Koch Idealism: Charles Koch recommends liquidating Koch Industries

Koch Industries, Inc. is a firm whose foundation found itself building oil refineries in Stalinist Russia - for the state, of course. In fact, Koch industries has a record of raping state industries across the globe, with some of its most Lucrative contracts in Yugoslavia (ship manufactories), Venezuela (natural gas) and  the US (oil fields on government owned land). Even when it comes to the US, in the face of what may be the strongest legal structure in the world, Koch Industries built its 1990s wealth expansion on oil fraud to the federal government. (See Yasha Levine's excellent article about their reliance on corporate welfare).


How surprising, then, that Charles Koch has written an article which all but demands the liquidation of Koch Industries - utilizing free-market mythology, he claims that we'll all be freer if firms enjoying corporate welfare go out of business. This is the same mythology that allows such cognitive dissonance as the claim that firms enjoying corporate welfare cannot compete globally. If anything, as Charles well knows, any kind of subsidy is correlated with an ability to compete more effectively - as Koch rightly argues later.

"Because they have the advantage of an uneven playing field, crony businesses can drive their legitimate competitors out of business. But in the longer run, they are unsustainable and unable to compete internationally (unless, of course, the government handouts are big enough). At least the Solyndra boondoggle ended when it went out of business." - Charles Koch, "Corporate Cronyism Harms America" WSJ

Cheer up, Charlie: corporate handouts will keep your company afloat to rival the best of them out there. It's not like Brazil was just fighting US subsidies to domestic agriculture ahead of their free trade agreement, right? The singular caveat "unless handouts are big enough" rings on hollow ears - what, is he demanding greater subsidies, or is he quietly admitting that subsidies are a far more pervasive fixture of our economy, with Koch Industries being a minor player? If so, and in the context of Koch holdings that are entirely reliant on government handouts, this is an indication that the government is a central player in any prosperous economy.

Of course, this is the case. Nonetheless, Koch falsely claims that "economic freedom" is what the alternative is, whatever that means. If government regulation and subsidies are the difference, as Koch strongly infers throughout, then not only are nations like Somalia freer - but the preferable model of governance. Even compromises like the liberalized economies in India and China are examples where capital has flowed to economies which offer markets "freer" in this way than than the US's.

And these are regimes which routinely squash peasants for corporate interests - literally and figuratively. See, their system of capital hasn't quite kicked all of their landholding farmers off of their farms yet. And their civil-social structures have had their own challenges - routinely held back by forces that sometimes employed the same market-worship rhetoric congealed in Koch's remarks. The regulatory race to the bottom (one example is discussed in this Real News segment with Bill Black) creates the dismal state of regulation that allows firms to pollute the air in China with toxic clouds, and diverts the clean water even whilst the local population is only allowed the water poisoned by the Coca-Cola Co's local operations.

To be fair, these firms rely on government subsidies. If they weren't provided, these firms would refuse to produce their goods there. And this is the root of the problem: the disparity in regulation, labor and taxation conditions incentivize a business model which threatens to leave nations where workers enjoy a significant portion of their input, where externalities such as poisoned public goods like water and air go unregulated. This is what you get when you prefer centrally manged economic entities to those built and maintained by democratic or social institutions. This is the competition model of global capital markets.

Koch routinely ignores this bottom line. He claims that "[t]he role of business is to provide products and services that make people's lives better-while using fewer resources-and to act lawfully and with integrity." Please. The role is to provide for the expansion of return on investment - and if resources are wasted, so be it, so long as the cost is low enough. Moreover, the role of business is to make people's lives more dependent on your firm, service or product, regardless of whether "people would ordinarily buy" them (an aspersion he wrongly casts exclusively on government-backed firms).


This inability to link the process of incentives across market ideals show just what a failure this interpretation of capitalist markets really is. If we are to take him seriously, and give grace to his misrepresentation of profit-seeking as "resource saving," we should still conclude that investment in production is only valid in the context of firms owned by nations or firms too week to protect their capital assets from external acquisition; building one's own wealth, as proven by the history of Koch industries, is out of the question.

But I'll give him something, and I think its only fair. He points something out I've been describing for years:

"When currying favor with Washington is seen as a much easier way to make money, businesses inevitably begin to compete with rivals in securing government largess, rather than in winning customers." -- Charles Koch, "Corporate Cronyism Harms America" WSJ

Yeah, winning customers is but a portion (much like the incentive process) of the profit system, and a small one at that - financial products made solely to gain a profit far outstrip production capital in terms of market capture, and the private services industry far outstrips the public industries in terms of everything from advertisements, "courtesy calls" and profit-protecting fail-safes that consumers would gladly not purchase, encounter or receive.

But back to the scraps C. Koch deserves: he's right that government lobbying serves as a disincentive for consumer-geared production. I've been saying this for a while now. He even admits that "some" government policies help Koch Industries - and Koch, a slave to the market - is obligated to accept them. But by golly, he wouldn't do it if he had the reigns of government power (well, besides his lobbying efforts, but that's just a part of competition).

And you can be sure he'd be disabused of government subsidies if he were able to reorganize those government handouts. It's not like profit would be a factor, right? The private profit of the market doesn't influence their goals in managing state firms. And of course, we can trust these industries after all to regulate themselves - I'm sure that power purchasable in the free market is likely to be far more democratic than power split between executive, legislative and judicial branches of an organization reliant on an electorate for legitimacy and tax revenue.

The real issue of liberty is the disproportionate power held by possession of capital assets. This is succinctly seen in national examples, but is also evident in the spurious claim about consumer-driven industry. As I have shown, consumers are hardly the dominant force in the determination of investment dollars - and why should they be, when so much wealth and technology comes from the government, either directly or in the form of subsidies? Wherever this kind of social control over the markets is removed, you get externalities that are worse than any "uncompetitive market" in the US, India and China being great examples of this.

The article is rife with inconsistencies, rhetoric and idealistic notions. It repeats just about every argument used to justify the expansion of private power and the centralization of economic power in the Western canon. Worst of all, it does nothing to peel back the political mysticism accumulated in the Democrat/Republican joint narrative. The partisan character of his real-world examples are laughably microcosmic: only too typically, he attacks such Democratic Party idols as solar power and low-income housing. Charles Koch may indeed be pained by corporate welfare, though it built his empire. But nothing in his editorial indicates that the issue is anything more than a tool for his own petty, partisan political posturing.

AJE Fails Re: Assange Speech

What a terrible episode of Inside Story. From the outset, the reporting is fairly shallow (ok as a newsbrief, not ok for a feature introduction). Douglas Murry was full of childish polemics and no real information or insight. Timmons was not the sharpest advocate for Assange's side, nor did he possess appropriate credentials or character to consider him a serious voice here. Khawar Qureshi was the only valuable guest, though his bias showed through in his focus and interpretation of events very sharply.



AJE: What next for Julian Assange?

Jane Dutton did nothing to balance this obviously slanted guestlist. Worse than that, she actively added to the obfuscation and the distance this program had from the real world - nothing is acknowledged about the Ecuadorean media "under attack" actively calling for the overthrow of the government - something intolerable in Trilateral (Western-oriented) nations as "incitement to violence." Nothing is acknowledged about the grasping character of the rendition request, wherein Sweden had to transfer the case from prosecutor to prosecutor until they could find one which would abuse their legal system. Nothing is acknowledged about the accountability of government and how much information that has come out from these documents that helpfully inform our democratic process. That Daniel Ellsberg, the person who released the Pentagon Papers, has sided with Assange is not acknowledged, though it changes the narrative immensely. Bradley Manning (the real victim here, who has been subject to torture) is facing far stiffer penalties than Ellsberg ever did.

This episode played into all the worse processes that organizations like Wikileaks are against. I don't know to what extent Dutton controlled this program besides her language on this segment, but just about everyone involved in this episode needs to really reconsider what on earth they were trying to accomplish.

NYT Blames Petty Theft and Old Workers for Prolonging the Recession

Yes, they really believe that the answer to the recession is, at least in Italy, liberalization of the labor market. In an article previously titled "Italian Business Potential Thwarted as Crisis Persists," Liz Alderman describes a microcosm to justify new labor laws that make firing employees easier in Italy:

"In Ms. Pallini’s own factory, an employee suspected of stealing had to be watched for two years before being caught in the act. Videotape that had captured his thefts was not admissible in court, so her father and two employees had to spend countless hours gathering watertight evidence to ensure that judges would not eventually reinstate the man. By contrast, a private sector employer in the United States could have terminated the worker as soon as a theft was detected, unless a union contract was involved or antidiscrimination laws were violated." Source

Dean at the Center for Economic and Policy Research missed the point by focusing on a polemic about how accurate it was to say that US businesses can fire workers after theft is "detected":

"Actually, a private sector employer can terminate a worker who it thinks is stealing, even if they never caught the worker. In fact, they can fire the worker just because they think they are the type of person who might steal or just because they don't like him or her. Workers who are not protected by union contracts or civil service guidelines can be fired any time for any reason that does not violate anti-discrimination laws." Source

Of course, he is right about that point, but its a rather narrow argument to make and it doesn't even start to address the real problems that created and are perpetuating the crisis.

Marx, the One-Dimensional Character

Normally I like the Christian Science Monitor as a unique fixture in the US, comparable to Al Jazeera. But sometimes it releases stories surprisingly soaked in Western chauvinism. This is one such example:

"Marx provided the intellectual foundation for an array of regimes that at one time governed nearly half of Earth's population.
These regimes were, for many, a long nightmare of state terror, genocides, deportations, extrajudicial executions, forced labor, and artificial scarcity, crimes that left tens of millions of people dead and deprived many more of basic dignity. 
But while Marx's solutions are widely and rightfully condemned, his analysis still resonates among workers and intellectuals alike around the world." -Karl Marx: 10 Great Quotes on his Birthday, Eoin O'Carroll

Of course, the article is incorrect when it says that Marx's suggestions are "rightly rejected" after insinuating that the fascist regimes using his namesake followed them. It's pretty simple to see that worker control wasn't even tried by the prevalent regimes in question, which was basically the only suggestion that Marx made. Furthermore, most of the quotes are clichés: vampiricism of capital, the opiate of the masses, and similar quotes that have been emphasized for their rhetorical value more than the value of their inherent analysis. Omitted are quotes like this:

Patent Trolling: Just Another Form of Capitalism

The dawn of the information age has ushered in a new form of value in intellectual property. Patents are based upon the innovative character of new kinds of tools, business models and processes with economic value. And like all economic functions, the patent occurs in, and helps to propagate, a specific social relationship of value.

Enter the "patent troll:" an irreverent term referring to those who deal in the purchase and defense of patent rights. Patent trolls purchase troves of patents, then litigate to turn a profit on their purchase. Sometimes, the patent merchants get a cut of the proceeds from litigation executed by their customers. All this is justified as defense of intellectual property and encouragement of innovation. But this is actually a simple form of capitalism.

Profit or Society?

I want to talk about the profit motive, because despite being the cornerstone of capitalism it is highly misunderstood. All sorts of proclamations about the profit motive's success as a social and economic model are published in the media daily. Other causes for social and economic conditions are often avoided, and where profit has a clear negative bias, it is generally de-emphasized.

The profit motive is a simple form of the incentive model. Incentives are conditions in a system which reward or punish different kinds of behavior. Profits refer to one subset of incentives: those which resolve in positive or negative changes to net worth. Needless to say, human incentives are more complicated than this, and strictly for-profit business models still need to account for more different changes which may not be clearly linked to positive or negative account balances. But the capitalist system tends toward this model of profit, and incentives processes are typically explained in this way as well.

The Job Creator's Tragedy

It's tough being a job creator these days. High taxes make it virtually impossible to hire more workers and an atmosphere of uncertainty is discouraging more investment in capital. Nobody would propose raising taxes on job creators under these conditions, right?

George Washington oversees the "car in the ditch" economy on Wall St / September 16th, 1920

That's the setting for the latest tragedy, that is. The job creator, ever heroic and noble, is accosted at all sides in his attempt to get the economy back on track. He confronts the Hydra of government and the armies of ignorance in his uncompromising quest to get the economy back on track. And this truly is a tragedy - our hero could perhaps be known as Supervacuo, and his tragic weakness - the fact that the job creator has absolutely no interest in creating jobs.

Alex Tabarrok Doesn't Get It: Why Civil Society is a Victim of Capitalism and Statism

Why don't Americans think that they use government services?

In citing Yglesias, Bartlett and Rampell, Alex Tabarrok attempts a moralization about coercion - without seeing that his attack on the government is no different than an attack on capitalism. See the following:

"What Rampell et al. implicitly imagine is that the natural state is slavery and any departure from that state a government benefit. Thus, if the government taxes your saving for a college education less than your other savings, you should be grateful for how government has benefited you and your children.
And if the government doesn’t jail you today, you should be grateful for how government has granted you the benefit of liberty.
This is the attitude of a serf not an American."

Some of these are forgivable - I enjoy the Home Mortgage Interest Deduction, for instance, but I don't think of it as a social program, or rather, I wouldn't have thought to include that if I were asked the question. But by the time you get to Social Security, Unemployment and Medicare, it is shocking that people don't consider them government programs. At face value, one can only speculate that the preeminent narrative - that Tabarrok reinforces here - is successful in claiming that the market can solve problems where the state has been the only actor - since its usually unprofitable to provide services to those who cannot pay out of pocket for them. Implicitly, Tabarrok is creating a distinction between government and market forces - the latter as civil society - in an attempt to make the ignorance of government-mediation (and I use this term purely for his own benefit) of economic functions a "virtue" of our "lack of deference" to the government. But capitalism is just as prevalent in these structures, perhaps just as misrepresented, and certainly worse for civil society in creating disproportionate power relations.

Measuring Marxism: The Democratic Ideal

This post is part of a series attempting to quantify Marx's theory of socialism.

The preeminent question in Marxism is the creation of socialism: this is roughly reflected in the democratization of the means of production. Democracy and productive, Marxist-style socialism are not the same, though.

What distinguishes Marxian socialism is its ability to birth a new society founded on different relations of production. These relations center on the "socially aware" human being, which is forced into existence by the extreme economies of capital accumulation which are decreasingly able to hide the underlying relations of production from the exploited populations.

Indeed, this kind of society is predicated on a rather basic understanding of democratic principles. It stems from the recognition of accumulated economic power, the treatment of those powers as utilities (see Yves Smith: Why Do We Keep Indulging the Fiction that Banks are Private Enterprises?) and the application of the democratic ideal of equal representation in that model.

Some Thoughts on Positive and Negative Liberty (Pt 1)

The positive/negative liberty dichotomy always bothered me. Not so much because it is necessarily wrong (though it is, as I'll explain), but because Isaiah Berlin and the propertarian (free-market) conceptualization has been the primary narrative on the subject. This is not to say that I dislike Berlin per se, or that he is undeserving of his acclaim. But this does speak to the imminent need for the ruling narrative to fit into the vision of the ruling class.

Indeed, Berlin starts his essay, Two Concepts of Liberty, by blasting so called "fanatically held social and political doctrines" reflected in the works of Marx/Engels as "dangerous ideas." To Berlin, this speaks to the supreme importance of ideas in shaping our world. Yet for all of his inquiry, the materialist conception of history is lost on Berlin. He claims without irony that "political theory is a branch of moral philosophy," perhaps ignoring just how many transfers of wealth and power occur as a result of the material conditions of society rather than abstractions like "morality" - abstractions that have their own place, but not as the foundation of rational inquiry into the movements of society. With Marx, the moral foundation is absolutely critical - but only in guidance.