The American corporate elite reacted in the 1970s to the combination of fiscal, accumulation and legitimation crises by adopting a neoliberal agenda of curtailing consumption and subsidizing new accumulation. Along with these new policies, it adopted the forms of political control necessary to force them on a recalcitrant population.

Until the late 1960s, the elite perspective was governed by the New Deal social compact. The corporate state would buy stability and popular acquiescence in imperialist exploitation abroad by guaranteeing a level of prosperity and security to the middle class. In return for higher wages, unions would enforce management control of the workplace. As Richard K. Moore put it, prosperity would guarantee public passivity.²³ But starting in the Vietnam era, the elite's thinking underwent a profound change.

They concluded from the 1960s experience that the social contract had failed. Besides unprecedented levels of activism in the civil rights and antiwar movements, and the general turn toward radicalism among youth, the citizenry at large also became less manageable. There was a proliferation of activist organizations, alternative media, welfare-rights organizations, community activism, etc.

Elite intellectuals like Samuel P. Huntington lamented the drastic decrease in the level of trust of government and other leading institutions among the general public. In The Crisis of Democracy, written by Huntington and others as an inagural paper for the Trilateral Institution (an excellent barometer of elite thinking), the authors argued that the system was collapsing from demand overload, because of an excess of democracy. Huntington's analysis is so illustrative of elite thinking at that time that we will quote it at length.

For Huntington, America's role in maintaining the global state capitalist system depended on a domestic system of power; this system of power, variously referred to in this work as corporate liberalism, Cold War liberalism, and the welfare-warfare state, assumed a general public willingness to stay out of government affairs. For the first two decades or so after WWII, the U.S. had functioned as "the hegemonic power in a system of world order."²⁴ And this was only possible because of a domestic structure of political authority in which the country "was governed by the president acting with the support and cooperation of key individuals and groups in the Executive office, the federal bureaucracy, Congress, and the more important businesses, banks, law firms, foundations, and media, which constitute the private establishment."²⁵

America's position as defender of global capitalism required that its government have the ability "to mobilize its citizens for the achievement of social and political goals and to impose discipline and sacrifice upon its citizens in order to achieve these goals."²⁶ Most importantly, this ability required that democracy be largely nominal, and that citizens be willing to leave major substantive decisions about the nature of American society to qualified authorities. It required, in other words, "some measure of apathy and non-involvement on the part of some individuals and groups."²⁷

Unfortunately, these requirements were being gravely undermined by "a breakdown of traditional means of social control, a delegitimation of political and other means of authority, and an overload of demands on government, exceeding its capacity to respond."²⁸

The task of traditional state capitalist elites, in the face of this crisis of democracy, was to restore that "measure of apathy and noninvolvement," and thus to render the system once again "governable."³⁰

In response to the antiwar protests and race riots, LBJ and Nixon began to create an institutional framework for coordination of police state policy at the highest levels, to make sure that any such disorder in the future could be dealt with differently. This process culminated in Department of Defense Civil Disturbance Plan 55-2, Garden Plot, which involved domestic surveillance by the military, contingency plans for military cooperation with local police in suppressing disorder in all fifty states, plans for mass preventive detention, and joint exercises of police and the regular military. Senator Sam Ervin, of the Subcommittee on Constitutional Affairs, claimed that "Military Intelligence had established an intricate surveillance system covering hundreds of thousands of American citizens. Committee members had seen a master plan--Garden Plot--that gave an eagle eye view of the Army-National Guard-police strategy." (Of course, much of the apparatus needed for preventive detention of "subversives" had been in place since the McCarran Internal Security Act of the Truman era.)

The New Deal social compact with organized labor was reassessed in the light of new events. The country was swept by a wave of wildcat strikes in the early 1970s, in coal mining, auto manufacturing, and the post office. These disruptions indicated that the business unions could no longer keep their rank and file under control, and that the Fordist system was no longer serving its purpose of maintaining social control in the workplace.

At the same time, the business press was flooded with articles on the impending "capital shortage," and calls for shifting resources from consumption to capital accumulation, by radically scaling back the welfare state and hamstringing organized labor. This shift was reflected in traditionally corporate liberal think tanks like Brookings and the CED, which both produced studies acknowledging the need to impose limits on consumption in the interest of accumulation; for example, the Brookings Institution's 1976 study Setting National Priorities: The Next Ten Years.³²

Business journals predicted frankly that a cap on real wages would be hard to force on the public in the existing political environment.³³ For example, an article in the October 12, 1974 issue of Business Week warned that

This only heightened the imperative to curb the excess of democracy and make the state less vulnerable to popular pressure.

Corporations embraced the full range of union-busting possibilities in Taft-Hartley, risking only token fines from the NLRB. They drastically increased management resources devoted to workplace surveillance and control, a necessity because of discontent from stagnant wages and mounting workloads (aka increased "productivity").³⁵ Not surprisingly, workplace violence ("going postal") escalated along with general levels of employee disgruntlement. The use of internal surveillance systems and personality profiling to detect disgruntlement and weed out those with bad attitudes toward authority, not to mention to track down those guilty of quiet and unobtrusive sabotage, became a central preoccupation with the new Chekists in Human Resources departments.

Wages as a percentage of value added have declined drastically since the 1970s, and real wages have been virtually flat. Virtually all increases in labor productivity have been channeled into profit and investment, rather than wages. The new Cold War military buildup, from the late '70s on, still further transferred public resources to industry.

A series of events like the fall of Saigon, the nonaligned movement, and the New International Economic Order were taken as signs that the transnational corporate empire was losing control. The national security community saw America's "system of world order" coming under increasing pressure from national liberation movements. An excellent example of foreign policy elites' view of the near future is the work of RAND analyst Guy Pauker, who wrote in 1977 of a "possible world order crisis in the 1980s."³⁶

Reagan's escalating intervention in Central America was a partial response to this perception. But more importantly, the collapse of the USSR ended all external restraints on the global system designed during WWII, and deprived internal resistance to that system of the Soviet Union's patronage. In the aftermath of this snatching of total victory from the jaws of defeat, the Uruguay Round of GATT ended all barriers to TNCs buying up entire economies, locked the west into monopoly control of modern technology, and created a world government on behalf of global corporations.

This was, in its essentials, the development that James O'Connor had foreseen in 1984--years before the fall of the Berlin Wall and the implosion of the USSR:

In the meantime the U.S. was moving toward radical polarization of income. The general effect of the neoliberal reaction was to blur the lines between imperial core and periphery: the comprador bourgeoisie, living in heavily fortified luxury sectors of Third World cities, coexisted with the gated communities of America as elements of the core; at the same time, something resembling a Third World society has arisen in parts of what was traditionally the First World. The inner city and the depopulated countryside, the seats of urban and rural squalor, respectively, were subject to increasing surveillance and brutality under the guise of the War on Drugs. "Most of the world has been turned into a periphery; the imperial core has been boiled down to the capitalist elite themselves...."³⁸

As policy elites attempted to transform the country into a two-tier society, a kinder and gentler version of the Third World pattern, the threat of public discontent forced the government to greater and greater levels of authoritarianism.

"The Rubicon," Moore concludes, "has been crossed--the techniques of oppression long common in the empire's periphery are being imported to the core."³⁹

With the help of the Drug War, and assorted Wars on Gangs, Terrorism, etc., the apparatus of repression continued to grow. The Drug War has turned the Fourth Amendment into toilet paper; civil forfeiture, with the aid of jailhouse snitches, gives police the power to steal property without ever filing charges--a lucrative source of funds for helicopters and kevlar vests. SWAT teams have led to the militarization of local police forces, and cross-training with the military has led many urban police departments to view the local population as an occupied enemy.⁴⁰

Reagan's old California crony Giuffrida resurfaced in the '80s as head of FEMA, where he worked with Oliver North to fine-tune Garden Plot. North, as the NSC liaison with FEMA from 1982-84, developed a plan "to suspend the constitution in the event of a national crisis, such as nuclear war, violent and widespread internal dissent or national opposition to a U.S. military invasion abroad."⁴¹ Garden Plot, interestingly, was implemented locally during the Rodney King Riots and perhaps also in recent anti-globalization protests.⁴² Delta Force provided intelligence and advice in those places and at Waco.⁴³

The apparatus of the police state ratcheted further upward during the Clinton administration, with the passage of the so-called Counter-Terrorism Bill in 1996. The Clinton Bill, arguably more dangerous than anything since done by Ashcroft, gave the President blanket authority to declare any organization "terrorist" by executive fiat, and then to seize its assets without due process of law. Since then, seizing on the opportunity presented by the 9-11 attacks, Ashcroft's Justice Department was able to push through (via the USA Patriot Act) a whole laundry list of police state measures desired by the FBI that Congress had been unwilling to swallow five years earlier.

The post-911 growth of the police state dovetails nicely with the pre-911 reaction against the anti-globalization movement, which since Seattle had replaced the so-called constitutionalist or militia movement as a chief concern of federal law enforcement.⁴⁴ John Timoney, Philadelphia Police Commissioner during the August 2000 police riot at the Republican National Convention,⁴⁵ has been a close associate of Homeland Security Director Tom Ridge. Before 9-11, Timoney was a vocal enemy of the "international anarchist" conspiracy to disrupt globalization meetings, and advocated the use of RICO statute and harsh federal law enforcement tactics to break the anti-globalization movement. In August 2000, he made what was arguably the most drastic, thorough, and creative use of police spying, harassment, preventive arrest of activists on trumped up charges, of any local police official involved in fighting the post-Seattle movement.⁴⁶ As police chief in Miami, he supervised the recent police riots during the FTAA meeting. Timoney's name has periodically surfaced in the mainstream media in connection with Homeland Security, often rumored to be under consideration for a top lieutenancy under Ridge. The "economic terrorism" provisions of USA Patriot, arguably, apply to many of the direct action tactics used by the Wobblies and other radical unions; how long will it be before the "criminal syndicalism" laws of eighty years ago are resurrected under this guise?

An especially creative innovation from the War on Drugs, since applied to all sorts of other areas, is to turn everyone we deal with into a police agent. Banks routinely report "suspicious" movements of cash; under "know your customer" programs, retailers report purchases of items which can conceivably be used in combination to manufacture drugs; libraries come under pressure to report on readers of "subversive" material; DARE programs turn kids into police informers.

The media and popular culture also do their part. In the police drama, "'rights' are a joke, the accused are despicable sociopaths, and no criminal is ever brought to justice until some noble cop or prosecutor bends the rules a bit."⁴⁷ Meanwhile, the schools, through "peer group socialization" (aka the barracks society), DARE, and "zero tolerance," are molding a public trained from childhood to believe that the way to success is to please authority figures, to avoid making waves, and to do and believe what they are told--and that every problem or perplexing situation should be dealt with by running to someone in authority.

Computer technology and digital media have increased the potential for surveillance to Orwellian levels. The existence of enormous computer databases, surveillance programs like Echelon and Carnivore, and police experimentation with combinations of public cameras, digital face-recognition technology, and databases of digital photos, have between them made a total surveillance state technically feasible. Although trial balloons like Total Information Awareness are occasionally floated, the public still resists final steps toward a universal surveillance database or a national ID card. No doubt Ashcroft already has the draft legislation to implement them handy in his desk drawer, to be produced after the next convenient terror attack restores the properly attitude of servility among the general public.

A common response to those fearing such capability (from the sort of "small government conservative" who is typically full of zeal for the national security state), is to challenge civil libertarians to produce "one example" of how (for example) the USA Patriot Act has been abused. But the powers the government has on paper, and what it could choose to do with them if it ever found it "convenient," are a lot more important than the use it has made of them so far. All the rights we have were originally forced on the government from below, not granted by the government out of good will. The only guarantee we have for these rights, in the last resort, is our ability to exercise them against the will of the government, and our ability to resist if it attempts to restrict them.

The "slippery slope" argument used against gun control is just as applicable here: the more the exercise of a right is regulated, licensed and monitored, the less credible is the public's ability to exercise that right against the will of the government, and the more that right becomes in practice a privilege granted by the government. The federal government has gone a long way to creating the full legal and institutional structure necessary for dictatorship, regardless of whether they choose to exercise it; Ashcroft clearly desires to go most of the rest of the way down that path. The very fact that the government is busily acquiring the ability to track us, and to keep our speech and associations under surveillance, and to suspend them at the stroke of a president's pen, makes those liberties less secure. The effect is to render those liberties a grant from the government, depending on the continuance of its good will.

There are, however, built in limits to these tendencies toward repression and statism; they lie in the potential for legitimation crisis detailed in the previous section. Many aspects of the neoliberal reaction itself, like the politically charged debate over "welfare reform," are examples of the contradictions of capitalism being translated to the administrative realm, as Habermas predicted.