Cartel Capitalism and the Deep State

An excerpt from my forthcoming book "The Coming World Nation"

Today I’m sharing another excerpt from my forthcoming book, The Coming World Nation. This one’s taken from Chapter 3, which is called “The Industrial Age and the Politics of Energy”.

For context, the first four chapters of the book are focused on examining the origins of American Empire. This story involves an in-depth examination of how the institutions of financial capitalism moved into the United States after its founding and fundamentally transformed the nation. In particular, it led to the rise of an emergent oligarchical ruling class, who integrated with the military and foreign policy departments of the federal government to drive the nation in the direction of empire. Today, this hybrid public-private, military and corporate nexus of power forms the basis of the American “Deep State”.

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John D. Rockefeller

Given the critical role that oil would play in 20th-century geopolitics, it is unsurprising that the Rockefeller family, the founders of the Standard Oil cartel, would rise as perhaps the single most dominant power player within America’s oligarchical ruling class. Leveraging their immense power and wealth, this dynastic family would exert an outsized influence on the future trajectory of American society, pushing it in the direction of empire and driving the creation of a covert shadow government or “Deep State” within it.

• Delving into the history of the Rockefellers’s corporate empire, oil industry historian Timothy Mitchell explains that Standard Oil “built its domination of the American oil market by first monopolizing the refining industry, then controlling pipelines and shipping routes, and finally taking charge of distribution, replacing independent importers and wholesalers with Standard Oil's own worldwide networks of storage tanks, horse-drawn carriages, and reusable tin cans.”

• By gaining an end-to-end monopoly over the oil industry’s global supply chain, the Rockefellers positioned themselves as essential players within America's foreign policy establishment. By the turn of the century, oil had become such a critically important resource to the success of American military operations and the growth of its economic power that national security planning could no longer be conducted without the active participation of the Rockefeller family. Indeed, it even became an explicit component of US national security strategy to ensure that the Rockefellers maintained their monopoly position over the industry, lest a foreign rival seize control and implement changes to its operations that would compromise the national security interests of the nation.

During the late 19th and early 20th centuries, the Rockefellers shared power with J.P. Morgan, the most powerful and influential banker on Wall Street. F. William Engdahl explains that “by the end of the 1890’s, Morgan and Rockefeller had become the giants of an increasingly powerful Money Trust controlling American industry and government policy, … accumulating and consolidating vast fortunes largely through fraud, bribery of public officials and Congress, corruption, forced bankruptcies, and other ‘noble’ practices.”

• In his book Seeds of Destruction, Engdahl offers further detail on the unsavory business practices that led to the spectacular rise of these oligarchical dynasties, writing that “in their rise to unprecedented heights of power, the Morgan and Rockefeller interests deployed fraud, deceit, violence, and bribery.” They conspired together to engineer financial panics, which they “brought about through their calculated control of financial markets and banking credit, allowing them and their closest allies to consolidate ever more power into fewer and fewer hands. It was this concentration of financial power within an elite few wealthy families that created an American plutocracy or, more accurately, an American oligarchy.”

• Engdahl explains how Aristotle had originally coined the term oligarchy “to describe rule by the wealthiest families, where voting power in the state was related to the size of a family’s fortune.” Applying this concept to America, he notes that “the real power in the spectacular rise of the American Century at the end of the 1890s did not rest democratically in the hands of the majority of citizens. … (Instead), power, together with control over the nation’s economy, was being ruthlessly centralized in the hands of the wealthy few, every bit as much as it had been in the days of Imperial Rome.”

• Americas ascendant oligarchy was centered around an elite syndicate of powerful industrial and banking corporations linked closely to America’s national security establishment. This corporate cabal “used its immense economic power, often secretly and in coordinated fashion, to orchestrate events that generated waves of bankruptcies and severe economic depressions, even panics.” The oligarchical rulers in charge of this syndicate “cynically corrupted and co-opted state legislatures, governors, US Congressmen, judges, newspaper editors, and even Presidents to serve their private interests. Those interests were served by wars their captive press helped trigger, wars from which that oligarchy profited while thousands (and even millions) of young Americans perished for causes they knew nothing about.”

This oligarchical power structure operated outside the parameters of the US Constitution, becoming the basis of what many geopolitical analysts today term the “Deep State”. In his book American War Machine, Princeton professor Peter Dale Scott, one of the intellectual pioneers of this concept, explains that the term “Deep State” references the existence of “a shadow government, or a state within a state”.

• In his explication of the idea, he cites Father Javier Giraldo, who described how this type of shadow government functioned within the context of Columbian politics in the 1970s and 80s: “The Colombian state is contradictory. It tries to fulfill two functions. On the one hand it’s a violent, discriminatory institution that must favor a small wealthy minority. Even basic necessities are denied to the great majority of its people. By its very nature, at its core, it is not democratic. On the other hand, in public discourse it presents itself as a state based on law, one that respects and implements justice, human rights norms, democratic laws.”

• Giraldo asks “how do government functionaries manage this contradiction? They maintain a duality: the parastate, a structure that is illegal and clandestine, increasingly takes over the dirty work, the repression. It doesn’t appear to be part of the state. For many years now Colombia’s government has been creating and maintaining these structures, (with) the legal, constitutional structure existing parallel to structures of a parastate and paramilitary” - i.e. a “Deep State”.

Describing the relationship between the “Deep State” and the overt government of a nation, Peter Dale Scott references the idea of “deep politics”, which is “the constant, everyday interaction between the constitutionally elected government and subterranean forces of violence - forces of crime - that appear to be the enemies of that government.”

• One way these interactions occur is through is through a “hands off” policy by the government towards its Deep State institutions. As an example, consider the CIA, which, “for most of its existence, operated under a secret exemption from legal review of its actions.”

• Another interaction pattern is through outsourcing Deep State operations to private corporations. As an example of this, Scott points to “the American company Aramco, representing a consortium of the oil majors Esso, Mobil, Socal, and Texaco.” This corporate cartel “conducted its own foreign policy in Arabia, with private connections to the CIA and FBI.” Later, in coordination with the CIA, Aramco funded, as a means to consolidate US control over Middle East oil, while at the same time advancing its own financial interests, “not only the Saudi monarchy but also its creation the World Muslim League, which in turn fostered Wahhabism, Islamism, and the forces of al-Qaeda throughout the world.”

Here we discover the imperial ambitions of a “shadow government” being advanced through the actions of oil corporations on one hand and US intelligence agencies like the CIA on the other. Public and private interests form a symbiotic relationship with each other and become inseparable in their activities. Together, they form the basis of the Deep State, which is neither exclusively public nor private but comprised of a synthesis of the two.

• To find the origin of how this hybrid public-private approach to empire first developed in America, consider once again the case of oil: because oil had become a vital component to modern industrial warfare, the American corporate cartel who rose up to monopolize the industry (Standard Oil, owned by the Rockefellers) became an integral asset to the national security interests of the government.

• US military planning and the operations of its privately-owned oil corporations could no longer be separated. The two had to fuse together, with the “Deep State” born from their union.

• The close relationship between the American oil cartel (centered around the Rockefellers) and the US military was mirrored in other economic sectors, such as the steel and railroad cartels owned by J.P. Morgan. These industrial cartels also played critical roles in advancing the national security interests of the nation and therefore the capitalist overlords who owned and controlled them were also integrated into the structure of the US national security establishment.

• Together, this syndicate of public-private imperial interests formed what Father Geraldo called a “parastate”: a shadow government working secretly behind the overt government of the United States, manipulating its democratic institutions and driving the nation in the direction of empire. When people talk about the “Deep State”, this is what they're referring to. It’s not a “conspiracy theory”; it's a fundamental sociological dynamic that has driven the development of American society since the Gilded Age.