This may be a dumb or unpopular question for a socialist to ask, but I’m interested in thinking it through: should our slogan be “people before corporations!” when it comes to the bailouts coming from the federal government.
One of the main left responses to the $2 trillion fiscal relief package in the CARES Act is that it bails out corporations before people. This is sure true. The breakdown chart above shows where money is going, and a lot is going to ‘large corporations’. This kind of thing is happening everywhere in the world. (Michael Roberts has a great graph charting the percentage of GDP per country on this score, separating out fiscal from monetary action.)
What’s making the biggest waves is an unspecified $454 billion ‘slush fund’ going to those large corporations. I’ve written already about how that money is basically going to leverage the trillions the Fed has spent up until now, ten to one. That means if the monetary relief works, it works tenfold.
I chanted back in Occupy that “banks got bailed out, we got sold out,” and believed it. I still think that. Similarly, the rallying cry from the left has been ‘people before corporations!’
But the capitalist response to to this is pretty easy: the demarcation between ‘people’ and ‘corporations’ is not an either/or.
The corporations are firms that compose the mode of production itself. They hire people. They produce, distribute, exchange the stuff that people consume. The mode of production is how we make our material lives together.
If that mode fails, the negative impact on people will be extremely intense. Not bailing out corporations, on this line, hurts people a lot. Saving corporations helps people, they say. Biden articulated the perspective succinctly. He said back in 2008, if they hadn’t bailed out the banks, people would have suffered.
My question is: what’s the socialist response to this?
One clear answer is that a labor bailout just looks different than a capital bailout. We have examples from the UK, Denmark and elsewhere about salaries being compensated at 75% and 80% rather than a flat one-time payment like the CARES Act has.
A labor bailout prioritizes worker benefits like healthcare and pay as much as if not more than prioritizing employers. But another version of the same question emerges: as socialists, we obviously want to do right by labor over capital. How far does that go in a pandemic? What does it mean to do right by labor right now given our mode of production and the pandemic? To some degree, you have to save capital to do right by labor. But capital exploits labor…Thus the conundrum.
Precedents to look at might be Corbyn’s people’s quantitative easing proposal in 2015. Doug Henwood proposed to me that we have a people’s structural adjustment where capital has to meet certain social-democratic requirements when receiving the money.
Andrew Elrod and Mark Engler point to oversight as another route for demands in this moment. Okay, there’s $454 billion in the CARES act that is going where again? Who’s making sure it’s not all just going into the private sector without accountability? (In that sense, they point out some ‘not insignificant’ measures in the act: you can’t do buybacks, managerial salaries have to freeze, and Trump can’t send the money to his businesses.)
Elrod and Engler historicize the Federal Reserve’s actions from the Great Depression till now, particularly contrasting the Reconstruction Finance Corporation (RFC) in 1934 with TARP in 2008. The authors call for another RFC, which was not beholden to Wall Street and run by capitalist Jesse James. TARP on the other hand, had no such federal corporation for oversight.
One of the interesting things for me is the word ‘corporation’. Actually, according to this article, we want corporations to be stronger: but we want those corporations to be federally run, accountable to taxpayers rather than shareholders.
As a coda, Adam Tooze makes an interesting point in this interview with Ezra Klein, that perhaps the left is making a mistake by focusing too much on change, reform, and revolution. The politics and economics of the pandemic are inherently conservative he says. By conservative he means attempting to maintain a status quo, get things back to normal.
It’s good to keep that mind, particularly in the battles ahead: what would a ‘conservative’ socialist response look like? How could socialists accrue credibility in this moment? It might not be the slogans of the past.