Published: 2022-02-17   Last modified: 2022-03-11

Futurists warning about the threats of AI are looking in the wrong place. Humanity is already facing an existential threat from an artificial intelligence we created hundreds of years ago. It’s called the Corporation.[1]

— Jeremy Lent

They Live

Welcome to the Megamachine

Never send a human to do a machine’s job.

— Agent Smith
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[W]hat economists lately termed the Machine Age or the Power Age, had its origin, not in the so-called Industrial Revolution of the eighteenth century, but at the very outset in the organization of an archetypal machine composed of human parts.
This extraordinary invention proved in fact to be the earliest working model for all later complex machines, though the emphasis slowly shifted from the human operatives to the more reliable mechanical parts. <…​> As a result of this invention, huge engineering tasks were accomplished five thousand years ago that match the best present performances in mass production, standardization, and meticulous design.

This machine escaped notice and so naturally remained unnamed until our own day, when a far more powerful and up-to-date type, utilizing a congeries of subordinate machines, came into existence.
Because the components of the machine, even when it functioned as a completely integrated whole, were necessarily separate in space, I shall for certain purposes call it the 'invisible machine': when utilized to perform work on highly organized collective enterprises, I shall call it the 'labor machine': when applied to acts of collective coercion and destruction, it deserves the title, used even today, the 'military machine.' But when all the components <…​> must be included, I shall usually refer to the 'megamachine': in plain words, the Big Machine. <…​> [A]n invisible structure composed of living, but rigid, human parts, each assigned to his special office, role, and task, to make possible the immense work-output and grand designs of this great collective organization.
That invention was the supreme feat of early civilization: a technological exploit which served as a model [which] was transmitted, sometimes with all its parts in good working condition, sometimes in a makeshift form, through purely human agents, for some five thousand years, before it was done over in a material structure that corresponded more closely to its own specifications, and was embodied in a comprehensive institutional pattern that covered every aspect of life.
With the energies available through the royal machine, the dimensions of space and time were vastly enlarged: operations that once could hardly have been finished in centuries were now accomplished in less than a generation. On the level plains, man-made mountains of stone or baked clay, pyramids and ziggurats, arose in response to royal command: in fact the whole landscape was transformed, and bore in its strict boundaries and geometric shapes the impress of both a cosmic order and an inflexible human will. No complex power machines at all comparable to this mechanism were utilized on any scale until clocks and watermills and windmills swept over Western Europe from the fourteenth century of our era on.
Now to call these collective entities machines is no idle play on words. If a machine be defined <…​> as a combination of resistant parts, each specialized in function <…​> to utilize energy and to perform work, then the great labor machine was in every aspect a genuine machine: all the more because its components, though made of human bone, nerve, and muscle, were reduced to their bare mechanical elements and rigidly standardized for the performance of their limited tasks. The taskmaster’s lash ensured conformity. Such machines had already been assembled if not invented by kings in the early part of the Pyramid Age, from the end of the Fourth Millennium on.
Capitalism <…​> relied on the method of conditioning used successfully by animal trainers to ensure obedience to orders, and to secure the performance of difficult feats. And whereas kingship had emphasized punishment, a method that has a definite limit in the death of the individual too severely punished, there was no limit under early capitalism to the possibility of reward. Moreover, this new motive did not appeal only to a single class: it theoretically held out a promise and a hope to the humblest individual who would strictly apply himself to business.
Money, as the nexus in all human relations and as the main motivation in all social effort, replaced the reciprocal obligations and duties of families, neighbors, citizens, friends. And as other moral and esthetic considerations diminished, the dynamics of money power increased. Money was the only form of power which, through its very abstraction from all other realities, knew no limits—though finally this indifference to concrete realities would meet its nemesis in the progressive inflations of an 'expanding economy.'[2]
[The invention of] the joint stock company, with limited liability, <…​> widened the number of possible investors and relieved them of the burden of individual responsibility for bankruptcy that single ownership or partnership entailed. These changes completed the depersonalization of the whole industrial process. After the seventeenth century an increasing number of anonymous workers were exploited for the benefit of equally anonymous and invisible and morally indifferent absentee owners.

Thus the various components of mechanized industry conspired to remove the traditional valuations and the human aims that had kept the economy under control and caused it to pursue other goals than power. Absentee ownership, the cash nexus, managerial organization, military discipline, were from the beginning the social accompaniments of large-scale mechanization <…​> based on <…​> contracting or expanding or diverting human needs to those that are required to keep such an economy in operation. Warfare <…​> in turn contributed further to mechanization by reverting in industry to a military discipline and daily drill, in order to ensure uniform operations and uniform results. This reciprocal interplay between warfare <…​> and mechanization was ultimately responsible for some of the most vexatious problems that must now be faced.
The process of automation has produced imprisoned minds that have no capacity for appraising the results of their process, except by the archaic criteria of power and prestige, property, productivity and profit, segregated from any more vital human goals. The Pentagon of Power. By its own logic automation is dedicated to the installation of a system of total control over every natural process, and ultimately over every organic function and human purpose. Not strangely, the one part of this civilization that escapes the principle of total control is—automation itself! The country in which this mode of collective servitude has been carried furthest has been taught by its information-manipulators (public relations specialists) to call this system ‘Free Enterprise.’
Hitler demonstrated his understanding of the ancient malpractices and misuses of the megamachine far better than its positive potentialities. <…​> To ensure undeviating uniformity, writers, artists, musicians, psychologists were <…​> obliged to wear the same mental uniform. <…​> Meanwhile, the military spirit of brutal drill and mindless obedience was carried into the schools and universities, where, <…​> it had never been entirely absent. In short, the Germans not merely enlarged the dimensions of the ancient megamachine, but made important innovations in the techniques of mass control: innovations that later corporate megamachines are now perfecting with the aid of spying devices, opinion polls, market research, and computerized dossiers on private life.
Fortunately there already are many indications, though scattered, faint, and often contradictory, that a fresh cultural transformation is in the making: one which will recognize that the money economy is bankrupt, and the power complex has become, through its very excesses and exaggerations, impotent. <…​> [I]f mankind overcomes the myth of the machine, one thing may be safely predicted: <…​> present megatechnic institutions and structures will be reduced to human proportions and brought under direct human control. Should this prove true, the present canvass of the existing society, its technological miscarriages and its human misdemeanors, should by implication give valid positive directions for working out a life-economy.[3]

Hoc Est Corporation

…​how can there be an objective social and institutional reality that is the reality it is only because we think it is? The answer is that the collective assignment of status functions, and above all their continued recognition and acceptance over long periods of time, can create and maintain a reality of governments, money, nation-states, languages, ownership of private property, universities, political parties, and a thousand other such institutions that can seem as epistemically objective as geology and as much a permanent part of our landscape as rock formations. But with the withdrawal of collective acceptance, such institutions can collapse suddenly, as witness the amazing collapse of the Soviet empire in a matter of months…​

— John Searle, "Mind, Language and Society"
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An icon that somewhat resembles the Stadel lion-man appears today on cars, trucks and motorcycles from Paris to Sydney. It’s the hood ornament that adorns vehicles made by Peugeot, one of the oldest and largest of Europe’s carmakers. Peugeot began as a small family business in the village of Valentigney, just 300 kilometres from the Stadel Cave. Today the company employs about 200,000 people worldwide, most of whom are complete strangers to each other. These strangers cooperate so effectively that in 2008 Peugeot produced more than 1.5 million automobiles, earning revenues of about 55 billion euros.

In what sense can we say that Peugeot SA (the company’s official name) exists? There are many Peugeot vehicles, but these are obviously not the company. Even if every Peugeot in the world were simultaneously junked and sold for scrap metal, Peugeot SA would not disappear. It would continue to manufacture new cars and issue its annual report. The company owns factories, machinery and showrooms, and employs mechanics, accountants and secretaries, but all these together do not comprise Peugeot. A disaster might kill every single one of Peugeot’s employees, and go on to destroy all of its assembly lines and executive offices. Even then, the company could borrow money, hire new employees, build new factories and buy new machinery. Peugeot has managers and shareholders, but neither do they constitute the company. All the managers could be dismissed and all its shares sold, but the company itself would remain intact.

It doesn’t mean that Peugeot SA is invulnerable or immortal. If a judge were to mandate the dissolution of the company, its factories would remain standing and its workers, accountants, managers and shareholders would continue to live – but Peugeot SA would immediately vanish. In short, Peugeot SA seems to have no essential connection to the physical world. Does it really exist?

Peugeot is a figment of our collective imagination. Lawyers call this a ‘legal fiction’. It can’t be pointed at; it is not a physical object. But it exists as a legal entity. Just like you or me, it is bound by the laws of the countries in which it operates. It can open a bank account and own property. It pays taxes, and it can be sued and even prosecuted separately from any of the people who own or work for it.

Peugeot belongs to a particular genre of legal fictions called ‘limited liability companies’. The idea behind such companies is among humanity’s most ingenious inventions. Homo sapiens lived for untold millennia without them. During most of recorded history property could be owned only by flesh-and-blood humans, the kind that stood on two legs and had big brains. If in thirteenth-century France Jean set up a wagon-manufacturing workshop, he himself was the business. If a wagon he’d made broke down a week after purchase, the disgruntled buyer would have sued Jean personally. If Jean had borrowed 1,000 gold coins to set up his workshop and the business failed, he would have had to repay the loan by selling his private property – his house, his cow, his land. He might even have had to sell his children into servitude. If he couldn’t cover the debt, he could be thrown in prison by the state or enslaved by his creditors. He was fully liable, without limit, for all obligations incurred by his workshop.

If you had lived back then, you would probably have thought twice before you opened an enterprise of your own. And indeed this legal situation discouraged entrepreneurship. People were afraid to start new businesses and take economic risks. It hardly seemed worth taking the chance that their families could end up utterly destitute.

This is why people began collectively to imagine the existence of limited liability companies. Such companies were legally independent of the people who set them up, or invested money in them, or managed them. Over the last few centuries such companies have become the main players in the economic arena, and we have grown so used to them that we forget they exist only in our imagination. In the US, the technical term for a limited liability company is a ‘corporation’, which is ironic, because the term derives from ‘corpus’ (‘body’ in Latin) – the one thing these corporations lack. Despite their having no real bodies, the American legal system treats corporations as legal persons, as if they were flesh-and-blood human beings.

And so did the French legal system back in 1896, when Armand Peugeot, who had inherited from his parents a metalworking shop that produced springs, saws and bicycles, decided to go into the automobile business. To that end, he set up a limited liability company. He named the company after himself, but it was independent of him. If one of the cars broke down, the buyer could sue Peugeot, but not Armand Peugeot. If the company borrowed millions of francs and then went bust, Armand Peugeot did not owe its creditors a single franc. The loan, after all, had been given to Peugeot, the company, not to Armand Peugeot, the Homo sapiens. Armand Peugeot died in 1915. Peugeot, the company, is still alive and well.

How exactly did Armand Peugeot, the man, create Peugeot, the company? In much the same way that priests and sorcerers have created gods and demons throughout history, and in which thousands of French curés were still creating Christ’s body every Sunday in the parish churches. It all revolved around telling stories, and convincing people to believe them. In the case of the French curés, the crucial story was that of Christ’s life and death as told by the Catholic Church. According to this story, if a Catholic priest dressed in his sacred garments solemnly said the right words at the right moment, mundane bread and wine turned into God’s flesh and blood. The priest exclaimed ‘Hoc est corpus meum!’ (Latin for ‘This is my body!’) and hocus pocus – the bread turned into Christ’s flesh. Seeing that the priest had properly and assiduously observed all the procedures, millions of devout French Catholics behaved as if God really existed in the consecrated bread and wine.

In the case of Peugeot SA the crucial story was the French legal code, as written by the French parliament. According to the French legislators, if a certified lawyer followed all the proper liturgy and rituals, wrote all the required spells and oaths on a wonderfully decorated piece of paper, and affixed his ornate signature to the bottom of the document, then hocus pocus – a new company was incorporated. When in 1896 Armand Peugeot wanted to create his company, he paid a lawyer to go through all these sacred procedures. Once the lawyer had performed all the right rituals and pronounced all the necessary spells and oaths, millions of upright French citizens behaved as if the Peugeot company really existed.[4]


The structure of the corporation …​ designed to eliminate all moral imperatives but profit. The executives who make decisions can argue—​and regularly do—​that, if it were their own money, of course they would not fire lifelong employees a week before retirement, or dump carcinogenic waste next to schools. Yet they are morally bound to ignore such considerations, because they are mere employees whose only responsibility is to provide the maximum return on investment for the company’s stockholders . (The stockholders, of course, are not given any say.)

— David Graeber, "Debt: The first 5,000 years"
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Recent history saw an intensifying debate about corporate conduct in light of widely publicized corporate scandals involving companies such as Enron, Monsanto, and WorldCom. Issues surrounding immoral, even psychopathic, corporate conduct arise out of the conflict between legal and socially expected standards of corporate conduct and the corporate pursuit of profit. The quasi-personification of corporations under corporate law is coupled with the concept of moral agency, which ascribes corporate entities the quality of being able to act intentionally and with independent volition.
The blinkered pursuit of a single goal within the human context to the exclusion of other, more humane interests would be considered psychopathic. Thus, the personification of the corporation leads to comparisons between corporate and human behavior and to the conclusion that the corporate, legally defined mandate to pursue corporate self-interest regardless of the consequences to others bears the hallmarks of human psychopathy.
The corporate psychopathy thesis is rooted in the legal status of the corporation. In historical terms, the corporation has a long-standing tradition with early references to stock trading entities dating back to medieval European times. The expansion of international trade across Western Europe from the fifteenth century onward saw the establishment of the first limited liability companies whose stock owners could not be sued for the recovery of debt; limited liability is still one of the key characteristics of corporations today as under corporate law, the company, but not an individual shareholder or employee, is solely responsible for the company’s losses. Over the centuries, the legal status of corporations became more refined, with corporations being granted a suite of different rights and responsibilities. The late nineteenth century saw the introduction of the most profound changes in corporate law, which granted corporations the attribute of being a separate legal personality, also known as “personhood” or “artificial personality.” This change occurred in English law in 1895 <…​> and across the Atlantic in 1886 <…​>. Back then, US Chief Justice Morrison R. Waite gave an obiter dictum, referring to corporations as “persons” and granting them some human rights based on the 14th amendment to the US Constitution. <…​> [C]orporate personhood granted under corporate law paved the way for the contemporary debate on corporate conduct and its comparability to human, moral behavior.

Internationally, corporate law can vary widely, and many forms of corporations exist. However, private, for-profit corporations represent the majority of corporations today and can be regarded by far the most dominant form of institution worldwide. Despite national differences in corporate law, corporations share a set of legal characteristics which define this type of organization; these include (a) having legal person status, (b) having limited liability, and (c) having the ability to transfer shares, as well as (d) sharing ownership of resources and (e) having a centralized management under a company board. In this sense, corporations today are granted most of the rights usually extended to ordinary people such as the right to own property and to enter into contracts but also some of the responsibilities such as needing to pay taxes. While other rights such as those relating to holding public office and the permission to vote are generally denied, corporations have the right against self-incrimination, the right to privacy, and the right to lobby. In addition, corporations, unlike human beings, are immortal due to continued succession. In this regard, body corporates enjoy a special legal status beyond the reach of ordinary people in that they continue to exist perpetually and enjoy limited liability.
Corporate personhood or having an artificial personality can also to some extent be seen as a requirement for companies for the purposes of conducting business. This resemblance in law between a natural person and corporations has led to the personification of companies, which—while no longer part of the legal debate—provides the platform of the corporate psychopathy thesis popularized in the book “The Corporation” by Joel Bakan and the accompanying documentary film released the same year.[5]

The Luggnaggians Way

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…​ gave me a particular account of the struldbrugs among them. He said, they commonly acted like mortals, till about thirty years old; after which, by degrees, they grew <…​> incapable of friendship, and dead to all natural affection <…​>

As soon as they have completed the term of eighty years, they are looked on as dead in law; their heirs immediately succeed to their estates, only a small pittance is reserved for their support; and the poor ones are maintained at the publick charge. After that period, they are held incapable of any employment of trust or profit; they cannot purchase lands, or take leases; neither are they allowed to be witnesses in any cause, either civil, or criminal, not even for the decision of meers and bounds.
They are despised and hated by all sorts of people; when one of them is born, it is reckoned ominous, and their birth is recorded very particularly; so that you may know their age by consulting the register <…​>

I could not but agree, that the laws of this kingdom relative to the struldbrugs, were founded upon the strongest reasons, and such as any other country would be under the necessity of enacting, in the like circumstances. Otherwise, as avarice is the necessary consequent of old age, those immortals would in time become proprietors of the whole nation, and engross the civil power; which for want of abilities to manage, must end in the ruin of the publick.[6]

Dude, Where’re My Taxes?

Mega State Versus Corposaurus

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[U]p to the present “the world” does not exist as a political unit at all. Only the so-called “nation-states” exist, although from time to time some of them are powerful enough to have effective global policies or to set up global institutions for certain special purposes. The United Nations (typically so named) illustrates this problem. It has no power of its own, apart from what is made available by its members, and no single policy that cannot be sabotaged by one or more of its members. Of course the effective state system today consists not of the two hundred or so politically sovereign members of the United Nations and other autonomous units, but of the relative handful of large, economically or militarily powerful states. The existence of a collection of such states is the chief obstacle in the way of further globalization.
The obstacles to globalization are weakest in techniques of communication, and in the development of science and technology. Local particularities are irrelevant to these matters, and the capacity of power to inhibit the transmission and development of ideas has diminished dramatically, not only because governments trying to do so have become less common, but also because communications technology is now almost impossible to keep under anyone’s control. Here “the nation” or any other identity group is virtually eliminated. There is not such thing as Islamic physics or Romanian mathematical logic, or black linguistics. It is the same physics, mathematical logic or linguistics, whether practised by Mexicans or Buddhists or people with straight black hair and slit eyes. The fact that some kinds of people may do these things better than others has nothing to do with the matter. <…​> Science remains resolutely modernist, not postmodernist. One of the oddest developments of our times has been the refusal of a number of intelligent people in the academic world to accept this.
The economy is not quite so freely transnational, although some of it, like the world currency market, operate outside and, apparently, beyond the control of states altogether. The absurdity of introducing “national” considerations into it has lately been demonstrated by the prime minister of Malaysia, who sees the fall in the exchange value of his currency as the result of a plot by Jewish stock exchange speculators such as George Soros, who cannot stand the idea that an Islamic state is an economic success. Nevertheless, the world economy continues to operate within the constraints of the state system in two ways. First, most of its transactions still take place within the borders of states, that is to say as internal trade and not as international trade (imports or exports). Second, it still remains subject to varying extents to the laws, institutions and policies of state governments. (Of course governments, especially the smaller ones, also operate under the constraints or temptations of the transnational economy, but right now this is not our concern.) At present transnational economic units – i.e., typically the so-called “multinationals” usually cannot override these obstacles. Their most characteristic strategy so far is to side-step and by-pass them, in two ways. First, at least chronologically, by shifting to an “offshore” base in one of the many ministates mostly left over from the disintegration of the old empires. “Divide and rule” as the Romans said. This is to transform the national state system into a tool for globalization. <…​> Unless it has oil, the smaller the state, the weaker it is, and the less money it takes to buy its government. Second, transnational operators develop their own institutions for by-passing state laws – e.g., by global arrangements for inter-firm arbitration in disputes over contracts and for overcoming the limitations of the single nation-state, e.g., by developing global consultancy and credit-rating agencies; which, incidentally, also determine the credit of governments. The closest thing to a genuine world authority today is Standard & Poor. We are already at the stage where virtually all financial control over large firms is in the hands of six world-wide accountancy firms, and if current negotiations for mergers succeed, soon by three such firms.
And yet, the basic structure of the global economy is increasingly separate from, and cuts across the borders of, the world’s political structure. What we have today is in effect a dual system, the official one of the “national economies” of states, and the real but largely unofficial one of transnational units and institutions; the two are linked together at the edges by those transnational economic institutions like the IMF and the World Bank which are both global in their terms of reference, but still dependent on the state system, or rather on the richest states within it, and especially on the United States. Moreover, unlike the state with its territory and power, other elements of “the nation” can be and easily are overridden by the globalism of the economy. Ethnicity and language are the two obvious ones. Take away state power and coercive force, and their relative insignificance is clear. Even religious identity, which imposed prohibitions of genuine economic significance, like that of alcohol in Islam and birth control in Catholic countries, is no longer what it once was. That ethnicity has some economic impact as such is obvious – as we all know in New York, it is the basis of flourishing niche markets. But by global standards this is chicken-feed.
[T]here is a handful of states so large in terms of population, area, resources, and/or power that they can affect the global economy single-handedly: the United States, Japan and China, perhaps also in future India, belong to this group. To these we should add the unions of middling states, of which the European Union is the exemplar. For economic purposes they function to some extent as super-states, though in terms of international politics they are of little significance. The major practical question before the world today is whether these states – which constitute a consortium of something like the “great powers” of the nineteenth century, but in economic rather than politico-military terms – can act together sufficiently to control the global economy of the free market and its unforeseeable and potentially unmanageable and disastrous consequences. I am pessimistic about this, but here is where decisions can be made, if the will is there. I am afraid the future of the world depends on it. [7]

Race to the Bottom Privelege

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It may seem scarcely believable to younger generations that in 1981 the statutory rate of corporation tax in the UK was 52%. Certainly, generous tax reliefs meant that the tax base was relatively narrow and the effective rate was therefore rather lower, but it’s still an eye-watering number compared to nowadays. By 1997, at the beginning of the New Labour era, the rate had fallen to 31% and it is now 19%.

The story is similar elsewhere. In the US the rate in 1980 was 46%, but had fallen to 34% by the late 1980s. It stayed at around this level until 2018, when it was reduced to 21% by the Trump administration.

Meanwhile, the OECD average rate fell from 28.6% to 21.4% in the two decades leading up to 2018. Numerous countries, including France and Belgium, cut their corporation tax rates in 2020 and France, the Netherlands and Sweden were reported in December to be planning further cuts in the near future.

The rationale for cutting the corporate tax rate rested on a set of assumptions that have come to look highly debatable. Governments were threatened that if the rate were too high, global companies would relocate to a country with a more favourable tax regime, thereby depriving the first country of both tax revenue and economic activity.[8]
Governments eager to show corporations that their country is ‘open for business’ by reducing the corporate tax contributions are making a political choice. They are choosing to pass on the tax burden left unpaid by corporations to labour, and small- and medium-sized businesses. If these groups are not taking on more of a burden in direct taxation, then they are made to pay through increased indirect—and often more regressive—forms of taxation, such as taxes on goods and services.
[I]ndirect taxes such as VAT place a greater proportionate burden of tax on the lowest-paid and small businesses. This reduces income and standards of living, but also means that small businesses and those on low incomes are contributing more than their fair share to essential services, infrastructure and other public goods and services. Moreover, it gives global corporations a further competitive advantage over their smaller domestic counterparts. Independent coffee shops, for example, are subject to statutory tax rates, while global coffee brands might not be.[9]

Why Call Them Back from Heaven?

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The most common way multinational corporations abuse or avoid tax is by shifting the profits they make out of the countries where they genuinely do business and into tax havens. This allows the corporation to under report its profit it made in the country where it does business, and so pay less or no tax, and to not pay tax on the profit shifted out of the country.

For example, a multinational corporation can setup a shell company in Ireland and make the shell company the owner of its branding. The shell company then charges the multinational corporation’s other companies (ie the ones that actually sell good and services in other countries) expensive royalty fees to use the branding. This creates costs for the companies that they must pay into the tax haven, effectively driving down their profits and “shifting” them into the tax haven.[10]
Tax havens are the ultimate expression of the global corporate tax race to the bottom, and they can be found in every region of the world. For this paper, Oxfam has conducted new research that identifies the world’s worst corporate tax havens.
Table 1. Oxfam’s ranking of the top 15 corporate tax havens




Cayman Islands














Hong Kong












British Virgin Islands

These countries earned their place on Oxfam’s ‘world’s worst’ list because they facilitate the most extreme forms of corporate tax avoidance, driving the race to the bottom in corporate taxation. To create the list, Oxfam researchers assessed countries against a set of criteria that measured the extent to which countries used three types of harmful tax policies: corporate tax rates, the tax incentives offered, and lack of cooperation with international efforts against tax avoidance.

Corporate tax havens are causing the loss of huge amounts of valuable tax revenue and their use is becoming standard business practice for many companies. Oxfam analysis found that 90 percent of the world’s biggest companies had a presence in at least one tax haven. According to the United Nations Conference on Trade and Development (UNCTAD), large multinationals own, on average, almost 70 affiliates each in tax havens, and this enables them to pay a lower effective corporate tax rate at the group level compared to multinationals without affiliates in tax havens.

Both the European Union and the G20 have committed to producing a blacklist of tax havens in order to clamp down on corporate tax dodging. However, a failure to use objective and comprehensive criteria for assessing countries means many tax havens – including those identified by Oxfam as being among the world’s worst offenders – will not appear on their lists. Criteria for the EU blacklist, may not, for example, include whether a country has a zero percent corporate tax rate. This means countries such as Bermuda, the world’s worst corporate tax haven according to Oxfam’s analysis, may not feature on the list at all. Oxfam found that US multinational companies reported $80bn in profits in Bermuda in 2012 – more than their profits reported in Japan, China, Germany and France combined.

The EU’s decision to only assess and list countries outside of the EU ensures that no European country will feature on their blacklist, despite Oxfam’s analysis indicating that the Netherlands, Luxembourg, Ireland and Cyprus are among the world’s worst corporate tax havens. Many EU leaders are also willing to exclude countries such as Switzerland from the blacklist merely because it is engaging with the EU on issues relating to exchange of financial information.[11]

National Treasure: Book of Secrets

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Note: This report is adapted from written testimony submitted by Amy Hanauer before testifying in person to the Senate Budget Committee on March 25, 2021.

In 2020, <…​> Amazon’s profits surged to $20 billion last year as people shifted to shopping online. But the company paid just 9.4 percent of its profits in federal corporate income taxes, after paying zero in 2018 and about 1 percent in 2019. Over those three years combined it paid federal corporate income taxes equal to 4.3 percent of its $44.7 billion in profits. That is another way of saying that even though the federal tax rate for corporate profits is 21 percent, Amazon effectively paid a rate of just 4.3 percent during this period.

In 2020, Netflix’s profits surged to $2.8 billion because people went out less and instead watched more TV at home. Yet the company paid less than 1 percent of those profits in federal corporate income taxes, after paying nothing in 2018 and about 1 percent in 2019. Over those three years combined, Netflix paid a total effective rate of 0.4 percent on $5.3 billion in profits.

Even Zoom, the company providing the platform so many people used for meetings and events over the last year, got in on the tax avoidance. Despite an increase in profits of 4,000 percent (not a typo), the company paid no federal corporate income tax on its 2020 profits.

Zoom, Amazon and Netflix are not alone. The pandemic has been hard on many businesses large and small, and many corporations reported losses in 2020. But even those companies reporting profits, which we would expect to pay the corporate income tax, have avoided the tax. Indeed, even some of those who reported record profits because of the pandemic have avoided the tax. So far, ITEP has identified 55 S&P 500 corporations that reported substantial profits in 2020 but also reported paying no federal corporate income taxes that year.

In fact, lawmakers were quite aware of the crisis of corporate tax-dodging when they drafted a major overhaul of the tax code, the Tax Cuts and Jobs Act (TCJA), that was signed into law by former President Trump in 2017. Rather than ending tax avoidance by repealing tax loopholes, lawmakers chose to allow this to continue. Tax avoidance by companies like Amazon, Netflix and Zoom are the direct results of the TCJA during the first three years it has been in effect.

When ITEP points out that specific corporations are not paying federal income taxes, representatives of those companies sometimes object that they are following the law. This is an attempt to change the subject. No one is suggesting that large, publicly traded corporations are engaged in clearly illegal activities to evade tax laws. No CEO of a large corporation needs to risk going to prison when Congress has provided so many legal ways for corporations to avoid taxes.
This is not to say that all corporate tax avoidance is clearly legal. A great deal of it falls in a legal gray area. Corporations push the envelope and make extremely dubious claims about the nature and locations of their profits and about the tax breaks they are entitled to. Whether a particular practice is legal is an academic point because the question will be determined by whoever controls the relevant information and has the resources to make their case, which is usually a large corporation and not the overburdened IRS.

For example, if a company sells the patent for an invention to its offshore subsidiary for what seems like an artificially low price, and then pays royalties to the offshore subsidiary at what seems like an artificially high rate, the effect is to shift profits offshore. But how often can the IRS prove that the company is doing something wrong?

If the patent is for a new invention (which often happens in the world of tech and pharmaceuticals, for example), the IRS may be hard-pressed to find a comparable transaction between unrelated companies that would prove that something is off about this arrangement.
Some people might mistakenly think that raising corporate tax revenue—either by ending corporate tax avoidance or in other ways—might harm what seems like a fragile economy. Such concern is not justified.

The corporate income tax is a tax on corporate profits. It does not affect companies that are not profiting and are therefore struggling to survive. Raising revenue by shutting down special breaks and loopholes in the corporate income tax would not affect businesses that are laid low by the pandemic.

Apologists for corporations argue that if corporations pay low taxes, either because the statutory corporate income tax rate is reduced or because of special breaks and loopholes, this has a positive effect on our economy. Conversely, they argue that raising corporate tax revenue, even if only by eliminating special breaks and loopholes, would hurt our weak economy.

But there is no evidence that low corporate taxes help the overall economy. Proponents of the TCJA held out the corporate tax cuts as the key provisions that would spur economic growth. In fact, GDP growth in 2018, the first year the law was in effect, was about 2.9 percent, the same as in 2015. In 2019, the second year the law was in effect, GDP growth was 2.2 percent. (Of course, GDP growth for 2020 was negative.)
In addition to slashing the statutory corporate tax rate from 35 percent to 21 percent, the TCJA also gave corporations a tax break on their offshore cash holdings, which were estimated at the time to be around $3 trillion. Officials in the Trump administration claimed that corporate tax breaks would flow immediately to workers in the form of compensation increases that would average $4,000 to $9,000 annually.

Nothing like this happened. In fact, the Congressional Research Service (CRS) found that corporations generally spent their tax savings (from both the lower rate and from any offshore profits they repatriated) on share buybacks, which are a way of enriching shareholders. Share buybacks reached a record-breaking $1 trillion the year the new law went into effect.

Most economists, including those at the staff of the Joint Committee on Taxation (JCT), believe that most of the corporate income tax is ultimately borne by the owners of corporate stocks and other business assets, as we would expect. Those stocks and assets are owned mostly by the well-off. In other words, the corporate income tax is ultimately borne mostly by the well-off, making it a progressive tax. Conversely, cuts in the corporate income tax and avoidance of the corporate income tax mostly benefit the well-off.
It is difficult to document how specific corporations shift profits offshore to avoid taxes because companies are not required to provide country-by-country reporting of their profits and taxes publicly. However, aggregate data show us that American corporations overall claim to earn an impossible amount of their profits in countries with very low corporate taxes or no corporate taxes at all, jurisdictions known as offshore tax havens.

For example, the Cayman Islands has no corporate income tax. It has a population of just 63,000 people, but US corporations claimed to have earned $58.5 billion in profits there in 2017, which was about 10 times the entire gross domestic product (the entire economic output) of that tiny country. This is obviously impossible. Back in 2008, the Government Accountability Office found that nearly 19,000 corporations claimed to be headquartered in a single five-story office building in the Cayman Islands.

The basic problem is that the offshore profits of American corporations are taxed more lightly than their domestic profits. This was true under the old tax law, and it is true under the TCJA, although the details differ. Because corporations pay little in U.S. taxes on their offshore profits, they have an incentive to use accounting gimmicks to make their domestic profits appear to be earned in offshore tax havens. Under the new law, they even have incentives to move real operations, and the jobs that go with them, offshore.

The first goal should be to equalize the U.S. tax rates on domestic and foreign profits of our corporations or come as close as possible to equalizing those rates.

This does not mean that offshore profits would be double-taxed. American corporations would be allowed to claim the foreign tax credit (FTC) for any taxes they pay to foreign governments on their offshore profits, just as they do today. The result would be that our corporations pay at least at the U.S. statutory tax rate regardless of where they claim to earn their profits.

If the U.S. statutory tax rate is 21 percent, American corporations would pay that much on all their profits regardless of whether they are earned in the United States or abroad. For example, if an American company paid foreign taxes on its foreign profits at a rate of 10 percent, it would claim the FTC which allows it to subtract that 10 percent foreign tax from the 21 percent U.S. tax imposed on those profits. It would pay just 11 percent to the United States, which combined with the foreign taxes paid, would come to a rate of 21 percent.

If the company paid foreign taxes at a rate of just 1 percent, it would claim the FTC for that 1 percent and pay the other 20 percent to the United States. For this reason, there would be nothing gained from making profits appear to be earned in an offshore tax haven. The total tax rate paid would be 21 percent no matter where the profits are earned.
Other corporate tax breaks, which could be thought of as domestic corporate tax breaks, include accelerated depreciation and the stock options break <…​> among others.
During his campaign, President Biden proposed a much more effective minimum tax for corporations. It would require corporations to pay a minimum tax equal to 15 percent of the profits they report to shareholders and to the public if this is less than what they pay under regular corporate tax rules. This would require profitable companies like Amazon, Netflix and Zoom to pay at least some income taxes no matter how many special breaks or loopholes in the regular tax rules benefit them.

A corporation paying nothing or very little under the regular tax rules would not be able to avoid the minimum tax Biden proposed unless it low-balls the profits that it reports to the public and to potential investors, which companies never want to do because that would make it difficult to attract investment.

In other words, Biden’s proposal balances corporations’ desire to report low profits for tax purposes against their desire to report high profits to potential investors.
While lawmakers may find it difficult to agree on what our tax laws should be, they should at least agree to enforce those tax laws on the books. And yet the IRS is not always able to enforce our tax laws, including corporate tax laws, because of budget cuts and other constraints.
In fact, ITEP has documented cases in which corporations announce publicly that they have made claims on their tax returns that are unlikely to withstand scrutiny by tax authorities, and those tax authorities fail to investigate before the statute of limitation runs out.

When publicly traded corporations publish financial disclosures to investors, they are required to list any tax breaks they claimed that the IRS is likely to deny. (The accounting rules call these “unrecognized tax benefits,” or UTBs.) Corporations are literally announcing breaks they claim that the IRS will probably find to be illegal. And yet, incredibly, corporations in many cases are allowed to keep these tax breaks, simply because the IRS fails to reach a conclusion before the statute of limitations runs out, which can happen in as little as three years.

ITEP recently examined corporate annual financial reports for 2019 and found that five companies—Chevron, Dell, Eli Lilly, ExxonMobil, and General Electric—kept $1 billion in tax breaks that they previously had admitted were unlikely to withstand scrutiny by the IRS or state tax agencies.[12]

Edge of Tomorrow

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08/10/2021 - Major reform of the international tax system finalised today at the OECD will ensure that Multinational Enterprises (MNEs) will be subject to a minimum 15% tax rate from 2023.

The landmark deal, agreed by 136 countries and jurisdictions representing more than 90% of global GDP, will also reallocate more than USD 125 billion of profits from around 100 of the world’s largest and most profitable MNEs to countries worldwide, ensuring that these firms pay a fair share of tax wherever they operate and generate profits.

Following years of intensive negotiations to bring the international tax system into the 21st century, 136 jurisdictions (out of the 140 members of the OECD/G20 Inclusive Framework on BEPS) joined the Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. It updates and finalises a July political agreement by members of the Inclusive Framework to fundamentally reform international tax rules.

With Estonia, Hungary and Ireland having joined the agreement, it is now supported by all OECD and G20 countries. Four countries - Kenya, Nigeria, Pakistan and Sri Lanka - have not yet joined the agreement.

The two-pillar solution will be delivered to the G20 Finance Ministers meeting in Washington D.C. on 13 October, then to the G20 Leaders Summit in Rome at the end of the month.

The global minimum tax agreement does not seek to eliminate tax competition, but puts multilaterally agreed limitations on it, and will see countries collect around USD 150 billion in new revenues annually. Pillar One will ensure a fairer distribution of profits and taxing rights among countries with respect to the largest and most profitable multinational enterprises. It will re-allocate some taxing rights over MNEs from their home countries to the markets where they have business activities and earn profits, regardless of whether firms have a physical presence there. Specifically, multinational enterprises with global sales above EUR 20 billion and profitability above 10% - that can be considered as the winners of globalisation - will be covered by the new rules, with 25% of profit above the 10% threshold to be reallocated to market jurisdictions.

Under Pillar One, taxing rights on more than USD 125 billion of profit are expected to be reallocated to market jurisdictions each year. Developing country revenue gains are expected to be greater than those in more advanced economies, as a proportion of existing revenues.

Pillar Two introduces a global minimum corporate tax rate set at 15%. The new minimum tax rate will apply to companies with revenue above EUR 750 million and is estimated to generate around USD 150 billion in additional global tax revenues annually. Further benefits will also arise from the stabilisation of the international tax system and the increased tax certainty for taxpayers and tax administrations.
Countries are aiming to sign a multilateral convention during 2022, with effective implementation in 2023. The convention is already under development and will be the vehicle for implementation of the newly agreed taxing right under Pillar One, as well as for the standstill and removal provisions in relation to all existing Digital Service Taxes and other similar relevant unilateral measures. This will bring more certainty and help ease trade tensions. The OECD will develop model rules for bringing Pillar Two into domestic legislation during 2022, to be effective in 2023.[13]

Va Banque

Ex Nihilo

And to me, a person far removed from economics, it remains a mystery to this day how these persons unknown contrive to produce something completely immaterial and intangible – and use it to keep a tight grip on the balls of an entire material world, the existence of which they strictly forbid us to doubt

— Victor Pelevin, "S.N.U.F.F."
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Many people would be surprised to learn that even among bankers, economists, and policymakers, there is no common understanding of how new money is created.

This is a problem for two main reasons. First, in the absence of this understanding, attempts at banking reform are more likely to fail. Second, the creation of new money and the allocation of purchasing power are a vital economic function and highly profitable. This is therefore a matter of significant public interest and not an obscure technocratic debate. Greater clarity and transparency about this could improve both the democratic legitimacy of the banking system and our economic prospects.

Defining money is surprisingly difficult. We cut through the tangled historical and theoretical debate to identify that anything widely accepted as payment, particularly by the government as payment of tax, is, to all intents and purpose, money. This includes bank credit because although an IOU from a friend is not acceptable at the tax office or in the local shop, an IOU from a bank most definitely is.

We identify that the UK’s national currency exists in three main forms, the second two of which exist in electronic form:

    1. Cash – banknotes and coins.
    2. Central bank reserves – reserves held by commercial banks at the Bank of England.
    3. Commercial bank money – bank deposits created either when commercial banks lend money, thereby crediting credit borrowers’ deposit accounts, make payments on behalf of customers using their overdraft facilities, or when they purchase assets from the private sector and make payments on their own account (such as salary or bonus payments).

Only the Bank of England or the government can create the first two forms of money, which is referred to in this book as ​‘central bank money’. Since central bank reserves do not actually circulate in the economy, we can further narrow down the money supply that is actually circulating as consisting of cash and commercial bank money.

Physical cash accounts for less than 3 per cent of the total stock of money in the economy. Commercial bank money – credit and coexistent deposits – makes up the remaining 97 per cent of the money supply.

There are several conflicting ways of describing what banks do. The simplest version is that banks take in money from savers, and lend this money out to borrowers. This is not at all how the process works. Banks do not need to wait for a customer to deposit money before they can make a new loan to someone else. In fact, it is exactly the opposite; the making of a loan creates a new deposit in the customer’s account.

More sophisticated versions bring in the concept of ​‘fractional reserve banking’. This description recognises that banks can lend out many times more than the amount of cash and reserves they hold at the Bank of England. This is a more accurate picture, but is still incomplete and misleading. It implies a strong link between the amount of money that banks create and the amount that they hold at the central bank. It is also commonly assumed by this approach that the central bank has significant control over the amount of reserves banks hold with it.

We find that the most accurate description is that banks create new money whenever they extend credit, buy existing assets or make payments on their own account, which mostly involves expanding their assets, and that their ability to do this is only very weakly linked to the amount of reserves they hold at the central bank. At the time of the financial crisis, for example, banks held just £1.25 in reserves for every £100 issued as credit. Banks operate within an electronic clearing system that nets out multilateral payments at the end of each day, requiring them to hold only a tiny proportion of central bank money to meet their payment requirements.

The power of commercial banks to create new money has many important implications for economic prosperity and financial stability. We highlight four that are relevant to the reforms of the banking system under discussion at the time of writing:

    1. Although useful in other ways, capital adequacy requirements have not and do not constrain money creation, and therefore do not necessarily serve to restrict the expansion of banks’ balance sheets in aggregate. In other words, they are mainly ineffective in preventing credit booms and their associated asset price bubbles.
    2. Credit is rationed by banks, and the primary determinant of how much they lend is not interest rates, but confidence that the loan will be repaid and confidence in the liquidity and solvency of other banks and the system as a whole.
    3. Banks decide where to allocate credit in the economy. The incentives that they face often lead them to favour lending against collateral, or assets, rather than lending for investment in production. As a result, new money is often more likely to be channelled into property and financial speculation than to small businesses and manufacturing, with profound economic consequences for society.
    4. Fiscal policy does not in itself result in an expansion of the money supply. Indeed, the government has in practice no direct involvement in the money creation and allocation process. This is little known, but has an important impact on the effectiveness of fiscal policy and the role of the government in the economy.

The basic analysis of Where Does Money Come From? is neither radical nor new. In fact, central banks around the world support the same description of where new money comes from. And yet many naturally resist the notion that private banks can really create money by simply making an entry in a ledger. Economist J. K. Galbraith suggested why this might be:

    “The process by which banks create money is so simple that the mind is repelled. When something so important is involved, a deeper mystery seems only decent.”

This book aims to firmly establish a common understanding that commercial banks create new money. There is no deeper mystery, and we must not allow our mind to be repelled. Only then can we properly address the much more significant question: Of all the possible alternative ways in which we could create new money and allocate purchasing power, is this really the best?[14]


The upper class keeps all of the money, pays none of the taxes. The middle class pays all of the taxes, does all of the work. The poor are there just to scare the shit out of the middle class. Keep 'em showing up at those jobs.

— George Carlin
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September 2008 saw the beginning of a financial crisis that almost brought the entire world economy screeching to a halt. In many ways the world economy did: ships stopped moving across the oceans, and thousands were placed in dry dock. Building cranes were dismantled, as no more buildings were being put up. Banks largely ceased making loans. In the wake of this, there was not only public rage and bewilderment, but the beginning of an actual public conversation about the nature of debt, of money, of the financial institutions that have come to hold the fate of nations in their grip.

But that was just a moment. The conversation never ended up taking place.

The reason that people were ready for such a conversation was that the story everyone had been told for the last decade or so had just been revealed to be a colossal lie. There’s really no nicer way to say it. For years, everyone had been hearing of a whole host of new, ultra-sophisticated financial innovations: credit and commodity derivatives, collateralized mortgage obligation derivatives, hybrid securities, debt swaps, and so on. These new derivative markets were so incredibly sophisticated, that—according to one persistent story—a prominent investment house had to employ astrophysicists to run trading programs so complex that even the financiers couldn’t begin to understand them. The message was transparent: leave these things to the professionals. You couldn’t possibly get your minds around this. Even if you don’t like financial capitalists very much (and few seemed inclined to argue that there was much to like about them), they were nothing if not capable, in fact so preternaturally capable, that democratic oversight of financial markets was simply inconceivable. (Even a lot of academics fell for it. I well remember going to conferences in 2006 and 2007 where trendy social theorists presented papers arguing that these new forms of securitization, linked to new information technologies, heralded a looming transformation in the very nature of time, possibility—reality itself. I remember thinking: "Suckers!" And so they were.)

Then, when the rubble had stopped bouncing, it turned out that many if not most of them had been nothing more than very elaborate scams. They consisted of operations like selling poor families mortgages crafted in such a way as to make eventual default inevitable; taking bets on how long it would take the holders to default; packaging mortgage and bet together and selling them to institutional investors (representing, perhaps, the mortgage-holders' retirement accounts) claiming that it would make money no matter what happened, and allow said investors to pass such packages around as if they were money; turning over responsibility for paying off the bet to a giant insurance conglomerate that, were it to sink beneath the weight of its resultant debt (which certainly would happen), would then have to be bailed out by taxpayers (as such conglomerates were indeed bailed out). In other words, it looks very much like an unusually elaborate version of what banks were doing when they lent money to dictators in Bolivia and Gabon in the late ‘70s: make utterly irresponsible loans with the full knowledge that, once it became known they had done so, politicians and bureaucrats would scramble to ensure that they’d still be reimbursed anyway, no matter how many human lives had to be devastated and destroyed in order to do it.

The difference, though, was that this time, the bankers were doing it on an inconceivable scale: the total amount of debt they had run up was larger than the combined Gross Domestic Products of every country in the world—and it threw the world into a tailspin and almost destroyed the system itself.

Armies and police geared up to combat the expected riots and unrest, but none materialized. But neither have any significant changes in how the system is run. At the time, everyone assumed that, with the very defining institutions of capitalism (Lehman Brothers, Citibank, General Motors) crumbling, and all claims to superior wisdom revealed to be false, we would at least restart a broader conversation about the nature of debt and credit institutions. And not just a conversation.

It seemed that most Americans were open to radical solutions. Surveys showed that an overwhelming majority of Americans felt that the banks should not be rescued, whatever the economic consequences, but that ordinary citizens stuck with bad mortgages should be bailed out. In the United States this is quite extraordinary. Since colonial days, Americans have been the population least sympathetic to debtors. In a way this is odd, since America was settled largely by absconding debtors, but it’s a country where the idea that morality is a matter of paying one’s debts runs deeper than almost any other. In colonial days, an insolvent debtor’s ear was often nailed to a post. The United States was one of the last countries in the world to adopt a law of bankruptcy: despite the fact that in 1787, the Constitution specifically charged the new government with creating one, all attempts were rejected on "moral grounds" until 1898. The change was epochal. For this very reason, perhaps, those in charge of moderating debate in the media and legislatures decided that this was not the time. The United States government effectively put a three-trillion-dollar Band-Aid over the problem and changed nothing. The bankers were rescued; small-scale debtors—​with a paltry few exceptions—​were not. <…​> Meanwhile, the conversation stopped dead, popular rage against bailouts sputtered into incoherence, and we seem to be tumbling inexorably toward the next great financial catastrophe—​the only real question being just how long it will take.
One can see the great crash of 2008 <…​> as the outcome of years of political tussles between creditors and debtors, rich and poor. True, on a certain level, it was exactly what it seemed to be: a scam, an incredibly sophisticated Ponzi scheme designed to collapse in the full knowledge that the perpetrators would be able to force the victims to bail them out. On another level it could be seen as the culmination of a battle over the very definition of money and credit.
By the end of World War II, the specter of an imminent working class uprising that had so haunted the ruling classes of Europe and North America for the previous century had largely disappeared. This was because class war was suspended by a tacit settlement. To put it crudely: the white working class of the North Atlantic countries, from the United States to West Germany, were offered a deal. If they agreed to set aside any fantasies of fundamentally changing the nature of the system, then they would be allowed to keep their unions, enjoy a wide variety a social benefits (pensions, vacations, health care…​), and, perhaps most important, through generously funded and ever-expanding public educational institutions, know that their children had a reasonable chance of leaving the working class entirely. One key element in all this was a tacit guarantee that increases in workers' productivity would be met by increases in wages: a guarantee that held good until the late 1970s. Largely as a result, the period saw both rapidly rising productivity and rapidly rising incomes, laying the basis for the consumer economy of today.
As time went on, more and more people wanted in on the deal. Almost all of the popular movements of the period from 1945 to 1975, even perhaps revolutionary movements, could be seen as demands for inclusion: demands for political equality that assumed equality was meaningless without some level of economic security. This was true not only of movements by minority groups in North Atlantic countries who had first been left out of the deal—​such as those for whom Dr. King spoke—​but what were then called "national liberation" movements from Algeria to Chile, or, finally, and perhaps most dramatically, in the late 1960s and 1970s, feminism. At some point in the '70s, things reached a breaking point. It would appear that capitalism, as a system, simply cannot extend such a deal to everyone. Quite possibly it wouldn’t even remain viable if all its workers were free wage laborers; certainly it will never be able to provide everyone in the world the sort of life lived by, say, a 1960s auto worker in Michigan or Turin with his own house, garage, and children in college—​and this was true even before so many of those children began demanding less stultifying lives. The result might be termed a crisis of inclusion. By the late 1970s, the existing order was clearly in a state of collapse, plagued simultaneously by financial chaos, food riots, oil shock, widespread doomsday prophecies of the end of growth and ecological crisis—​all of which, it turned out, proved to be ways of putting the populace on notice that all deals were off.

The moment that we start framing the story this way, it’s easy to see that the next thirty years, the period from roughly 1978 to 2009, follows nearly the same pattern. Except that the deal, the settlement, had changed. Certainly, when both Ronald Reagan in the United States and Margaret Thatcher in the UK launched a systematic attack on the power of labor unions, as well as on the legacy of Keynes, it was a way of explicitly declaring that all previous deals were off. Everyone could now have political rights—​even, by the 1990s, most everyone in Latin America and Africa—​but political rights were to become economically meaningless. The link between productivity and wages was chopped to bits: productivity rates have continued to rise, but wages have stagnated or even atrophied.
All this is not to say that the people of the world were not being offered something: just that, as I say, the terms had changed. In the new dispensation, wages would no longer rise, but workers were encouraged to buy a piece of capitalism <…​> [E]veryone could now become rentiers—​effectively, could grab a chunk of the profits created by their own increasingly dramatic rates of exploitation. The means were many and familiar. In the United States, there were 401(k) retirement accounts and an endless variety of other ways of encouraging ordinary citizens to play the market; but at the same time, encouraging them to borrow. One of the guiding principles of Thatcherism and Reaganism alike was that economic reforms would never gain widespread support unless ordinary working people could at least aspire to owning their own homes; to this was added, by the 1990s and 2000s, endless mortgage-refinancing schemes that treated houses, whose value it was assumed would only rise, "like ATMs" as the popular catchphrase had it, though it turns out, in retrospect, it was really more like credit cards. Then there was the proliferation of actual credit cards, juggled against one another. Here, for many, "buying a piece of capitalism" slithered undetectably into something indistinguishable from those familiar scourges of the working poor: the loan shark and the pawnbroker.
Any number of names have been coined to describe the new dispensation, from the "democratization of finance" to the "financialization of everyday life." Outside the United States, it came to be known as "neoliberalism." As an ideology, it meant that not just the market, but capitalism (I must continually remind the reader that these are not the same thing) became the organizing principle of almost everything. We were all to think of ourselves as tiny corporations, organized around that same relationship of investor and executive: between the cold, calculating math of the banker, and the warrior who, indebted, has abandoned any sense of personal honor and turned himself into a kind of disgraced machine.
How did we get here? My own suspicion is that we are looking at the final effects of the militarization of American capitalism itself. In fact, it could well be said that the last thirty years have seen the construction of a vast bureaucratic apparatus for the creation and maintenance of hopelessness, a giant machine designed, first and foremost, to destroy any sense of possible alternative futures. At its root is a veritable obsession on the part of the rulers of the world—​in response to the upheavals of the 1960s and 1970s—​with ensuring that social movements cannot be seen to grow, flourish, or propose alternatives; that those who challenge existing power arrangements can never, under any circumstances, be perceived to win. To do so requires creating a vast apparatus of armies, prisons, police, various forms of private security firms and police and military intelligence apparatus, and propaganda engines of every conceivable variety, most of which do not attack alternatives directly so much as create a pervasive climate of fear, jingoistic conformity, and simple despair that renders any thought of changing the world seem an idle fantasy. Maintaining this apparatus seems even more important, to exponents of the "free market," even than maintaining any sort of viable market economy. How else can one explain what happened in the former Soviet Union? One would ordinarily have imagined that the end of the Cold War would have led to the dismantling of the army and the KGB and rebuilding the factories, but in fact what happened was precisely the other way around. This is just an extreme example of what has been happening everywhere. Economically, the apparatus is pure dead weight; all the guns, surveillance cameras, and propaganda engines are extraordinarily expensive and really produce nothing, and no doubt it’s yet another element dragging the entire capitalist system down—​along with producing the illusion of an endless capitalist future that laid the groundwork for the endless bubbles to begin with. Finance capital became the buying and selling of chunks of that future, and economic freedom, for most of us, was reduced to the right to buy a small piece of one’s own permanent subordination.

In other words, there seems to have been a profound contradiction between the political imperative of establishing capitalism as the only possible way to manage anything, and capitalism’s own unacknowledged need to limit its future horizons lest speculation, predictably, go haywire. Once it did, and the whole machine imploded, we were left in the strange situation of not being able to even imagine any other way that things might be arranged. About the only thing we can imagine is catastrophe.

To begin to free ourselves, the first thing we need to do is to see ourselves again as historical actors, as people who can make a difference in the course of world events. This is exactly what the militarization of history is trying to take away.[15]

2. Mumford, L. (1970). The myth of the machine. 1: Technics and human development. Harcourt, Brace, Jovanovich.
3. Mumford, L. (1970). The myth of the machine. 2: The pentagon of power (1. ed). Harcourt, Brace, Jovanovich.
4. Harari, Y. N. (2014). Sapiens: A brief history of humankind. Signal Books.
5. Brueckner M. (2013) Corporation as Psychopath. In: Idowu S.O., Capaldi N., Zu L., Gupta A.D. (eds) Encyclopedia of Corporate Social Responsibility. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-28036-8_128
7. Hobsbawm, E. (1998). The Nation and Globalization. Constellations, 5(1), 1–9. https://doi.org/10.1111/1467-8675.00069
15. Graeber, D. (2011). Debt: The first 5,000 years. Melville House.