In the 1990s and for years into our century, it was common to ridicule the Government for being technologically backwards. We were all gaining access to fabulous things, including the internet, apps, search tools and social media. But Governments at all levels were stuck in the past using IBM mainframes and large floppy disks. We had a great time poking fun at them.
I recall the days of thinking Government would never catch up to the glories and might of the market itself. I wrote several books on it, full of techno-optimism.
The new tech sector had a libertarian ethos about it. Its denizens didn’t care about the Government and its bureaucrats. They didn’t have lobbyists in Washington. They were the masters of the new technologies of freedom and didn’t care much about the old analogue world of command and control. They would usher in a new age of people power.
Here we sit a quarter-century later with documented evidence that the opposite happened. The private sector collects the data that the Government buys and uses as a tool of control. What is shared and how many people see it is a matter of algorithms agreed upon by a combination of Government agencies, university centres, various nonprofits and the companies themselves. The whole thing has become an oppressive blob.
Here is Google’s new headquarters in Reston, Virginia.
And here is Amazon’s, in Arlington, Virginia.
Every major company that once stayed far away from Washington now owns a similar giant palace in or around D.C., and they collect tens of billions in Government revenue. Government has now become a major customer, if not the main customer, of the services provided by the large social media and tech companies. It is an advertiser but also a massive purchaser of the main product too.
Amazon, Microsoft and Google are the biggest winners of Government contracts, according to a report from Tussel. Amazon hosts the data of the National Security Agency with a $10 billion contract, and gets hundreds of millions from other governments. We do not know how much Google has received from the U.S. Government, but it is surely a substantial share of the $694 billion the federal Government hands out in contracts.
Microsoft also has a large share of Government contracts. In 2023, the U.S. Department of Defence awarded the Joint Warfighter Cloud Capability contract to Microsoft, Amazon, Google and Oracle. The contract is worth up to $9 billion and provides the Department of Defence with cloud services. It’s just the beginning. The Pentagon is looking for a successor plan that will be bigger.
Actually, we don’t even know the full extent of this but it is gargantuan. Yes, these companies provide the regular consumer services but a main and even decisive customer is Government itself. As a result, the old laughing stock line about backwards tech at Government agencies is no more. Today Government is a main purchaser of tech services and is a top driver of the AI boom too.
It’s one of the best-kept secrets in American public life, hardly talked about at all by mainstream media. Most people still think of tech companies as free-enterprise rebels. It’s not true.
The same situation of course exists for pharmaceutical companies. This relationship dates even further back in time and is even tighter to the point that there is no real distinction between the interests of the FDA/CDC and large pharmaceutical companies. They are one and the same.
In this framework, we might also tag the agricultural sector, which is dominated by cartels that have driven out family farms. It’s a Government plan and massive subsidies that determine what is produced and in what quantity. It’s not because of consumers that your Coke is filled with a scary product called “high fructose corn syrup”, why your candy bar and danish have the same, and why there is corn in your gas tank. This is entirely the product of Government agencies and budgets.
In free enterprise, the old rule is that the customer is always right. That’s a wonderful system sometimes called consumer sovereignty. Its advent in history, dating perhaps from the 16th century, represented a tremendous advance over the old guild system of feudalism and certainly a major step over ancient despotisms. It’s been the rallying cry of market-based economics ever since.
What happens, however, when Government itself becomes a main and even dominant customer? The ethos of private enterprise is thereby changed. No longer primarily interested in serving the general public, enterprise turns its attention to serving its powerful masters in the halls of the state, gradually weaving close relationships and forming a ruling class that becomes a conspiracy against the public.
This used to go by the name ‘crony capitalism’ which perhaps describes some of the problems on a small scale. This is another level of reality that needs an entirely different name. That name is corporatism, a coinage from the 1930s and a synonym for fascism back before that became a curse word due to wartime alliances. Corporatism is a specific thing, not capitalism and not socialism but a system of private property ownership with cartelised industry that primarily serves the state.
The old binaries of the public and private sector – widely assumed by every main ideological system – have become so blurred that they no longer make much sense. And yet we are ideologically and philosophically unprepared to deal with this new world with anything like intellectual insight. Not only that, it can be extremely difficult even to tell the good guys from the bad guys in the news stream. We hardly know anymore for whom to cheer or boo in the great struggles of our time.
That’s how mixed up everything has become. We’ve clearly travelled a long way from the 1990s!
Some might observe that this has been a problem far back in time. Starting with the Spanish-American War, we’ve seen a merger of public and private as involving the munitions industry.
This is true. Many Gilded Age fortunes were wholly legitimate and market-based enterprises but others were gathered from the nascent military-industrial complex that began to mature in the Great War and involved a vast range of industries from industry to transportation to communications.
Of course, in 1913 we saw the advent of a particularly egregious public-private partnership with the Federal Reserve, in which private banks merged into a unified front and agreed to service U.S. Government debt obligations in exchange for bailout guarantees. This monetary corporatism continues to vex us to this day, as does the military industrial complex.
How is it different from the past? It’s different in degree and reach. The corporatist machine now manages the main products and services in our civilian life including the entire way we get information, how we work, how we bank, how we contact friends and how we buy. It is the manager of the whole of our lives in every respect, and has become the driving force of product innovation and design. It has become a tool for surveillance in the most intimate aspects of our lives, including financial information and inclusive of listening devices we’ve willingly installed in our own homes.
In other words, this is no longer just about private companies providing the bullets and bombs for both sides in a foreign war and obtaining the rebuilding contracts after. The military-industrial complex has come home, expanded to everything and invaded every aspect of our lives.
It has become a main curator and censor of our news and social media presence and postings. It is in a position to say which companies and products succeed and which ones fail. It can kill apps in a flash if the well-placed person does not like what it is doing. It can order other apps to add or subtract to a blacklist based on political opinions. It can tell even the smallest company to comply or face death by lawfare. It can seize on any individual and make him a public enemy based entirely on an opinion or action that runs contrary to regime priorities.
In short, this corporatism – in all its iterations including the regulatory state and the patent war chest that maintains and enforces monopoly – is the core source of all the current despotism.
It obtained its first full trial run with the lockdowns of 2020, when tech companies and media joined in the ear-splitting propaganda campaigns to shelter in place, cancel holidays and not visit grandma in the hospital and nursing home. It cheered as millions of small businesses were destroyed and big-box stores thrived as distributors of approved products, while vast swaths of the workforce were called nonessential and put on welfare.
This was the corporatist state at work, with a large corporate sector wholly acquiescent to regime priority and a Government fully dedicated to rewarding its industrial partners in every sector that went along with the political priority at the moment. The trigger for the construction of the vast machinery that rules our lives was far back in time and always begins the same way: with a seemingly inauspicious Government contract.
How well I recall those days in the 1990s when public schools first started to buy computers from Microsoft. Did alarm bells go off? Not for me. I had a typical attitude of any pro-business libertarian: whatever business wants to do, it should do. Surely it is up to the enterprise to sell to all willing buyers, even if that includes governments. In any case, how in the world would one prevent this? Government contracting with private business has been the norm from time immemorial. No harm done.
And yet it turns out that vast harm was done. This was just the beginning of what became one of the world’s largest industries, far more powerful and decisive over industrial organisation than old-fashioned producer-to-consumer markets. Adam Smith’s “butcher, baker and brewery” have been crowded out by the very business conspiracies against which he gravely warned. These gigantic for-profit and public trading corporations became the operational foundation of the surveillance-driven corporatist complex.
We are nowhere near coming to terms with the implications of this. It goes way beyond and fully transcends the old debates between capitalism and socialism. Indeed that is not what this is about. The focus on that might be theoretically interesting but it has little or no relevance to the current reality in which public and private have fully merged and intruded into every aspect of our lives, and with fully predictable results: economic decline for the many and riches for the few.
This is also why neither the Left nor the Right, nor Democrats or Republicans, nor capitalists or socialists, seem to be speaking clearly to the moment in which we live. The dominating force on both the national and global scene today is techno-corporatism that intrudes itself into our food, our medicine, our media, our information flows, our homes and all the way down to the hundreds of surveillance tools that we carry around in our pockets.
I truly wish these companies were genuinely private, but they are not. They are de facto state actors. More precisely, they all work hand-in-glove and which is the hand and which is the glove is no longer clear.
Coming to terms with this intellectually is the major challenge of our times. Dealing with it juridically and politically seems like a much more daunting task, to say the least. The problem is complicated by the drive to purge serious dissent at all levels of society. How did American capitalism become American corporatism? A little at a time and then all at once.
Jeffrey A. Tucker is Founder and President of the Brownstone Institute, where this article first appeared.
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What I want to know is who are the masters in these relationships?
Every bit of evidence we see, every day, is that the Government simply does not understand the technolocy they are paying for. Certainly, in UK, the Civl Service is made up predominantly of arts, business and social “sciences” graduates who technically illiterate.
They have become dupes of the environmental lobby and of the pharma giants, and now are all signed up to the AI bandwagon, not understanding that most AI is driven by its autthors’ ethos.
AI is already blurring the lines between reality and fantasy and I fear that those who control us are not those who are controlling the development of AI, this is ultimately in the hands of the usual culprits, all proponents of World Government.
It’s a shared responsibility, so no one is responsible, but ‘everyone’ benefits, that is ‘everyone’ who matters.
Can you remember when those with Science and Engineering wisdom were allowed to speak? Remember, I the UK, the BBC so Tomorrow’s World, with Raymond Baxter, a former fighter pilot.
They don’t make them like that any more:
https://en.m.wikipedia.org/wiki/Raymond_Baxter
Isn’t corporatism a partnership? Both sides are getting what they want for now – but for how long will this partnership last? Ayn Rand foresaw exactly what has come to pass.
“How Did American Capitalism Mutate Into American Corporatism?”
How?
World War II and FDR and his admiration of Mussolini’s Fascist economics – State direction of private capital to serve the interests of the State. This required big business leaders, union leaders, leaders of the State to form a triumvirate to rule in their mutual interests. As the Mafia puts it, one hand washes the other.
There is nothing like a wartime economy to get Government and big business romping together under the sheets.
And once Government gets a taste of a command economy, directing industry and has the power to affect how corporations do business, what they make and how they make them, what profits they can keep, it is inevitable Corporations will build alliances and relationships in Government to minimise damaging legislation, taxation and maximise benefits, what they can get in exchange for cooperation – Corporate Welfare – one such being ‘regulation’ which Corporations help write, which limits or excludes competition both external and internal.
Bribery and corruption is inevitable.
And then along comes ESG to keep out the competition and make us all comply.
It has happened in all countries the same way. The left and its values and ideologies infiltrated state institutions, especially universities, and big business. There is a (probably) unspoken deal between them to impose authoritarian control, of the people in the interests of the elites and big business.
This used to be called out for what it is – fascism, but the word is instead now flung at libertarian democrats.
A radical reduction in the size and scope of the state is essential but how can this be achieved when many appear beholden to the state? There are no easy answers but every opportunity ought to be taken to raise awareness of the collusion of big government and big business as well as supporting small businesses and using cash wherever possible.
The state and its “stakeholders”
The IT “issues” Sainsbury and Tesco have experienced over the past couple of days will have done more to focus the sheeple’s attention on the desirability of having cash than any amount of calm explanation about the dangers of letting them do away with it.
It would be a real benefit if Putin managed to knock out ALL our IT systems for a week so that the country simply can’t be run
I am surprised you haven’t mentioned Tesla in this article. It simply would not exist (not in the form it has taken since Mr Musk’s involvement) were it not for huge quantities of other people’s money thrown at it by fawning governments.
Tesla only loses money from selling BEVs.
When there’s a coup, what always happens? They take over the Radio and TV stations.
The difference is that, in the West, they took over the Radio and TV stations first.
Their propaganda has allowed all the actors, in the Military, Medical, Energy, Foos, Entertainment, Educational and Political sectors to work together, seemlessly, so the public are unaware of the absolute change.
I remember, in the UK, schools purchasing the BBC Micro, a fledgling computer for children to learn about programming, pushing out the technically superior Sinclair Spectrum, from the private sector, and no one batted an eyelid!
The BBC have been the most effective organisation pushing the Climate Agenda, the Mask, Medical Intervention and setting the Woke government policies that includes ‘false science’ propaganda, and they are financed by the TV licence fee, enforced by government.
I recommend you read PSEUDOPANDEMIC by Iain Davis it explains all this very well.