We're In A Boiling-Point Crisis Of Exploitive Elites

Authored by Charles Hugh Smith via OfTwoMinds blog,

The "fixes" to the stagnation of postwar Capitalism in the 1970s were financialization, globalism, and the sustained expansion of debt--all have run out of steam.

Many of us have written about cycles in the past decade: Kondratieff economic cycles, business/credit cycles, the Strauss–Howe generational theory (an existential national crisis arises every four generations, as described in their book The Fourth Turning), and long-wave cycles of growth and decline, as described in seminal books such as The Great Wave: Price Revolutions and the Rhythm of History and War and Peace and War: The Rise and Fall of Empires.

There is another Rhythm of American History that few recognize: the economic, social and political crises sparked by exploitive Elites. There are two dynamics that drive these crises:

1. The exploitation of commoners by financial/political Elites reaches extremes that create systemic instability as commoners no longer have the means to improve their conditions.


2. The economic mode of production that generated Elite wealth no longer functions, but the Elites cling to the failing system and enforce it with increasingly violent suppression of dissent.

Here are the previous Crises of Exploitive Elites:

1. Slavery, 1850 to 1865. Though the toxins generated by slavery are still with us, the existential political, social and economic crisis arose in the years between 1850 and the end of the Civil War in 1865.

In broad brush, the rise of the American West triggered a political crisis in the U.S. as the southern states realized the non-slave West's rising political power would doom the fragile balance between the non-slave Northern industrial-economy states and the cotton/agricultural slave-economy South.

It was a trend the South couldn't possibly win, but the South's exploitive Elites refused to concede any of their power--and that refusal to adapt to changing conditions guaranteed the Civil War.

The first Industrial Revolution radically transformed the source of wealth creation. The plantation agrarian mode of production of the South was eclipsed by the vast wealth-generating might of the rapidly industrializing North.

The Southern political and economic Elites could not win economically or politically, so they attempted a military solution--a war they might have won had it not been for the Westerners Lincoln, Grant and Sherman. (Lincoln was born and raised in the frontiers of Kentucky, Indiana and Illinois; both Grant and Sherman were born in Ohio and served in Army postings along the West Coast.)

The moral tide was rising against slavery. The Christian world had long been divided on the issue of slavery, but the tide turned against slavery in the early-to-mid-1800s, both in Great Britain an the U.S. Moral turnings are powerful instigators of political crises, and once again the Southern Elites attempted to stem this tide with military force.

2. The Crisis of Gilded-Age Exploitation, 1892 to 1914. The dates of this crisis are inexact and open to interpretation, but in broad brush, the Second Industrial Revolution (mass production, integrated industrial corporations, the rising dominance of Finance and Industrial Capital, emergence of monopolies and cartels, etc.) forced millions of commoners into the penury of wage-labor while concentrating the gains of capital and speculation into the hands of the few.

Adjusted for inflation, the wealth of the financier-industrialists in this era exceeds the wealth of today's billionaires, and is on par with the extremes of wealth concentration that characterize the last stages of the Roman Empire.

Commoners attempting to unionize were brutally suppressed by hired private enforcers and the police/military forces of the American government. Radical unions such as the I.W.W. (Industrial Workers of the World, a.k.a. Wobblies) were destroyed by coordinated, concerted government suppression, much of it by means that are visibly illegal by today's standards.

The conflict between exploited industrial labor and politically dominant Capital was eventually resolved by progressive anti-trust laws (aided by President Theodore Roosevelt) and the beginnings of social rights and welfare programs--universal education, limits on hours worked per week, etc.

3. The Great Depression and the Failure of Debt-Based Capitalism, 1929 to 1941. Capital was increasingly concentrated in the hands of the Elites in the Roaring 20s, but the commoners had new access to the financial magic of credit: banks sprouted by the thousands, anxious to loan money to fund the purchase of more farmland, new autos, and all the other output of a consumerist economy.

But alas, credit is not collateral, nor is it wealth. When the debt bubble burst, so did the stock market, which was based on highly leveraged margin debt.

The Elite financiers resisted writing down the debt that had made them so rich, and as a result the Depression dragged on, immiserating millions who then turned to fascism or radical socialism as the political fixes to the systemic exploitation and dominance of Elites.

4. Civil Rights and Global Empire, 1954 to 1973. The legacy of slavery's oppression had lingered on for almost 100 years, and the rising prosperity of the 1950s and 60s generated a social, moral, political and economic movement to throw off the most oppressive aspects of an exploitive social/political order.

At the same time, the costs of maintaining a Global Empire were raised to a boiling point by the war in Vietnam, which destabilized the moral, political, social and economic orders.

In response the Elites instigated waves of violent, suppressive state tactics designed to disrupt and destroy the organized dissent of social movements. These tactics included the FBI's COINTELPRO programs as well as other blatantly illegal, heavy-handed government enforcement of the dominance of exploitive Elites.

I've written extensively about state over-reach and illegal suppression of dissent: remember, the state exists to enforce the dominance of Elites: everything else is propaganda, misdirection and obfuscation.

Welcome to the United States of Orwell, Part 3: We had to Destroy Democracy in Order to Save It (March 28, 2012)

State Over-Reach: Stripmining the Citizenry for Fun and Profit (November 13, 2009)

When It Becomes Serious, First They Lie--When That Fails, They Arrest You (March 16, 2015)

For more on COINTELPRO, please read War at Home: Covert action against U.S. activists and what we can do about it.

Simply put: when lies no longer work, the government devotes its resources not to eliminating wars of choice, cronyism and corruption but to suppressing dissent and resistance to those extractive, exploitive policies.

Which brings us to the present-day Crisis of Exploitive Elites. The "fixes" to the stagnation of postwar Elite/state-dominated Capitalism in the 1970s were financialization, globalism, and the sustained expansion of debt in all sectors--state, corporate and household.

Now all three engines of "growth" have run out of steam. All three greatly exacerbated wealth and income inequality, as these two charts reveal:

Once again, the political and economic Elites are resisting the tides that are undermining their Empires of Debt and Exploitation. The Elite-controlled Corporate Media has been ordered to War Status, an DefCon-5 emergency requiring an endless spew of all-out propaganda designed to distract, disrupt and destroy organized dissent and any resistance to the dominance of Exploitive political and financial Elites.

The Exploitive Elites cannot turn back the clock, so they cling to their failed "fixes" and demand our compliance.

The Exploitive Elites cannot turn back the tides of history, but they can immiserate millions. That seems to be "solution" enough for them, but you cannot destroy rising moral revulsion to soaring inequality and the abject failure of debt-based global capitalism with mere media propaganda.

*  *  *

Of related interest:

Coming Apart: The Imperial City At The Brink

The U.S. Is Where the Rich Are the Richest

The Pin To Pop This Mother Of All Bubbles?


Anteater Sun, 06/18/2017 - 19:13 Permalink

More useful than quintile income history would be quintile net worth history.I'm willing to wager the Dot.Con, Iraq.Con, Mortgage.Con and TBTF QEn.Con decimated the net worth of the majority of quintiles, and is the real smoking gun here, the real perverse incentive, to manipulate yet again another, appears to be -25% wealth revaluation, probably overshooting to -30%, and putting another 90,000,000 workers on the bricks.All animals are equal, ... but some are more equal.

illuminatus (not verified) Sun, 06/18/2017 - 19:19 Permalink

Maybe they cannot, but it sure looks and feels like they can. With every tool, too many to mention and when that fails,with brute force wherever necessary.

meditate_vigorously (not verified) Sun, 06/18/2017 - 19:32 Permalink

Too many people watch Fox News and read Breitbart and think they are so much smarter than the useful idiots on the "left" They are oblivious to the fact that they are just higher IQ useful idiots.

Xena fobe meditate_vigorously (not verified) Mon, 06/19/2017 - 00:33 Permalink

There is cog dis on both sides.  Conservatives support the great crime families but not their enforcement arm, the public sector.  Liberals support the public sector and refuse to admit who the public sector works for. It's not communism vs free markets and liberty.  The elite want us all to be slaves.  Political ideology does not apply to slaves.Cobservatives and liberals are both half right and half wrong.

In reply to by meditate_vigorously (not verified)

reader2010 Sun, 06/18/2017 - 19:32 Permalink

It happened in history. Take a good look at the late stage Rome, the bottom 99% experiened the exactly same fate and many Roman citizens eventually became slaves. There is nothing new under the sun.

Thomas Paine tripletail Mon, 06/19/2017 - 07:46 Permalink

Yes, the 'war of succession' was about states rights...moreover about stolen private lands and PROPERTY or the imminent threat thereof, and price fixing of southern commodities by north-eastern financial interests supported by corrupt federal legislation and taxation.  Slavery as a direct issue for supporting the war evolved in attempts to gain more support for the war from the northern populace.  Slavery as a driving issue of the war is revisionist history cloaking thefts by bankers and politicians.

In reply to by tripletail

indygo55 Sun, 06/18/2017 - 19:40 Permalink

Its the dollar. Its all the dollar. And the Euro and Yen. But when the dollar falls for real like when it seems to be falling now, its over. What are they going to do? Tell you you can't use what ever the fuck you want for transactions? They have enough bullets, they just don't have enough believers to put them to use.

decentraliseds… (not verified) Sun, 06/18/2017 - 23:14 Permalink

 Why waste time on this alligator when the swamp’s most critical economic and political problems revolve around the hegemony of a global corporate cartel, which is headquartered in the US because this is where their dominant military force resides. The US Constitution is therefore the “kingpin” of an all-inclusive global financial empire. These fictitious entities now own the USA and command its military infrastructure by virtue of the Federal Reserve Corporation, regulatory capture, MSM propaganda, and congressional lobbying. The Founders had to fight a bloody Revolutionary War to win our right to incorporate as a nation – the USA. But then, for whatever reason, our Founders granted the greediest businessmen among them unrestricted corporate charters with enough potential capital & power to compete with the individual states, smaller sovereign nations, and eventually to buy out the USA itself. The only way The People can regain our sovereignty as a constitutional republic now is to severely curtail the privileges of any corporation doing business here. To remain sovereign we have to stop granting corporate charters to just any “suit” that comes along without fulfilling a defined social value in return. The "Divine Right Of Kings” should not apply to fictitious entities just because they are “Too Big To Fail”. We can't afford to privatize our Treasury to transnational banks anymore. Government must be held responsible only to the electorate, not fictitious entities; and banks must be held responsible to the government if we are ever to restore sanity, much less prosperity, to the world. It was a loophole in our Constitution that allowed corporate charters to be so easily obtained that a swamp of corruption inevitably flooded our entire economic system. It is a swamp that can't be drained at this point because the Constitution doesn’t provide a drain. This 28th amendment is intended to install that drain so Congress can pull the plug ASAP. As a matter of political practicality we must rely on the Article 5 option to do this, for which the electorate will need overwhelming consensus beforehand. Seriously; an Article 5 Constitutional Convention is rapidly becoming our only sensible option. This is what I think it will take to save the world; and nobody gets hurt: 28th Amendment: Corporations are not persons in any sense of the word and shall be granted only those rights and privileges that Congress deems necessary for the well-being of the People. Congress shall provide legislation defining the terms and conditions of corporate charters according to their purpose; which shall include, but are not limited to: 1, prohibitions against any corporation; a, owning another corporation; b, becoming economically indispensable or monopolistic; or c, otherwise distorting the general economy; 2, prohibitions against any form of interference in the affairs of; a, government, b, education, c, news media; or d, healthcare, and 3, provisions for; a, the auditing of standardized, current, and transparent account books; b, the establishment of state and municipal banking; and c, civil and criminal penalties to be suffered by corporate executives for violation of the terms of a corporate charter.    

conraddobler Sun, 06/18/2017 - 23:37 Permalink

All of this is obvious.This is what you get when you elevate man or any set of men / women to the level of ruler over other men / women.When you take God out of the equation it devolves neatly into the law of the jungle every STINKING TIME!!!Now the biggets predators are not the most physically domineering, no, not anymore, the biggest baddest predators now use money and their warped minds that hate to control and dominate others.It's relatively obvious to me that the only solution is not religion or the church or dogma but actual morality born out of the basic concept that man is flawed and God rules the universe.Taking that away, in any form, no matter how moral you think you are, results in exactly the world we see today.I'm not judging you or anyone else just making what I believe to be a correct statement.Once you abdicate morality to just the morality of men this is the world you will get.Our founding fathers built a nation based on rights given to us by our creator.  No creator, no rights.Get it?

AnarchistRex Mon, 06/19/2017 - 00:46 Permalink

"The "fixes" to the stagnation of postwar Capitalism in the 1970s"

Dear Mr. Durden, when you begin by effectively blaming capitalism, the article is logically derailed before it even gets started ...

When looking for blame, start with banking, socialism (for the rich & poor), & taxation ... no need to drag capitalism into your fantasy.

Osamabeentokin Mon, 06/19/2017 - 01:17 Permalink

The allure of money for nothing drives the financialisation of an economy, and it's the very ease at which money gets made that ultimately corrupts the players in a capitalist economy, where eventually everyone wants loan or invest in the easiest startups with the most potential. By this effect, there is an underappreciation of businesses that rely too heavily on "brick, mortar, machinery and manpower"...see Detroit as a perfect example. When the Chineese and the Mexicans start refusing American dollars for their goods, we'll find out just how "efficient" this globalist model really worked.  

turkey george palmer Mon, 06/19/2017 - 02:13 Permalink

How come you can't smell McDonald cooking breakfast?Used to be a nice kitchen smell at breakfast in restaurantsSeems McDonald's has little to smell or else I'm accustomed to it and don't notice

Batman11 Mon, 06/19/2017 - 04:39 Permalink

There are different versions of capitalism and the latest one hasn't been particularly successful.Keynesian capitalism ended in the stagflation of the 1970s.This version ended in the secular stagnation of the new normal.For some reason the establishment (bankers) can’t let it go, even though it has failed miserably.Reforming the banking system and not the labour market, seems to provide the best model as shown by Germany and the Asian Tigers before their neo-liberal conversion. The success of the Asian Tigers was due to a policy known as “window guidance” by the Central Bank; this directs bank credit into the important areas of the economy that will ensure it thrives, business and industry. It ensures the bankers don’t go into the normal bubble mode by guiding them away from real estate speculation, financial speculation and focusing on just one area of business without looking at the bigger picture.Germany doesn’t use “window guidance” but it ensures bank credit caters for the long term needs of business and industry by having 70% of its banks being small, non-profit organisations that are closely tied to the regions they serve. There is no incentive to blow bubbles for short term profits, dividends and bonuses.The historical record is now there for all to see, the tragedy that is financial liberalisation.The early experiments in 1970s South America revealed the inequality, pension fund raiding, other financial raiding and the legacy of debt that it leaves behind.The early 1980s see the beginnings of financial liberalisation and the late 1980s sees the following crises, e.g. US S&L crisis; UK, Japan, Australia, Canada and Scandinavia real estate busts.More financial deregulation leads to 2008; the Euro-zone crisis; Irish and Spanish real estate crashes.2008 is just another real estate bust, leveraged up and transmitted internationally by complex financial instruments. As the global bust hits the Euro-zone, it crumbles.That’s another fine mess financial liberalisation has got us into.Australia, Canada and Scandinavia are queuing up for their second real estate bust.We need bank credit to be directed sensibly into the economy.

Batman11 Batman11 Mon, 06/19/2017 - 06:02 Permalink

Neo-liberal success was a debt fuelled illusion that missed private debt from its economics, which conveniently hid how it worked.The UK private debt data:https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.53.09.pngThe US private debt data:https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png

In reply to by Batman11

Batman11 Batman11 Mon, 06/19/2017 - 06:22 Permalink

The psychopath is always caught out by the trail of destruction they leave behind.They are effortlessly charming and have the perfect excuse for every problem they create.You can’t see them directly, you have to look behind them and see the carnage they have left in their wake.Look at the historical record the financial psychopaths leave behind (see above).Try it with the IMF and World Bank.They are either idiots or psychopaths, you decide.  

In reply to by Batman11

malek Mon, 06/19/2017 - 12:58 Permalink

"previous [4] Crises of Exploitive Elites"

Sounds a little make-it-up-as-you-go to me.
Especially as the list is skirting a key point: how and WHY did each of those crises end?