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Appeared in: Volume 9, Number 6
Published on: June 15, 2014
Political Economy & The State
The Twin Insurgency

The postmodern state is under siege from plutocrats and criminals who unknowingly compound each other’s insidiousness.

States within the global political economy today face a twin insurgency, one from below, another from above. From below comes a series of interconnected criminal insurgencies in which the global disenfranchised resist, coopt, and route around states as they seek ways to empower and enrich themselves in the shadows of the global economy. Drug cartels, human traffickers, computer hackers, counterfeiters, arms dealers, and others exploit the loopholes, exceptions, and failures of governance institutions to build global commercial empires. These empires then deploy their resources to corrupt, coopt, or challenge incumbent political actors.

From above comes the plutocratic insurgency, in which globalized elites seek to disengage from traditional national obligations and responsibilities. From libertarian activists to tax-haven lawyers to currency speculators to mineral-extraction magnates, the new global super-rich and their hired help are waging a broad-based campaign to limit the reach and capacity of government tax-collectors and regulators, or to manipulate these functions as a tool in their own cut-throat business competition.

Unlike classic 20th-century insurgents, who sought control over the state apparatus in order to implement social reforms, criminal and plutocratic insurgents do not seek to take over the state. Nor do they wish to destroy the state, since they rely parasitically on it to provide the legacy goods of social welfare: health, education, infrastructure, and so on. Rather, their aim is simpler: to carve out de facto zones of autonomy for themselves by crippling the state’s ability to constrain their freedom of (economic) action.

The Failures of Social Modernism

Understanding how these twin insurgencies gathered momentum requires a brief look at the past. During the social modernist era (1945–71), virtually all states—whether capitalist or communist, industrialized or developmental, great power or post-colonial—aimed to legitimate themselves by serving the interests of middle classes whose size they sought to expand. Both capitalist and communist accumulation strategies were based on the nurturing of industrial laborers, who were expected to work for a living and who in turn were told that the state not only would steadily improve their standard of living but also cushion them from misfortunes through various forms of social security.

These were “welfare states” in the sense that they sought to promote the general welfare rather than lift up the poor or defend the prerogatives of the rich. In the non-communist world, the wealthy were taxed not out of class hostility but in order to finance benefits for society as a whole. Health care, pensions, schools, and so on were represented less as individual “entitlements” than as collectively enjoyed public goods. While there were many different kinds of social contracts during this period, in virtually every country elites felt some duty to underwrite the well-being of the middle class.

Partly as a result of these welfare goods, inequality within most countries steadily decreased. For Western elites in particular, the fact that the Cold War made radical alternatives to capitalism thinkable no doubt helped concentrate a certain commitment to larger moral, social, and political purposes.1 Postwar social solidarity and Cold War national security concerns also generated greater reserves of social capital, bolstering trust in government and making it politically possible to pursue such ends. This was especially true in the United States.

During this period, the ideal of the modernist welfare state may have been honored mainly in the breach, but it was honored. And it was honored despite competition from leftists who sought a more explicit policy of class leveling, and from rightists who sought to uphold or enforce various forms of racial, national, or class-based exclusions. The liberal welfare state remained firmly ensconced as the hegemonic model—that is, as the baseline against which other political discourses and proposed political-economic models had to define themselves.

By the 1970s, however, it was becoming clear that the social modernist states were increasingly failing to deliver on their promises. In the West, inflation eroded the technical foundations of the Bretton Woods financial order, and economic stagnation undermined the technocratic consensus in favor of Keynesian demand management and the political consensus in favor of sharing productivity gains between labor and capital. In the East, centrally planned economies were revealing themselves not only as politically repressive but also as economically inefficient and environmentally catastrophic. In the “Global South”, the commodity boom of the 1970s led to a golden age for some primary producers, but industrialization by means of import substitution failed to sustain growth, and the debt crisis of the early 1980s put to rest any dreams of a new international economic order.

By 1980, the reaction against the social modernist state had set in. Levels of economic inequality began to grow again, eventually reaching heights not seen since the 1920s—prompting one financier to celebrate the emergent economic order as a “plutonomy”, that is, an economy geared to the interests of plutocrats.2 When Communism collapsed in 1989, what died was thus not just the collectivist economic system and authoritarian politics of the Soviet Union and its satellites. Cremated along with the corpse of Communism was the civic-minded conception of development as the central responsibility of the state and allied elites—a conception shared by communists and liberals alike during the Cold War. It wasn’t just that the state “retreated” from the “commanding heights” of the economy, to use Daniel Yergin’s terms, but also that the very ambition of the state receded. Many states stopped even pretending they wanted to create a more egalitarian society and instead sought to legitimate themselves by claiming they were maximizing individual opportunity. For proponents of this perspective, the rise of new plutocrats counted not as a defeat, but as a success for the new model of governance. The best face that the World Bank could put on the new order was to say, in 1997, that henceforth the role of the state would be to “steer” rather than to “row.” By the turn of the millennium, even elements of the Left had come to doubt whether states could be relied on to effectively and disinterestedly promote the public interest.

Two texts published the year the Berlin Wall fell, Francis Fukuyama’s “The End of History?” and John Williamson’s “The Washington Consensus”, made the nature of the new order explicit. Fukuyama proposed that big-H History (in the Hegelian sense of the ideological contest over the proper relationship between state and civil society) had come to an end with a universal agreement that liberal, democratic capitalism was not just the best but the only reasonable form of socio-political-economic organization. By doing so, Fukuyama did not advocate weak states, and indeed later he argued that state executive capacities were widely undervalued as preconditions for development and sound governance, even in affluent societies. He suggested rather that the command-economy model had been deposited in Trotsky’s dustbin of history. Williamson’s text was more pragmatic than metaphysical, filling in the details of this “post-historical” policy consensus with specific imperatives around fiscal discipline, the redirection of public spending away from subsidies, the rollback of progressive tax codes, the floating of currencies, the liberalization of trade and cross-border investment, the privatization of state enterprises and deregulation of private ones, and above all the sanctification of private property rights.

The Washington Consensus, in particular, promoted not just a dethroning of the state, but a wholesale challenge to the idea that technocratic leadership constituted the primary way to ensure collective social well-being. Pioneered as domestic policy in Margaret Thatcher’s Great Britain and Ronald Reagan’s United States, but continued thereafter in administrations controlled by their respective political opposites, the programs associated with the Washington Consensus—above all, the privatization of national industrial assets (especially of state-owned firms and utilities) and deregulation (especially of financial firms)—soon became the model London and Washington sought to export to the Global South and the post-Communist world under the rubric of “structural adjustment” and “shock therapy.” As Dani Rodrik concluded, “‘Stabilize, privatize, and liberalize’ became the mantra of a generation of technocrats who cut their teeth in the developing world and of the political leaders they counseled.”3

This transformation of the role of the state in the wake of the Cold War has dramatically increased the precariousness of the lives of the middle classes within most societies. On a material level, it has generated unprecedented new forms of insecurity. From above, middle classes find themselves threatened by a global financial elite, in league with ultra-wealthy compradors, both of whom seek to cut social services and the taxes that pay for them—taxes that these elites depict as a form of illegitimate expropriation. From below, the middle classes find themselves exposed to a new resurgence of criminality, which has discovered in their plight a business opportunity.

At the same time, on an ideological level, the crisis of the labor-centric, social welfare-providing nationalist state has undermined the ability of the middle classes to organize themselves collectively in the face of these new threats. The post-1970s loss of faith in the state as a disinterested welfare provider goes a long way toward explaining why the “Occupy” movements of 2008–09 failed to generate any significant political traction.

Plutocratic Insurgency

The ideological retreat of the social modernist state thus represents the central enabler of plutocratic insurgency. During the 1990s, a new class of globetrotting economic elites emerged, enriched by the opportunities created by globalizing industrial firms, deregulated financial services, and new technology platforms. This new class is an order of magnitude richer in absolute terms than previous generations of the ultra-wealthy. As Thomas Piketty has recently demonstrated, the rise of the new plutocrats since the 1970s reflects an historic shift in the structure of capital accumulation. The accumulation regime that predominated during the heyday of social modernism depended on a new class of workers who could afford the goods they were producing. The great fortunes of the late 19th and early 20th centuries were built on the backs of worker-consumers in primarily inward-looking national contexts. By contrast, today’s plutocrats thrive by selling their goods and services globally; their success is dramatically less connected to the fortunes of their fellow national citizens than was that of previous generations.

Moreover, the two signature types of massive wealth accumulation in the early 21st century have been high technology and financial services. Neither of these industries relies on masses of laborers, so their productivity is detached from the health of any particular national middle class. The result has been a dramatic rise in inequality within countries, even as wealth inequality transnationally has narrowed.

The plutocrats have also developed novel ideological self-conceptions. Many see themselves as “the deserving winners of a tough worldwide competition” and regard efforts to make them to pay for public goods as little more than organized theft.4 Whereas during the Cold War the apparent availability of a socialist alternative pressured the ultra-rich to temper their maximalist ambitions, the collapse of communism removed that constraint, enabling a shift in how many of the new ultra-wealthy conceived their relationship with society. While some continued to see themselves as owing a debt of obligation to the societies in which they enriched themselves, a significant subset, particularly among financial elites, began to see their personal achievements as being detached from the success of the national societies in which they reside. Instead of seeing themselves as the ultimate winners of the systems in which they work, they characterized themselves as the noble rebels who made it on their own despite the drag caused by incumbents, loafers, and parasites in government and society. The growing popularity of the pseudo-philosophical novels of Ayn Rand, whose ideas George Monbiot refers to as “the Marxism of the new right”, represented the most visible manifestation of an ideology that depicts the rich as “makers” and the masses as shiftless “takers.”5 From Washington to London, plutocrat-funded think tanks devoted themselves to creating a body of usable ideas and policy proposals aimed at dismantling what is left of social modernity. This ideological shift heralded the arrival of the plutocratic insurgency.6

The defining feature of the plutocratic insurgency is its goal: to defund or de-provision public goods in order to defang a state that its adherents see as a threat to their prerogatives. (Note that, conceptually, plutocratic insurgencies differ from kleptocracies; the latter use the institutions of state to loot the population, whereas the former wish to neutralize those institutions in order to facilitate private-sector looting. In practice, these may overlap or co-mingle.) Practically speaking, plutocratic insurgency takes the form of efforts to lower taxes, which necessitates cutting spending on public goods; reducing regulations that restrict corporate action or protect workers; and defunding or privatizing public institutions such as schools, health care, infrastructure, and social space.

The political strategy associated with the plutocratic insurgency is to use austerity in the face of economic shocks to rewrite social contracts on the basis of a much narrower set of mutual social obligations, the ultimate effect being to de-collectivize social risks. As a palliative for the loss of public goods and state-backed programs to improve public welfare, plutocratic insurgents typically promote philanthropy (directed toward ends defined not democratically but, naturally, by themselves alone). “There’s no such thing as society”, Margaret Thatcher famously declared, issuing the cri de cœur of insurgent plutocrats everywhere. If there’s no such thing as society, then the very idea of social services collapses, along with any responsibility on the part of the rich to contribute to them. From this perspective, plutocratic insurgency signifies the reimportation of the aforementioned “structural adjustment” policies (originally designed to discipline poor states) back into the rich, industrialized core.

For plutocratic insurgents, this strategy is dictated at bottom by a raw cost-benefit analysis: The price the social modernist state asks them to pay in taxes and regulatory burdens outweighs the benefits they believe they receive from living in such a state. Plutocratic insurgents believe they can afford (and therefore everyone should be required) to buy for themselves the sorts of goods that the state was once expected to provide. They live in gated communities, travel via personal jets and private bus fleets, and send their children to exclusive schools. While each of these decisions may be motivated by lifestyle choices or a desire for social differentiation, the result is a progressive moral disinvestment and civic disengagement from the quality of these traditionally public services, especially as the habit of opting out of public services trickles down from the oligarchs to the upper middle classes.

Leaving aside the undemocratic nature of such private services, or the adverse selection problems that arise from partial privatizations, the hallmark of the arrival of plutocratic insurgency is when the rich begin to revolt against paying taxes for public services they never plan to use. As these public services deteriorate in quality, the result is a self-reinforcing cycle whereby plutocratic insurgents increasingly see no reason to contribute anything to their host societies and, indeed, actively contest the idea that citizenship comes with economic responsibilities.

Criminal Insurgency

Many of same processes that are driving the plutocratic insurgency also underpin the process of criminal insurgency: the globalization of economic flows, growing wealth inequality, and a collapse of state provisioning of public goods and services. That is partly why these are twin insurgencies, plutocratic and criminal, for they have both thrived on the basis of the same shifting preconditions. The other reason for the twinning is that they abet one another.

From Latin America to Africa to the former Eastern bloc, the 1980s and 1990s structural adjustment and shock therapy programs led to the hollowing out of the state: the physical buildings and institutions of “adjusted” states may have remained in place, but their ambitions and capacities shriveled. The states in these countries dramatically decreased spending on social services—ranging from subsidies for food and fuel to broader social services like public health and pensions. State-owned industries were either shut down or privatized, with wages and employment slashed. The state, in other words, further shed its capacity to deliver a decent life to its citizens, leading to a collapse in the popular expectation that it should serve as a guarantor of progress.

At the same time, the economies of these countries opened rapidly to cross-border financial and trade flows. The combination created both the opportunity for enterprising individuals to make money in new ways and, for many, an imperative to do so as a matter of survival. These effects were not merely a byproduct but in fact the explicit objective of the structural adjustment and shock therapy programs: rolling back the dirigiste state and opening up the economy was meant to unleash entrepreneurial energy, and indeed it did.

Alas, shock-therapy-driven globalization of the formerly closed economies of the Eastern bloc and the Global South turned out to have an unfortunate bug. While the mainstream globalization celebrated by the likes of Thomas Friedman grabbed the headlines, the parallel development of a “deviant” globalization in industries like narcotics, immigration, wildlife harvesting, and antiquities smuggling remained long enough in the shadows for it to set deep roots. Though the weakness of the post-communist and post-developmental state represented a dire problem for mainstream businesses and for imploding middle classes in these countries, it offered comparative advantages for illicit commerce. While plutocrats sewed up the licit opportunities afforded by the integration of the global economy, they mostly avoided dealing in goods and services that were banned for moral or prudential reasons. By contrast, deviant entrepreneurs realized that arbitraging the moral and regulatory differences that existed in different jurisdictions worldwide presented fantastic business opportunities—with opportunities continuously emerging as the capacities of different states contracted at differing rates. The unsung globalizers of the 1990s and 2000s, therefore, were the criminals who rapidly scaled up their local mom-and-pop graft organizations to become globe-spanning deviant commercial empires.

These avatars of deviant globalization constitute the leaders of today’s criminal insurgency. While they often emerge from the excluded and subaltern classes within their societies, what distinguishes them from classic social revolutionaries is that rather than seeking to build or capture institutionalized state power, they wish merely to protect their rents in the various (usually deviant) markets they control. Organizations such as the First Command of the Capital in Brazil, the ’Ndrangheta in Italy, or the Zetas in Mexico have no interest in taking over the states in which they operate. Instead, like plutocratic insurgents, they seek to selectively cripple the state so as to establish a private zone of economic autonomy, while continuing to rely on the state to supply vestigial social services. These actors thrive in (and indeed try to foster) weak-state environments, and their activities reinforce the conditions of this weakness.

This observation enables us to understand the error of the liberal enthusiasts of globalization who assert that poverty, insecurity, and state fragility are the result of “disconnectedness” from the world economy. In fact, even paradigmatically “failed” states—such as Congo, Somalia, and Afghanistan—are deeply connected to the global economy; instead of being connected to the formal and legal parts of it, however, their primary ties are through illicit trade in minerals, through piracy, through the global drug trade, and so on. The crucial issue is thus not connectedness or disconnectedness, but rather what kind of connectedness.

As deviant globalization takes root in a particular locale, it soon begins to generate a positive feedback loop, in much the same way that many successful animal and plant species, as they invade a natural ecosystem, reshape their ecosystem in ways that improve their ability to exclude competitors. Forms of state weakness that at first are merely permissive enabling conditions for their businesses soon become assets that the now-empowered criminal insurgents try to perpetuate and expand. They siphon off money, political loyalty, and sometimes territory; they increase corruption; and they undermine the rule of law (think Mexican drug organizations or Sahelian smuggling operations, among dozens of examples). They also force well-functioning states in the global system to spend an inordinate amount of time, energy, and attention trying to control what comes in and out of their borders.

In building their business empires, deviant globalizers inevitably come into conflict with host states in three distinct ways that render them de facto political actors. First, they control huge, growing swathes of the global economy, operating most prominently in places where the state is hollowed or hollowing out. Corruption fueled by drug money on both sides of the U.S.-Mexican border exemplifies this point.

Second, many deviant entrepreneurs control and deploy significant quanta of violence—an occupational hazard for people working in extra-legal industries, who cannot count on the state to adjudicate their contractual disputes. This use of violence brings deviant entrepreneurs into primal conflict with one of the state’s central sources of legitimacy, namely its monopoly (in principle) over the socially sanctioned use of force, transforming them from merely deviant businessmen into criminal insurgents.

Third, these criminal insurgents in some cases have begun to emerge as private providers of justice, health care, and infrastructure—that is, precisely the kind of goods that functional states were once supposed to provide to their citizens. (However, since they are provided privately, the deviant entrepreneurs’ personal constituents see them not as “public goods” because they are goods not equally accessible to all citizens.) Prison-based drug syndicates in Brazil, the Movement for the Emancipation of the Niger Delta in Nigeria, the Sinaloa Cartel in Mexico, and many more—all are criminal insurgents who not only have demonstrated the will and capacity to shut down areas of their host states’ basic functions, thereby upsetting global markets half a world away, but who also provide social services to local constituencies.

Criminal insurgency is thus the form that deviant globalization takes as it scales up and reaches political self-consciousness. On the one hand, the more deviant industries grow, the more damage they do to the political legitimacy of the states in which they operate, thus undermining the capacity of the state to provide the infrastructure and services that the criminal insurgents want to free ride on. On the other hand, the people living in the semi-autonomous zones controlled by criminal insurgents increasingly recognize the insurgents rather than the hollowed out state as the real source of local power and authority.

Of course, even when deviant providers of alternative governance functions end up seeming “legitimate” in the eyes of local stakeholders, this type of governance is usually poorly institutionalized and nontransparent about both ends and means. Nonetheless, as these groups take over functions once expected of the state, their stakeholders increasingly lose interest in the now hollowed-out formal state institutions. Thus, even though criminal insurgents have no desire to kill their host state, they may end up precipitating a process whereby the state implodes catastrophically.

The Enclavization of Microsovereignties

During the 1990s, it became a fashionable form of irony to declare that, in the new post-Marxist era, the state (the dirigiste state, at least) was destined to wither away. In truth, something more subtle was going on: the double collapse of social modernist state’s capacity and legitimacy was giving birth not to the post-historical utopia of a universal consensus in favor of liberal democratic capitalism, but rather to a two-headed monster in the form of plutocratic secession and deviant globalization. Instead of projects of collective emancipation, what both plutocratic and criminal insurgents desire is for the social modernist state to remain intact except insofar as it impinges on them. Neither criminal nor plutocratic insurgents are revolutionaries in the classic modernist sense of political actors who seek to take over the state.

Indeed, as the social modernist state failed to realize its promise, the very notion of a revolution that aspires to a project of national-scale collective social reform has come to seem quaint. (Of course, rebels who seek to take over or direct the state toward projects of social reform do still exist: Marxian movements like the Zapatistas in Mexico or the Naxalites in India, Islamic movements like Al-Shabaab in Somalia and the Moro insurgency in the Philippines. But these are arguably anachronistic phenomena.) Today’s rebels increasingly seek neither state control nor national (or international) social reform. Nor do they seek a political revolution in the Arendtian or Burkean sense of a contest for direct operational and ideological control over the organs of the state. Instead of being in revolt against a particular political regime with the goal of building better government, they aim instead to cripple their hosts states in order to gain de facto zones of private autonomy that can enable individual or corporate enrichment. They are thus parasitic in a very specific sense: They free ride on the institutional legacy of social modernism so as to avoid costs to their businesses.

What both insurgencies represent is the replacement of the liberal ideal of uniform authority and rights within national spaces by a kaleidoscopic array of de facto and even de jure microsovereignties. Rather than a single national space in which power is exercised and all residents enjoy rights in a consistent and homogeneous way, the cartography of the dual insurgency consists of diverse enclaves of heterogeneous political authority and of non-standardized social-service provisioning arrangements.

As these arrangements emerge, national and local authorities proliferate a variety of increasingly one-off exceptions to the general rules, incrementally traducing the liberal notion of equality before the law. Just as the 1930s saw a multiplication of conditions poised between war and peace, so today do we see the multiplication of various forms of authority between the full-blown modern state and outright anarchy, symbolized by the blurred lines between police, military, and private security contractors. The process tends to be self-reinforcing: The proliferation of exceptional and unique microsovereignties increases the scope for insurgents to engage in jurisdictional arbitrage and generates demands by other insurgents for their own sovereign exceptions. In the space of the dual insurgency, citizenship no longer signifies the liberal ideal of an identical package of rights for all, but instead means very different things depending on where individuals are in physical and social space.

Within plutocratic enclaves, the source of authority and loyalty is, at bottom, money. From a spatial perspective, plutocratic insurgents seek to create zones of private authority and legal autonomy where they can privately command goods once considered public, including not just security but also increasingly schooling, transportation, health care, shopping, legal enforcement, and so on. The paradigmatic case for plutocratic spatial segregation and secession are so-called gated communities. These spaces are much more than simple residential enclaves but increasingly offer full-service operations that contain virtually everything their denizens need. Residents only need to leave in order to travel to other such enclaves.

Rights within such spaces accrue to dollars rather than to citizenship. The vision of the future here is of a global archipelago of what Evan McKenzie has called “privatopias”, essentially gated enclaves linked by air and internet to other such spaces, protected by high ramparts from the roiling dystopian ocean of the hoi polloi.7

In addition to these zones of physical separation, plutocratic insurgents also seek out (or seek to create) virtual zones of legal exception in the form of offshore tax havens and special economic zones allowing them to avoid tariffs as well as laws designed to protect labor or the environment. Plutocratic insurgents are adept at playing off one jurisdiction against another, threatening to take their capital elsewhere if the local authorities refuse to grant the exceptions they seek.

The enclaves of criminal insurgents are more precarious. Unlike the visible separation that the plutocratic insurgents enjoy in the form of high walls and armed guards, the autonomous zones of deviant globalizers are more temporary and fragile. Such autonomous spaces take the form of feral “no-go zones” in which some notionally social modernist state may claim authority, but in which true power is wielded by warlords, gangsters, or other kinds of organized criminals. In these zones, sources of authority and loyalty and the application of raw power tend toward what might be called “neo-tribalism”—“neo” in the sense that primal loyalties adhere not just to those who share (perceived) bonds of ancient kinship, but rather in accordance with all manner of intense and ritualized personal connections among young male specialists in the use of violence.

In short, while globalization is indeed undermining national political institutions and thus national identities and loyalties, what appears to be replacing the national is not the “global” political identity that “cosmopolitical” dreamers have long aspired to, but rather a return to localized identities rooted in clan, sect, ethnicity, corporation, and gang.8 In literary terms, this future has more in common with Neal Stephenson’s Snow Crash than it does with Gene Rodenberry’s Federation utopia in Star Trek.

The central difficulty that both plutocratic and criminal insurgents face is that it is unclear whether the political objective they seek can produce stable equilibria of governance. There are at least two separate reasons to entertain skepticism on that count.

First, the fracturing of sovereign homogeneity increases transaction costs for people traversing them; it requires one to constantly bleed time and effort to determine exactly which zone of governance one is in and thus who is due respect and obeisance. This is equally true whether one considers the spaces of the plutocratic or the criminal insurgency: in the former case, the price is paid to lawyers, in the second it is paid to gangsters.

Second, the kaleidoscope proliferates opportunities for arbitrage and the defection of customers and foot soldiers alike to other governance spaces. The ultimate losers in all of this, of course, are the middle classes—the people who “play by the rules” by going to school and getting traditional middle-class jobs whose chief virtue is stability. These sorts of people, who lack the ruthlessness to act as criminal insurgents or the resources to act as plutocratic insurgents, can only watch as institutions built over the course of the 20th century to ensure a high quality of life for a broad majority of citizens are progressively eroded. As the social bases of collective action crumble, individuals within the middle classes may increasingly face a choice: accept a progressive loss of social security and de facto social degradation, or join one of the two insurgencies.

[For a fully-annotated version of Prof. Gillman’s essay, click here.]

1That said, labor-management relations in the West (particularly in the United States) were combative even during the postwar heyday of social modernism. Plutocratic pushback against both organized labor and the regulatory and tax reach of the liberal state existed from the beginning of the New Deal and became a formal political strategy by mid-1940s. Nevertheless, the end of the Cold War represented a major watershed. One cannot help but note the contrast between the public-mindedness of postwar statesmen like Jean Monnet, Dwight Eisenhower, and Willy Brandt and the shameless way that post-Cold War Presidents (George H.W. Bush, Clinton), Chancellors (Schroeder) and Prime Ministers (Blair) have been happy to receive enormous payouts from hedge funds and foreign governments upon leaving office.

2See Ajay Kapur, Niall Macleod, and Narendra Singh, “Plutonomy: Buying Luxury, Explaining Global Imbalances”, Citigroup Research, October 16, 2005.

3Rodrik, “Goodbye Washington Consensus, Hello Washington Confusion?”, Journal of Economic Literature (December 2006).

4See Chrystia Freeland, “The Rise of the New Global Elite”, The Atlantic (January/February 2011).

5Monbiot, “A Manifesto for Psychopaths”, Guardian, March 6, 2012.

6The fortunes of plutocratic insurgents in the BRICs has been more ambivalent. Russia experienced a huge plutocratic insurgency in the 1990s, but the arrival of Putin and the defenestration of the first-generation oligarchs represented the reassertion of the prerogatives of the state—that is, a successful plutocratic counterinsurgency. While India has been experiencing many classic symptoms of plutocratic insurgency, in Brazil social democratic governments since 2000 have succeeded in narrowing inequality and expanding social welfare benefits. In China, the rise of the super-rich has happened mainly through state-sponsored (though not necessarily state-owned) enterprises, which means that plutocrats there remain dependent on the state and the Communist Party and, as such, are relatively insecure politically. There and elsewhere in East Asia rent-seeking rather than insurgency remains the norm among plutocrats.

7McKenzie, Privatopia: Homeowner Associations and the Rise of Residential Private Government (Yale University Press, 2006).

8“Cosmopolitical” is the coinage of Pheng Cheah and Bruce Robbins, eds., Cosmopolitics: Thinking and Feeling Beyond the Nation (University of Minnesota Press, 1998).

Nils Gilman is associate chancellor at the University of California, Berkeley.
show comments
  • Maynard G. Krebs

    all i know is all this nonsense started when jfk was killed and it’s been all downhill since

  • Harry Alffa

    At the base of it all is the financial system – get a grip on that and get a grip on all of it.
    Start with linking banker taxes to unemployment level, and bank corporate tax to the cost to the state of unemployment benefit:
    http://www.bailoutswindle.com

    Organised crime in the USA & UK would quickly become disorganised if an additional levy on banker income tax was added for every one thousand estimated drug addicts.

  • rheddles

    Is Nils related to Daniel Coit? Could nepotistic decay be the source of so much nonsense?

  • Fat_Man

    tl;dr

  • Bruce

    The use of the term Libertarian is misleading. What the author is really talking about is cronyism where one crony has the ability to proceed as if we have a Libertarian free market economy while his competition is impeded by laws. The word psychopath also needed to appear in this analysis. Psychopathy is at the heart of many of our economic and social ills. But the psychopath is not as effective without the cronyism of government. Of course, there are psychopaths in government too.

  • MarqueG

    The analysis is so meta that you get the sense of drifting up, up, and away, high into the clouds, to the point that the clear surface features on the ground are no longer identifiable. Although the author at least names some “criminal insurgents” specifically, none of the libertarian plutocrats are identified, presumably because the author could only think of the Koch Brothers, famed billionaire libertarian philanthropists. Who are all these other libertarians plutocrats? The reader is invited to assume they exist in great numbers.

    Another abstraction whose presumed features are indistinguishable from its features seen up close is the gated community. One must assume, as the author appears to, that these are the anarcho-libertarian wonderlands where the denizens can ignore the state, government, taxes, regulations, you name it. If anything, these communities are subject to rather strict laws, generally are wealthy enough to afford the regulatory compliance costs, and — even more incongruous to the conjured image — have rigid sets of by-laws themselves dictating all aspects of lawn care and overall curbside appearance, down to what materials are permitted in the initial construction.

    One need not even bother quibbling with the idea that The State is and has been beaten into a compliant submission to the plutocrats, or into retreat by the criminals. Anyone interested might look at GDP or tax revenue comparisons between the supposed Golden Age up to 1971 and the period of The Fall from the 1990s. The trend is that The State its central self has taken over so much more of what used to be private and local, leaving the withered middle classes with less power, less money, and little input in government affairs.

  • Anthony

    The essay poses a problem: what socio-economic arrangements are developed societies to comprise in transforming 21st century globalized, technologized, and economic bifurcated countries. I sense that not insurgencies per se threatens the middle but systematized inattention and general misdirection (unperceptive or lacking in judgment) potentially harms and induces what essay intimates as anxiety among middle. “It should be observed that, except for disaffected, out-of-step critics, there is no widespread rejection on the American (read global) scene of the ascendant notion of success. Not only does a broad public uncritically accept steamy monetary success as a proper life goal but it feels any questioning of this goal to be un-American, possibly traitorous or at least subversive and surely cowardly. Who but a coward would shrink from entertaining the glorious contest of success? The “unsuccessful” are regarded with contempt or pity, often even by themselves. What we find, if we delve deeply enough, is a special value system at the root of it all.”

    I think essay and author alludes to special value system but fails to both call it out and analytically take it to task directly. Essay cites various strands for consideration as thoughtful writers continue to grapple with subject Piketty has focused attention.

  • FriendlyGoat

    I can’t speak for what is going on in other nations, but some of the reasons we are seeing “social bases of collective action crumble” (per the article’s last sentence) are the politics of anti-abortion, pro-guns, and false promises that tax cuts would create jobs. America’s church people were supposed to have more discernment than to get sucked in by the insurgency from above, but they didn’t and they don’t.

  • Kevin

    This is simply wrong about the plutocratic class. These people pay low taxes (“carried interest” exemptions, etc.) but are not withdrawing from the state but instead using the power of the state to subsidize themselves (“too big to fail” or “socialization of losses”) and to enforce intellectual property laws that favor their commercial ventures. They are far from being libertarians.

  • concerndcitizen

    The author has missed one key point. The difference between the oligarchy and the organized gangs of criminals is blurring. Both represent a state of lawlessness, one coming from within, the other from outside of society.

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