The New Parasitic Bureaucracy

The Occupy Wall Street movement was a protest against the oligarchy that is responsible for the increasing economic inequality between the rich and the rest of society. The ideology of neoliberalism drives the social agenda and economic goals of the oligarchs. Neoliberals believe that if the market is left to its own devices, not stymied by regulation, the outcome would be wonderful for everyone. In addition, do not worry about social or environmental issues, as these will sort themselves out on their own. Apologists like Mike Ridley write books such as The Rational Optimist providing excuses for the excesses of neoliberalism. Ridley attempts to provide a scientific justification for the deregulation of business and attacks bogymen like parasitic bureaucracy that he claims stifles free enterprise. His ideas support an ideology serving the interest of financial capital and globalized elites in the redistribution of wealth upward and an oligarchy blind and deaf to anything but privilege.

The 16th century was an age of economic expansion – for the first time Europe was living off on Asia, Africa and America. This was also the era of the Renaissance State in Europe, which first broke and corroded the power of the cities. The kings put in place machinery to keep themselves in power. This included a huge system of administration centralization, staffed by an ever growing number of officers. The good points were this bureaucracy provided the king with some much needed cash and officials who showed more efficiency and loyalty to their king than the old feudal nobility had. The main drawback was that such a system bred corruption, since money, not ability, was often the key to gaining office. For all the problems this new bureaucracy created, it was still more efficient than the old feudal system and gave kings far greater degree of control over the states.

By the end of the 16th century this administration had become known as the parasitic bureaucracy. Offices in the 16th century were sold and the purchase-price went to the Crown. The middle and lower ranks of the bureaucracy imitated the way of life and the tastes of their leaders. Salaries were not large, and the officials extracted everything they could from the country via their offices. Three quarters of the cost of the bureaucratic machine was made not from the government, but by the country in the form of various taxes and levies. The Crown would sell more and more offices at higher and higher prices, leaving the officers to be paid by the country. The Crown could not afford an absolute loss of revenue. It is clear this expansion of waste had to be at the expense of society. The European economy was expanding at the time, and able to maintain incredibility wasteful, ornamental, parasitic Renaissance Courts and Churches. Prosperity and peace allowed this outrageous system to survive.

In 1620 both the economy and peace failed. In 1618 a political crisis in Prague had set the European powers in motion. By 1621 the war of Philip II had resumed, bringing in their train of new taxes, new officers, and new extractions. In addition there was an economic downturn in 1620. In the ensuing twenty years a new attitude of mind appeared – created by the disgust at that gilded merry-go-round which cost society so much more than it was willing to bear. It was a hatred of princely failures, bureaucratic corruption, and hatred of the Renaissance court. The 17th century protest was not just economic, but about the means of production. It was a desire for emancipation from the burden of centralization, reduction of fees, the abolition of wasteful indirect taxes. Reformers wanted changes: let them protect industry, let them develop productive wealth, rationalize finance and bring down the apparatus of Church and State to a more just proportion. In addition reduce the hatcheries which turned out the superfluous bureaucrats: grammar schools in England, colleges in France and monasteries and seminaries in Spain. In response, let them build up local elementary education: skilled workers at the base of society now seemed more important than those unemployable university graduates that Renaissance foundations were turning out.

The princes knew how to avoid revolution: the parasitic bureaucracies must be cut down, but it was difficult to carry out. It means the reduction of a parasitic, but living and powerful class. This required two things: (1) cut down on costly sinecures of Church and State and, (2) the discovery or rediscovery of an economic system – mercantilism, when city-states made decisions based on the interests of society. In England the Long Parliament (1640) tried not to reverse economic policy rather repair the administration.  However, the opportunity to resume the reforms of Salisbury was rebuffed. Eventually, the rational reformers were swept aside: then the Puritans swept aside the last Renaissance Court in Europe. The enemies of the court were ‘the country’, that indeterminate, unpolitical, but highly sensitive miscellany of men who mutinied not against the monarch, or against the economic system, rather against the ever controlling apparatus of parasitic bureaucracy which had grown up around the throne and above the economy in England. In England this system did not disappear until the restoration of Charles II.1

The fundamental idea of Adam Smith’s Wealth of Nations (1776) was the concept around the development of division of labour. The division of labour developed as a result of the initiative and enterprise of private individuals, and would develop more rapidly when such individuals were free to apply their enterprise and initiative and reap the corresponding rewards. Smith laid the foundation of neoliberalism with his argument that free exchange was a transaction from which both parties necessarily benefited, since nobody would voluntarily engage in an exchange from which they would emerge worse off. This idea was incorporated into classical liberalism supporting the notion that society as a whole would begin to prosper as the level of personal freedom or autonomy increased. Individuals left to their own devices to pursue their own goals, limited only by known and universally applied prohibitions against harming the same freedom for others, would produce superior results for all, rather than allowing one authority to dictate terms to everyone.

In the 1970s the Western world faced a devastating new problem: inflation. It took a crisis to bring new ideas into government, and that was the price-inflation that followed the 1973 Arab-Israeli war. By the end of the 1970s both Ronald Reagan and Margaret Thatcher were seeking office with new liberal economic policies. These policies were adopted to deal with economies that were getting out of hand. During the 1980s governments of Reagan and Thatcher neoliberal economic ideology became mainstream, and was rebranded trickle-down economics. The idea is simple: The more money the people on top make, the more the people below will benefit from the dripping down of that prosperity. The hidden agenda here, of course, is the rationalization of inequality. By linking the welfare of working-class Americans directly to the prosperity of the rich, the neoliberals protect the insulated interests of corporations and the wealthy without the fear of backlash.

The market is an instrument of ‘natural selection’ that judges not on the basis of an individual’s ability to contribute to society, but on the basis of the individual’s ability to contribute to the production of surplus value and the accumulation of capital. In the past 30 years the system spread out of control: neoliberals finessed the application of the formula the source of profit is the surplus labour, over and above that required to cover the subsistence of their employees, which the capitalists are able to extract from their labour force. Corporations, meanwhile, regularly augment their capital not only from the profits obtained from realising the products of the surplus labour of their employees, but the more surplus labour they are able to extract, the greater will be that profit. The rate of profit depends on the cost of labour. Therefore, offshoring or outsourcing is all about globalization of production, rather the division of labour that has assumed an international dimension. Whereas the previous division of labour was localized, the current one is globalized to allow corporations to extract more surplus labour.

Globalization has been facilitated by numerous technical developments and the spread of economic neoliberalism. The ugly underbelly of neoliberal fundamental economics was exposed during the Great Recession. Neoliberals blamed individuals who bought risky subprime mortgages rather than the bankers with a sense of entitlement who chose not to apply critical thinking, but to intentionally take advantage of people. It coincided with two unfunded wars that triggered the neoliberal austerity button interfering with the stimulus package to the North American economy. The Brexit vote result is a revolt against globalization that has empowered corporations against communities and the well-paid jobs that once sustained them. The scale of and reasons for the global financial meltdown are posing questions that are every bit as intense as those posed to economists at the time of the Great Depression, and the 1970s oil shock. In both those instances, the inability of the dominant paradigm to accommodate the new realities led to major changes in ways people organized their societies around the world.

Picketty’s most important findings in his book, Capital in the Twenty-First Century is that inherited wealth is rapidly reassuming its traditional role as the preeminent source of economic power. Krugman notes this trend is being reflected in conservative economic policy in the US: Bush’s tax cuts were about removing taxes from unearned income. Representative Paul Ryan’s “road map” in 2014 called for the elimination of taxes on interest, dividends, capital gains and estates. Under this plan, someone living solely off inherited wealth would have owed no federal taxes at all. “Of grammar schools,” declared Sir Francis Bacon in the 17th century, “there are too many.” At the turn of the 20th century Andrew Carnegie argued that inheritance tax was the only way to prevent a permanent aristocracy of the wealthy. The goal of both was to reduce the source that turned out parasitic elite.

The 17th century protest was not against the economic system, rather the means of production. The protests in the 21st century – the Brexit vote along with the rise of Trump and Sanders in the US prompts further skepticism in neoliberal market fundamentalism. Neoliberalism happens to be the ideology that has the fortune of coinciding with technological change on a scale that it makes its penetration into every realm of being – redefining the state, institutions of society and the self. Traditional bureaucracy is a system of government in which most of the important decisions are made by (state) officials rather than by elected representatives. Today neoliberal ideology defines actions of the state as well as institutions of society which serve the interest of a financial oligarchy – the new parasitic bureaucracy. Voters in the 2016 primaries cast their vote for leaders outside the mainstream party candidates are not against the economic system, rather are protesting against the parasitic elite responsible for the means of production and for workers being left behind by soaring inequality.

1 Trevor-Roper on the General Crisis of the 17th Century http://oll.libertyfund.org/pages/trevor-roper-on-the-general-crisis-of-the-17thc

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One Response to The New Parasitic Bureaucracy

  1. Trudy says:

    I never thought I would find such an everyday topic so enalltrhing!

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