Neoliberalism at Work

Globalization and the Corporatist State-jk
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The Corporatist State & Globalization Exposed:

proof that it is worse than you supposed

By JK 6/07, updated 12/08, 5/09, 12/11, expanded 1/13 at

All major nations have similar debt expansion
M3 tracks the growth of debt

There is a monstrous enemy of the people afoot, unfettered capitalism (UC hereafter).  UC has been pushed upon all nations by the corporate giants--first among them is the financial sector (banking/banks hereafter).  UC is dressed in the economic-market theory of neoliberalism[1].  It is neither new nor liberal.  Neoliberalism is a theory that supports unregulated economic activity (laissez faire capitalism, UC), which because of the of corporate influence is taught in universities and praised in the corporate media.  Once we had divine-right of kings and Papal infallibility to justify the unjustifiable, now we have neoliberalism to justify the global-ruling elite.  It is bull used to justify the 2nd era of Robber Barons (the first ended with the Great Depression).  Corporations haven’t changed.  Don’t swallow the spin of the ruling elite. 

The US corporate press has rewritten the history of the struggle to control banking and thereby the function of government as to whom is served first.  The power to control credit entails the power to control the economy.  Tighten credit and the economy crashes; and then comes foreclosures and bargain buyouts, which benefit the giants in each sector of the economy.  The founding fathers knew of this because France and England had private national banks.  They hotly debated this issue.  Twice Congress voted for a private national bank; then voted not to renew their charters in 1811, and again in1836.  The control of banking had been lost with the death of Lincoln, who had warned that he feared the bankers more than the Rebel Army.[2]  The failure of governments to serve the people first is a result of organized private banking.    

The globalizers’ success in dismantling the populist, Keynesian economics practices starts with the Bretton Woods Agreement (System) adopted by all 44 Allies in 1944.  It created a global financial system with the US dollar (then backed by gold) as the standard of exchange.  This accord set up the World Bank (then called the IBRD) and the IMF.  The process of globalization accelerated out of this accord which favored the giants of banking.  Their control of credit has made them on a global scale the shadow government.  Following the 2007 implosion of finance, the carte-blanch bailouts through the process of reflation which occurred in every developed nation proves who is in control.  The former CEO of Goldman Sachs, Henry Paulson was our Treasury Secretary (2006-09 under Obama & Bush).  The present Secretary, Timothy Geithner (former President and CEO of Fed Reserve Bank of NY) worked under Paulson in creating the bailout programs--welfare without oversight.  We bear the burden through debt payments for the over $5 trillion (09-13)  increase in federal debt--mostly carried by banking.  Social services are being cut as payments on federal debt rises.  The Feds pay over $500 billion a year of our taxes in interest on debt.  But what else is to be expected from the shadow government which is too big to fail?[3] 

The shadow governments, with their control of finance and NATO militaries, have established a new-world order.  Political contributions, trade treaties, loans, and economic sanctions are tools of “persuasion”—and when that fails there is regime change.  In the third world loans are mainly through the IMF and World Bank to the under developed country who are signers of and adopt the policies of these trade treaties.  These treaties call for deregulation (UC), which they call liberalization.  The flat-world treaties of the globalizers are  given acronyms such as NAFTA, CAFTA, AFTA, and MEFTA, which are signed by both underdeveloped and developed nations.  In the NAFTA treaty—as in the others--there is 900 pages of clauses.  These treaties require much more than no tariffs:  the opening up the resources, the banking, the media, the utilities, the borders, and their very market places to foreign buy outs and competition.  The UC clauses require an overriding of national environmental, safety, drug, labor, commerce, and tariff laws.  And NAFTA has its own court system to accomplish this!  These clauses and the conditionality attached to loans require the privatization of government services such as the water works, social security, post office, schools, prisons, and even the military. In The US the White House and Congress have been gradually implementing these clauses.  The power of the globalizers has caused our national sovereignty to be signed away, and their corporate press is essentially silent over the treaties reach.  

5)  While the elite tell us to blame the corporate heads, it is the corporate system that produces the bad results.  Standard Oil and J. P. Morgan and Company did not change business practices with new CEOs who replaced John D. Rockefeller and J. P. Morgan.  We have robber-baron corporations, which is a result of the need to maximize profits.  Monsanto, Merck, B.P. Petroleum all have the same goals.  And they have evolved into global corporations.  In the past the third world was carved up into colonies, and nations protected their corporations and colonies with high tariffs.  In 1946, starting with the Brent Woods Agreement, there was a banking led move towards the “liberalization” of regulations (UC).  The Business ethics hasn't changed, only monopoly capitalism through these trade agreements is now played upon a board that covers our planet.

The Iraq and Afghan wars are about MEFTA—opening up the entire Middle East markets including the oil fields, banking, marketplace, and manufacturing.  Both nations resisted globalization and were punished.  The war is about the resolve of the US (as a tool of the shadow government) to promote neoliberalism (called liberalization).  So far 13 Middle East nations have signed all or parts of the MEFTA package of treaties, which Europe and the U.S. are parties to.  But it is more than just trade treaties: it is about a takeover of governments by international corporations who want UC globally.  Thus it is entails the crushing of populism—includes theocracies & socialism types.  There is a long list since WWII of U.S. lead assaults against countries that have formed populist governments—resistant to the new imperialism.  Populism is about serving the people first, thus the control of  corporations, land reform, social service, banking regulations, trade restrictions, nationalization of resources.  The corporate media call this “socialism” and drums into our heads that this is counter to freedom, thus evil.       

Because of popular unrest, with over 1 million voting socialist in 1932 and an attempted fascist coupe in 1933 backed by corporate elite, Roosevelt responded with Keynesian, populist changes that ended corporate political domination, and established through the protection of unions a powerful populist political voice for the people.  With the marginalization of unions in the 1970s, we have returned to a blatant corporatist state, a state which promotes on global-scale neoliberal policies.  These policies have resulted in the out sourcing of jobs, the flood of cheap tariff-free goods, the flood of foreign workers both documented and undocumented, the reduction in the pay for skilled and unskilled jobs, the breaking of unions, reduction in requirements for benefits to employees, the reduction of government social services, and a shift of the tax burden from corporations (many of whom have moved to tax heavens to avoid U.S. taxes) and the rich to the bottom 95%. productivity has gone up, but buying power way down.   In 1950s the husband supported the family; the mother stayed home.    Through the corporate media, paint a rosy picture for the benefits of UC and the new Robber Baron corporations, by using  bought economists, slanted media, cook federal stats.  But reality thunders a sad, sad, storm, and a sadder future.      

8) In the pursuit of their short-term profits and global interests the neoliberals expanded credit which resulted in a credit-expansion based prosperity similar to the 1920s.  Now it is like the 1930s only by our government expanding credit have we temporarily escaped the economic collapse of 07.  The $4.7 trillion in by 09 of debt has reflated the economy (a path not taken by Hoover, but by his successor Roosevelt).  But reflation is a short-term fix, for the same casino type banking speculation hasn’t changed, nor can it, for contraction entails collapse.  The Federal Reserve policy[4] is to flood the banks with funds based on new government debt that is expanded 10-fold through issuing new credit ($1 million in assets become 10 in loans).  It is the 10% equity requirement and going off the gold standard plus deregulation (the 1933 Glass-Steagall Act was modified under Reagan, and repealed in 1999) that has led to massive market speculations.  Mostly deregulated, banks take high-risk gambles, which pay off because of credit expansion.  The problem banking is much greater than a credit bubble.  Most of the loans have been bundled and sold to other institutions based on 3% equity.  Speculative shadow banks are mostly owned by banks and have over $25 trillion in liabilities (world-wide $67 trillion as of 11/12).  Shadow banks holding are highly leveraged.  When the bubble burst in 2007, the US our government stabilized the markets by guaranteeing $23.7 trillion mostly in shadow banks assets (source Neil Barofsky, the special inspector general).   Every-developed nation’s banks operate like the US’s.  All have a very high total debt to GDP ratio.  In the U.S. total debt is over 483% of GDP ($72 trillion total debt, $14.7 trillion GDP).  It is higher than was held by those nations that have had an economic crisis in the last 2 decades (Mexico, Argentina 1995, and the 1997 Asian Financial Crisis.  Servicing federal government debt is now the second biggest item (over $428 billion in 07) in our budget after the military.  State and local governments have similar debt payments.  Our tax dollars are feeding banks instead of providing social services and infrastructure.  Our shadow government especially banks want more and more of our money, and they get it.  And there is business and personal debt interest payments.

Neoliberal policies--especially unfettering finance and NAFTA (both just described)--have brought our nation to the precipice, and when the US falls, so too will all the developed nations.  Our nation is being bought up by foreigners made fat by our trade deficit ($817 billion in 06, and rising) because the manufacturing, once the foundation of our economy, shrunk to less than 12% of employment.  Falling wages are a result of rising number of people looking for work:   seniors, women, illegals, immigrants, and those made unemployed because of outsourcing.   Not counting food and plants, 87% of items sold at Wal-Mart are imported.  Credit inflation has resulted in over $53 trillion in debts.  Of corporate profits, bank’s share is 44%.   Our over 800 foreign military bases only makes sense by considering the aspirations of the globalizing corporations and vulture capitalism.  Globalization costs us over $1 trillion annually in military spending.[5]   And though US worker productivity has increased 45% over the last 30 years, the masses don’t benefit.  The real median income has declined world-wide.  Pollution, global warming, corporate medicine, dumb-down schools and media, all these follow from the neoliberal policies of the shadow government.  The corporate-banking shadow government follows the pattern observed by Adam Smith.[6]  Thus the globalizers want to remove the social safety net, so that our government can make interest payments without raising their taxes.  These are the results of having the international business community as our shadow government. 

 A strong economy and domestic tranquility are not built on a steep pyramid of income, but on a prosperous middle class, full employment, and social-economic justice.  The U.S. now ranks 4th in GDP per capita, yet is 92nd in distribution of key benefits—UN stats (principle causes for being 92nd are the economic pyramid, the military budget, debt payments, inflated corporate profits, and high costs of health care).  Neoliberal policies have rolled back the wisdom that got us out of the Great Depression and carried us forward following WWII:  tariffs, living wages, and strong unions.  A prosperous working class buys lots of durable goods, while those at the top primarily speculate in trading.  Most of the credit inflation since the 1970s has gone into highly leveraged trading.  Banking exists as a parasite upon the backs of labor, for nearly all the payments on debt is passed on to them.  Labor provides the goods and services used by banking and its employees.   They have created a casino like economy[7] with the banks holding the chips and making the rules, rules for finance and the corporatist state. 

         11) Globalizers promised better pay, cheaper goods, a strong economy, and whatever else sold the public on it.  Now they say that lower wages and benefits are necessary to keep jobs here.   They and the politicians, who are in their fold (Reagan,

Bush 1 & 2, and Margaret Thatcher were the most brazen) have no regard for the truth.  Thirty years of economic decline for both developed and undeveloped nations proves the case against them.  A case much worse than the CIA’s and World Bank’s manipulated stats; and worse still because they include the parasitic income made by banking as part of the service sector.  The service sector’s percentage of GDP is in the US is 79.6%, Germany 70.6%, U.K 77.7%, Mexico 61.7%, India 56.4%, Venezuela 60.4% of which the parasitic financial activity accounts for over half of those totals.  The GDP growth thus is not a result of greater prosperity, but the results of currency expansion (see graph page 1), which results in the parasitic profits based upon ever increasing speculation.   A second deception of the GDP comes from an underestimation of the rate of inflation (the Consumer Price Index, CPI).  In the US inflation average over the last decade is 10% (some estimate it at 12% others a bit less), but the official rate is under 3%.  Thus historical comparisons are off.  A final distortion as to the prosperity of the masses is that the income pyramid has over doubled in the last 40 years; even more for the top 0.01% (see footnote).  With that wealth and their use thereof, they and their corporations own our political system.  A better measure of purchasing power and what has happened to the bottom 90% would be to calculate how many loaves of bread can the median[8] income worker purchase per hour of pay now and in 1973?   In 1973 the average Safeway checker made $15/hour in 1973 dollars.   

 The troubles are not over:  Greece, Italy, Spain, and Ireland are just some of the countries to face a second round of debt based problems.  And the market has responded by buying their new government bonds at rates that strips most of its social services.  Greece in Nov, of 2012 sold 10 year bonds that paid 13% interest, and a high of 37% Dec 2011.  The economies of Greece and Spain collapsed under the sucking effect of the high-interest payments.  If our government in a crisis was forced to roll-over its bonds (November 2012 rate was 1.62%) at a rate comparable to Greece’s, our economy also would collapse.   In crisis assets become dirt cheap, and this creates opportunities for the vulture-capitalist corporations.  As Naomi Klein explains in her book, The Shock Doctrine, it is all scripted.  In the IMF and World Bank’s scripts are loans with conditionalities that prolong the crisis.  Also in the script for the lackey governments is a military-police response to the mass’s protests--Klein calls it the Pinochet option (dictator Chile 73-90).   Economic collapse is on our horizon, and I fear our government’s response.   

SOLUTION:  The market place needs regulations:  regulations for safe and effective drugs, wholesome foods, clean air and water, safer work places, honest advertising, product safety, accurate news reporting, and to prevent price gouging.  It needs regulations to prevent banking and speculative bubble, regulations to distribute to the workers a greater share of what their labor produces, regulations to protect unions, and tariffs to assure a living wage.   All this is needed for a government to serve the public weal first.  Such a government ought to replace the existing banking system with public banking, prohibit corporate political donations, democratize the corporations by having workers elect directors, close the speculative markets, and replace the corporate media with one ran by public universities free of corporate influence.   All this is to insure that the corporations don’t again create a corporatist state.  There is a fundamental conflict between short-term profits and long-term economic growth, between domestic prosperity and open borders, between the aspirations of the ruling elite and the bottom 95%, between corporate media and a true democracy, and between neoliberalism and populism.  As Aristotle observed:  “A democracy exists whenever those who are free and poor are in sovereign control of the government; an oligarchy when the control lies in the hands of the rich and better born.”   Therefore don’t believe the spin of the corporate media.  The corporatist parties are about globalization and promoting their contributors wealth.  NAFTA was passed under Clinton.  Nothing will change until we dethrone the ruling elite and replace them with a populist type of government ran by humanist who will legislate fundamental changes like those just listed above--otherwise history will repeat itself, as it did following Roosevelt. 

More readings:  The long version;  a rebuttal of the 5-basic premises in support of neoliberal (laissez faire) economics; original 2007 version; & the solution   









[1] Webster dictionary,  “Neoliberalism, a modern politico-economic theory favoring free trade, privatization, minimal government intervention in business, reduced public expenditure on social services, etc.”

[2] As Napoleon noted, “The hand that gives is above the hand that takes.” Banks by their control of credit, they can bring on at will a recession or depression. Ben Bernanke confirmed that the Federal Reserve’s credit policy was the primary cause of the Great Depression.  On point is Nathan Mayer Rothschild; I care not what puppet is placed on the throne of England to rule the Empire…. The man that controls Britain's money supply controls the British Empire. And I control the money supply.” 

[3] Theodore Roosevelt on invisible government, New York Times 1917: These International bankers and Rockefeller-Standard Oil interests control the majority of newspapers and the columns of these papers to club into submission or rive out of public office officials who refuse to do the bidding of the powerful corrupt cliques which compose the invisible government”. 

[4] The Federal Reserve is not a government agency, but one chartered through our government, and for whom from the banking community our President select their directors—the fašade of US control.  They have never been audited! 

[5] Gov. lists it at $805 billion for 3/2010, but they miss the $4 trillion for the Middle East wars and future veteran benefits.

[6] The cruel maxim of the rulers of mankind, all for ourselves and nothing for anybody else,wrote in the 1750s.

[7] Their media serves not to instruction but confuse and confound.  It is their complex system of finance that hides their activities.  Good sources are the movie, The Money Masters, and Ellen Hodgson Brown’s book, The Web of Debt.

[8]  Median is used because it avoids the inflation of results created by those at the top of the economic pyramid.  In the US in 2010 the top 1% have 42.1% of the wealth, the next 19% have 53.5%, 4.7% for the bottom 80%--figures excludes value of home.  The average yearly income per household: for the bottom 90% $29,840, for 90-99% 161,139, for the 1 to 0.1%  $1.019,089, for 0.1 to .01 make $2,802,020, and the .0.01% and above average $23,846,950, source Emmanuel Saez, University of California Berkley. Thus 1,150 households make $2.74 trillion TAXABLE income (115,000,000 total household in US in 2012).

The European nations have under 4% requirement


The BOTTLENECK—1/21/23

There are fundamental flaws in an economic system which fetters industrial production ultimately to the consumer’s ability pay (including through taxation).  A second flaw:  the ability to pay is in conflict with a system of corporate review based upon the maximization of profits.  Corporate influence has steadily grown primarily because of their control of the economy by controlling credit, by their ownership of the media and the media’s dependence upon advertisement for income, and by their funding of elections.  The unions stood, through their ability to deliver votes, as a political voice for the working class.  With their dismantling, global corporations—especially in the financial sector—act blatantly as the shadow government.  And as the shadow government, they have flooded the labor market to lower wages, reduced the tax burden upon corporations, and cut government programs for the masses, since these are paid for by taxes, and tax dollars are needed to pay interest on the debt and to support the military that does the biding of the global corporations (they are currently opening up the Middle East).  The masses lack a voice and our government is trapped by a global-finance system that can at will tighten credit.  The effects of their every increasing profits has created a bottleneck whereby the capacity to produce on a national level is constricted by declining demand. 


This contraction of demand and the ability to produce is increased by inefficiencies in the present market-based system.  This system grossly violates transparency:  what an item would cost in a maximally efficient system compared to what it now costs.  First among inefficiencies is finance, which sucks funds and thus the demand for goods.  Finance takes funds from corporations resulting in higher prices; takes tax dollars from governments resulting in higher taxes; and from consumer consumers resulting in interest payments that reduces disposable income.  The financial sector accounted in 2012 for 44% of all corporate profits, up from 5% in 1950.  Second waste is the spread between fixed (necessary) costs and the price to retailerss.  Third on the list is advertising & marketing--in most cases amounting to over 30% of costs.    Fourth is the economic pyramid with the top 1% own 85% of our nation’s non-residential wealth.  Fifth is monopoly pricing.  The large corporations collude to drive up prices and dismantle government oversight.   Other major inefficiencies are the health-care system, insurance, taxation in support of a gigantic military, private transportation, and the lack of public ownership of the resources, of businesses, and of rental and commercial properties.  All wealth comes off the back of labor. All these are burdens upon wage earners thereby increase the bottleneck created by the ability to produce and a contracting demand. 


Even when the corporate system was managed by governments using Keynesian-populist economics following the Great Depression, the problem of distribution of labor and products of labor where not adequately addressed.  There has been 11 recessions since WWII, and never full employment or a living wage for all workers.  As the corporatist state evolved, conditions worsen.   This has been temporarily hidden by the Federal Reserve constantly increasing the credit limits of its member banks, and in so doing the debt of governments, businesses, and citizens has been steadily increasing payments on their debts.  This is another major flaw of our economic system. The effects of falling wages are in part hidden by the expansion of debt (the same occurred in the 1920s).  The 2007 crash resulted from the credit expansion/bubble.  The shadow government’s solution was reflation.  Our government has assumed $7.7 trillion (federal debt $8.7 Jan 2007 to $16.4 trillion Jan 2013).  For every dollar of federal debt a bank acquires it then can issue $10 in credit. The debt expansion entail an every greater percentage of taxes and income are going to cover the interest on the debts, and thus decreasing demand for goods and services.  But there are limits to debt an economy can support.  For the next crisis reflation will then not be an option (as it isn’t for Greece and Spain).   The next bursting of the bubble will produce a downward spiral worse than during the Great Depression when factory wages dropped 50%, production dropped 40%, and unemployment reached 25% based on government overly optimistic figures.  A depression is bottleneck at its worse:  millions wanting to work, yet factories are operating at a fraction of capacity because of lack of demand caused by falling wages and spiraling unemployment, all of which are exacerbated by tightening of credit and bank failures.   


Corporate capitalism is a system unto itself; it seeks to increase profits by eliminating competition and lowering costs.  In this system there is neither full employment nor sufficient purchasing power to assure for quality of life for the masses.  The system creates a bottle neck for the corporations want the markets to expand, yet the masses receive less, and thus demand shrinks.  Their solution is currency expansion, but this produces speculative bubbles, and bubbles produce periods of growth and recession/depression.  Even in period of growth there is always a bottleneck, one where the where product and distribution of goods are held bondage to the cash nexus.   It is a system that rates low when measured by transparency, a system dotted with cycles of expansion and recessions, a system where profits comes before people, a system that is driven by profit growth that has evolved into a global force of unsustainable growth that is devouring the resources of this planet and producing global climate change, a system of hegemony that opposes regulations in the public’s interests. 


All we need is to take the might of industrialization and harness it to a system of distribution of goods according to needs and contribution through labor.  And this requires a solution to the political problem of how to get the best to run the economy and have an independent system of oversight to assure that the public weal is the ultimate goal.  For a modes, concise proposal or fixing the apple cart with 5 basic changes go to  


A collection of articles in support of the above are to be found at and in other locations.  There is an internal Google search on every home page, and a table of contents at  The overall theme of this site is that of humane skepticism:  A humane skeptic is one whose beliefs are not only beliefs in proportion to the evidence in support thereof, but also accepts utilitarian ethics and thereby seeks to improve the condition of mankind in according to the measure of harm-and-happiness.


There are alternatives, but they won’t become a possibility until the current system collapses and the people organized, hopefully to support the populist alternative, and not the fascist alternative favored by corporate media and big business, as they did with Hitler and Mussolini, and they wanted Smedley Butler in the US -- Business Plot for Fascist Coupe US 1933, General Smedley Butler —jk.

Teddy Roosevelt's advice that, "We must drive the special interests out of politics. The citizens of the United States must effectively control the mighty commercial forces which they have themselves called into being. There can be no effective control of corporations while their political activity remains."