One Regime to Rule them All

It is considered bad form for journalists to refer to the US government as a “regime.” Apparently, that moniker is reserved for our country’s enemies, of late Russia, North Korea, Iran, and Syria. Maybe Myanmar too; that’s still being sorted out. But what is a regime, really, and is it really true that we don’t have one here?

The OED tells us a regime is “A government, especially an authoritarian one, e.g. ‘ideological opponents of the regime’” The rival Cambridge Dictionary broadens the definition: “[mainly disapproving] A particular government or a system or method of government. ‘The old corrupt, totalitarian regime was overthrown’; a particular way of operating or organizing a business, etc. ‘The regime in this office is hard work and more hard work.’” My Encarta World English Dictionary defines it as “A system or style of government; a particular government, especially one that is considered to be oppressive; any controlling or managing group, or the system of control and management adopted by it; an established system or way of doing things.”

So regimes are considered “authoritarian,” “oppressive,” and mostly to be criticized, but also are just the way management exerts control over everyday affairs. Myanmar or McDonalds, Castro or Chevrolet, take your pick; they’re just doing their thing.

Which tempts one to ask whether the Trump Administration can be said to be a regime. After all, until late last year it ruled entirely via executive order, administrative fiat, and tweet, upending previous precedents, proclamations, rules, regulations, and trade deals absent legislative authority. At least the buttoned-down Obama White House maintained a veneer of constitutionality until a Republican Congress checkmated its legislative initiatives. After #44 issued a string of executive orders, opponents sometimes used the r-word, though sparingly, but never the press. In truth, while Americans can be said to be live under a regime, it isn’t seated in the White House. We must look elsewhere.

Regime in the pejorative sense tends to be applied to self-serving arriviste dictators, tyrants and kleptocrats whom the speaker both detests and has no use for. For the most part, such autocrats are orcs who, in one sordid way or another, serve the one true regime. One ring to rule them all and in the darkness bind them to the ethos of greed.

That ethos attracts swarms of billionaires to buzz around Trump like flies around shit. But neither he nor they are the regime. Nor is the Koch Dynasty for that matter, even as its shifty sway over legislatures furthers its coal-fired lust for corporate hegemony. Despite their occult machinations, they and their ilk are no illuminati, not even a conspiracy. There is no Sauron at the center of these circles marshaling the minions of Mordor. Rather than an evil mastermind or a coven, we find capital. Having donned the one true ring, it trespasses at will invisibly to gorge itself on the commonweal and suck the souls of citizenry. Whereas capital once was the power and prerogative of sovereigns, that situation is now almost fully inverted; capital now drives public policy by rewarding those who serve its interests and allowing all that don’t to fall into indifferent ruin.

In his provocative essay in The Baffler Oculus Grift, Anis Shivani argues that the automation of financial markets has superseded human agency to leave no one in control:

Capital has become so autonomous (the mind-boggling numbers reflect the power that stems from this autonomy) that the state as we knew it has ceased to exist as a competing power. The state, to the extent that finance dominates every decision the state makes, has become absorbed in capital. The state is merely part of the external architecture capital has learned, very intelligently, to maneuver around, with the eventual aim of extinguishing it.

Capital, Shivani claims, is AI (artificial intelligence) run amok: “Can we imagine civilization functioning in any recognizable form if we pull the plug on capital? We have reached a point where, far from conceptualizing a mode of life not dependent on capital as AI, we cannot even imagine a situation where capital’s power can be regulated.”

This isn’t to say human agency is out of the picture; AI can tell bankers that they should, say, put the screws on Greece, but it can’t by itself wield the screwdriver. But considering that a preponderance of stock and currency trading is blindingly algorithmic and that derivative financial instruments such as the collateral debt obligations that brought Wall Street to its knees a decade ago dwarf tangible assets, big-time finance is essentially an abstraction ginned from bits coursing through the Net from one expert system or artificial neural network to another.

So let’s consider finance a regime or perhaps a network of them. Some of them, like brokerage houses, hedge funds, and investment banks are called enterprises. In these regimes, human beings make most top-level decisions. But to decide anything more significant that what to eat for lunch they need numbers, often a lot of them, which they must coax out of one AI or another. Whether a person or a bot makes an investment decision, many AIs are involved shepherding streams of data through networks and logic circuits, comparing, triaging and manipulating numbers they might want to make bets on. The people are nothing without the numbers; the games they play involve digesting such far-flung facts so fast that without the bots their heads would explode.

Who’s in charge here? Shivani might say that AI has become the -ism in capitalism, its deus ex machina. But of course capitalism requires legal frameworks, i.e. corporate charters and contracts, security and tax laws, partnerships and regulations. These are regimes too, though not autonomous entities. All of them shape the behavior of what firms do with and for capital. Perhaps the most fundamental of these shaping mechanism are their corporate charters, which spell out what the firm’s business is, how management is structured and compensated, how shares of stock are distributed, and the basic rules of the game, notably what the corporation must maximize and minimize.

Due to idiosyncrasies in how capitalism coevolved with sovereign states, almost all corporate charters have bugs, logical flaws that cause firms to engage in more creative destruction than necessary. Destruction to communities where they operate, to the natural environment, to workers, and to our corrupted democracy. The biggest bug of all is their ironclad mandate to maximize net returns and share prices. Increased revenues make shares go up in value, and the sum of all that value is the net worth of the enterprise, known as its valuation. The problems this rule engenders are manifold. It puts the interests of shareholders above all other stakeholders (senior management often seems to be the exception). When profits are low, in the red, or even decent yet “below analysts’ expectations” the need to satisfy shareholders begets “creative accounting” (cooking the books and filling quarterly reports with arcane euphemisms for “uh-oh”).

Two or three quarters of that sort send bad market signals and set off mad scrambles to find savings somewhere, usually at the expense of employees. Hiring gets frozen. Staff members are let go or made part-time. Contractors are brought in to do essential work, hired hands with no benefits. Other jobs or entire worksites may be outsourced overseas. A hostile takeover or corporate merger could be next, leading to layoffs or the company pulling up stakes and moving away. It’s bad for morale, but worker satisfaction isn’t a priority in corporate charters. So it goes, valued employees.

Families and surrounding communities suffer too. Reduced wages mean fewer sales for local businesses. Stresses build as bills go unpaid. Older workers who can’t find jobs in their field may end up as cashiers at Burger King if they’re lucky. Whole towns may be wiped out when a major facility shuts down. Those that struggle along can be stuck with razing and cleaning up the site. It’s a death spiral.

What animates all this is another destructive bug in the regime. Capital has a built-in imperative to grow arising from the expectations of financial markets. No growth mandate is baked into corporate charters, yet companies with stable sales and reasonable profit margins are penalized when their valuations stagnates. They may have many happy customers and pay dividends to shareholders, but that’s not good enough; analysts and big investors prefer firms that plow their profits into expanding by increasing market share, entering new markets, or merging with or acquiring other companies. And so corporations dutifully pursue growth strategies that have little to do with their core business model, giving rise to conglomerates and holding companies—giantism for the sake of mechanized greed.

The poster child for the hazards of giantism is General Electric. As a result of offering financial services alien to its portfolio of industrial, military, and consumer product lines, GE suffered big losses in the Great Recession. Even though it has shed its financial services operations and laid off thousands of workers, its viability remains in doubt.

Tech companies on a similar glide path include Amazon and Google (now held by its evil spawn Alphabet) that seek to dominate assorted vertical markets by occupying the turf of established players. Amazon has branched out from selling books to all things consumer, cloud computing platforms, delivery services, and grocery stores. After dominating online advertising, Alphabet ne Google has focused serious investments on wired and mobile communications, robotics, autonomous vehicles, and even real estate development, all perfused with proprietary AI technology, aimed at taking on established players such as Apple, Microsoft, Uber, and maybe even Disney. It also builds much of its own hardware, eating up market share of electronics manufacturers.

Growth über alles is the ethos of a cancer cell. Would we admiringly call metastasizing brain cancer “creative destruction?” Corporate predation and financial pyramid schemes are the consequences of a capital regime that believes it can never get enough to eat. Its gluttonous feasting on empty calories of junk bonds and leveraged speculative debt has brought on an epidemic of corporate obesity that starves our families, communities, natural environment, and what’s left of our democracy.

Time for regime change, I would say. Grab a pitchfork.