Sunday, May 18, 2014

Is Small Business a Threat to the Status Quo?

Truth is the first victim of the Company Store's dominance.

My view of the Status Quo as a neocolonial, neofeudal arrangement is succinctly captured by correspondent D.C.'s description of state-corporate capitalism: the Company Store. In the plantation model (i.e. any economic setting dominated by a primary corporate employer and/or the state), almost everyone works for the company, and is beholden to the company for their livelihood and security.

In exchange for this neofeudal (often described as paternal) security, employees must shop at the company store, which maintains a near-monopoly (i.e. competition is limited because the company owns the land and/or colludes with local government) as a means of extracting monopoly prices.

The company store extends credit to employees (in the modern version, student loans take the place of employee credit), and since prices are kept artificially high and wages are kept stagnant, the employees never manage to pay off their debts at the company store.

This describes the core dynamic in our state-corporate system. The state-corporate Status Quo suppresses competition (few other stores are allowed in town), usually by indirect means: high land leases, high fees for doing business in town, mountains of absurd regulations no small businesses can afford to meet, etc.

In state-corporate capitalism, small business thus poses a threat to the monopolistic partnership of the government and dominant corporations. Small businesses that try to meet all the regulations and pay all the fees and taxes are either marginalized or driven out of business by the high overhead.

But those that live in the nooks and crannies between the major players pose a threat to the guaranteed profits of the state-corporate Status Quo. As a result, despite the propaganda about how the state supports small business, the real agenda is to marginalize small business in every way possible so the small-business sector can never gain enough political weight to challenge the corporate interests and their partners, the state fiefdoms.

Here is D.C.'s gloves-off, truth-to-power commentary: 

The decline of small businesses serves the same purpose as continuous, compound monetary inflation: Both keep everyone on "company property" buying at the "company store."

Inflation means that people can't save in a medium that is not ready-to-be-seized (by the IRS, any Federal court, any creditor like a hospital, i.e. by any minion of the central state Corporation). If people could save honest money "under the mattress" without continuous erosion, then some of their wealth might remain fully private.

We can't have fully private wealth. The Company must always be able to take what the Company deems its fair share, or take whatever payments the Company Store levies (since people are largely compelled to purchase their medical services, for instance, from the CS and prices are not marked on the shelf...only assessed in arrears).

The same is true of employment. If people are able to earn a living apart from the Company, they become less subject to the Company's innumerable rules (including, especially, the requirement to buy everything guessed it...the Company Store).

Small businesses are messy little vermin much more difficult to regulate (and corral, and milk) than what otherwise amount to subsidiaries of the Company Store. All significant corporations in the USA today are clearly such subsidiaries. What else do their legal departments do but finagle "deals" and navigate "hyper-compliance" with the larger Company? The corporations for which I have worked behave like subordinates in a branch of the military: "Sir, YES Sir!" A larger phylum of invertebrates will never be discovered.

Small businessmen, however, comply only under overt duress and are apt to seek end-arounds at every opportunity due to self-interest and lack of bureaucratic organizational incentives. Seeking alternate paths to exercise greater liberty and keep a larger share of their product puts them on the side of nascent informal networks to which you refer.

Your conception of private or informal networks side-stepping the Company is both (in my opinion) the future and an existential adversary of the central state Corporation. This means to me that we will see an increasingly hot war emerge as the early adopters pursue their fledgling networks while the minions of the Corporate State ever-more-openly chase and harass them.
My belief is that people only abandon a failing paradigm when the cost of duplicating the "service" privately is lower than the combined cost of the old paradigm plus the cost of its failures. For example, people will abandon the tax-paid, centrally-planned education paradigm only as they perceive the cost of duplicating it privately (home schooling, unschooling, foregone income, etc.) is lower than the "cost" of uneducated, mis-educated, unsafe kids.

Early adopters must be willing to pay twice (private duplication plus tax extortion) so their formula for the decision is Private+Tax < tax-produced output.

(By the way, I consider current "private" schools to largely be the same as tax-paid. Until a market fully emerges, finding a true alternative to the tax-paid model is challenging.)

This means that early adopters of non-Corporate State paradigms must evaluate the "costs" of the old paradigm higher than their neighbors. The lingering consent of the neighbors to the old paradigm will place heavy burdens on the early adopters of new paradigms.

A significant problem with forging new paradigms is that the earliest of adopters are overt criminal organizations. Non-criminals will intentionally be conflated with criminal networks as the Corporate State's minions war on alternatives that threaten its parasitic and dysfunctional monopoly. 

Thank you, D.C., for telling it like it is. Truth is the first victim of the Company Store's dominance. 

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