Could Capitalism Reconstitute Itself with Private Armies?

On NAASN, an email list for anarchist academics, Wayne Price (whose review of my book I previously replied to here) responded to someone else’s proposal to “abolish the state and see if capitalism survives until sunrise” as follows:

[This is] what most people probably think anarchists advocate: society just as it is but with no police.

What would happen (if such a transformation were to magically occur) would be that the capitalists would re-create the state — as likely as that capitalism would crumble. The big corporations would soon build up their private police corps (“security forces,” rent-a-cops) and merge them or let the strongest ones take over the rest. Meanwhile the Mafia would be rapidly organizing its own forces. One or the other (or a combination of both) would become the new state, or at least make a try for it.

The thing is, the state and capitalism are thoroughly intertwined, along with all other systems of oppression (racism, sexism, national oppressions, etc.). They each support and are supported by the whole system of oppressions. I think of it like a pile of pick-up-sticks. Some sticks are more to the center of the pile (particularly the state and capitalism) but they all support each other. All must be overthrown and dismantled.

This is a fairly common argument, and his statement of it is as good as any I’ve seen.

I’ll start by saying I don’t see much practical use in a scenario of abolishing the state before everything else. First of all, as anything other than a thought experiment the whole idea of a “magic button” to abolish the state is just silly. But the scenario is also irrelevant precisely because, as Price points out, the state, capitalism and other aspects of the system are all thoroughly intertwined. Like him, I see the overall structure of the system as a pile of pick-up-sticks. The state and capitalism are close to the center; but I would go further and say that the state is more central than capitalism, and capitalism would be fatally undermined without the state.

The semi-facetious proposal to “see if capitalism survives until sunrise” was intended, I believe, not as a proposal to leave the economy exactly as it is minus the state, but a suggestion that without the constant intervention of the state big business would shrivel up like a garden slug with salt on its back.

I believe that both corporate capitalism and the state as we know it are parts of the same dying system, and it will die as a whole. But capitalism is dying because it increasingly depends on the state to subsidize a growing share of its inputs and to enforce monopolies like “intellectual property” on which its business models increasingly depend. And the state is dying because capital’s needs for such inputs are growing faster than it can supply them, and hence bankrupting it; because technology is making the enforcement of such monopolies far more difficult; and because a cultural phase transition associated with network communications is undermining the consensus reality on which the state’s aura of legitimacy depends.

I also regard Price’s scenario of capitalism reconstituting the state through private security forces as highly unlikely. First of all, capitalism didn’t come about in the first place without the prior existence of the state, and the large-scale use of state power to bring capitalism into existence. In Europe this meant the enclosure of the open fields and common pasture and waste, the reduction of free towns by absolute monarchies with gunpowder armies, the criminalization of mutual aid, free association and free movement by workers. Globally it meant the reduction of the entire global south to European control, the expropriation of most of their land for cash crop production, the extraction of their mineral wealth, the reduction of their populations to slavery, and suppression of domestic industry in the colonied countries.

And second, capitalism is already dying right now despite the state, because its growing demands for the state to prop it up have surpassed the ability of the state to fulfill.

The whole point of the state under capitalism is exogenous enforcement at taxpayer expense. Whole categories of property (in which the actual costs of excluding squatters and homesteaders exceed the likely revenue of the property) are only cost-effective right now because the costs are externalized on the taxpayers. And capitalism in general depends on externalities — on externalizing costs and risks onto a general tax base rather than paying them out of revenues. Capitalism is profitable only because its operating costs and risks are socialized by the state, and its privatized extraction of rents is enforced by the state. If it had to operate on its own nickel, it wouldn’t be capitalism any more.

Subsidies and externalities depend on the existence of a territorial state funded with money other than that of its corporate beneficiaries, and hence able to extract revenue from a popular tax base.

So for those corporate police forces and military forces to be effective at functioning as a capitalist state, they would first have to be able to secure territorial control sufficient to extract general revenues from a popular tax base to fund the policing actions out of something besides corporate revenue.

And in the meantime, the actual costs of subsidies, exogenous enforcement, and all the other forms of cost socialization are leading to O’Connor’s “fiscal crisis of the state” and already making capitalism unsustainable.

Large-scale corporate manufacturing, despite propagandists of mass production like Schumpeter, Galbraith and Chandler, is actually less efficient for the most part than small-scale production close to the point of consumption. It’s only able to stay in business because it’s not operating on its own nickel, and the state criminalizes a great deal of the more efficient competition. Because large-scale capitalist manufacturing and agriculture have pursued a wasteful growth model based on the extensive addition of subsidized inputs rather than increased efficiency in the use of existing inputs, state subsidies have tended to create a positive feedback loop in which the demand for subsidized inputs has grown faster than the state can appropriate money to provide them. This wasteful use of inputs includes cheap raw materials obtained through colonialism and neocolonialism overseas, federal preemption of oil and mineral deposits domestically, and large-scale agribusiness with preferential access to encgrossed or stolen land. But it also includes, increasingly, the socialization of labor training costs, research and development and long-distance distribution, as well as eminent domain and caps on liability — the list is endless.

On top of this are other crises, like the growing tendencies toward chronic overaccumulation and underconsumption, which require enormous state spending to soak up surplus investment capital and utilize excess industrial capacity, and constant wars to open up foreign markets for the dumping of surplus capital. Chronic deficit spending itself is increasingly necessary to increase aggregate demand, as well as indirectly providing a sort of “price-support subsidy” for idle capital by financing the deficit with guaranteed-return government bonds.

Taken together, all these things are driving the state to bankruptcy.

So if corporate capitalism is dying right now from the unsustainable costs of propping it up through the state, wouldn’t the capital outlays of recreating the same system, and reconstituting a tax base through territorial conquest, be even higher? If a tax-funded state is unable to meaningfully enforce the copyright and patent monopolies that are the greatest source of corporate monopoly rents, how will the record companies and Microsoft enforce something like the DMCA out of their own private revenues going to a police corporation? And what about the need to reduce transaction costs of enforcement by recreating the whole aura of legitimacy and the cultural reproduction apparatus from scratch?

I’ve seen the East India Company put forward as a counter-example, but I think the tools of networked resistance, cheap area denial weapons and widespread ownership of firearms have significantly shifted the advantage towards defense since the Seventeenth Century. As it is, the most powerful empire in history pulled out of Iraq because it was being bled dry by cheap IEDs. Who will Halliburton, Blackwater and Pinkerton call in as backup when its rent-a-cops are cut to ribbons by more and cheaper of the same IEDs, 3D-printed drones, and Sunburn missiles destroying their corporate aircraft carriers? Who did they call for back-up the last time when their mercenaries were burned alive in Fallujah? To borrow a phrase from Steve Earle, they’ll never come back from Copperhead Road.

And the Mafia really isn’t a plausible model for reconstituting the state, because organized crime depends for its revenues on the prior existence of a state to criminalize the goods it traffics in. If all consensual activities like drugs and sex work are legal, what will be the revenue base? Then, too, getting back to my point about the technological shifts in favor of popular self-defense, even in the areas of Mexico where the drug cartels act in direct collusion with local and regional government officials, the autodefesa movement has had remarkable successes in driving them out of villages.

If state-backed capitalism dies of bankruptcy and resource/input crises, I don’t see the corporations beating the Second Law of Thermodynamics and unscrambling the egg.