The de-industrialization of the U.S.

So this is how it worked: instead of greening our manufacturing base, amping up our recycling system and competing on the basis of better production technology, we shipped our production to China, which is busy polluting themselves and spewing carbon dioxide. In return, the Chinese took the hundreds of billions from sales to the U.S. and reinvested the money here, helping to make our sprawl even spawlier and our military even more wasteful.

According to an article from the N.Y. Times, "Chinese Savings Helped Inflate American Bubble":

In the 19th century, the United States built its railroads with capital borrowed from the British...But Americans did not use the lower-cost money afforded by Chinese investment to build a 21st-century equivalent of the railroads. Instead, the government engaged in a costly war in Iraq, and consumers used loose credit to buy sport utility vehicles and larger homes. Banks and investors, eagerly seeking higher interest rates in this easy-money environment, created risky new securities like collateralized debt obligations.

So China and the US are caught in a death spiral -- well, at maybe tha's too strong a word. By undercutting our manufacturers, in the long-run the Chinese are destroying the very market that they are selling to. But they are terrified of upsetting the model that is "working" in China, creating the world's biggest middle class and decreasing pressure for democratization. Meanwhile, the Åmericans desperately need the savings from China in order to keep the economic system afloat, and need to import cheap goods for the formerly well-employed working class.

This would be called colonialism, or imperialism, on the part of the U.S. if the U.S. owned China: they send us their goods for very little in exchange, in effect.

The rational solution for China, which the US and Chinese governments have been trying to sell to the Chinese public, is to spend some of their money at home instead of saving so much of it, creating pressure to park the saved money somewhere -- like in the U.S. However, as the article states,

Chinese save with the same zeal that, until recently, Americans spent. Shorn of the social safety net of the old Communist state, they squirrel away money to pay for hospital visits, housing or retirement.

In other words, it seems to me, the Chinese could solve this problem by providing the population with a safety net, with a national health system, social security system and unemployment benefits. And then they could even buy U.S. goods and services.

The rational solution for the U.S. is to create a green manufacturing base, one that will employ millions in well-paying, high skill jobs, instead of relying on financial shenanigans and real estate. As Michael Hudson has argued, higher prices for already existing things does not add wealth to the economy; only creating goods and services adds wealth to the economy. And in order to avoid climate change, ecosystem destruction, and resource exhaustion, an entirely new production infrastructure needs to be put in place. And then the Chinese would have someone to sell to, and they might be able to get their ecological act together.

This was originally posted at Grist.org under the title "The de-greening of America and China"

Meta: 

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Communist China needs more Communism?

Do I understand you right? That China has failed to provide enough of a communist safety net for the poor, is the cause of China's great savings rate?

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The danwei

the economic collective to which everyone was assigned was broken in the late 1990s.

The migrants that swarmed factory towns in Guangdong and up the eastern coast through Dalian left their native villages, where they held residency permits and the right to social services, are in pretty dire straits right now.

The CCP is quite frightened of the possibility that the collapse of economic growth (Saxo bank has its predictions out for the New Year, # 7 is that Chinese GDP growth will drop to 0%) will create a revolutionary situation.

The process of deindustrialization that took the better part of 30 years to accomplish in the industrial Midwest has been sped through in less than a year in China's Guangdong province.

Polling from the province has been revealing.

The Guangzhou Public Opinion Research Center poll found 51.7 percent of respondents were worried that diminished incomes and growing unemployment will weaken public security.

  Another 35.5 percent fear social disturbances, according to the survey of 1,000 residents conducted in mid-December.

  The survey also found 81.9 percent of respondents claimed their income or employment had been affected by the crisis. Of these, 30.9 percent said the impact was severe, while 51 percent had been "influenced to some extent".

  In addition, 32.3 percent of respondents said the financial crisis had made it difficult for them to find jobs, while 17.5 percent said they had been laid off because of the crisis.

Companies have simply closed up shop and left town. The story of suitcase workers in Dongguan is emblematic.

It has become common in Guangdong for factory owners to suddenly shut down their cash-strapped plants and disappear without paying laborers.

That's what happened at Chen's factory — the Jianrong Suitcase Factory in the city of Dongguan. The plant shut down Tuesday without warning and its 300 workers began taking to the streets, demanding full payment of wages.

Local government officials eventually glued an announcement to the factory's walls, saying its Japanese owner could not be located and the workers would only get 60 percent of the monthly wages they had earned since October. The laborers, paid an average monthly salary of 1,500 yuan, or about $220, refused to accept the deal....

There is real resentment here, and if it escalates into anger at the regime instead of the Japanese owners, the current shtick from the CCP about economic development isn't going to work. They are going to have to turn to something else, and that's probably going to be nationalism. And the worst strains of nationalism in contemporary China harken back to the extremism of the 1930s.

The big test is going to be after Chinese New Year. Chinese workers typically leave their jobs to go home to their native village at this time, and in the past factory owners have shown a tendency to use the time to scoop up machinery, and skip town with wages unpaid.

If that happens on a massive scale this year, there's going to be hell to pay for it.

I've been prepping a piece about this that I hope to get published in a policy journal. We've given the Chinese the industrial base they need to allow the cancer of nationalism to cause real harm in Asia. Extremist strands of Chinese nationalism believe that areas as far apart as the Russian Far East, and the entirety of South East Asia were "stolen" from China during the 19th century. In earlier centuries these areas engaged in tribute-trade with the Chinese Emperor, "recognizing" the sovereignty of China over them. Some Chinese don't get that this was a facade used to allow trade.

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Please tell us when you publish the article

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China's savings

The question "That China has failed to provide enough of a communist safety net for the poor, is the cause of China's great savings rate?"
doesn't make sense. China's high savings rate is the result of: (1) there is hardly any social safety net for her people; (2) the Chinese has a high-savings culture throughout her 3000-years history.

RLsoundpost

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At least a social democratic one, seebert

They had full employment before, that is, jobs in state-run factories and farms, so they didn't need unemployment insurance. They had "barefoot doctors" and various other forms of health care -- I'm not sure what happened to that.

There's been a tendency for the east Asian countries to push for less consumption at home so that they could accumulate the investment capital necessary to build export industries. Japan did the same thing. The entire planet has become used to the idea of using the U.S. as their main market, which is also part of the problem.

The Chinese should be using their production power to create public goods such as train systems, a health care system, education system, etc., instead of investing in the U.S. and keeping the Chinese currency so low. Another part of the problem is that companies with dollars are required to put their dollars in state-run banks which then invest in the U.S.; those state-run banks could easily use that capital for internal development instead. That might also lead to more export potential from the U.S. to China.

JR on Grist

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I guess I just assumed

That one of the basics of any communist government was a social safety net for the poor. After all, that is the only draw communism has over capitalism- that everybody is taken care of. If they've got a communist government that fails to provide that, then they've got MORE reason to revolt than the US did in 1776: King George may have been a tariff-riding scoundrel, but at least he provided what he said he'd provide.

Economic systems are all about the social contract, break that contract only at your own peril.

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I don't know why it's called communism

When to me it's a totalitarian regime. They have state owned enterprise, so I guess that falls under it, a lot of the corporations are 50% China owned.

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It's not really "communist" anymore

It's more like a one-party dictatorship, with maybe a patina of ideology, but I don't think they spend much time quoting Marx or Mao anymore. A chunk of the economy is still state controlled, and they still have some planning, from what I understand, but basically they're capitalist, and their "safety net" has been the rapid expansion of the economy. If the rapid expansion stops, they're screwed, legitimacy-wise. Thus the desperate clinging to a devalued currency and a huge trade surplus with the U.S., even though they only get back dollars. They're in some trouble now as the U.S. contracts, so we'll see what happens.

JR on Grist

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corporatist?

State corporatism? They still are in partnership, force partnership with the state for any private enterprise, especially any foreign one as far as I know.

Great post and you might notice the "reply" link in the comments. Comments are threaded, and tracked in the "my account" action so people can have a conversation, see who has replied to theirs. Have to hit the reply link though for the threads to work.

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Pet Peeve

"Corporatist" is thrown around by people on blogs as though its meaning is that an economic system is dominated by corporations.

That is not what the concept means.

At its base corporatism tries to organized economic interests into a series of organizations representing the interests of industrial sectors and the government and they get together to direct future economic development.

In its social democratic variant, labor is integrated, so that workers have a seat at the table where decisions are being made. This is the German model, as an ideal it's really limited to the metalworking sector (IG Metall, labor, and Gesamtmetall, the employer's federation), but it's a different way of doing social welfare that requires less direct state involvement.

Arguably, the system of pattern bargaining between the UAW and the Detroit Three was basically a social democratic variant of corporatism that lead to the establishment of a private socialism where the company provided workers benefits and jobs security in exchange for labor peace. It was called the Treaty of Detroit.

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Interesting

I've always used Corporatist to mean a government of the corporations, run by the corporations, for the corporations, usually through excessive lobbying.

State Corporatism as used above is really Fascism- the dictator owns a controlling share in all corporations.

I just never thought before that a State Corporatist economy could, through economic growth, replace the duty of a communist government to provide for the commune.

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No, No, No

Corporatism does not equal fascism.

Implying this demonstrates that you don't know what the term means, and utterly discredits any argument that you make using it. Because it looks like you lack intelligence, like when people use a fancy word wrong to try to look smart.

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Hey

What's in a word? Just define it for him. (Your PhD exp. is showing! ;)) Personally I can see why one would confuse fascism with Corporatism.

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Which is why

I tried to define it in my original post- separating Corporatism as we know it in the United States (which is most certainly NOT facism- more mercantilism than anything else) with State Corporatist as practiced in China (which seems, at least to me, closer to fascism).

Who makes the laws is what it comes down to for me. Under US Corporatism, lobbyists write the laws and Congress rubber stamps them. Under China's system, the Communist Party makes the laws and it's up to the corporations to implement them.

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they are real terms

what you probably don't realize and middle is working on a PhD in public policy, hence he wants people to use the real terminology for each system and understand what it implies. Hopefully he will write up a blog post on all of these terms, their real definitions and systems.

But in other words, we're just batting the terms around and he's saying, hey, these are real classifications in forms of economic systems w/in government systems, so hopefully he'll write up a nice tutorial so we don't misuse them.

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I was hoping he'd correct me

I'm wondering what his term for a government controlled by bribery and lobbyists is...that's what we've got in the United States.

I'm a little less sure about China now....

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I have to disagree here

To confuse terms like this, lends to what George Orwell said about the destruction of language. It's dumb luck that the word "corporatist" was used as manfrommiddletown has correctly stated. You make sense in that control from private corporations would, had the term not already been coined, logically be called "corporatism". But, and perhaps I'm too much of a history nerd here, we do a misjustice to the term. Frankly, I view this as an opportunity to develop a new word for what you are trying to relate here.

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This still doesn't tell me

What the real meaning of the word IS.

To me, what's going on in China isn't Corporatism, it's Fascism, as described by you below (control of the government over the corporations in an attempt to build the government's view of a perfect society. manfrommiddletown's proof that there is currently some debate in China of what that perfect society should look like is an aberration- the method remains the same).

What the left wing in the United States has been calling Corporatism is really just advanced corruption hiding in lobbyists and campaign contributions: the government is the slave of the international corporations, and it doesn't matter who you vote for because long before the election *all* candidates have already been bought out to pay for the campaign.

So what is Corporatism?

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Middle read this

Here is your classic blog post, title "What is Corporatism?"

I hope you write this!

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I was thinking more

"Why Corporatism is actually a good thing."

In time.

I've got a load of things I need to do first.

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I think you misunderstood

Corporatism != fascism is true.

China's method of the dictator having a controlling interest in almost every corporation is the *reverse* of corporatism- the controlling interest is the dictator, not the corporation. I was saying China's method is equal to fascism, not corporatism = fascism.

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FUBARism

How about a blog post defining and giving illustrations on these various systems from an economic point of view? Kind of an educational piece. Like my new term? ;)

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State capitalism?

FWIW, Seymour Melman used the term "state capitalism" to describe a situation in which the state controlled a significant portion of the capitalist system, in particular, the military part, and directed it to some extent that way -- with a certain amount of influence moving from corporations to government as well, although Melman saw the Pentagon as the source of most power. But "fascism" I think is the more traditional term for a merging of corporations and government.

JR on Grist

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I'd refine it a bit more

In both cases, I'm seeing a hostile takeover rather than a merger. But the direction is reversed:

Fascism is the hostile takeover of business by the government.

Corporatism as we see it in the last four decades in the United States, is the hostile takeover of government by business.

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thank you

You have no idea how much that has irked me. From the blogs to respectable names on the radio like Thom Hartmann, I've heard "corporatist" being bandied about meaning everything these days, but mainly rule by private corporations. I had an argument over the holidays over this very thing! My younger relative kept saying that it was something invented by American corporations to maintain power. She had no friggin' idea that one of the origins of "corporatism" came from Fascist Italy and the syndicalist movements in Europe. When I tried to explain this, this "student agitator" (As she likes to call herself) said basically "yeah, well corporations are fascist, it would make sense that it would come from a Fascist." I kid you not on this.

So ManfromMiddletown, thank you.

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That is funny

I remember having the same discussion with a relative when this all started. The main point in return was that US Corporatism was different because there is no dictator, just an oligarchy of private corporations colluding to prevent competition with themselves. While that oligarchy DOES dominate our government and our economy, it does not have any means to keep somebody from marketing a new invention that doesn't fit the vision (unlike facism).

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I reccomend

Mark Leonard's What Does China Think? for a really good overview of current intellectual thought in China.

There's a really interesting debate between the New Right, who are basically neo-liberals, and the New Left, who are social democrats. They've been going at it for a while, and often their academic debates are proxies for ongoing battles in the CCP. It's just that open political debate isn't an option.

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And because open political debate isn't an option

What that debate really is about is what is the correct vision to impose on all of China, and eventually the world. It will never result in a truly free market, because the form of government is wrong.

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Sorry about that Robert!

I'm too used to Grist, which believe it or not has nothing like that. They claim they'll redo the system next year, Real Soon Now. I think I can manage in the future.

JR on Grist

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no problem!

There are so many features on here that are not on even the major blogs it gets confusing. But hey man, there is always email for problems. EP has a full email system on it.

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Parallels stuck into a single word

I think what we have here are two pillars trying to be defined by one single term. That term being Fascism, is probably the one "ideology" that has been mistook or better yet had it's definition abused. The two pillars in question is economics and politics. Both are intertwined, yet can be separate. Often Fascism is seen merely as an authoritarian version of capitalism be it a regulated one or the free-market kind, the key being that the latter is integral to having Fascism. Yet Fascism does not need free-markets, because at the end of the day it really is a political religion than an economic one.

The core of Fascism is totalitarianism, that a special order (be it a party or more often than not, a leader) must have direct authority over all aspects of life. Orthodox fascism differs from plain authoritarianism in that it takes that to the next step, like a sculptor working with clay. While authoritarian regimes would simply be pleased with holding onto the reigns of government, the true fascist wants to mold society so that the masses obtain an image the fascist deems as "perfect". This image comes in many forms bonded together, that is a certain way of thinking, an appearance crafted by this new way of thinking, and behavior molded along these two. Politics and tools of the state and society are simply there to achieve this idea of perfection. This is forced evolution in a way, and that other elements are deemed as competition which must be destroyed.

One way to look at Fascism, would be to think of it as the closest thing to religious fundamentalism on a secular plane. It's God, if the perfect image incorporates such a concept by said regime, is an ultimate utopia where a supposed harmony is achieved once everyone thinks and believes and looks the same. Orthodox Fascism deems that this is the greatest achievement that man can do, because of that, there must be struggle. And this is one of the ironies of attempting to achieve "perfection," the struggle can never end, because for the regime a new flaw will always be found that needs to be stamped out.

In regards to economics, it has a history of opposing bolshivism and other socialisms. Yet, in practice, fascist regimes are hipocrits, in that many policies that are enacted often echo leftist state run economic initiatives. In Nazi Germany, the state would establish industries it deemed necessary; it would also annex competing companies and also take partial stock ownership (IG Farbin for example). Now in many cases, the old owners remained, but this was because the Party in power either did not have the expertise to operate such business concern in a timely manner (Germany was gearing up for war or was in the early stages of it) or that company bosses proved more willing to meet the needs of the ruler. If one has a chance, please read up on Krupp steel, there is an interesting tale between the last heir and I think it was Albert Speer. I will have to find this and post it.

But in the economic sector, the orthodox fascist cannot have anything competing with it in stature. Any private entity, be it church or company, is either brought into line or neutralized. In Nazi Germany, it was deemed that the Aryan needed holiday time, so they initiated a whole enterprise of resorts and such, which would become known as "Strength through Joy." The same was said for the media, propaganda (the fascist's sermons?) which at the time was radio, was unified under the control of Goebbels. Automobile production was coordinated by the state, Hitler's "Peoples Car" (the Volkswagen Beetle, or a precurser of it I should say). In all of these, there was no drive for profit by these companies, there was no market competition. Companies existed, but they merely served as extensions of the order in power.

Ok, I could go on, but I am ill these days, and now realize it is 5am. I hope you see what I was trying to point out here. Yes, I played fast and loose (borrowing a Shakespeare there) and ommited somethings, but trying to hit on the main points.

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A quick correction or clarification

I mentioned Krupp and Albert Speer. It should be noted that Alfried Krupp was initially an ardent supporter of the Nazis and pursued henious acts. What I wanted to point out was that as the war turned against Germany, fortunes reversing, Krupp was not able to back out because of Speer and the state. Gosh, I am going to have to find that book, because I know I'm leaving out stuff.

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Very good explaination

Which is what I was trying to say above. I don't see China's version of corporatism being primarily for individual profit, but rather for the ultimate shaping of a society (though new to me, preventing revolt with an expanding economy is certainly a good example of this, as is China Everbright, a corporation whose sole purpose is to invest in the west to pay communist-promised pensions to old people).

US Corporatism, on the other hand, is primarily for profit- instead of shaping society for the "common good" or the "perfect vision of the Fatherfigure", US Corporations pay lobbyists to change the law to reduce competition *solely* for additional profit. There is no "single world view" like in Facism.

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I think I have the perfect word for what you want

seebert, first I think your assessment of China being more of a fascist regime versus a "communist" one is spot on. Now as for "US Corporatism" may I suggest to you and the rest of the good folk a new term? How about Corruptism? As you noted, what we have here are private interest groups representing business concerns who are attempt to mold government policy to such a degree that it comes to the detriment of society. In order for their policy goals to be met, they attempt to do what most other lobbyist groups (i.e. environmental, civil rights, etc) let alone a normal citizen can do, and that is monster contributions of campaign war chests. That isn't to say that some groups, like say the labor unions, cannot donate in hopes to shape policy. But nothing matches the level of "financial influence" onto the lifeline of a politician's re-election like those from lobbyists representing companies.

Indeed what you have here, is an advanced form of corruption. And given how this is corruption on a political plane, what we have here is government by the financially pliable for the financially-capable. So how this differs from basic corruption is that we are going beyond donating to Congressmen X for hopes of landing a contract to the much bigger staging of policy to advance future goals beyond a single business application. In an odd way, it's an antonym of the term "socialism" in that one is for a public (or state) control of policy to the one in controlled through financial bribary for private business control of policy. So...how does everyone here feel about the term "Corruptism"?

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Corruptism sounds about right to me

It is indeed the antonym of socialism- but it's more than that. It's still somewhat centralized like socialism, in that the elites with the money, buy the game.

I'm still very much a distributist at heart myself- I like the idea of a "shipping tax" across the board, charged by distance, instead of tariffs or value-added taxes. But that can only come from a decentralized authority model- one where the highest law in the land is the neighborhood ordinance, and the lowest, the Constitution.

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Sclerotic maybe, most regimes are corrupt

Or corrupt to a certain extent. Corruption by itself does not destroy a society, although it certainly doesn't help.

I think it's safe to say that as far as political scientists are concerned, the important distinction is between totalitarian regimes and nontotalitarian ones. In other words, does the state have complete control? In fascist states there is a remaining private sector, however they are vulnerable to arbitrary acts on the part of the totalitarian regime. In other words, there is absolutely no constraint on state action. One could argue that in a "regular" dictatorship, there are certain contraints that the dictator doesn't, or can't, cross.

It's possible that Bush and co. were heading toward something similar to fascism, without the totalitarian aspect -- but maybe they were.

The late economist Mancur Olson put forward the idea of "sclerosis", that is, that because of the greater ability of small elite groups to act collectively than large, mass groups, eventually the state becomes bogged down and gunked-up with relationships based on power, and it becomes very difficult to change anything. Thus, WWII wiped out the German and Japanese power structure, and they were able to be more innovative socially as a result.

There are plenty of examples in the US. The Defense Department is history's greatest political machine, and it regularly wastes hundreds of billions per year. The oil and coal industries fight back against renewable energy and efficiency, the car companies and highway lobby against transit, the real estate industry keeps the money flowing for suburban development (and financial meltdowns), the financial industry skews policy against domestic manufacturing, etc. etc. Short of getting involved in a world war and having democratic regimes conquer us and wiping away our power structure, we're in need of some pretty massive social movements to clear away some of the mess.

But concentrating on sclerosis, or some more poetic word, implies that there is nothing organized about this, it's just the workings of a powerful set of actors on a state. The Rove Republican party was trying to do something of an organized nature (1000 year republican reich? remember Rove wanted a permananet one party country), but the U.S. corporate elite don't have an organized view -- if anything, they have more of a "disaster capitalism" view that Naomi Klein asserts. They're more like vultures on a tree waiting for opportunities than cadres of disciplined party members (at least, outside of the Republican party).

So, I guess I'd have to argue that a truly totalitarian society requires a totalitarian political party -- big corporations are too disorganized. Big corporations, left to themselves, lead to sclerosis, they need a powerful political party to move to fascism.

JR on Grist

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Corporatism

The term 'corporatism' has changed in meaning over time and is increasingly being used to define the promotion of the interests of private corporations in government over the interests of the public. On that basis China can be considered a corporatist state as is the US as represented by the interests of the 'Industrial Military Complex' which seems to be promoted at the expense of the broader population.

It could be argued in a narrow sense that China is also 'fascist' state as individuals rights have been suspended to support the broader state objective of economic growth (at all costs?). What prevents China being defined explicitly as a fascist state is the absence of a Dictator although it is a single party state.

The decline to becoming a fascist state can be a subtle one - examine the 14 points and consider if the US is on that journey.

http://www.oldamericancentury.org/14pts.htm

I'm not American but one of the best books written about corporatist America was by C W Mills (written in the 50's but still holds today) called The Power Elite.

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