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Imagine someone—call him
‘the principal’—who wants somebody
else—call him ‘the agent’—to do
something of benefit to the principal.
Yes, but the agent has values, interests, motivations, and goals perhaps
quite different—or even opposite—to the principal’s. How can the principal
make the agent do his bidding? Economics, political science, and
international relations departments have developed this question into a
branch of thought called ‘principal-agent theory’ (PAT). It has
infinite applications, from how a boss can get his workers to work harder (or
work at all) to the relationship between the State and its citizens. Ours is
the latter question. Those who
apply PAT to politics commonly cast the
citizenry as ‘principal’ and those
running the State as the citizenry’s ‘agents,’ which assumes that Western
democracies function pretty much as their revolutionary founders intended.
Isn’t this terribly optimistic? Well, it’s the dominant approach. One must
work hard, in fact, to find a discussion even mildly critical of the
‘citizen-as-principal’ view. But this
mild criticism does exist.
Herschel
Grossman—who for many years had the most cited article in the American Economic Review (the most
prestigious economics journal in the world)—once observed, in a provocatively
titled paper, “The State: Agent or Proprietor?,” that “viewing the State to
be an agent of its citizens involves a paradox.” A paradox. Why? Because “the
State can exploit its citizens by taxing and spending for its own purposes,”
turning the citizens into its
agents. Now, in
Grossman’s sentence above ‘the State’ is presumed to be an acting subject. This is a dubious
practice. ‘The State’ is a collection of taxpayer-funded bureaucracies
employing many thousands. It is not a ‘person.’ Of course,
if ‘the State’ is a shorthand for the people at the top of government
bureaucracies, a group small enough to be a cadre, this manner of speech is more reasonable. However, top
bureaucrats are replaced in every incoming administration, so they cannot
form any kind of permanent ‘State’ that we might speak of in the abstract,
timeless, quasi-mystical terms that social scientists seem to prefer. But what
if—beyond ‘government’—there existed a small, self-perpetuating cadre with
enough influence to place the top
government officials at every renewal? In the US,
for example, it is well documented that a few private organizations funded by a small handful of wealthy
industrial patrons (chief among them the Carnegie, Ford, and Rockefeller
networks) function as breeding grounds for top officeholders of both Democratic and Republican
administrations.[0] By such
means, a small ruling or power elite, with top bureaucrats acting as their
agents, may in principle act the part of State
proprietor and use official “taxing and spending” powers to turn the citizens, too, into their agents (Part
1)—a “proprietary State.” Says Grossman: “This
observation leads to the alternative characterization of the [ostensibly
democratic] State as the instrument of a ruling elite.”[1] Whether or
not this actually happens, it is an obvious hypothesis to consider. Yes, but
Grossman’s ‘conspiracy theory’ is politically incorrect, a glaring violation
of the media-imposed grammar, and the sort of thing to get an academic
punished (Part 2). Perhaps this is why Grossman quickly
turned to the following question (I paraphrase): Under what conditions will the power
elite—even though they hold the reins of State—be constrained to be
“democratically responsive,” as if
they were willing agents of the citizens? After doing
some mathematical modeling, Grossman concluded that if a “maltreated
citizenry” has a reasonable chance to “depose the incumbent ruling elite
either by legal or extralegal means,” then “the threat
or potential threat posed by a rival ruling elite is akin to the threat of entry
of a rival firm that induces an incumbent monopolist to restrain its exercise
of market power in a contestable market.”[2] Let’s unpack
this ‘economist speak.’ In a market
for ordinary goods and services, a monopolist, since consumers cannot go
elsewhere, can charge high prices for low quality (this is called ‘market
power’). It’s great for the monopolist. So a producer may resort to various
tricks—for example, bribing politicians—in order to become a monopolist and
extract ‘rents’ (or unfair profits) from consumers. Such behaviors are called
rent seeking. When rent-seeking
monopolists succeed, they hurt everybody else. Rent-seeking
monopolists succeed when governments, rather than protect the people’s free
markets, ally instead with powerful predatory enemies who mean to profit from
market destruction. The cure for all this is for new firms to enter the
monopolist’s market. Why? Because in order to compete, new firms must offer
higher quality and/or lower prices, bringing a stop to the harms inflicted by
the monopolist. (This is precisely why competitive, free markets are a good
idea.) Coming to
Grossman’s point, the more a monopolist abuses ‘market power’—charging
exorbitant prices for pathetic products—the easier it is for newcomers to
compete. Thus, if these latter seem poised to enter the market, the
monopolist will improve quality and lower prices somewhat (“restrain its
exercise of market power”) in order to make it harder for them to enter. This
protects the monopoly but does yield a partial benefit to consumers. In the political market, likewise, concludes
Grossman, a monopolist will become more “democratically responsive” (restrain
his exercise of power) if there is a credible “threat or potential threat posed by a rival ruling elite.” This
protects the political monopoly but brings partial benefits to citizens. But careful
here. One might be tempted to interpret, perhaps, that by “the threat or
potential threat posed by a rival ruling elite” Grossman means the actual—and
quite regular—alternation of parties in office (for example, the
back-and-forth switches between Democratic and Republican parties in the
United States). This is not what he means. To avoid this confusion, Grossman
clarifies: “both theory
and observation suggest that in stable democracies the ruling elite typically
includes a political establishment that is an implicit coalition of [merely] ostensible political opponents.”[3] (emphasis mine) Put another
way, in “stable democracies” the main parties are unified covertly in a
political cartel or de facto
monopoly. Thus—and Grossman is careful to underline this—in a modern
democracy a “maltreated citizenry” cannot “depose the incumbent ruling elite”
by means of “the electoral rivalry of established political parties, like
Democrats and Republicans [in the United States], who alternate in power,”
because this process returns to office, each time, the same incumbent cartel (it just brands itself differently at each
alternation).
What
Grossman means, therefore, by “the threat or potential threat posed by a
rival ruling elite,” is the danger that a new
force, wholly independent of the incumbent “political establishment,” may
take power. This, according to Grossman, is a real danger, and here lies the
“key to accountability” in “stable democracies.” What is the
institutional implication for a place such as the US? That in
order to have a (reasonably) democratically responsive power elite, there
must be “freedom of entry into the electoral process, which allows new
political groups to form and to become effective rivals of the existing
political establishment.” “Maltreated citizens,” therefore, should have the
power—in principle—to install “a rival ruling elite” that happens to be “a genuine outsider” (my emphasis). For
only then will the incumbent
monopolist—out of fear that a force beyond its two-party control may take
power—moderate its political rent-seeking.[3a]
Well but
have no fear, says Grossman, for (as we all know): (*) Citizens of Western democracies can install in power a “genuine
outsider.” Thus, by
logical necessity, incumbent power elites in the West do restrain their
power. And here is
the academic consequence, also the answer to Grossman’s original question:
the vast, university-sponsored literature on Principal-Agent Theory (PAT), in
which Western governments appear (always...) as the democratically responsive agents of their citizens, is
safe from criticism. QED. Not so fast. Is this a
real demonstration? Grossman certainly fought his way to a mathematically
rigorous statement of what he must
assume—see (*) above—if he wishes to believe that the US or some
other Western power elite is (reasonably) democratically responsive. And
clearly, he does wish to believe that. But in order to justify that belief, his next step should be to investigate the assumption. Does that
assumption obtain? Can Western citizens really bring true outsiders to power? Of course,
to investigate any such question would be to allow that perhaps—pending the
investigation—the answer might be ‘no,’ and hence to put a ‘conspiracy
theory’ on the table as a legitimate intellectual contender, something that
Western academic grammar now forbids (see Part
2). So instead of asking the question, Grossman ‘concluded’ by
stipulation. And yet
Grossman—impossible to miss it—did bring himself, as if daring us to
blaspheme, right up to the line of heresy. He states—and so matter-of-factly
that I must stifle a scream—that, according to “both theory and observation,”
a de facto power monopoly rules in
each of the “stable [Western] democracies”! Such ‘openly
hidden’ political cartels are the very essence of ‘sloppy totalitarianism’ (Appendix A). But having walked up to the line,
Grossman does not cross it. He turns around, palms extended, and reassures
his readers (and no doubt himself) that a Western democracy—despite the
cartel—is nevertheless (reasonably) democratically responsive. His pretended
demonstration is just his restatement, in formal terms, of his original
prejudice: his faith in the liberal health of the West. The exercise
is nevertheless useful to those unafraid to investigate, for Grossman has
clarified the key empirical question: Is it true
(in actual fact!) that in a stable Western democracy a “genuine outsider” can
come to power? Or we may
turn it around thus: Just how much influence does a Western
incumbent power elite wield over those ostensible critics and rivals who lie
beyond the established and cartelized parties that regularly alternate in
office? As long ago
as the mid-19th c., in Dialogue in Hell between Machiavelli and Montesquieu,
the great political theorist Maurice Joly considered this question broadly.
He had a fictional Machiavelli explain to a fictional Montesquieu how Western
power elites could easily corrupt media and political parties in order to
preserve only the façade of ‘democracy’ and protect a political cartel.
He was not
anticipating a transparently corrupt system such as 20th c. Mexico under the
old PRI (the ruling party for 71 continuous years), where apathetic and
cynical citizens assumed the PRI would win, because it was obvious even to
them that ‘opposition’ parties and the media were either submissive or else
directly in the dominant party’s pocket. No. Joly laid out something rather
more devious: a thoroughly covert
“proprietary state.” Joly
described a system with vigorous alternation of parties in office; an
explosive, expressive, combative press; and citizens throwing themselves into
the political fight. And yet, unknown to the common citizen, all media
messages, and all choices in the political menu, would be covertly determined
and controlled in advance by the power elite’s intelligence services. No
potential rival would be a “genuine outsider” because as soon as a new
movement emerged the power elite would send its covert agents to lead it. In
this way, sophisticated tools of psychological (or political) warfare would
keep citizens fully committed to the hyperreal ‘democratic’ show, but their
participation would be to no avail. Don’t get
your political geniuses confused. This is not Orwell but Joly (Orwell was describing a conventional
totalitarian State.) Though
smarter and deeper, perhaps, than Hobbes, Machiavelli, and Orwell combined,
Joly was no prophet and no armchair theorist. He was a politically involved
activist describing contemporary empirical facts: the innovations of Louis
Napoleon Bonaparte (or Napoleon III) in France. (For his writings, Joly was
jailed.) What about
the United States? In
Christopher Simpson’s documentation of the genesis and development of
‘communication research’ (Part
1) we see the top US industrial elite—people in the Carnegie,
Ford, and Rockefeller networks—treating State institutions (and taxpayer
funds) as if the US government were just another franchise of their private
corporate networks.[3b] To
what end? To seize the educational infrastructure that trains media
personnel, henceforth deployed in psychological warfare (Part 1). And
what for? To lead the US citizen, through a simulation of reality, to
demand the very policies that the US power elite desires (Part 2). In this
simulation, Enlightenment values are always praised in public, thus keeping
the power elite—even as democracy is covertly undermined—within the grammar
of democratic ‘political correctness’ (Part 2). Notice now
the similarity. Here is Joly’s character ‘Machiavelli’: “Today, it
is less a question of doing violence to men than disarming them, of
repressing their political passions than effacing them, of combating their
instincts than deceiving them, of proscribing their ideas than changing them
by appropriating them.”[4] And here is
Simpson on the founders of US psychological warfare (from Part
1): “Lasswell[,
with a] . . .Machiavellian twist. . . emphasized employing persuasive media…
He advocated what he regarded as ‘scientific’ application of persuasion and precise violence, in contrast to bludgeon tactics.”[5]
(emphasis mine) A covertly
tamed press, Joly explains, will construct alternate realities for citizens.
For “it is less a question of repressing their political passions than effacing
them, of combating their instincts than deceiving them.” Harold Lasswell
agrees: use “persuasive media” rather
than “bludgeon tactics.” If necessary, use “precise violence,” but for
the most part fool the citizen:
give him a ‘reality’ in which upholding his own most cherished values will
accomplish the power elite’s bidding (see Part
2).
It is quite
possible that Lasswell was reading Joly. The industrialists funding
Lasswell’s activities were major supporters of the eugenics movement, the
very same that spawned German Nazism (Part
1 and Part 5), and as we know—it is an established
historical fact—those responsible for pro-Nazi propaganda were quite familiar
with Maurice Joly’s work.[6] Whereas Joly
meant to warn the citizen, these others used him as a power manual, as a way
to learn from Napoleon III. The most
important lesson—a point that Joly emphasizes—is that a truly useful controlled press must be trusted, and trust requires that people consider it free. Thus, some of the controlled media
must have an ‘opposition’ flavor and will constantly attack ‘the government.’
The attacks, of course, will be on trivial issues (e.g. Did the President lie
about having sex with Monica Lewinsky?). But the show will be good, as it must be in ‘sloppy totalitarianism’ (Appendix A). With trust in the media thus
gained, the power elites can turn citizens into willing agents by harnessing
‘informational asymmetries.’ An
‘informational asymmetry’ means that one party knows more than the other. In
democratic politics, according to PAT theorists, the agent has better
information than the principal—because, they insist, the agent is the bureaucrat. The citizen is the guy
in charge. This is ironic, they say, because typically it is the principal
who enjoys strategic knowledge advantages over the agent. But perhaps
there is no irony. Perhaps ‘democratic’ politics is like other
principal-agent cases. Perhaps these theorists are just getting confused
about who the principal is. For, according to the experts funded by the
Carnegie, Ford, and Rockefeller networks, these networks—real boss of all
bureaucrats—meant to exploit informational asymmetries and manage citizens with a false picture
of reality. What better lie than to insist that the citizen is principal?
Everybody loves to be flattered—it’s the basis of every con.[7] The standard
PAT tradition taught at US universities—a predictable consequence of the
McCarthyist purge (see Part
2)—is precisely what one would expect in a falsely ‘democratic’
(i.e. ‘sloppy totalitarian’) state managed via psychological warfare. For this
standard tradition—by presuming always that the citizenry is the
principal—makes it impossible for political scientists to study their
putative subject matter: power. And since
the influence of the US educational system is worldwide, it has taught the
entire world how (not) to
investigate the US power elite.[8]
We will pay no heed, and will employ—as a tool of
exploration that we test against the evidence—the model that Grossman
obediently discarded. Up next, we consider the implications for geopolitics.
[0] This has been going on for a long
time. Consider as an example the Council on Foreign Relations (CFR). In a
1978 paper titled “Oligarchic Tendencies in National Policy-Making: the Role
of the Private Policy-Planning Organizations,” political scientist Thomas Dye
wrote: “Political scientist Lester Milbraith
observes that the influence of [the] CFR throughout the government is so
pervasive that it is difficult to distinguish CFR from government programs:
‘The Council on Foreign Relations, while not financed by government, works so
closely with it that it is difficult to distinguish Council actions stimulated
by government from autonomous actions.’ ” (a) It is equally difficult to distinguish
government actions stimulated by the Council from autonomous government
action. Dye gives a list of quite major US foreign policy initiatives which
the CFR led, “including both the initial decision to intervene militarily in
Vietnam and the later decision to withdraw.” Further, he points out that many
important members of the CFR are simultaneously top government officeholders.
For example, “Council members in the Kennedy-Johnson Administration included
Secretary of State Dean Rusk, National Security Advisor McGeorge P. Bundy,
CIA Director John McCone, and Under-Secretary of State George Ball.”(b) A list of important figures in
the CFR over the years up to 1978, which Dye also provides, shows that many
are former top officials in the United States Government.(c) But the CFR is not merely where
present and former officeholders meet; it is also an incubator for future
officeholders. As the political sociologist William Domhoff observed: “Douglass Cater, a journalist from
Exeter and Harvard who served on the staff of President Lyndon B. Johnson,
has noted that ‘a diligent scholar would do well to delve into the role of
the purely unofficial Council on Foreign Relations in the care and breeding
of an incipient American Establishment.’ ...Turning to the all-important
question of government involvement… the point is made most authoritatively by
John J. McCloy… director of CFR and a government appointee in a variety of
roles since the early 1940s: ‘Whenever we needed a man,’ said McCloy in
explaining the presence of CFR members in the modern defense establishment
that fought World War II, ‘we thumbed through the roll of council members and
put through a call to New York.’”(d)
And who funds the CFR? You’ll never
guess (watch the initials): the Carnegie, Ford, and Rockefeller networks. In 1970 William Domhoff wrote that “As to the foundations, the major
contributors over the years have been the Rockefeller Foundation and the
Carnegie Corporation, with the Ford Foundation joining in with a large grant
in the 1950s. According to [Joseph] Kraft, a $2.5 million grant in the early
1950s from the Ford, Rockefeller, and Carnegie foundations made the Council
‘the most important single private agency conducting research in foreign
affairs.’ In 1960-61, foundation money accounted for 25% of CFR income.”(e) By the way, as we saw in Part 1, the
Carnegie, Ford, and Rockefeller networks essentially took over the academic
disciplines of ‘communication’ and ‘sociology.’ The same may be said of
‘international relations’ (and ‘political science’): the most influential
journal in the field, Foreign Affairs,
is published by none other than the Council on Foreign Relations. To learn more, read: “What is the Council on Foreign
Relations (CFR)?”; Historical and
Investigative Research; 4 March 2008; by Francisco Gil-White SOURCES: (a)
Dye,
T. R. 1978. Oligarchic Tendencies in National Policy-Making: the Role of the
Private Policy-Planning Organizations. The Journal of Politics
40:309-331. (p.316) (b)
ibid. (c)
ibid.
(pp.314-15) (d)
Domhoff, G. W. 1970. The Higher Circles: The
Governing Class in America. New York: Random House. (pp.113-14, 117) (e)
ibid. (p.115) [1] Grossman, H. I. (1999). The state: Agent or proprietor? Economics of Governance, 1, 3-11. (p.4) [2] Grossman, H. I. (1999). The state: Agent or proprietor? Economics of Governance, 1, 3-11. (p.6) [3] ibid. (p.4) [3a] ibid. (p.6) The same fingerprints can be found all over other important initiatives that contribute to give the power elite a smooth management of ‘democracy.’ For example, in the creation of the Council on Foreign Relations, where former, current, and future US government officials meet with the leaders of the US industrial elite and their representatives and academic retainers to decide US foreign policy. See: What is the Council on Foreign Relations (CFR)? The following sources are valuable for a larger picture: Mills, C. W. (1956). The Power Elite. Oxford: Oxford
University Press. Domhoff, G. W. (1996). State Autonomy or Class Dominance:
Case Studies on Policy Making in America. Hawthorne, NY: Aldine de
Gruyter. Amadae, S. M. (2003). Rationalizing Capitalist Democracy:
The Cold War Origin of Rational Choice Liberalism. Chicago: University of
Chicago Press. [4]
Joly, M. (1864). Dialogue aux enfers entre Machiavel et Montesquieu.
Bruxelles: Imprimerie de A. Mertens et fils. English translation: [5] Simpson, C. (1994). Science of Coercion: Communication Research and Psychological Warfare. New York: Oxford University Press. (p.23) [6] In one of his famous I Robot stories, Isaac Asimov once
laid bare this kind of relationship rather clearly. Asimov imagines what would happen if
robots were built with such a sophisticated intelligence and awareness that
they developed curiosity about their own existence. The story is called Reason. It is set in the far future: lots of
planets have been colonized by humans, and solar energy can be redirected to
those planets remotely from stations. Robots are built to keep the beams
directed properly at the planets. Everything is fine until a new robot
model, the QT (pun absolutely intended by Asimov) is developed. These new
robots, with more powerful ‘positronic’ brains, assembled in the space
station, and completely devoid of context, begin to wonder what it is that
they are doing, and who are they,
really? What is the meaning of it all? And who created them? A two-man team is sent to the station
to deal with this unusual phenomenon and make sure that the robots are safe
to use. They are not too worried
because of the Three Laws of Robotics, which are hardwired into every
‘positronic’ robot brain: 1.
A
robot may not injure a human being, or, through inaction, allow a human being
to come to harm. 2.
A
robot must obey the orders given it by human beings except where such orders
conflict with the First Law. 3.
A
robot must protect its own existence as long as such protection does not
conflict with the First or Second Law. The two humans sent up to the station
have deep metaphysical conversations with the robot leader, who wishes to
understand who created him, and refuses to believe that humans did it (the
robot’s superiority to humans is so obvious). This robot becomes a ‘prophet’
to the other robots. Long story short, the robot ends up
constructing the following view of the Universe. There is a Master, who
created him, and that Master wants him to keep the beams focused on certain
little dots in the empty black beyond the window. Obviously, humans were also
created by the Master, for the same purpose, but these are early models,
wholly inferior to robots. They are harmless, and they may come and go, but
the robot will make sure that the station runs properly. This is functionally
satisfactory, so the humans quit arguing with him and leave the station. The
robots continue to do their job perfectly, and the Three Laws in fact are not
violated. One of the humans is completely
depressed by this turn of events. The other takes a more practical view: If
the robot does his job perfectly, “Then what’s the difference what he
believes!” The new robot religion is a way for them to derive meaning from
directing the energy beams at the planets. To humans, how they interpret what
they do is neither here nor there. For my purposes, Asimov’s story is a
useful parable. The agents (here, the robots) can have a completely false understanding of what they do and yet be
perfectly useful to the principal (here, humans). Now, in Asimov’s story the principal
stumbles upon the solution, because the false representation of reality is
provided by the agent. But this is a detail, and we can easily see how this
may be turned around. In other words, a false and (to the principal) useful
representation of reality may be created by the principal for the agent. What
matters, if the principal wishes the agent to do his job, is to give the
agent a satisfying story. The moral of the story (for me) is
this: whoever controls the representation of reality, or, if you will,
whoever owns the ‘information asymmetries,’ can turn others—without their
knowing—into his agents. [7] A document entitled “The Protocols of
the Learned Elders of Zion” became the very foundation of modern antisemitic
propaganda. It was created by agents of the Tsar’s secret police, the
Okhrana, around the turn of the 20th c. The document purported to be the minutes
of a meeting of secret ‘Super Jews’ who met to discuss how to destroy
‘Christian civilization.’ In reality, the Okhrana’s agents had copied the
speeches of Maurice Joly’s character, Machiavelli, and put them in the mouths
of these ‘Super Jews,’ who supposedly controlled everything clandestinely:
banks, newspapers, unions, industries, governments. . . This was so effective
that it has now become part of our political grammar. Proposing ‘conspiracy
theories’ gets one labeled paranoid, but certainly not when the proposed
conspiracy involves very powerful Jews.
It is entirely politically correct
to say that ‘the Jews’ control the banks, the media, the US government, etc. In
fact, political scientists at the very best universities claim that ‘the
Jews’ control the foreign policy of the United States. See, for example: Op-Ed:
Reply to Mearsheimer & Walt's "The Israel Lobby"; Israel National News; April 03, 2006;
by Francisco Gil-White Such accusations
were made before World War II, and in fact they were the main ideological
contributing force to the Holocaust. Millions of people in the West believed
that ‘the Jews’ had an awesome and dangerous clandestine power, and that
behind the scenes they pulled the ropes to do us harm. The butchers thought
they were acting in self-defense. And yet, to a close approximation, nobody
lifted a finger to defend the Jews when the entire European continent set
about killing them. How did their awesome power vanish so completely and so
suddenly? And now it has magically returned? We learned nothing from World
War II, and are as easily fooled now as our grandparents were back then. To
learn more: The modern "Protocols of Zion" [8] Consider
the following observation by a Mexican political scientist: “It would be absurd to deny that political science developments in the United States are almost always the ones to set the tone everywhere. ...Besides, the United States concentrates in its universities a full 80 per cent of active political scientists from around the world, a number so eloquent as to make us think of a kind of US imperialism over the discipline. It is obvious, therefore, that what is generated there will end up ‘contaminating’ political scientists the world over.” SOURCE: Cansino, C. (2010). La Muerte de la Ciencia Política.
México: Random House Mondadori. (p.10)
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%20examines%20how%20%E2%80%98principals%E2%80%99%20can%20manipulate%20%E2%80%98agents%E2%80%99%20to%20do%20their%20bidding.%20It%20has%20been%20applied%20to%20political%20behavior%20but,%20perhaps%20not%20too%20surprisingly,%20in%20such%20a%20manner%20that%20it%20will%20not%20challenge%20the%20perception%20that%20Western%20States%20are%20functioning%20democracies%20whose%20governments%20are%20duly%20responsive%20to%20the%20citizenries.%20Here%20we%20explore%20an%20alternative%20picture%20that%20takes%20into%20account%20what%20power%20elites%20can%20do%20through%20psychological%20(or%20political)%20warfare.){kind=small}
