Saturday, December 26, 2020

Elites and Businesses

The key fact of economic dynamism is that it is new businesses, not small businesses, that create jobs. Which is why you have to do some mental substitutions if the writer mixes them up.

On the other hand, if I were more of a globalist I would want to crush small businesses, get rid of all that "Every man his own master" type of thinking or, as noted in the introduction to 2017's "Monopoly power and the decline of small business: big business vs democracy, growth & equality": 

While the Jeffersonian yeoman farmer, owning his own freehold, industrious for himself, was idealized to the point of mythology and Franklin's entrepreneurial commerce was probably a bit easier to achieve if one was, like Franklin himself, an energetic autodidactic polymath genius, there is something to be said for a citizenry leavened by the thinking of more rather than fewer small business owners.

Understanding that Napoleon was expressing envy rather than disdain when he called the folks who whupped his ass "A nation of shopkeepers" ("L'Angleterre est une nation de boutiquiers.") goes a long way toward explaining the underlying strength of the Anglosphere.

From Palladium:

Small Business’s Class War Could Finish Off American Dynamism

When we ask why nations and empires fail, we often point to how their ruling classes ossified and stagnated. Aware of their decline but unable to revive themselves, they instead struck down any possible source of dynamism and innovation that could threaten their rule. On the other hand, the freeness of our political and economic system was supposed to save us from this fate.

As it stands, the line separating America from fossilizing into one of these historical relics is precariously thin, and more so than it has ever been. But there’s a great irony to this fact. Around 40 years ago, the U.S. and Britain embraced the political commitments of what we call neoliberalism, a decision which was supposed to spark growth and disrupt stagnation. But instead of leading to increased dynamism and innovation, this regime presided over and even accelerated the very stagnation it warned against.

The role of political elites is to produce state ideology that is received as legitimate, one that can find support in a coalition of social classes. Throughout the post-war social democratic period, this coalition had mainly been a compromise between large business owners, often exercising a degree of monopoly power, and the working class. The social democratic period, which lasted from the New Deal to around 1980, was a period where capital—as the abstract motor of the economy—had absolute power, rather than any particular social class. It stands in stark contrast to what came both before and after. This was the nature of the compromise: both workers and capitalists yielded to the rationalization of production, to ever growing investment in fixed capital, increasing the ability to produce a great mass of commodities.  

Capital, after all, isn’t reducible to the simple commodity, nor markets, nor even profit. Marx called capital the “dead labor” which subsists on the living—congealed in the machinery of production, and coming to life in the cycle of creating value by employing labor. Capital owners serve the purposes of its development through their competition and profit seeking. But there are also times where the expansion of capital as such can conflict with the interests of its owners. In this case, that conflict arose in the profitability crisis of the 1970s. Caused by supply shocks and strong wage growth pressures, it was the straw that broke the camel’s back. After years of fixed capital investment taking up larger and larger shares of surplus, at the expense of capitalist consumption, the compromise exploded. 

The state response to the profitability crisis wasn’t simply an immediate regulatory adjustment. It created a change that rippled throughout state ideological apparatuses, especially the political parties and the universities. The state and its appendages recognized the crisis of legitimacy which rocked the social democratic consensus. In response, they sought a new base for legitimacy on business alone, through a political economy which drove down wages and undermined organized labor. In the framework of this ideology, those who did not belong to the capitalist class became consumers rather than workers, still selling their labor but benefiting from low prices to maintain their lifestyles. 

The neoliberal reformers didn’t really have any other choice if they wanted to preserve the system of value expansion and circulation of commodities that underpinned the state itself, and this consensus grew to encompass the entire Overton Window in America, Britain, and other Western nations. Despite conservative elements like the Thatcher and Reagan coalitions sparking this process, many reformers ultimately sided with the ongoing cultural changes in the Western world. Economic interests took precedence over moral conflicts, which were relegated to performative squabbles in election seasons.

This was a decisive change from the settlement based on developing capital as such. In doing this, pro-market reformers also cemented the small business owner as a real economic and political entity—a byproduct of atomization. This played into breaking the back of organized labor, and the lowering of real wages....