Plutocrats Are Only Part Of A Larger Problem

Journal of Political Risk, Vol. 8, No. 2, February 2020

BEIJING, CHINA – MARCH 18: Apple CEO Tim Cook (R) attends China Development Forum 2017 – Economic Summit at Diaoyutai State Guesthouse on March 18, 2017 in Beijing, China. The forum sponsored by Development Research Center of the State Council centers on “China and the World: Economic Transformation through Structural Reforms”. Source: ITHome.

William R. Hawkins
Former US House Foreign Affairs Committee member

I ran across a review of the Plutocratic Insurgency Reader in an unusual place. Not in the usual left media outlets, like Jacobin, Dissent or The New Republic as its title would seem to fit, but in Parameters, the quarterly journal of the U.S. Army War College (AWC). This is because the book is not edited by the usual “progessive” activists, but by Robert J. Bunker, adjunct research professor at the AWC Strategic Studies Institute and his wife, Pamela Ligouri Bunker, a specialist in counter-terrorism. And the book is published under the auspices of the Small Wars Journal (SWJ), not known for leaning left.

The book collects 31 short essays by 15 authors, six of whom have ties to either the AWC or the SWJ, thus giving a high expectation that national security would be its primary concern. Its self-avowed purpose is to present the core of a scholarly movement that originated in 2012 from correspondence between Robert Bunker and Nils Gilman of the Bergguen Institute concerning how the wealthy “opt out of participation in the collective institutions that make up society.” The Bergguen Institute was founded in the wake of the 2008 financial crisis and Gilman’s interest is apparently reshaping the relationship between globalized capitalism and national sovereignty. As one reads through the essays, there is a tension that undermines the national security side of the discussion in favor of a domestic policy focus on income inequality and a radical desire to transform property rights that leaves the welfare state in the dust. Gilman is not an editor, but I would argue, his is the stronger voice.

The Parameters book reviewer, José de Arimatéia da Cruz, is another AWC adjunct professor attracted by the insurgency part of the title. He argues, “The end of the Cold War and the ‘end of history’ have led to a more interconnected and globalized world in the twenty-first century. At the same time, the democratization of technology has created a new environment in which previously suppressed actors can exercise greater power via the internet in a dark, deviant globalization. When corrupt politicians join forces with plutocratic insurgents, nation-states pay the price because corruption threatens national and global security.”

Most people are familiar with this problem in terms of drug cartels and human traffickers who bribe officials in Mexico and Thailand to carry out their heinous criminal activity. This volume expands the view to include “legal’ transnational business activities such as banking and manufacturing. Cruz sees plutocrats using their influence “to carve out de facto zones of autonomy by crippling the state’s ability to constrain their freedom of economic action.”

There is clearly a national security issue here, one that I have been following for decades. Where industry, research, infrastructure, resources, investment and labor are located around the world establishes the material foundation for national capabilities, societal wealth and world order. The international distribution of these assets cannot be left solely to autonomous business decisions because of the larger existential consequences. Governments have a duty to direct the development of strategic assets within their domains to assure their citizens’ prosperity and security in a contentious and divided world. The sophistry of “globalism”, with its tacit assumption of a single harmonious polity, gave plutocrats their opportunity to escape sovereign controls in the short-lived “post-Cold War” euphoria, and has left a bitter legacy in the United States as the world cycles back to Great Power competition where material assets matter.

Unfortunately, this volume largely misses the point despite its stated desire to fill a void in the debate over the failure of globalism. Very little new ground is broken, largely because the authors draw heavily on left-wing and partisan screeds that are opposed to the concept of national security even if they share the antipathy of the editors towards plutocrats who undermine sovereignty. The editors claim they want to restore a socially moderated capitalism that provides bedrock for national identity focused on the middle class. Yet, most of the writers seem bent on abolishing capitalism rather than renewing its synergy with national development. This leads toward policies that are at best irrelevant to their professed cause and at worst suicidal for the societies they want to preserve and protect.

They spend a great deal of time on tax hikes to reduce income inequality and to fund welfare programs (not defense spending). But not everyone with money is a plutocrat, which is properly defined as someone who uses their influence to warp policy away from the public interest to their own personal interests. The focus should be on modifying detrimental behavior which is not confined to the wealthy and which will not be driven from the public square by tax reform. As Bryan T. Baker, an Army Reserve intelligence officer notes in his essay, “The desire to hold on to as much of one’s money as possible is human nature. Most citizens would do the same thing if they had been born into the upper classes.” Most citizens do this, whichever “class” they are in, especially those who move up through achievement. Capitalism is an incentive system.

Unfortunately, Baker finds this every success troubling, complaining “we are exchanging our time — our lives — for material possession…. Materialism must be rejected in order to defeat plutocratic insurgency.” In other words, we must stop rewarding innovators by buying their products. Is billionaire Bill Gates a plutocrat for changing our lives in fundamental ways through technological progress? No, but his plan to build an experimental nuclear reactor in China is in that category of bad behavior.

There is a strong dose of Luddite feeling with several authors alarmed by artificial intelligence and robots. The pursuit of efficiency and productivity in general is seen as a threat to the middle and working classes. This is but an echo of the even then outdated protests centuries ago against stream-powered looms. The reason there is a middle class and a working class that has climbed out of the poverty we still see in underdeveloped economies, is that manual labor has been superseded or enhanced by technology. Productivity gains are what make higher incomes possible.

The term “predatory capitalism” is used indiscriminately. This practice, picked up on the cheap from tired left-wing rhetoric, risks throwing the baby out with the bathwater when it comes to policy. From the national security perspective, the greatest “crime’ committed by the plutocrats was the transfer of industrial capacity and the knowledge it embodied out of the Midwest “rust belt” and “tech belt” of California and Texas to the domain of foreign rivals, in particular China. Their desire to profit from China’s rise gave Beijing the means to fulfill its superpower ambitions. It also made America dependent on Chinese supply-chains in strategic industries from electronics to medicine.

That the plutocrats campaigned vigorously (and successfully) to escape sovereign controls on their decisions to out-source production deserves condemnation. However, the simple model of “corruption” presented where the “fat cats” just buy politicians off the rack does not address the larger problem that needs to be solved to end this assault on national society.

Having worked in Washington for 20 years, almost half of which was on Congressional staffs, I can attest to the role that money plays in politics. Politicians are required to spend enormous amounts of time fund-raising to pay for election campaigns, and they hate it. While there are some House members with “for sale” signs hanging around their necks, most of those who serve in government, especially the often unjustly maligned “career politicians”, want to do good things for the country (even though they cannot all agree on what that is). Lobbyists can buy access, but then must appeal to this desire with arguments that claim to link special interests to a higher general interest.

One of my proudest moments was in a situation that would have aroused a pitchfork mob if seen on TV. Outside a meeting of the GOP House conference, the hallway was filled should-to-shoulder with lobbyists laying in wait for the passing Congressmen. In front of me, a lobbyist grabbed a Member and made his pitch; to which the Member responded “I can’t help you, the people back home would not like it,” Bravo!

The political environment that provided the plutocrats with their opportunity was not initiated in any boardroom; it was the result of intellectuals who concocted an anti-nationalist ideology going back centuries and which hit its height in another post-war era. It was the school of classical liberalism that blossomed in the wake of the Napoleonic Wars. The claim by British Radical Richard Cobden that commerce was “the grand panacea” and that under its influence “the motive for large and mighty empires, for gigantic armies and great fleets would die away” was appealing after a quarter century of world war. And the claim by French economist Frederic Bastiat that “Free trade means harmony of interests and peace between nations” and that “we place this indirect and social effect a thousand times above the direct or purely economic effect” was appealing after an even longer period of Cold War. Those who eyed a “peace dividend” could embrace Thomas Paine’s hope that all warships would be converted to merchant vessels. This sentiment is common in current textbooks and was drawn upon by Citibank CEO Walter B. Wriston in his 1992 book, The Twilight of Sovereignty which was the spearhead of the plutocratic claim that they could run the world better than statesmen.  That is what “free trade” means; free of government “interference.”

Harvard economist Dani Rodrik has noted, “At the time, these changes seemed to be based on sound economics. Openness to trade would lead economies to allocate their resources to where they would be the most productive. Capital would flow from the countries where it was plentiful to the countries where it was needed. More trade and freer finance would unleash private investment and fuel global economic growth. But these new arrangements came with risks that the hyperglobalists did not foresee…. increased trade with China and other low-wage countries accelerated the decline in manufacturing employment in the developed world, leaving many distressed communities behind.” The shift of productive assets also changed the international balance of power; something the liberals hoped was an obsolete concern.

Plutocrats are not the only ones selling out. China runs a talent recruitment program that has ensnared hundreds of faculty members at American universities who provide Beijing with research in exchange for generous grants and lavish travel. A November 2019 report by the U.S. Senate Permanent Subcommittee on Investigations included contracts mandating that academic researchers grant intellectual property rights to Chinese entities and keep their relationships confidential — a violation of U.S. law. Americans are allowed to work for China, but must report on what they are doing to guard against the transfer of information harmful to national security — which is exactly the kind of information Beijing wants. Many justify their taking of foreign money by thinking of themselves as “citizens of the world” working to advance human knowledge.

The globalist philosophy even impacts a group associated with the Bunker collection. The Berggruen Institute has a $25.5 million China Center (BCC) established in 2018 at Peking University. It works to “promote deep cross-cultural understanding and allow building strategic trust among the world’s great powers.” It “organized repeat delegations of government and industry leaders in a meeting with Chinese President Xi Jinping” and others. The BCC also works to advance “non-Western intellectual sources of governance for both domestic and global affairs.” The group apparently hopes to transcend “Notions of nation-state, national interest, zero-sum competition, and big power rivalry”, which are the proper core concerns of the Army War College.

The Bunkers present essays that propose two alternatives to liberalism, but in ways that will not solve the problem because they distort the nature of the problem and the history of the United States. Their focus is on “democratic socialism” and “authoritarian nationalism” with adjectives meant to skew appeal to the former. Yet, again, veering to the Left will not reach the goal of “national and social cohesion” that Nils Gilman (the author of several pieces in the book and identified as a major voice in the field) hopes can transcend current partisanship. The Left has no interest in making America great again, since its ideology does not hold that America has ever been great because it was not built on Left principles. No surprise there, since no great nation has ever been built on Left principles, unless one wants to count the Soviet Union. Few continue to hold up the disintegrated USSR as an attractive example (though many once did, including presidential aspirant Senator Bernie Sanders, who took his honeymoon there).

Nationalism is constantly distorted in the Bunker book, as is capitalism. America was built on the more accurate phrase “democratic capitalist nationalism” as laid out in Alexander Hamilton’s seminal 1791 Report on Manufactures which with some ebbs and flows guided U.S. industrial and trade policies on a developmental path that had created a national economy larger than those of Germany and Great Britain combined by the dawn of the 20th Century — the American Century. And just as Germany’s surpassing of Great Britain changed European politics and triggered two world wars, America’s ascendency changed world politics and won both wars.

The rise of China that so many plutocrats championed (and many still do) will also change the international situation, and not in a positive way. It is ironic to note that those plutocrats who “escaped” American sovereignty to transfer assets to China have been firmly captured in Beijing’s sovereign grip, and forced to surrender control of enterprises and technology to a power that has a nationalist agenda that will eventually displace them both at home and abroad.

There are almost as many Chinese billionaires as American. They rallied to Deng Xiaoping’s slogan “To get rich is glorious” as long as the reward results from activities that benefit the country. As the result of Deng’s state-capitalist reforms, China has surged forward in ways that astonish and alarm the rest of the world.

America must re-embrace its nationalist roots; hitching capitalism, by far the “strongest horse” among economic systems, to the wagon of society to move it forward. It may be romantic in libertarian circles to imagine a wild stallion economy galloping across the global plain, but unless it is put in harness, no work gets done. The socialists would kill the horse and eat it, then wonder why the wagon was stalled. Their allies in the Green movement would then assert that wagons are bad for the planet and everyone should just sit in the mud to commune with nature.

As a political conservative, I have fought against the libertarian influence on the Right that so many plutocrats exploited. I spent much of my time trying to build bi-partisan support for a renewed nationalist economic policy that would bring together labor Democrats and Republican hawks. But this effort never gained support from the White House regardless of which party held the presidency during the post-Cold War dominance of classical liberal ideology. I was thus dismayed by several attacks on President Donald Trump in the Bunker book since he is the first president in this epoch to openly embrace nationalism and institute reforms in international economic policy to boost American capabilities at the expense of China.

The worst claim in the Bunker collection is Baker’s; that the U.S. victory in the Mexican War (1847) was “a great injustice.” And we are then to believe he has America’s best interests at heart? The worst essay however is by “social justice warrior” Paul Rosenberg who calls then candidate Donald Trump “half plutocrat, half criminal and entirely ruthless.” This kind of partisan rant from 2016 undermines the credibility of the entire book which was put together well into the Trump administration. The Bunkers, Gilman and John Sullivan (a senior fellow at Small Wars) also attack now President Trump despite an economy with full employment and rising wages (especially for the working class and minorities). And with no acknowledgement that the “trade war” with China is based solidly on national security concerns and has forced plutocrats to re-think their ventures there. Trump’s military buildup to contain Beijing’s expansion across the Indo-Pacific is never mentioned.

Gilman does note in a 2012 essay that “increasingly conservatives are getting alarmed” about the plutocratic insurgency. President Trump is the result of that concern and has sparked a major revival of “national conservatism.” Despite teething problems and some internal debate, the revival of this doctrine provides the hope that the political environment can be changed so that lobbyists cannot persuade officials that they should look the other way when their clients make decisions that run contrary to national interests under an unexamined creed of “free enterprise.” This is the only viable path to a socially moderated capitalism. The Bunker circle should look into it.

William R. Hawkins is a consultant specializing in international economic and national security issues. He is a former economics professor who has served on the staff of the US House Foreign Affairs Committee.