Guest Post: Concentrated Wealth and the Purchase of Political Power: Democracy's Death Spiral

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

Concentrated Wealth and the Purchase of Political Power: Democracy's Death Spiral

Democracy's Death Spiral is a positive feedback loop between ever-greater concentrations of wealth and the ever-higher costs of retaining political power.

Positive feedback loops lead to "death spirals" in which destructive forces reinforce each other until the dynamic implodes. One example is an "arms race" in which ever more costly and complex weapons systems must be matched lest one nation in the race fall behind.

Since the number of weapons and their cost are essentially unlimited, then the race continues until one contestant is bankrupted.

Though many would claim it is a simplification, this dynamic was at the root of the Soviet Union's collapse: as the U.S. embarked on a massive expansion of its military and technological power, the Soviet Union exhausted its much smaller resources attempting to keep up.

Though statistics from the Soviet era are not entirely reliable, various scholars have estimated that fully 40% of the Soviet GDP was being expended on its military and military-industrial complex.

The U.S. was spending between 4% and 6% of its GDP on direct military expenditures, even during the height of the Reagan buildup. If you include the Security State (CIA, NSA, et al.), the Veterans Administration and other military-related programs (DARPA, etc.) then the cost was still far less than 10% of GDP.

The greater freedom to exchange information between government-funded research labs, private firms and government-funded universities enabled the U.S. to outdistance the Soviets technologically. Once again a positive feedback loop can be discerned in the way that increased spending on military-related R&D in the U.S. led to increasingly networked nodes of technological advancement which led to greater advances and more spending to develop those technologies.

The U.S. emerged victorious as the sole superpower, but a more closely matched rivalry might have ended with the collapse of both competitors: a Death Spiral of the sort Jared Diamond describes on Easter Island in his book Collapse: How Societies Choose to Fail or Succeed.

In the U.S., the ever-greater concentrations of wealth gathered by an ascendant Financial Power Elite has entered a positive feedback loop with the costs of gaining or retaining political power. The costs of winning an election have skyrocketed to the point that fundraising is the key function of any politico who is not independently extremely wealthy.

This quantum leap up in the costs of gaining or retaining power has forced politicos to curry the favors of those few Elite groups which can give them millions of dollars.

Just as in an arms race, the amounts of money which can be spent on campaigns is essentially unlimited. The explosion of media now requires multi-million dollar campaigns on multiple fronts: broadcast TV, cable TV, mailed flyers, radio spots, promotion campaigns to influence the mainstream media coverage, adverts on the Web and social media campaigns--the list grows longer every year.

Here is the positive feedback loop. Candidate A gains the backing of a Power Elite group (a political action committee or other front) and collects $5 million. As a result of a media blitz, he/she wins.

Between elections, he/she amasses a "war chest" of $5 million from the same donors, guaranteeing that the final cost of the next election will be $10 million.

Potential rivals understand that victory against this well-funded incumbent, no matter how incompetent, will require $15 million. The only sources of that amount of cash are other Financial Power Elites and State-funded fiefdoms like teachers unions, and so each candidate sells their soul to the few "special interests" with deep enough pockets to harvest and contribute millions of dollars.

Now repeat that election cycle a few times and see how quickly the cost rises. The truly pernicious aspect of this positive feedback is this: if wealth wasn't becoming ever more concentrated in the razor-thin slice at the top of the U.S. economy, then politicos couldn't gather huge sums of money from such small groups. They would have to seek a broader base to raise money, and that would dampen the influence of the top donors.

Instead, the cycle grows stronger with each election cycle: to raise the gargantuan sums needed to keep political power, politicos become ever more reliant on a tiny pool of super-wealthy Elites and State-funded fiefdoms.

(In Survival+, I describe the desperate plowing of millions of dollars by public unions and other State-dependent fiefdoms into election campaigns as full spectrum defense of the status quo. When two such fiefdoms are competing for dwindling State resources, I term that Internecine Conflict Between Protected Fiefdoms.)

In other words, the more elections cost, the greater the dependence of politicos on a wealthy Elite. And thus the influence of those Elites over the politicos grows as well. This is how the political machinery of deomocracy gets "captured" by a tiny Financial Power Elite.

But there is another aspect to this feedback loop: the key way to gather more of the national income and restrict competitors is to get the Central State (Federal government) to lower your taxes, raise barriers to competition, award you sweetheart State contracts, and so on: in other words, partner with the politicos who now depend on you for their power to expand your cartel's reach, revenues and profits.

This is the Death Spiral of Democracy. The way to increase the concentration of wealth is to partner with the State so the Central State functionaries and agencies funnel ever-larger shares of the national income to your cartel or quasi-monopoly while the State suppresses or marginalizes potential competitors.

The more wealth you concentrate, then the more political power you can purchase. Indeed, the involvement of the super-wealthy causes the costs of campaigns to rise to levels where politicos have no choice but to become dependent on Power Elites to fund their campaigns.

You see how the feedback works: greater concentrations of wealth creates greater concentrations of political power, and just as importantly, increases the dependence of the political class on the Financial Power Elites and fiefdoms for their very survival.

Alienating a Power Elite or State-funded fiefdom/monopoly is a death sentence, for all those millions will quickly flow to a political rival.

Now that the Supreme Court has ruled that corporations have the same rights as individual citizens and giving unlimited sums of money to politicos is protected as "free speech," then the Death Spiral of Democracy has no negative feedbacks to restrain its dynamic.

This is how a handful of banks and Wall Street firms over-rode the will of the citizens who expressed their desire to let the banks go bankrupt 600-to-1.

The winner and loser of this Death Spiral are clearly visible: democracy has imploded and concentrated wealth has won.

Lest you consider the bank bailout a now-stale example, consider these recent headlines:

A Paralyzed Fed Defers Decision On Monetary Policy To Primary Dealers In An Act That Can Only Be Classified As Treason

Triple Down: Fannie, Freddie, and the Triumph of the Corporate State

Want to get away with murder? Become a bank.

SIGTARP Report: Treasury Hid AIG Losses

Treasury Shields Citigroup as Deletions Undercut Disclosure

Top U.S. Incomes Grew Five-Fold in 2009, to a $519 Million Average

Apologists who claim democracy is basically unchanged abound. The entire goal of a corporate media and State propaganda machine is to obfuscate what is really going on. Apologists ignore $500 million elections, an army of 40,000 lobbyists, and all the other evidence that concentrations of wealth are concentrating political power which they then use to further concentrate and protect their growing share of the national income.

A guest on a recent "Charlie Rose" show (I believe it was the October 25th show) summed up the reality of our "democracy" with an anecdote about President Obama's visit to Wall Street while the bogus "financial reform" bill was in play. The President essentially pleaded with the Wall Street Elite to "please stop lobbying us" about the (already gutted) "reform" bill.

There you have the end-state of Democracy's Death Spiral: "the most powerful elected official in the world" begging Wall Street to stop lobbying its Central State lackeys so visibly, lest the public catch on.

Democracy is already dead in America, but the wizened death-mask offers a useful facade for propaganda purposes. As I noted in The Stealth Coup D'Etat: U.S.A. 2008-2010 , The Power Elites are apolitical. They don't care about the color of your uniform; whether you wear a blue shirt or a red shirt is inconsequential.

So please enjoy the bread and circuses of the election which the Central State is holding for your entertainment in the Coliseum. No expense has been spared.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
zevulon's picture

yes, this is why fascism is coming. maybe not that soon. or maybe it is here and we don't even know it. 

B9K9's picture

From bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back into bondage.

When the strong man comes, the People will be literally begging for salvation, regardless of cost, from our cruel tyrants. Just try and make sure you're not part of the group(s) that will be considered an expense.

Bay of Pigs's picture

Coming? Patriot Act? Homeland Security? TSA goons? All we're missing now is guys with machine guns on every corner like they had in Bulgaria.

Thank goodness for our new political rallies and movements like Glenn Beck and Jon Stewart.

What a bunch of bullshit. End the Fed. Zero chance of reform until this happens.

Ragnar D's picture

Beck may be a clown, but he's a functional one.  I don't see how you can compare him to Stewart/Colbert, whose only function is rallying bratty college kids to keep the control freaks in place.

At the end of the day, at least Beck is screaming to push back against thug government, rather than expand it faster than ever.

midtowng's picture

At the end of the day Beck represent large corporate interests.

jesus's picture

Yes, the Glenn Beck who works for Fox News and used to be a "shock jock" on the radio (now he is just the same wrapped in the flag/cross on TV instead).


Aghast in Midlothian's picture

Agreed, Ragnar...and in my experience, the folks who don't like Beck are generally toadies or apologists for the current administration. They don't dispute his facts, nor even his conclusions...they, rather, engage in name calling (and junking).

I don't agree with all of Beck's conclusions, and generally am a fan of testing beliefs with contrary facts and analyses...but these are generally not forthcoming from Beck's detractors. Instead, their intelligence, wisdom and courage is usually brought into question through their resorting to name-calling and other deflections. 


DeeDeeTwo's picture

Most centrists who trash Beck... do not understand what he is doing, baby. He's a Master Propagandist who's beating Obama at his own game... by pitting the Founding Fathers against the Marxists. Beck is pushing back HARD. And he's winning... see Nov 2nd, it's a start.

And for the Professional Complainers here, including and especially Tyler. Any idiot can delineate 1,000 "insurmountable" problems. That's what makes you a smug LOSER with $10K of gold in your mattress.

Successful people are optimistic and VERY busy solving problems... not many of them left here, baby. They all looooooong gone.




morkov's picture

hey pig,

greeting from complacent Bulgaria.

no machine`guns around here. it's low, but not that low.

btw, no chance even after "ending the Fed". enjoy the show.


Milestones's picture

Complete the circle begin another cycle. And the beat goes on. Milestones

Azannoth's picture

Most people are predisposed to follow 'lidership' regardless how incompetent or how damaging to their own interests, look at North Korea or China, power concentrates naturaly as people want a Leader to follow (especialy in tough periods), the whole monoteistic religion fad(going on for 2000 years) shows how people crave a 'Messiah' if the right person can impersonificate this figure people will follow 

Blano's picture

You really think the North Korean people have any say at all??  Surely you jest.

Triggernometry's picture

"Fascism is nothing more than state sponsored corporatism."

-Benito Mussolini

squid_pro_quo's picture

This was never a democracy - the article is

Oligarchy's Death Spiral


Cognitive Dissonance's picture

You are correct. This was never a democracy. It was, and believe it or not still is, a representative republic. While I'm sure this will sound like nit picking to some, when a person uses the words and vocabulary of the enslaver, that person is truly enslaved.

I will not disagree that our representatives are been co-opted and corrupted. Of this there is no doubt. But we are told we live in a Democracy for very specific reasons, primarily because it helps feed the illusion that we all have a say in our lives, which additionally feeds into the false belief that we are "free".

While it has always been the case in America, in particular over the last 60 or so years or from the end of WW2, what we have experienced is not "freedom" but rather freedom to choose from a relatively narrow list of choices. And most of the choices offered are themselves manipulated, distorted and hijacked.

But once the slave has accepted his captivity, he either decides to die or he gets down to the business of denying his captivity as best as he can, often in small and seemingly inconsequential ways, in order to muck out an existence. This is the true utility of denial. In our case, the ruling elite graciously offer us illusions and false choices to help the bitter medicine go down. Or he fights back.

I don't say this to rub our noses in it, but rather to declare that maybe it's time to reexamine everything we think we know with the intention of getting down to the business of changing it all, beginning within. 

We can argue all we want about who gets short sheeted because the master won't give us enough sheets to go around or we can get busy taking matters into our own hands. It's up to us. The master only has the power because we hand it to him on a daily basis. Don't you think maybe it's time for a change?

RockyRacoon's picture

I guess a real Democracy is not one limited by a Hobson's choice, but that is what we are dealing with. I dare say future historians will refer to what we have by some new nomenclature.

squid_pro_quo's picture

might that nomenclature be "The Postmodern Dark Age"?

We're all guilty of watching the Republicrat dog and pony show and thinking it could result in something meaningful.

The funny part is that the oligarchs have it so good. They're the ones really taking a chance remolding the behavior of the masses yet again. "You can't squeeze blood from a stone."

Geoff-UK's picture

Just because you can't squeeze blood from a stone doesn't mean you can't beat the living shit out of the stone trying...


I think the middle class are the stones.

Slartibartfast's picture

Welcome to Feudal Capitalism. Too Big To Fail, or Too Big For Rules?

TBT or not TBT's picture

Hmm:     "The only sources of that amount of cash are other Financial Power Elites and State-funded fiefdoms like teachers unions, and so each candidate sells their soul to the few "special interests" with deep enough pockets to harvest and contribute millions of dollars."

I excerpt this statement because it is instructive to look at how political capture has happened in other countries, and in the different U.S. states.   In France, the gigantic omnipresent central government gives a better deal to its employees in nearly all respects than private sector employees can hope for.   This destiny (fear in loathing in the private sector VS cushy perma job in civil service) is determined by tests conducted regularly on graduating students.   Those that make it in, are "in" for life, and vote in a block, and donate mostly to politicians that keep the public sector gravy train rolling and growing.   A lot of those who don't make it "in", and who aren't all that employable in the private sector, or who want to live on the dole, vote for various flavors of lefties as well.   The overworked overtaxed private sector workers who aren't in something unionized to death don't have much voice, and their votes are split between warring versions of left of right of center, and center parties, plus one or two overtly xenophobic, nationalistic, and/or racist parties.   So the polity lurches forward with a heavy state, slowing to a halt and going backwards in wealth and health under the burden of antiproductivity leachism.

California has copied that system to a lesser degree over the past decade or two, with similar results:  capture of the state and local governments by large unionized voting blocks and expansion of the taxing regulating state.   The politicians they send to national office are of a similar bent.

As to the fate of the United States, note carefully that THERE ARE GRASSROOTS DONOR GROUPS that have been very effective of late, such as (quoting Obummer himself) Americans for Prosperity and Moms for Motherhood(sic).    These are effective, and they are based on the sum result of lots of private sector and limited government loving(i.e. Constitution enamored) donations.   We know these are effective because they've driven the TOTUS to direct the POTUS to say, on at least 18 different occasions, that this one grassroots driven organisation represents "secret" money and so on, which is a lie(by the TOTUS...the POTUS is just reading the TOTUS).    Meanwhile, ASFME (gigantic amalgamation representing public sector unions) has been the number one donor to democratic campaigns this election cycle.   See above paragraph about France's and California's fates.

All and all I'm going to say that as long as public sector unions are legal, and assuming they remain legal, as long they are able to give to political causes, all other donor types who are US organisations or persons should be able to give and publish and advertise to their hearts' contents.   

Why?   So we don't end like France and California, among so many others(most of the PIIGS for example)

midtowng's picture

So unions are the problem? LOL

Unionized workers composed to working class people and represent just 14% of the workforce.

Perhaps you don't understand the concept "wealth concentration".

TBT or not TBT's picture

PUBLIC SECTOR unions are the problem   Reread.    Public sector union money given to Democrats (the government party) outstripped donations by Americans for Prosperity or the US Chamber of Commerce in this election cycle.  Nevertheless TOTUS hammered on these two impressively transparent and forthright organisations as being representative of suspect and secret money, in speech after speech.    This is the guy who collected shitloads of money in 2008 by allowing donations from ANY valid credit card number, turning off ALL checks versus the name, address, phone number, and so and so forth.    This permitted anyone on the planet to give to his campaign.   And they did!     Lots of credit card numbers associated with names like Loving You, among so many other obvious frauds.   Hamas and Quaddafi claimed to have given to Obama's campaigns, OK?  That's illegal, but nevermind.   Eric Holder and the Dem Congress can't be bothered.  And now they are on the stump whining about the influence of money in politics.   

Why is it that it is OK for public sector unions and private sector unions to give without limits but it is not OK for corporations to do so?    Citizens United was a scary decision only in that it was decided 5-4.

midtowng's picture

And yet people still argue that we need to cut taxes for the rich. Amazing.

It really has come down to this: if you believe in democracy then you must oppose letting the wealthy becoming wealthier.

FreedomGuy's picture

This presumes that all the wealthy have the same beliefs and political agenda and use their influence to the same ends. I am not sure that is true. I think a lot of it depends on how someone achieved their wealth along with their own character development. Rupert Murdock is wealthy.

What I see is the problem of the concentrated interests versus the diffused interests. That's why a 14% union interest can be equal to many times that number in the general public. The other 84% of the public has diverse views and interests...or is even completely uninterested. Fortunately, union members do not always vote as a block but their money does go to the official party of the state, generally democrats in the U.S. and socialists everywhere else.

weinerdog43's picture

Well said Charles.  Combine with a clueless and corrupt Supreme Court (see Citizens United) which allows anonymous corporate wealth to add to the problem, and you have a citizenry that opts out of the process.  Why vote for "change" when it's just more of the same?

Cistercian's picture

 Consider how insanely difficult it is for non-agents of the matrix to even get on the ballot.The current election would send actual new people to DC....if they were on the ballot.Serious reform of the election process is needed so normal people can get on the ballot, as opposed to the current rigged pile-o-shit.

  Revolution will probably be needed to effect this much needed reform.

TBT or not TBT's picture

Oh dear lord.   Vivement Citizens United!    See my above screed about the fates of California and before that France, and how to avoid going there.   Citizens United just helped level the playing field between limited government interest and statists' interests.   McCain-Feigold tilted toward the statist's interests, this in a country conceived on the principles of limited government, ever divided into three coequal branches.     Unless we stop the advance of the state, the defacto fourth branch of government, the unelected permanent out of control regulatory bureaucracy that writes law, judges, and punishes willy-nilly, will take over "democratically".

weinerdog43's picture

No sir, I am not going to read your 'screed' about the fates of California as it appears that you are a corporate funded astroturfer.  Please move to Somalia where you can enjoy the benefits of your nutty theories and let us normal people alone.

TBT or not TBT's picture

Being for limited government and against public sector unions does not make one a corporate funded astroturfer.   Also not understanding how embracing the constitution turns us into into Somalia.   Rule of law is lacking there, last time I checked.

ATM's picture

I don't think that the SCOTUS is clueless at all. In fact that decision to allow corporate money was correct. The real problem is the scope of the federal government. If it was truly a limitied and restricted government all that money wouldn't mean and shouldn't mean squat. The problem results form the government that has assumed powers that no one is willing to end, including the SCOTUS and that's the problem.  

anarchitect's picture

Precisely. The problem isn't the abuse of power, but the power to abuse. This naturally attracts a ton of lobbying and money.

FreedomGuy's picture

Exactly right! The problem is the enormous power our Imperial Congress now has. They can regulate, tax and generally coerce with abandon given a compliant Supreme Court.

Large companies or interest groups don't tend to spend billions on lobbying Peoria city council because Peoria cannot do anything significant to them. It has no power (OK, other than locally.) and therefor cannot draw the lobbying money. The root problem in the unlimited powers of Congress. You must lobby or a regulatory brick comes through your window in the congressional protetion racket. And if the brick is coming no matter what (financial reform, healthcare reform, cap and trade) you lobby to get it down to a pebble.

Corporations like individuals have to represent their concerns in elections. Part of freedom. Take away Congress' power if you want the lobbying to abate.

economicmorphine's picture

Yawn. Not again, Durden.  This is getting boring.

traderjoe's picture

Please elucidate us with your fascinating opinion. Or not. Actually the latter.


B9K9's picture

Yawn. Not again, EM.  This is getting boring.

Website 'troll' jailed

Ethics Gradient's picture

So you want to defend an article about the loss of democracy (and by association, the power of the individual) from any negative critique by inferring that anyone that posts anything that's not to your liking should go to jail?

I think you may have lost that one....

rwe2late's picture

 What you claim was a "negative critique"  was nothing but an ad hominem insult, that Tyler was "boring".

 Responding to such a comment with sarcasm was more than polite, and not too subtle for most to understand.

Ethics Gradient's picture

Wasn't he saying that he's read it before - and more than once?

I missed the sarcasm.

You need to look up the meaning (and not just the translation) of ad hominem.

Azannoth's picture

No 'self made' person would spend this much for a dumb wine bottle

asianist's picture

That's because there aren't that many 'self made' rich people in Asia.

Milestones's picture

Ah, the westwrn slope dilettante once again. Whereabouts buckaroo; Aspen, Vail, Telluride, maybe Durango?

Getting bored? Why not just take a hike and relieve it and us?





Ethics Gradient's picture

Do you know what Marla's job description means?

defender's picture

Yes, I do.

However, I am curious how that is relevant to the conversation.

I am also curious why you chose a Wankle piston as your avatar.

Ethics Gradient's picture

1. I was addressing the question to Milestones.

2. An alternative opinion can help to highlight various truths. TD seems to like a foil (otherwise why advertise having one?). That's a pretty relevant observation to make when someone with an alternative opinion turns up and gets dismissed just for having one.

3. Wankles don't have pistons.

4. It's self depricating.

RECISION's picture

You have spent WAY too much time in academia...

p.s.  It's also spelt "WANKEL".

Ethics Gradient's picture

Half right!

I also misspelt deprecating.

RECISION's picture

Yes, I noticed.

But decided that was most probably deliberate...

Ethics Gradient's picture

Just watch Fight Club and it will all become clear.