Who Rules America? by Prof. James Petras Global Research, January 13, 2007 Information Clearing House In the broadest and deepest sense, understanding how the US political system functions, the decisions of war and peace are taken, who gets what, how and why, requires that we address the question of 'Who rules America?'  In tackling the question of 'ruling' one needs to clarify a great deal of misunderstandings, particularly the confusion between those who make governmental decisions and the socio-economic institutional parameters which define the interests to be served.  'Ruling' is exacting:  it defines the 'rules' to be followed by the political and administrative decision-makers in formulating budgetary expenditures, taxes, labor and social legislation, trade policy, military and strategic questions of war and peace.  The 'rules' are established, modified and adjusted according to the specific composition of the leading sectors of a ruling class (RC).  Rules change with shifts in power within the ruling class.  Shifts in power can reflect the internal dynamics of an economy or the changing position of economic sectors in the world economy, particularly the rise and decline of economic competitors.              The 'rules' imposed by one economic sector of the RC at a time of favorable conditions in the world economy, will be altered as new dominant economic sectors emerge and unfavorable external conditions weaken the former dominant economic sectors.  As we shall describe below the relative and absolute decline of the US manufacturing sector is directly related to the rise of a multidimensional 'financial sector' and to the greater competitiveness of other manufacturing countries.  The result is an accelerating process of liberalization of the economy favored by the ascending financial sectors.  Liberalization in pursuit of unregulated flows of investments, buyouts, acquisitions and trade increases the financial sector's profits, commissions, incomes and bonuses. Liberalization facilitates the financial sector's acquisition of assets.  The declining competitiveness of the older ruling class manufacturing sector dependent on statist protectionism and subsidies leads to 'rear-guard' policies, attempting to fashion an unwieldy policy of liberalization abroad and protectionism at home.             The answer to the question of who rules depends on specifying the historical moment and place on the world economy.  The answer is complicated by the fact that shifts among 'sectors' of the ruling class involves a prolonged 'transitional period'.  During this period declining and ascending sectors may intermingle and the class members of declining sectors 'convert' to the rising sector.  Hence while power between economic sectors may change, the leading class groupings may not lose out or decline.  They merely shift their investments and adapt to the new and more lucrative opportunities created by the ascending sector.             For example, while US manufacturing sector has declined relative to 'finance capital', many of the major investment institutions have shifted to the new financial 'growth sectors.'  Concomitantly, the converted sectors of the ruling class will shift their policies toward greater liberalization and deregulation, thus severely weakening the rear-guard demands of the uncompetitive manufacturing sector.  Equally important within the declining economic sectors of the RC, drastic structural changes may ensue, to regain profitable returns and retain influence and power.  Foremost of these changes is relocation of production overseas to low wage, low tax, non-union locations, the introduction of IT technology designed to reduce labor costs and increase productivity, and diversification of economic activity to incorporate lucrative financial 'services'.              For example General Electric has moved from manufacturing toward financial services, relocated labor intensive activity off-shore and computerized operations.  Through these moves the distinction between 'manufacturing' and financial capital has been made obsolete in describing the 'ruling class'.

Certainly what President Hugo Chavez of Venezuela is doing challenges the ruling class in America and Western Europe. Venezuela is demanding a greater share in its own oil wealth which means American and European oil corporations will receive less by having to pay more to extract the oil. If you have been wondering, or you likely did not even know this, why European and Chinese oil companies recently reported a decline in earnings for the 1^st quarter, while American oil corporations showed an increase in profits, wonder no longer. You probably noticed that the American oil corporations really stuck it to you at the gas pumps in the last two months, with gas usually being above $3 per gallon, while the price per barrel is below $70 per barrel. They know their future losses are coming. The Europeans are already paying a large amount for gas and have for a long time. Raising the price on their customers was not an option. Essentially, the American oil companies are padding their bottom line because they know they are being kicked out or being told to go to the end of the line, as long term oil and gas contracts are being signed by China and other Asian countries. Even the Iraqi oil ministry told them to go to the end of the line. Little wonder that President Bush stated that America will be reducing its dependency on Middle East oil by 74%. What he did not say is that it was not by choice but the oil producers’ decision. We can say with certainty that big oil is a part of the ruling class in America and under the Bush Administration, has established the rules under which they will be governed. Not surprising since the Bush family is very much involved in the oil and gas business. Even Condoleezza Rice is involved enough to have a Chevron oil tanker named after her. Chevron is also one of the four American oil companies involved in Somalia which has resulted in the slaughter that is ongoing in Mogadishu and other areas of Somalia. The other three corporations are Amoco (now owned by British Petroleum), Halliburton, and Conoco Phillips. There is no other reason for the massive bloodshed in Somalia. Chavez: Troops to escort oil takeovers Fri Apr 13, 5:32 AM ET CARACAS, Venezuela - President Hugo Chavez said Thursday that soldiers will accompany government officials when they take over oil projects in the Orinoco River basin next month. Chavez has decreed that Petroleos de Venezuela SA, or PDVSA, will take a minimum 60 percent stake in four heavy-oil projects in the Orinoco River region and invited the six private companies operating there to stay on as minority partners. "On May 1 we are going to take control of the oil fields," Chavez said. "I'm sure no transnational company is going to draw a shotgun, but we will go with the armed forces and the people." The projects — run by BP PLC, Exxon Mobil Corp., Chevron Corp., Conoco Phillips, France's Total SA and Norway's Statoil ASA — upgrade heavy, tar-like crude into more marketable oils and are considered Venezuela's most promising. As older fields elsewhere go into decline, development of the Orinoco is seen as key to Venezuela's future production. Negotiations over the takeover have yet to yield an agreement and are expected to be difficult as the companies seek a deal that takes into account more than $17 billion in investments and loans related to the projects. Chavez has been given special powers by congress for 18 months to issue laws by decree in energy and other areas, which he has also used to nationalize the country's biggest telecommunications company and electricity company. Chavez has justified the nationalizations as necessary to give the government control of sectors strategic to Venezuela's interests. http://news.yahoo.com/s/ap/20070413/ap_on_re_la_am_ca/venezuela_oil_takeover_3 I was listening to a trade representative today as he compared China’s method of trade to that of the United States’. He stated that Chinese companies often have the power of the Chinese government behind them and American corporations basically don’t. That simply isn’t the case. In America, when rules are changed or created that allow companies and especially government entities to require payment into pension funds and 401Ks, much of that money goes directly to Wall Street where it is leveraged within American oil, pharmaceutical and other corporations by the banking and financial institutions. This sector of the ruling class even wants your social security dollars. This is where banking and financing institutions earns billions of dollars. Much of that is using your money from labor to speculate in worldwide investment. For African Americans, this ultimately increases the gap between White wealth versus Black wealth in America. Why? It is because Wall Street never was intended for African, i.e., Black people, except using you as a commodity. The fighting in Somalia is a result of Wall Street. The propaganda regarding Sudan is all about Wall Street. The American and Western European corporations desire to capture the raw resources, especially oil and gas, of Sudan and Somalia. Asian nations currently are reaping the great benefits of Sudan’s oil and other resources, to the anger of American oil and mineral corporations. Banking and finance exploits labor dollars by getting the government to adopt the rules that they write to benefit their own industry. In this first part of, Who Rules America, we have identified two of the industries of the ruling class, oil & gas, and banking and finance.