"Will the real oligarchs please stand up," by
Nicholas Strakon, part six.
Our Walter Karp table
TOC for Strakon's article
Unquestionably Karp is correct when he writes: "The most important single fact about monopoly is that it depends absolutely on massive government support and protection." (p. 180) But he goes further. From that proposition he derives an argument that believers in an extra-regime ruling class, such as myself, are engaging in circular reasoning:
They argue that the political privileges granted to the future monopolists were extracted by the future monopolists, who apparently used their economic power over politicians to gain the privileges that brought them the very wealth that gives them their economic power. This is tantamount to believing that effects create their own causes, that the newborn baby compelled its parents to conceive it. (p. 191)
Continuing, he offers a seemingly archetypal example from the early days of state capitalism:
It is tantamount to believing that when Congress put a Maecenean fortune into the hands of Leland Stanford, Collis P. Huntington, Charles Crocker and Mark Hopkins by authorizing them to build the Southern Pacific Railway, three California shopkeepers and an obscure lawyer controlled the Congress of the United States. (p. 191)
In the discussion that follows, I rely on Dee Brown's well-regarded Hear That Lonesome Whistle Blow: Railroads in the West.  I must make two minor points just to clear away the underbrush. First, the road in question is the Central Pacific, not the Southern Pacific. Second, given Karp's Lincoln worship, it is worth noting that Congress in 1862 did not sneak the railroad-subsidy act past a President Lincoln who was too distracted by the repulse of his invasion of Virginia to notice. Instead, a government-subsidized transcontinental railroad had long been a key plank of the Republican/Whig program; I can find no evidence that Lincoln hesitated one second in signing the bill when it hit his desk on July 1, 1862.
Now to those lucky nobodies Stanford, Huntington, Crocker, and Hopkins. Crocker does appear, from Brown's account, to have been a comparative munchkin: he owned a dry-goods store. (Perhaps he was just fortunate in his choice of friends.) But Huntington and Hopkins "had started a miners' supply store in a small tent in Sacramento and had built it into the largest hardware enterprise on the Pacific Coast." (Brown, pp. 44-45) And what was the nobody Stanford doing in 1861, in addition to incorporating the Central Pacific? Well, he was getting himself elected Republican governor of California! which one would never guess from Karp's account. (Brown, p. 45)
A writer willing to abruptly shift his ground to salvage an argument (unlike the honorable Karp) might reply, Very well, Stanford wasn't a nobody: he was a party oligarch, using his power to feather his own nest. Brown's book is populated with many such oligarchs notably, Black Republican congressional leader and iron manufacturer Thaddeus Stevens, who was one of many lawmakers showered with stock and land titles by railroad promoters and who inserted into the 1862 railroad act a provision that only American iron be used in construction. (Brown, pp. 46, 48)
What I see in all this and in the subsequent 130 years of corporate statism is different from what Karp sees. In general, I don't see nobodies whimsically being made into tycoons by the party oligarchs. I see wealthy and influential men becoming super-wealthy and super-influential through the employment of the political means. In fact, many members of the regime who have worked to award state-capitalist privileges from Stevens in the 1860s to Robert Kerr a century later were the direct beneficiaries of those very privileges, in their extra-regime roles as big-businessmen. Such men, in my view, are true oligarchs, but their political parties are not the true base of their power. After all, who is going to run for office in the first place but someone who can afford it personally or whose sponsors can afford it? Extra-regime oligarchs, in my view, are joined in the regime by hacks and creatures primarily nurtured not by the parties but by extra-regime oligarchs.
Ronn Neff's development of this theme in a private letter to me is so insightful that I cannot resist quoting it in full:
Karp is making the mistake of concentrating on what is seen and ignoring what is not seen. What is not seen are the bought politicans who lost elections or who didn't have the mettle to get any power in Congress. He doesn't see the wealthy backers of wrong horses or the would-be benefactors of wealthy figures. Try to imagine if the great contractors Brown and Root had misjudged Lyndon Johnson, and he had been unable to get them their crucial Navy contracts. They would never have become super-wealthy. And what if Johnson had never had their backing? He would never have been able to do anyone favors.
In other words, both power and wealth are achieved incrementally. And one can move back and forth between them, converting, when necessary, one into the other. Karp might just as well claim, "It is nonsense to argue that the wealthy get wealthier. Where did the initial wealth come from?" Apparently, no one gets wealthier. They are just wealthy. In reality, the wealthy seek out avenues and opportunities for influence, just as they seek out investment opportunities. Neither is a sure thing.
Readers who wish to pursue this further must read Domhoff's chapter 4, "The Candidate-Selection Process," especially his survey of the professional background and ambitions of the typical officeholder on the state or national level. 
To the next part: "The wielding"
Posted June 8, 2002
Posted in 2002 by WTM Enterprises.
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