Behemoth

ByBrian Platt

This country is going so far to the right you won’t recognize it.

―John Mitchell, Attorney General for the Nixon Administration, 1972

The standard of living of the average American has to decline. I don’t think you can escape that.

―Paul Volcker, Federal Reserve Chairman, 1979

Since May of 2018, when the Council unanimously passed a modest and compromised employee head tax, business leaders have been united around re-forming a City Council in their image. It didn’t matter that Washington has the most regressive tax system in the country which business had benefitted from for years or that the Council crumbled after Jeff Bezos personally threatened to move Amazon out of the city, reversing their vote on the tax. By passing the head tax the Council dared to suggest that capital was not in full control of city politics and that is unacceptable.

Speaking through outlets like the Seattle Times, whose editorial board begged Mayor Jenny Durkan to “stand up to the Council’s extremism,” a message was crafted that Seattle was a city in crisis. Columnist Jon Talton warned that Amazon had given Seattle an “unprecedented gift” by locating here – apparently a purely philanthropic move on Amazon’s part – and that prioritizing things like homelessness over Amazon was “a staggering act of ignorance and destruction” that risked damaging the city’s “economic brand.” It was a stunning example of what in the Twitterverse has been dubbed “peasant mindset” – the Bezos must be satisfied for he makes the sun rise and the crops grow!

So, it was with considerable glee that many of us watched the late ballots come in and the Seattle Times and business candidates go down in flames – Times’ endorsements lost every race except, notably, in District 4 where Shaun Scott lost to a pile of money in a suit. Most importantly, Kshama Sawant who was the object of the Amazon and the Chamber of Commerce’s ire brought in an enormous number of late ballots to close an eight point gap and ultimately defeat Amazon’s Egan Orion by four points. It was a feat worth celebrating.

In this atmosphere, however, a narrative began to emerge that candidates like Sawant didn’t win in spite of the large infusion of corporate cash into the race, but because of it. While the fact that this narrative was being suggested by candidates like Egan Orion as an excuse for his loss should have given critics pause, its breeziness led many to adopt it anyway. After all, if corporate money hurt corporate candidates, then I guess there is no need to challenge corporate power.

We should not expect the capitalist class in Seattle to whither after this election and give up on the Seattle City Council. What they spent on this election was pocket change for giants like Amazon, Microsoft, and Boeing and it got candidates through the primary and close to winning seats. The lesson business is likely to take from this is not to give up, but to spend more and push harder. What this election demonstrated was not the failure of money in politics, but its potential for success. And it is part of a broader trend in American politics.

The Crisis of Democracy

Seattle’s City Council election needs to be contextualized in the forty year rollback of New Deal programs and worker gains. A political project that sought to reassert the power of capital in America. A rollback that turned Seattle into a city where ten billionaires worth over $250 billion coexist with more than 12,000 homeless people living in absolute poverty.

The Powell Memo

The late 1960s was a nightmare time for American capitalism. Students and workers were in the streets fighting for civil rights at home and calling out American imperialism abroad. A strike wave swept the country leading to rapid wage growth and the distribution of benefits via New Deal programs was at its peak. As a result the period from 1966 to 1972 saw increases of wages and benefits set a record pace of 6.8% per year. In 1966 unemployment hit the all-time low of 3.8% while the average duration of unemployment fell to a record 7.8 weeks in 1969.

Harvard professor Samuel Huntington – the same academic who would later cheerlead the “war on terror” as a racialized civilizational conflict in his book Clash of Civilizations – would in 1976 sum up this disaster in a report for the Trilateral Commission entitled, The Crisis of Democracy. “The essence of the democratic surge of the 1960s was a general challenge to the existing systems of authority, public and private,” Huntington wrote, “People no longer felt the same obligation to obey those whom they had previously considered superior to themselves in age, rank, status, expertise, character, or talents.”

Huntington saw this as an “excess of democracy” that “produced problems for the governability of democracy in the 1970s.” He urged that there were “desirable limits to the extension of political democracy.” He argued that a popular mandate was “irrelevant” to how politicians should rule. What was relevant was “his ability to mobilize support from the leaders of key institutions in a society and government… This coalition must include key people in Congress, the executive branch, and the private sector ‘Establishment.’”

Huntington was not alone in his concern that the working class was exercising too much power in America. Lewis Powell was a corporate lawyer who sat on the board of several major American corporations including Phillip Morris when he was contacted by the National Chamber of Commerce to draw up a confidential memorandum for combatting this excess of democracy.

In his now infamous 1971 memo, Powell warned that radicals were winning the hearts and minds of the public by “setting the rich against the poor.” Most distressing to Powell was a poll of university students that revealed “almost half the students favored socialization of basic US industries.” It is revealing that Powell takes for granted that unfettered capitalism is the core value of Western society, that the capitalist class is the core constituency of this society, and that the right to private profit is the core human right.

Powell argued that business needs to stop its policy of “appeasement” with the working class and that “the time has come—indeed, it is long overdue—for the wisdom, ingenuity, and resources of American business to be marshaled against those who would destroy it.” He then outlined his plan as follows:

It was a bold plan of action designed to reassert the power of the capitalist class in American politics.

The Lobbying Boom

What Powell called for was nothing short of the largest mobilization of elite power for the purpose of maintaining its class interest since the start of the Cold War. The effect of Powell’s memo was immediately apparent. Between 1972 and 1982 the National Chamber of Commerce expanded its membership from 60,000 to 250,000 firms.

The National Association of Manufacturers, a traditional organizer of anti-union and anti-working class campaigns dating back to 1895, moved its main office from the Midwest to Washington DC to improve its access to government officials. In 1977 it created the Council on a Union Free Environment that pushed anti-labor legislation at every level of government.

Powell also inspired the creation of a bevy of policy think tanks to lobby on behalf of the ultra-rich, most notable of which were the Heritage Foundation, the National Taxpayers Union (which gave Grover Norquist his first make-work job), and the Trilateral Commission. The Business Roundtable, also created at this time, was made of CEOs whose firms made up one half of US GNP in 1972. By 1976, Business Week, labeled the Business Roundtable “the most powerful voice in Washington.”

The emerging power of the Roundtable was exemplified in their first major project, the defeat of the Consumer Protection Agency in 1979. The Roundtable distributed a stream of cartoons and editorials that derided the Agency to 1,000 daily newspapers and 2,800 weekly publications. Portions of these materials were published without listing the Roundtable as their source over 2,000 times. The Roundtable also sponsored a poll that fraudulently claimed that 81% of Americans opposed the CPA when in reality they were 2:1 in favor of it.

The Chamber paid to have the poll plastered in full page ads in the New York Times. Newspaper editorials from around the country, most having originated from the Roundtable itself, were gathered and mailed to members of Congress to create the illusion of a grassroots opposition to the bill. When the bill was defeated The Nation wrote of the Roundtable’s success, “With this final twist, the New Deal comes full circle. In the late 1970s, as in the 1920s, the business of America is business, and the populace cannot imagine it otherwise.”

As for Lewis Powell himself, he would be nominated to the US Supreme Court only two months after penning his infamous memo. On the bench, Powell fought to limit and weaken affirmative action programs in Regents of the University of California v Bakke and reaffirm state’s use of the death penalty in Gregg v Georgia and McClesky v Kemp.

Perhaps Powell’s most enduring contribution would be his assenting vote in Buckley v Valeo and the majority opinion he wrote in 1978’s First National Bank of Boston v. Bellotti which effectively invented a First Amendment right for corporations to participate in the political process through campaign contributions. It should be noted that by 1978, business interests were already spending $1 billion per year on “grassroots” propaganda. The Valeo and Bellotti cases would form the precedent for 2010’s Citizens United v. Federal Election Commission which removed all the remaining barriers to corporate influence of elections. A ruling that was opposed by 80% of the public.

That's a Neoliberalism!

The political and economic strategy that revanchists in the capitalist class were deploying in the 1970s would come to be known as neoliberalism. Neoliberalism was a political-economic philosophy developed largely in the University of Chicago economics department in the 1960s that stood opposed to Keynesianism and sought the reversal of the New Deal. It combined the economic liberalism of 19th century British factory owners with the religious devotion and mysticism of Ayn Rand – who had many devotees at the University of Chicago.

Neoliberalism centered on the notion that all barriers regarding the use and movement of capital should be removed and that labor – which they believe had been emboldened by the New Deal – should be disciplined through the mechanisms of the market. This meant that labor protections would have to be rolled back at the same time that oversight and regulation of capital was removed. The primary architect of this school of thought was Milton Friedman who had built the University of Chicago into a citadel of neoliberal ideology. By 1980, all the major universities had moved to place Friedman followers into chair positions in their economics departments causing a radical shift in the ideological make-up of American economists.

Even at its inception, it was understood that neoliberalism would be a deeply unpopular program for the vast majority of people who were more likely to receive the disciplining than the rewarding. So the first test trial of the program was in Augusto Pinochet’s Chile. University of Chicago alums were giddy to craft economic policy for a country where dissenting voices were tossed out of helicopters or tortured to death in dungeons. “Shock treatment,” Milton Friedman would say while on a visit to Chile in support of Pinochet, “is the only medicine. Absolutely. There is no other. There is no other long term solution.” It was a political atmosphere in which capitalism can really thrive.

In 1975, fresh from advising the Pinochet dictatorship in Chile, Friedman was allowed to make New York City the first neoliberal test case in the US. A deficit crisis was created in the city when banks, led by Citibank’s Walter Wriston a key advocate of neoliberalism, refused to roll over city debt and pushed the city into a technical bankruptcy. The bankruptcy was used to subvert the democratic process and institute austerity measures aimed at attacking workers’ wages in the most unionized city in the country.

Municipal workers first saw wage freezes, then pay cuts, and finally layoffs. City services, particularly those to poor neighborhoods, were neglected as trash was left on the corner and the subway fell into disrepair. The city was reorganized around the financial sector as neighborhoods, particularly on Manhattan, were gentrified and the poor were pushed to the margins. Taxes were cut for business while services were cut for workers (effectively amounting to a realignment of the tax burden from the capitalist class to the working class) and the city coffers were opened up for bankers who got top priority in the distribution of city funds.

Radical geographer David Harvey summed up the New York experiment like this, “It established the principle that in the event of a conflict the integrity of financial institutions and bondholders’ returns, on the one hand, and the well-being of the citizens on the other, the former was to be privileged. It emphasized that the role of the government was to create a good business climate rather than look to the needs and well-being of the population at large.”

With the election of Ronald Reagan in 1980, neoliberalism hit the mainstream. Dubbed “trickle down economics” during his campaign, Reagan promised to redistribute wealth upwards through massive revisions of the tax code while cutting social programs to “control deficits.”

And Reagan delivered. Taxes for the wealthy were cut dramatically: the top personal tax rate was cut by more than half going from 70% to 28% and the corporate income tax dropped from 46% to 34%. The expansion of tax loopholes meant that the effective tax rate (meaning what people actually pay) was reduced even further. The portion of federal revenues paid by corporations dropped from 50% in 1945 to 14% in 1979 to only 6.2% in 1983. Meanwhile regressive taxes like payroll taxes and sales tax climbed dramatically during this period wiping out any small reduction in the average income tax.

While the wealth of the nation trickled upward, programs designed to ease the lives of the growing numbers of poor were slashed. Between 1982 and 1986, $239 billion in federal funds were cut from food stamps programs, Social Security, college scholarships, legal services for the poor, etc. Reagan famously downgraded the quality of school lunches by declaring ketchup a vegetable for the purpose of saving money. The number of OSHA inspectors was cut by 16% under Reagan which lead to the highly predictable outcome of more accidents and a decreased concern over adopting and maintaining safety standards.

Knowing that their program was deeply unpopular, Republicans moved to restrict voting rights all over the country. Districts were redrawn to break up disloyal populations, polling stations were closed in poor and minority areas, and attack ads were stepped up to discourage political participation. The Reagan Administration urged states to deny groups the right to set up voter registration booths at food banks and welfare offices. Federal unions were told that engaging in voter registration would bring down the wrath of the Administration.

No tactic to suppress the vote was considered out of bounds. In 1985, federal and state officials pushed the FBI to open a voter fraud investigation into five primarily black counties in Alabama ahead of the mid-term election. The FBI interrogated over 2,000 people and brought charges against more than 200, before dropping most of the charges. US Attorney Jeff Sessions ultimately succeeded in getting three civil rights workers convicted of voter fraud in a highly dubious trial. “The Ku Klux Klan and the White Citizens Council can close up shop, because the Justice Department is doing their work for them,” Maryland state Sen. Clarence Mitchell told crowds on a trip to the region. Black voter turnout dropped precipitously afterwards.

The New Democratic Party

In the aftermath of Reagan’s 1980 victory, the Democratic National Committee asked Charles Manatt, an influential corporate lawyer, to guide the party toward a more pro-business agenda. He created the Democratic Business Council (DBC), an advisory group made up of CEOs, to guide policy for the Democratic Party. “Like most other business Democrats, Manatt wanted to strengthen the party’s ties with the business community rather than those with Blacks, community organizations, or the poor,” The Nation wrote in 1986, “To that end, he and his allies deliberately sought out millionaires and other wealthy figures to run as candidates.” Manatt’s successor, Paul Kirk, would call the DBC the “backbone of the Democratic Party’s finances and its intellectual resources.”

A faction of Democrats who would call themselves “new Democrats” began to strengthen their caucus within the Democratic Party at this time. They formed the Democratic Leadership Conference (DLC). Stocked with access to corporate money and promoting a new strategy of triangulation that sought to outflank the Republican Party on the right, the DLC attracted climbers like Bill Clinton, Al Gore, and Richard Gephardt into its ranks.

Concerned about the party base’s response to this right wing shift, the Democratic Party created a system of “super delegates” ahead of the 1984 election to wrest control of the primary process from rank and file voters. Initially, these appointed primary voters constituted 14% of the primary vote, but quickly swelled to 20% by 2008. Democracy, even in the extremely limited form allowed in the US, had become too risky for either party.

Following the 1984 election the Democratic National Committee financed a flurry of studies that aimed to understand white Republican voters. The studies revealed the degree to which white conservatives viewed black people as the problem with their lives. “These white Democratic defectors express a profound distaste for blacks, a sentiment that pervades almost everything they think about government and politics,” Concluded Stanley Greenberg in one study. “Blacks constitute the explanation for their vulnerability and or almost everything that has gone wrong in their lives, not being black is what constitutes being middle class, not being black is what makes a neighborhood a decent place to live.”

At least one of these studies was so incendiary and racist that it was suppressed by the DNC chair himself. In 1991, Thomas and Mary Edsall wrote Chain Reaction which sought to boil this research down to a more palatable format. They encouraged Democrats to distance themselves from African Americans and endorse policies like limiting welfare and escalating the drug war – all seen as harming black people. The logic was that this move to the right would bring in white Republicans and high income donors/voters while causing minimal loss around black voters because they would have nowhere else to go.

In 1992, Arkansas Gov. Bill Clinton flew from New Hampshire back to Arkansas in the middle of his presidential campaign to personally oversee the execution of Rickey Ray Rector, a mentally handicapped black man. His tough on crime bonafides confirmed – one commentator noted, “he had someone put to death who only had half a brain. You don’t find them any tougher than that” – Clinton came back from his defeat in Iowa to win the New Hampshire primary and ultimately the presidency.

With the arrival of the Clinton era, the Democratic Leadership Council, once the far right of the party, became the “centrists” around which all party policy and money revolved. With primary elections safely controlled by the DNC and the votes of poor people and people of color marginalized, the Democratic Party was cleared to create a corporate agenda. In 1992, Clinton ran on universal healthcare, but gave people “the end of welfare as we know it.” By 1996, Clinton bragged in a debate, “I’ve done more to eliminate programs – affirmative action programs – I didn’t think were fair and to tighten others up than my predecessors have since affirmative action’s been around.”

With growing poverty and disenfranchisement, the combustible classes had to be warehoused in cages for the wealthy to feel “safe.” While people fawned over the man from Hope, Arkansas, Clinton and Democrats in Congress expanded the American police state, creating the largest prison population in the world. After NAFTA collapsed Mexico’s economy causing massive displacement in agrarian regions of Mexico, Clinton created a brutal border regime that still kills hundreds of people a year.

Perhaps the greatest test for this new Democratic Party came in 2008, however, with the election of Barack Obama. Obama was elected with a massive popular mandate and a super majority of Democrats in the House and Senate to get whatever he wanted passed. On top of that, Wall Street had collapsed the American economy with their rampant, predatory, and frequently criminal practices. People demanded relief from the crisis and punishment for the financial sector that had caused it.

Obama gave neither. Instead he chose to “foam the runway” for the banks with public money while allowing people to get foreclosed on en masse. This destruction of working class wealth hit black people the hardest, meaning that the first black president oversaw the largest destruction of black wealth in the post-WWII era. It was an astonishing feat of elite solidarity. Here the base of the Democratic Party called out for relief and the Democrats at every level said no.

Even after seeing enormous electoral defeats at every level during the Obama Administration, the Democrats chose in 2016 to back Hillary Clinton. An original New Democrat, she was favored by the party out of a feudal loyalty to the Clinton family and because she controlled the spigot of Wall Street money that could potentially flood in. So the DNC put its thumb on the scale every way it could to get her through the primaries only to watch her inept campaign go down in flames to a dementia riddled game show host who entered the Republican primary partly as a ploy to renegotiate his Apprentice contract.

American Oligarchy

So what has been the product of all this political maneuvering by the capitalist class?

In 2014, political scientists Martin Gilens and Benjamin Page looked at the outcomes of 1,779 policy issues debated by Congress dating back to 1980. Using survey data they sought to see which groups in American society wielded the most political influence. “The preferences of economic elites (as measured by our proxy, the preferences of ‘affluent’ citizens) have far more independent impact upon policy change than the preferences of average citizens do,” Gilens and Page observe, before adding this salve, “To be sure, this does not mean that ordinary citizens always lose out; they fairly often get the policies they favor, but only because those policies happen also to be preferred by the economically elite citizens who wield the actual influence.”

“In the United States the majority does not rule,” Gilens and Page continue, “When a majority of citizens disagrees with economic elites and/or with organized interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favor policy change, they generally do not get it.” In short, the US is an oligarchy.

How Influence Works

In February of 2011, Wisconsin Governor Scott Walker was in the middle of a pitched battle with state unions. Walker had given massive tax cuts to businesses in the state upon entering office and sought to use the hole he blew in the budget as a cudgel to strip public unions of their bargaining rights and their ability to collect dues. What began as 1,000 protesters in Madison quickly swelled to more than 80,000 opposing Walker.

While dealing with the mass revolt in the capitol Walker received a phone call from Republican dark money gremlin David Koch. Walker took the phone call and the two talked for some time about the importance of crushing labor unions, in explicit terms, with Koch intimating that he would funnel money Walker’s way if he succeeded. The only problem is that it wasn’t David Koch on the other end of the phone, but a comedian prank calling Walker.

Walker ultimately got his unpopular bill – polling had it at 39% for, 52% against – shoved through the Wisconsin legislature. And the Democrats did their best to funnel popular protest away from the capitol and toward a doomed state Supreme Court campaign and a failed recall campaign. But the infamous phone call revealed the access that the wealthy have to political leaders. Even when 80,000 screaming people just outside his doors couldn’t get an audience with the governor, a billionaire could.

In 2014, political scientists Joshua Kalla and David Broockman, conducted the first field experiment that tested whether campaign donors had more access to their political representatives – whether campaign donations affectively bought access. Calling 191 Congressional offices and randomizing which donors would be presented as donors, the researchers found donors were three to four times more likely to be granted a meeting.

Now this might seem obvious, but media and pundits in America regularly ignore the link between money and access. If a politician is supposed to represent people in their district, then this study clearly shows that people with money get more representation. Even if a politician is not swayed by the first meeting, the increased access given to the wealthy gives them more opportunity to bring the politician in line. In short, while the working class is busy working, the ruling class is deciding how the working class should be ruled.

The example used above assumes said politician is not already actively seeking an alliance with a big money donor, or is even potentially hostile to them. Of course, there is no reason to believe this is typically the case. After all, donors can provide:

Of course, along with these carrots are the sticks that the wealthy can bring to bear on politicians they do not like. They can mobilize that wealth against someone by paying for a rival’s political ads, bankrolling their campaign, even convincing an opponent to run against them. They can cut off access, ostracizing politicians from other donors and politicians. They can even run their own campaigns designed to split the vote a-la Howard Schultz or Mike Bloomberg.

Perhaps most importantly, they can turn the media against a political figure they do not like. KOMO’s awful Seattle is Dying series of “documentaries” aimed explicitly at unseating the City Council, especially Kshama Sawant who is the clear villain of series, played repeatedly in the lead-up to the elections, shaping the debate in many ways. This sensationalist attack was bolstered by the Seattle Times’ only slightly less panicked endorsements of Chamber of Commerce candidates.

That's the Power of Wealth

The question is: Why would the wealthy use their hoarded resources, converting said resources into political influence, all to protect their own political and economic power?

Well now that I type it out, it seems pretty obvious. What did all that money buy? As the Economic Policy Institute notes, since 1973 “hourly compensation of the vast majority of American workers has not risen in line with economy-wide productivity. In fact, hourly compensation has almost stopped rising at all.” While worker productivity increased at 1.33% per year, median wages only saw a 0.2% increase, with the surplus going to the capitalist class. A process that has only accelerated in the past decade. As workers work harder for less, the number of millionaires and billionaires has exploded.

The presence of this massive wealth inequality is incompatible with democracy. In the debate over whether or not corporate money helped push a corporate agenda in Seattle’s local election, consider that we already live in a political world shaped by the power of the wealth.

Some form of universal healthcare has been so popular for so long, that the Nixon Administration considered it a fait accompli, offering his own poison-pill counterproposal in 1974 just before resigning from office. In 1992 the push for universal healthcare was so strong that President Clinton formed a special Health Care Task Force. The task force “was dismissive of bold solutions and carefully solicitous of health interests,” writes Colin Gordon in his history of American health reform, “a policy approach, as one critic put it, ‘close to handing blank paper to special interest lobbyists and saying, Hey you do it.’”

Similar demands for a higher minimum wage, increased taxes on the wealthy, and increased funding/access for social programs have fallen on deaf ears. In the press they are derided as “unrealistic” and mocked by politicians as “promising ponies.” These policies are politically impossible because they are only supported by the vast majority of the population – the capitalist class, however, is steadfast against them.

Questioning the impact of money on politics is a retreat into fantasy. Even when corporate backed candidates lose, it does not mean that the tendrils of capital are not stretching into the government. It is a comforting illusion to believe because it means that the power of capital does not have to be confronted. This seems like such an impossible task that rather than look the behemoth square in the eyes, many choose to pretend it doesn’t exist. Yet, any hope of having actual democracy must begin with breaking the stranglehold the wealthy have on the political system, and that necessarily means taking their money.

Sources for further reading...

On business campaigns to influence spending and public opinion

Elizabeth Fones-Wolf, Selling Free Enterprise

Alex Carey, Taking the Risk Out of Democracy

On Neoliberalism

David Harvey, A Brief History of Neoliberalism

Naomi Klein, The Shock Doctrine

Noam Chomsky, Profits Over People

On Rollback

Bennett Harrison and Barry Bluestone, The Great U-Turn

Frances Fox Piven and Richard Cloward, The New Class War

Frances Fox Piven and Richard Cloward, Why Americans Still Don't Vote

Christian Parenti, Lockdown America

Mike Davis, Prisoners of the American Dream

On the right wing turn in the Democractic Party

Lance Selfa, The Democrats: A Critical History

Nathan Robinson, Super Predator

Ian Haney López, Dog Whistle Politics

Jacobin, Issue 20, Winter 2016

Read the companion piece “Money For Nothing?”