HISTORY OF DEEP STATE PART 1

In all ages whatever the nature and form of government,be it monarchy,republic or democracy ,an oligarchy lurks behind the facade: Ronald syme , The Roman revolution

The economic origins of the Deep state

Major and minor events in history are at many times unexplainable. Wars especially appear to be endemic to human civilisation even when they are not waged to preserve  direct threat to existential survival. There is a feeling that there are false flag events that we mistake as real reasons that organizations ,whether ancient kingdoms or modern corporate nations go to war for. Pirate ships used to fy flags of maritime nations to falsely give an impression of legality to their enterprise of plundering. Thus wars are justified on the basis of religious persecution,dictatorships,spreading of enlightenment but the real reason may be different. These are spread by a powerful elite in states which benefit from wars and aggression. These are called the deep state. The theory of deep state is debunked as ‘Conspiracy theoriries’ , but there may be a firm basis of it.

     The basis of the Deep state has existed  since ancient state formation occurred after the agricultural revolution. Prior to this hunting tribes coming to conflict on overlapping territories for resources would withdraw to reduce it. With agriculture and permanant settlement arose private property .A group of people arose to defend these permanent settlements. With specialised armies these groups could not be removed and became hereditary rulers of ancient states.However the ruling class was not the king only but a deep state with courtiers,nobles.military generals and so on.Their income came from taxing peasants of their produce. 

    The interesting thing was the deep state was politically and economically unstable leading to succession of empires and dynasties with changing territorial extent like an amoeba. The economic basis has been explained by PICKETTY. In his book he has shown that when rate of capital accumulation( return from land through taxes) exceeds rate of growth ( income of peasants) wealth  gradually accumulates more and more to the top segments. Since rate of growth  in ancient societies was near zero for thousands of yearsdue to stagnant technological innovation this means that  with constant taxation of land peasants were impoverished and longed to;rebel. The political reason for instability is self evident. Since immense wealth could be obtained by replacing a king ,courtiers and neighbouring kingdoms constantly plotted to overthrow them. The deep state is thus an explanation of the overthrow of kingdoms and wars between them which cannot be explained otherwise clearly.It is based on distribution economics and capital accumulation and not on economics of efficient  production.The theory of capital accumulation was most vigorously propounded by Karl Marx in 19th century. However income and tax data was incompletely available during his time and the actual evidence for same was not there.

Greek and Roman deep states

 The Ancient Greek states consisted of landed aristocrats on whose estates slaves toiled and independent tillers and traders.In 508BC Greek lawgiver Cleisthenes introduced concept of democracy or rule by the people.His aim was to distribute power more evenly between the few oligarchic landed families and rising class of merchants ,traders and common citizens. Though decisions were taken by a vote the daily day to day affairs was carried out by an organization called Boule. The oligarchs managed to control it thus defying many democratic decisions. The democratic state was eventually overthrown when Athens lost to the militaristic state of Sparta. 

 Ancient Rome became a republic by overthrowing their king in 509BC. However just like Greece the landowning aristocrats called Patricians managed to control the senate.In 134 BC Tiberius Gracchus an aristocrat wanted a fairer distribution of land to the poor classes ,the Plebians. While Cleisthenes in Greece had been able to convince aristocrats to share power Gracchus was more confrontational. He incited plebeians against the patricians by fiery speeches.In133BC aristocrats and a hired mob beat Gracchus to death along with 300 of his supporters.Ten years later Gaius Gracchus brother of Tiberius killed himself when cornered by a gang sent by the oligarchs to murder him after  he demanded fair grain prices for the poor.

In 27 BC the aristocratic senate was overthrown by the Roman army . A continuous military rule occurred for next four hundred years and Generals became emperors. However the rulers were themselves constantly under threat from rival generals. In the period of imperial crisis between235- 284AD there were 27 different rulers in 49 years. Many were disposed by the Pretorian guard who were an elite organization constituted to personally protect the emperor.

The trading empires of Europe

The printing revolution had enabled Europe by 16th century to forge ahead of rest of the world in disseminated knowledge,scientific innovations,exploration and military technology. This laid the foundations for trading on a massive scale using better ships and armies to protect them. Public monopolies were granted by European nations to companies to trade with specific foreign nations. These companies , like East India company maintained their own army and at one time it’s army was larger than the army of it’s  parent country Britain. With their coercive power they created unequal trade with local population and even became landowners with power of taxation over local population. Many plantations employing slave or indentured labour were run for tea.cottonindigo,opium to make huge profits.Apart from this the East India company maintained a network of spies and assassins in London to silence any opposition to their nefarious activities around the world.

Industrial Revolution and capitalism in Britain

Britain became the first country in eighteenth century where Industrial Revolution took place. The immense volume of trade which Britain now undertook required corresponding large quantities  of manufactured goods for export as well as for rising purchasing power of the population. Initially it started with mechanisation of cotton textiles powered by water mills but later by steam engines.For the first time manufacturing took place in factories where workers worked with machines. Unlike craftsmen the tools were not owned by the workers. The factory required large sums of money to construct and this was the origin of CAPITAL. Initially traders dealing with sale of manufactured goods supplied the capital and became factory owners. Later the joint stock companies arose which pooled capital of the public and used it for building factories ,railroads,steamships.Thiswasthe phase of industrial capital and the economy was run by industrial owners in various segments separately.

The phase of industrial capitalism in Britain corresponded with stagnant wages and concentration of capital and income in the hand of capitalists in 19th century Britain. The rate of economic growth and income stayed around 1.5% and returns of capital around 5%. Capital labour ratios were around 40% indicating rising income from capital due to cumulative accumulation of profits.

 Though Britain had become a democracy the voting rights were not given to women or destitute.Political parties represented interests of the landed class or the moneyed capitalists. The poor had no access to quality healthcare and education. The mass of unemployed formed gangs for extortion or served as henchmen to politicians to gather votes. 

Finance capital and monopolies

By late 19th century the commercial banks had gained unprecedented power in the economy. They advanced loan capital to industrial capital to start factories. In turn due to their power in Boards of firms they could control the management of the firm. Over a period of time the banks started  having control over vast number of firms in a sector. Thus investment bankers like Rockfeller,J P Morgan  owned vast sectors of oil.steel or across multiple sectors of the economy. However in many cases these monopolies were created using threats and extortion to force owners to sell their firms. However the growth of monopolies does not automatically lead to monopoly prices as the capitalist is more concerned with profits from competitive sectors rather than a particular monopoly sector. 

   Finance capital was accompanied by a further rise in capital accumulation by the capitalists. On the eve of the Great Depression of 1929 the capital labour ratio was over 40%.Workerswages were stagnant and profit could be made only in the stock market by speculation. After the great stock market crash the entire industrial economy went into a deep recession.

    The world wars rescued the industrial economy. It destroyed factories and infrastructure capital in Europe leading to a loss of capital accumulation. This ,along with war investment led to employment and wage increases. The New Deal moreover separated banks from directly controlling the industrial firms.Italso led to public investment in infrastructure and employment.

The managerial deep state

The postwar economy saw unprecedented growth of western economies. The destruction of capital in the world war reduced capital labour ratio to 20%. Another change was public investment in health,education and unemployment social security. These provided a welfare state and looked after the needs of the poor and even middle classes. The political parties lost patronage of an unemployed criminal class as well as lost the privilege of giving favours to needy. They now indulged in economic and political competition along ideological lines.

   The New deal initiated laws to separate investment and commercial banks. The commercial banks could not own shares in firms while giving loans,The investment banks could not own shares in firms . Both measures decreased ability of finance capital to control administration of firms. This allowed professional managers to control administration of firms without caring for board oversight. They moreover gave themselves exorbitant salaries. As a result labour incomes consisting of professional managers at the top gets a high percentage of national income. However in spite of this the finance capital still controls the largest capital accumulation  in the economy.

 The managerial deep state comprises a large number of proffesionals in arms manufacturing,technology.oil industry who control multi division firms. The divisional managers control the adminnsrration of divisions. Those at top control the share of funds to the divisions as per profitability.

The professionals in top firms revolve from their firms to Wall Street to administration including FED and CIA. They thus determine government policy especially foreign policy affecting their firms. Thus the oil oligarchs planned the assassination ofPM Mossadeq of Iran when he tried to nationalise British oil. The military oligarchs have pushed the US army into numerous wars from Vietnam to Iraq to enable arms sales.

American exception:Empire and the deep state,The deep state.The fall and rise of American finance,Capital in the twenty first century( Picketty)