Neoclassical ideology is capitalist mind control. It was created to support the aims of dominant capital. Capitalist mind control is a smokescreen for the abuses of capitalist economics.
Dominant Capital and Tax Money Financed Neoclassical Economics
This development was financed by two sources, dominant capital and tax money. It is shored up by countless apologists and repairmen and implemented by state organs. And finally, the media sells it to the public.
Most outsiders have trouble understanding it. This is because it’s deliberately made to look difficult. This is only one of the reasons the public doesn’t discuss it. There is also the problem of treating the economy like a natural phenomenon subject to scientific study. It’s either above our heads, or it’s an inevitable phenomenon unaffected by humans, and therefore discussion is not necessary. Laws of nature can be discovered but they can’t be changed. Capitalist mind control is one of its greatest powers.
Denial of the Problem
The most troubling thing about the current crisis of capitalism is the large number of people who deny that a problem exists. One example is Catholics who object to Pope Francis’s condemnation of the economy. We should question who they represent. This kind of objection is standard practice for those whose job it is to head off criticism about the economy.
The phenomenon of murky, inexplicable economic manipulation is explained by Jonathan Nitzan and Shimshon Bichler in The Global Political Economy of Israel, published in 2002 . 1
What the Ruling class must hide
The book deals mainly with Israel, but the critique of economic theory isn’t specific to Israel. The United States has a similar economic story. 2
Between 1865 and 1920, in order for the U.S. to become the world’s leading industrial capitalist nation, dominant capitalists had to find a way to overcome two major factors: the demands of the working class; and competition among existing firms. They accomplished this through monopoly in manufacturing, and this produced a system of corporate capitalism.
The process was driven by a ruling class with designs on power. Control of the financial system was the basic mechanism and the merger movement was the result. The process was managed by financial experts who commanded either capital itself or the avenues for gathering it.
The Bankers’ Master Plan
During the first years of the 20th century, ‘higher financial circles’ decided that the banking system should be the headquarters of an investment system based on cooperation among large firms. According to Thorstein Veblen, the essentials of the system were as follows: ‘The banking community took over the strategic regulation of the key industries, and…also the control of the industrial system at large.’ Key industries were controlled by the investment bankers who made up a sort of General Staff of financial strategy and who commanded the country’s credit resources.
Their relation with insurance companies is one example.
“In the years 1885 and 1905, the annual income of life insurance companies in the United States was $525 million and 2.9 billion, respectively. These funds were derived from premiums paid by holders of the insurance policies, and needed to be invested promptly so as to yield in income for the companies to pay for the deaths of their insured persons. Five firms owned two-thirds of the assets of all life insurance companies: Metropolitan, Prudential, Mutual, Equitable, and New York Life. The last three owned fully one-half the assets of all life insurance companies.
In 1870 less than three percent of these assets were stocks and bonds; by 1900, that figure had risen to nearly 38 percent. Five years later, securities held by New York Life constituted 74 percent of its total assets; of Equitable 57 percent; and of Mutual, 54 percent. Which securities did the insurance companies buy? Primarily, those sold (i.e., underwritten) by six dominant New York investment banks, led by J.P. Morgan and Company. Such securities were issued by industrial corporations and others which had close relations with the dominant investment banks. According to Douglass North, ‘It was clearly a one-sided arrangement in which the great bulk of the advantages accrued to the investment banker rather than to the insurance company.’
“Crucial to this entire arrangement was the requirement that the insurance companies control their own back yard. This was accomplished by deep company involvement in political and governmental affairs. ‘The three big insurance companies occupied key positions in financing the [New York State] Republican machine (and to some extent the Democratic one also) and guaranteed not only friendly legislators but cooperative [state] insurance departments as well.’ Between 1895 and 1905, a New York Life lobbyist was paid at least $1,312,197.18 to guard against passage of hostile legislation. The New York State Department of Insurance functioned as a subdivision of the industry…”
The New York Department of Insurance Ruled Their Industry Like US Steel
The New York Department of Insurance was a creature of the dominant capital machine. Its ‘regulations’ enabled the large companies to evade regulations when necessary, and to insure continuous dominance by the large companies. The Big Three insurance companies ruled their industry very much like US Steel, a Morgan firm.
Neoclassical Ideology: the Organic Super-Government of Mankind
Historians refer to the late 19th and early 20th centuries are frequently referred to as the age of Big Business. But according to W.E.B. Du Bois, this is misleading. It wasn’t so much about the size of the firms as it was about an ‘organic super-government of mankind in matters of work and wages. This super-government was directed with science and skill for the private profit of individuals.’
“When Woodrow Wilson first ran for president in 1912, he declared that ‘the masters of the government of the United States are the combined capitalists and manufacturers of the United States.’ At the center of this process lay control of the principal political parties and the political machines, organized under the direction of party bosses. ‘Living to a great extent on the corporations, bossism burst into full bloom in the States where big capitalist interests were concentrated, where [railroad] companies were most numerous, such as New York, New Jersey, Pennsylvania…’”
The bosses didn’t run everything however. Often company officials sat in on important party committees and pulled the strings for them, equipped and kept up political organization for their own use, and ran them as they pleased.
The Sherman Anti-Trust Act Was Ignored by Dominant Capital
When the Sherman Anti-Trust Act was finally passed in 1890, an amendment was offered to assure it would not be applied against the unions. Senator Sherman led a successful fight against the amendment arguing it was not necessary. Within 5 years it was indeed used against the unions. The entire Anti-Trust Act was soon judged to be a charade because so much of it was ignored whenever it suited dominant capital.
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