How Wall Street and Washington Corrupted U.S. Democracy

  • December 19, 2010

Capitalism & Crisis

Forget about U.S. democracy — it’s a myth. By the standards of both Mussolini and Roosevelt, Wall Street’s capture of Washington turned the United States into a fascist republic a long time ago.

Last week, Spencer Bachus, the incoming chairman of the Banking Committee of the U.S. House of Representatives — soon to be the no. 1 most powerful figure in Washington’s efforts to regulate Wall Street and prevent the next great capitalist crisis — made a startling statement.

Bachus urged Congress and federal regulators to play a “subservient role” with banks, telling the Birmingham News in clear and transparent language that:

In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.

The extraordinary deceit emanating from Wall Street and Washington is nothing new, of course, but the clarity of Bachus’s statement takes away the last shreds of doubt any sensible person could have about the fact that U.S. democracy is dead.

Benjamin Franklin once wrote that “in free governments, the rulers are the servants and the people their superiors and sovereigns.” Today, the United States more closely resembles Mussolini’s description of fascism as “the merger of state and corporate power.”

I am careful to wield the word ‘fascism’ in this context. In recent decades, the term has become an epithet for leftist activists decrying the deplorable tactics by the U.S. government to ‘keep America safe’. In the process, it has become completely deprived of its original, historical meaning.

Yet simply going over some of the text book and dictionary definitions of the actual concept of fascism reveals frightening similarities between fascist political philosophy and the current state of affairs in the United States (or Europe, for that matter).

Indeed, the American Heritage Dictionary defines fascism as “the domination of a government by corporations of the political right, combined with bellicose nationalism.” As Gerald Celente astutely observed, the present U.S. form of “state-controlled capitalism is fascism, and fascism has come to America in broad daylight.”

In this respect, the haunting words of Franklin D. Roosevelt perhaps echo most ominously. Of all U.S. Presidents, Roosevelt was most directly and most violently confronted with the fascist threat during his Presidency in the 1930s and 1940s. It is therefore not surprising that he issued a desperate warning to the American people:

The liberty of a democracy is not safe if the people tolerate the growth of private power to the point where it becomes stronger than the democratic state itself. That in its essence is fascism – ownership of government by an individual, by a group or any controlling private power.

There is plenty of good reading around today — even in the mainstream media — that clearly displays this very phenomenon: the ownership of government by a group controlling private power.

Everyone knows about Henry Paulson, who — as the CEO of Goldman Sachs — took the investment bank’s corporate debt from $20bn to $100bn, and then, a few years later — as George W. Bush’s Treasury Secretary — made Goldman Sachs one of the biggest beneficiaries of the $700bn Wall Street bailout.

But there are more recent examples even in the Obama administration. Last week, Dean Baker — co-director for the Centre for Economic and Policy Research — wrote in an op-ed in the Guardian that “Wall Street’s access to the [Obama] administration rules out meaningful reform.”

James Fallows writes how Peter Orszag, Obama’s point man on budgetary issues, just passed through Washington’s infamous revolving door as well — resigning from his Directorship of the Office of Management and Budget to take up a lucrative function at Citibank.

Even Simon Johnson, a former chief economist of the International Monetary Fund, has acknowledged in an article in The Atlantic that “the finance industry has effectively captured our government,” referring to this alarming truth as ‘The Quiet Coup‘.

Just two weeks ago, the New York Times reported how “a secretive banking elite rules trading in derivatives.”

Drawn from giants like JPMorgan ChaseGoldman Sachs and Morgan Stanley, the bankers form a powerful committee that helps oversee trading in derivatives, instruments which, like insurance, are used to hedge risk.

In theory, this group exists to safeguard the integrity of the multitrillion-dollar market. In practice, it also defends the dominance of the big banks.

The U.S. government, meant to be a servant of the sovereign people, has become a servant of the Wall Street bankers. This is no longer just conspiracy theory — it is plain and obvious for everyone to see.

What David Harvey has called the Wall Street-IMF-Treasury Complex is rapidly giving rise to a corporatist form of government that more closely resembles Mussolini’s fascism than Franklin’s democracy.

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Jerome Roos

Jerome Roos is a postdoctoral researcher in political economy at the University of Cambridge, and the founding editor of ROAR Magazine. For more on his research and writings, visit jeromeroos.com.

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