraging corrupt foreign governments to be more like us, the corporate republic Galbraith describes makes us more like them.

Galbraith describes the Predator State:

It is a coalition of relentless opponents of the regulatory framework on which public purpose depends, with enterprises whose major lines of business compete with or encroach on the principal public functions of the New Deal. It is a coalition, in other words, that seeks to control the state partly in order to prevent the assertion of public purpose and partly to poach on the lines of activity that past public purpose has established. They are firms that have no intrinsic loyalty to any country. They operate as a rule on a transnational basis, and naturally come to view the goals and objectives of each society in which they work as just another set of business conditions, more or less inimical to the free pursuit of profit. [pg. 131]

In short, it is a system inimical to the public good, bent upon plundering government coffers for private gain. Indeed, writes Galbraith, “the men in charge do not recognize that public purposes exist.” What they don’t plunder in cash they appropriate in public property or programs, sell back at a profit, and tell people they are freer because it isn’t a tax.