LBO News from Doug Henwood

Fresh audio product: surveillance of sex workers (and others), varieties of Italian fascism

Just added to my radio archive (click on date for link):

March 23, 2023 Maxine Doogan and Tara Burns, contributors to this report, on how cops are snooping on sex workers, and using what they learn to spy on the rest of us • David Broder, author of Mussolini’s Grandchildrenon the fascist heritage behind Italian prime minister Giorgia Meloni and her party

Fresh audio product: bank failures; carceral state; China, Saudi Arabia, and Iran

Just (well, a few days late) added to my radio archive (click on date for link):

March 16, 2023 DH comments on the bank failures • Wanda Bertram of the Prison Policy Initiative on the state of the carceral state • Annelle Sheline on the Chinese-brokered deal between Saudi Arabia and Iran

Fresh audio product: reaction and resistance in Florida and Israel

Just added to my radio archive (click on date for link):

March 9, 2023 Florida follow-up: historian and union president Paul Ortiz on the DeSantis agenda and resistance to it • human rights lawyer Noa Levy on the far right agenda in Israel and resistance to it (the Ayelet Shaked Fascism ad is here)

Fresh audio product: crackdown on sex, crackdown on academic freedom

Just added to my radio archive (click on date for link):

March 2, 2023 Judith Levine on moves to defund the Kinsey Institute, and on the trans kids panic • Phil Wegner of the University of Florida on Gov. Ron DeSantis’s moves to quash academic freedom in that state

fresh audio product: the European energy situation, the case for nationalizing the railroads

Just added to my radio archive (click on date for link):

February 23, 2023 Jamie Webster of BCG on Western Europe’s energy situation • Kari Lydersen, author of this In These Times article, and Ron Kaminkow, locomotive engineer and organizer with Railroad Workers United, talk about the miseries of the industry and why it should be nationalized

Anatol Lieven: it’s not quite early 1914, but…

This is the edited transcript of an interview I did with with Anatol Lieven, Eurasia Program Director at the Quincy Institute, on Behind the News, February 16, 2023.

I’ve seen people in the last week or so making analogies to early 1914. Do you get any of that feeling?

Yes, to a degree. The Biden administration is still trying to keep America and NATO out of direct war with Russia, but clearly they’ve done a number of things which had they been done to the United States probably would have us in a war by now. There is also the growing and growing confrontation between the US and China. So, I don’t think we’re in July 1914 yet, but it’s not too hard to see how we could get there.

I want to speak about China in a little bit, but let’s talk about Ukraine for a moment. We keep seeing these stories of massive Russian casualties. The British Defense Minister said 97% of Russian forces, which would mean over 300,000 are in Ukraine. Now, that sounds a little hard to believe, but do we really have a clear picture of what’s going on there at all?

Well, we don’t have an exact picture. It must be remembered that US intelligence has said that Ukrainian casualties have been roughly the same as the Russians from, of course, a much smaller population. So, this has been a, a very bloody war on both sides. But I don’t think there’s any doubt whatsoever that especially in the first months, the Russian forces, and especially their best forces, which they used at the start of the war, have suffered very badly indeed. As a result, Russia is now, it seems, making very slow progress at all on the ground in in Eastern Ukraine. So that for months now, people have been talking about another analogy to the First World War, which is of course, the situation on the western front from 1914 to 1918, when both sides were bogged down in a war of attrition in the trenches with very, very heavy casualties on both sides.

I just looked up the casualties. I’d forgotten that 9 million soldiers were killed—remarkable bloodletting. But it does seem like they’re reviving that style of warfare with human wave attacks and blasting each other, and it all seems absolutely pointless and horribly bloody.

Yes. Obviously, this war, from Russia’s point of view, has been a complete disaster as well as a crime on the Ukrainian side. You have to ask not just obviously now, but for years, even since 2014, why exactly Ukraine wants back Crimea and eastern Donbas which are heavily populated by Russians and Russian speakers who by all reliable accounts do not want to return to, to Ukraine. So, the question is, what is Ukraine risking and losing in order to recover these territories, and what would it do with them if it got them back? But of course, it’s become a both a symbol of Ukrainian national pride and victory and an attempt to impose such a crushing defeat on Russia that the Putin would fall and perhaps Russia would break up as a state.

Which of course, on the other side is why the Russian regime is absolutely determined to fight on, to hang onto what it’s got. And Crimea particularly as not, not just symbolically for Russians, but actually in strategic terms as well as the only real Russian port on, on the Black Sea, and therefore the only one with access to the Mediterranean. This isn’t just a symbol of Russia as a great power. It is actually a key part of the reality of Russia as a great power. A great many Russians will undergo considerable hardship and loss to maintain that status, as of course many Americans would do for US global primacy.

Now you said the Biden administration is holding back, not escalating as quickly as it might, but they are amping up the level of arm shipments. It just keeps getting to be more and more sophisticated, more and more deadly. What is the goal here? Do they want to beat Russia? You see hawkish voices in the US and elsewhere saying, we want Russia to break up as a state as you mentioned—what is the point? What’s the end game?Anatol Lieven

There are obviously divisions within the Biden administration as there are divisions within Europe, both within European countries and between them. And as you’ve said, there are ultra-hardliners who actually do want to destroy Russia as a state as far as one can make out and from leaks. The majority opinion in the Biden administration wants to impose enough of a defeat on Russia. That Russia leaves all the territory that it has conquered since February of last year, which is essentially the land bridge between Russia and Crimea. And in return, the US would advocate a ceasefire in which Russia would—not legally this wouldn’t be recognized—but would in practice hang on to Crimea and probably the Eastern Donbas. And they want to give enough weapons to the Ukrainians to enable the Ukrainians to do that without the Ukrainians actually being able to attack Crimea and possibly trigger a nuclear war. But of course that is a very, very delicate balancing act.

Yes. The phrase “playing with fire” comes to mind.

Well, absolutely. I mean how do you calibrate that? And how do you stop the Ukrainians if they do achieve some smashing breakthrough with US weapons and then do what they say they’re going to do, which is actually aim for everything? Mind you whether, even with US weapons, the Ukrainian army is capable of breaking through. We really are not clear about that, just as it seems unlikely that Russia can do more than incrementally capture maybe the whole of the Donbas. But the people who say that Russia has to be completely defeated or even destroyed in, in order to save an independent Ukraine, they are, well, let us be kind and say deceiving themselves because that issue has been settled. Unless the United States sort of disappears from the world stage and all aid to Ukraine dries up.

We know by now that the Russian army is simply incapable of capturing Kiev and overthrowing the Ukrainian state, or even since the Russians withdrew from their only bridgehead west of the Dnieper River there, there’s no realistic way in which they can capture the Ukrainian Black Sea Coast either. So, most of Ukraine is now guaranteed its independence thanks to the victories that the Ukrainians won in the first weeks of the war. That was the decisive period. Everything else since then has been battles for limited amounts of territory in the east and south.

Do you see any outlines of a plausible peace deal? I know in this world that doesn’t necessarily mean that will people embrace it, but is there something that could plausibly be done to end this bloodletting?

If the West had an objective view of this war and was prepared to push a rational peace settlement, then yes. And the obvious way to base this in the longer run is a UN conducted process to do something which remarkably few observers are calling for or even noticing, which is for heaven’s sake to ask local people what they want to have referenda under international supervision, asking the population of the Donbas and Crimea which country they want to be in, and the other Russian-occupied territories as well. Now, of course, it would have to be conducted by the United Nations with full guarantees. But one’s assumption is that the areas that have traditionally identified with Russia and, which have, one must remember, been either bombarded or blockaded by Ukraine ever since 2014, would probably vote to stay with Russia.

And the areas that Russia has invaded and bombarded since last February would vote to return to Ukraine. I mean that is, as far as I can see, the only legitimate basis for a long-term solution. it would take a long time to get there, but we have precedents and mechanisms: United Nations peacekeeping forces, demilitarized zones, international supervision, and as I say, finally supervised referenda. Obviously, Russia would have to agree, but if Russia could actually get the legal transfer of the Donbas and Crimea, it could well be that that would be enough for Russia. But of course, the West would have to agree to put pressure on Ukraine to abandon limited amounts of territory, which at the moment, nobody is willing to do.

These weapons they’ve been sending, they’re not like rifles, which you can just pick up and shoot. They’re complicated, require a lot of training and maintenance. That means US forces will have to be on the ground. Isn’t that possibly quite dangerous?

Yes. And then we’ve heard in just in the past week the proposal to actually have US forces directly training Ukrainians. They’re described as scouts, but the line between a scout and a saboteur is a very thin one. And yes, the US is getting more and more stuck in on the ground, and we don’t know where that will lead because on one hand, if US troops are killed, that will be another cause of escalation on the American side. On the other hand, if these forces—as clearly many Ukrainians and very understandably, I have to say, would like to do—start extending their activities into Russia itself, then that will undoubtedly be another motive for Russia to escalate. So, you see, it’s not that we are going to suddenly go straight to nuclear war, but it’s so easy to draw a scenario in which one thing leads to another, leads to another, and then eventually we fall over the edge.

The forces of restraint on both sides seem to be missing.

Well, the Russians have, I think had a degree of restraint simply, as you might say, beaten into them. I don’t know a single Russian observer who I regard as sane, who thinks now in private that Russia can, can possibly capture Kiev. They recognize that most of Ukraine is lost, but that’s not hope with which Putin began the war. But military reality is military reality; if something is impossible, it’s impossible. So, I think the Russian regime, compared to its position a year ago, has reduced and modified its goals. It’s had to, but the question is what are our goals?

Do we know? is there an answer to that question?

The key problem is that the Biden administration has not formulated its key goals, and it hasn’t really linked them, at least not in a way that I find reassuring, to its military strategy in Ukraine. And meanwhile, of course, you have powerful forces in Washington and in parts of Europe, in Britain, and of course in Eastern Europe with their traditional hatred of Russia, who are pressing for total victory. So, the Biden administration does need to develop a clear line and stick to it.

But I guess there are just so many divisions within the US elite on this question that it’s hard to see how they’re going to come up with one.

Yes, and of course if there is going to be a ceasefire, let alone a peace settlement, then at some stage, unless we’re going to run a really serious risk of nuclear annihilation, it will be necessary to tell the Ukrainians to stop. And we’ve had indications, some fairly heavy hints, for example, from Gen. Milley saying just yesterday that Ukraine has already won great victories, which by implication is, “look, you don’t need much more than this.” But to actually come out publicly and tell the Ukrainians to stop would require considerable moral courage on the part of the Biden administration, given the attacks to which they would be subjected. And moral courage is not the chief distinguishing feature I would say of the Western political elites.

No, certainly not. So, China. Kirsten Gillibrand, the senator from New York, was on local radio the other day claiming that Xi Jinping wants a world war, has been planning for it for years, wants to defeat the US, and we have to start acting as if that’s the reality. What in God’s name is going on? It seems like people in senior positions in the US government really are looking to something like war with China.

I don’t think they exactly want war with China, but they are progressively trapping themselves in rhetoric, particularly about Taiwan and about the supposedly megalomanic and apocalyptic Chinese goals, which do risk bringing that about. This is the anniversary of George Kennan’s long telegram of 1946. I’m just reading a new biography of him, and it’s very striking how Kennan introduced the plan for the containment of the Soviet Union, but containing it within its then borders in Eastern Europe. And Kennan was horrified to find the way in which this was turned into a militarized and globalized struggle. And that is exactly what we see today. And of course, it then also becomes a bidding war within Washington, not just political party, against political party. But as with this latest comment, which has no basis in evidence, it becomes a bidding war between individual politicians to show who is tougher, who is more hawkish, who will give more money to the military.

There is a difference, of course, also that in the 1950s and 1960s, Soviet communism genuinely was still a dynamic ideology with great appeal in what we used to call the Third World. And there was a genuine competition between America and its allies and Soviet communism to see who would take over the collapsing British and French empires. Well, there, there is nothing like that in Chinese strategy today. China is not a revolutionary power. There is no sign whatsoever, and I mean no sign whatsoever, of China trying to bring about revolutions or even coups in other countries. Outside what America would call its own backyard in East Asia, China has in fact pursued an extremely cautious policy. China’s kept out of the Middle East. China is not developing military bases outside China. It has one. The US has what, 600? You are seeing the grotesque exaggeration of Chinese aggressiveness and ambition with really, I mean really, really strong parallels with the, the Cold War, but with much less justification. And of course, the results as we saw in the Cold War, some something that people have totally forgotten about it seems, is that if you portray the enemy in these apocalyptic terms, you end up deciding that there is a domino effect that America has to fight Chinese influence everywhere in the world, and eventually you stumble into something like Vietnam.

Behind all this, if I put on my Freudian cap here for a moment, it seems like people in Washington are having a hard time coping with the relative decline of the US, its political prestige and economic preeminence all eroding. China, like it or not is emerging as a really serious economic rival to the US. It no longer is the subordinate assembler of printed circuit boards but is now developing its own advanced technology. What do you see as underlying this outbreak of extreme hawkishness among so much of the US elite?

Well, I think it’s two things. It is that for a while, but when you think about it, it was very short while from about 1989 to when Iraq started going badly wrong in 2004, 2005, America genuinely was the global hegemon. And many people simply cannot bear to give that up. Because actually if you think about it, if you go back to 1988 or even after that, the United States behind its existing alliance systems—and that by the way now includes the new members of NATO in Eastern Europe—is enormously safe. There is no threat to the American homeland, except obviously from nuclear war. Russia has proved in Ukraine that it is simply not capable militarily of attacking NATO.

People talk about how China wants to drive America out of East Asia completely and replace America. That is simply not physically possible as long as Japan, South Korea, Australia and the Philippines want America to be there. For China to, to drive America out of East Asia, China would have to eliminate the American and Japanese navies and invade Japan to shut down the American bases at in Okinawa and Yokosuka. That’s beyond fantasy. It’s beyond paranoia. It simply cannot be done, nor is that the slightest evidence that China has any plans to do this. This is all about Taiwan, basically. And that is a that is admittedly a very, very difficult question. But because the overall American position in East Asia is in no danger, that should be a strong incentive to America to basically try to do what after all it’s been doing for the past 40 years, which is kick the Taiwan issue down the road.

Now, admittedly, of course this means sharing influence with China in East Asia, but America cannot of course be the unilateral hegemon anymore. But, let’s remember China hasn’t been the leading power in East Asia for much more than the past 2,000 years. How long has America been the le leading power in East Asia? There is a degree of ahistoricism about this, which is terrifying.

The other thing I’d say is that it is clear that liberal democracy in our societies is in danger, but it’s in danger for domestic reasons. The growth of extremism and polarization both in America and in parts of Europe, and in my own country, Britain, the, the appalling decline of standards of governance and public honesty—these are all for internal reasons. Reasons that we’ve endlessly debated, but most of which we know very well.

They have nothing to do with some global alliance of autocracies. If people are voting for Trump, it is for very American reasons. If people in France are voting for Le Pen, it’s for French reasons. But of course many people—I suppose one has to say the liberal mainstream—have convinced themselves that there is this link. But also I fear many of them, whether deliberately or unconsciously, think that they can undermine their domestic enemies by accusing them of being Russian or Chinese agents. Well, there’s a word for that. It’s called McCarthyism.

Fresh audio product: Ukraine, Indian capitalism

Just added to my radio archive (click on date for link):

February 16, 2023 Anatol Lieven on the slim prospects for peace in Ukraine and growing bellicosity towards China • Jairus Banaji, author of this Phenomenal World article, on the politicized structure of Indian capitalism generally, and the scandal surrounding Gautam Adani (Hindenburg report here)

Scattered speculations on the US ruling class

This is the text of a talk I gave at a virtual conference sponsored by the Havens Wright Center for Social Justice at the University of Wisconsin, February 13, 2023. The other panelists were Ho-fung Hung and Göran Therborn. It draws heavily on my Jacobin article on the ruling class and Harper’s magazine article on the WASPs but updates them to the lamentable present.

In preparing these remarks, that old Gayatri Spivak title came to mind, “Scattered speculations on the question of value.” I don’t mean to cite any more of that article, something I haven’t read for at least thirty years, but scattered speculations are the spirit of what follows.

If you read my article on the US ruling class in Jacobin, you know that I think it’s a pretty debased formation, with few ambitions beyond making as much money in as short a time as possible. Its political wing looks puny next to its ancestors. Its empire is in decline and its industrial prowess, with a few exceptions, is no longer the envy of the world. We’re one of the few countries in the world where life expectancy is declining. Mass shootings have become totally routine; in the first 42 days of this year, we had 66 of them. On a grander scale, the US is having a hard time adjusting to China’s rise alongside its ebbing. I’m not saying the US as an imperial capitalist society is on the verge of collapse; these things take time. But it’s underway.

The quick version of my historical analysis is that the WASP elite Groton kidsthat ruled the country from the late 19th century through the 1970s lost its pre-eminence and was succeeded by, well, it’s not easy to say what, except that it’s more mercenary and short-sighted than its predecessor. I don’t mean to romanticize that old formation; they were often appallingly racist, and eager to follow and then eclipse the English at the imperial game. But it had a coherence and a discipline that seems lacking today when accumulating the maximum amount of money in the shortest possible time seems to be the goal.

And before going any further, I should offer my definition of the ruling class. It consists of a politically engaged capitalist class, operating through lobbying groups, financial support for politicians, think tanks, and publicity, that meshes with a senior political class that directs the machinery of the state. (You could say something similar about regional, state, and local capitalists and the relevant machinery.) But we shouldn’t underestimate the importance of the political branch of the ruling class in shaping the thinking of the capitalists, who are too busy making money to think much on their own or even organize in their collective interest.

privatizing the private sector

To me, the US ruling class looks deeply split, and not just by region, party, or temperament. It’s also split lines of ownership. In recent decades, we’ve seen then rise of private models of ownership, like private equity and the large private corporation. During the decade of free money, there was an explosion in new venture-capital-financed firms, which, once they hit a billion dollars in valuation, became known as unicorns. There were even deca-unicorns. By Crunchbase’s count, there are currently 1,439 unicorns, valued at almost $5 trillion, based on $850 billion in real-money investment. (Whether those valuations are correct is a good question.) While some of these companies went the usual route of selling stock and becoming public corporations, an unusually large number didn’t, and even of those that did, waited a long time before doing their initial public offering. (See graphs below; data from Jay Ritter.) In the late 1990s bubble, there was a rush to go public. It seemed that many financiers and entrepreneurs had decided they didn’t want the scrutiny that came with having numerous outside stockholders.

IPO complex

They’re not alone in this. According to World Bank stats, the number of public companies in the US fell by almost half between a 1996 peak and 2019, the last year they have available. Much of that decline came from takeovers, but private equity firms have also taken thousands of public companies private over the last few decades. And there were many fewer IPOs as well.

Listed companies

A good deal of business support for right-wing politics comes out of this branch of the owning class (and I include hedge funds in this category as well). Not only do they hate regulation, as owners of private businesses, they don’t have outside shareholders causing trouble. It feeds nicely into the authoritarian social Darwinism that characterizes the milieu. The notorious Charles Koch, CEO of the second-largest privately held company in the US, has not only showered billions of his own money on the mission, but he’s organized rich fellow thinkers into doing the same. Many of them—Koch himself, but characters like Harold Hamm, fracking billionaire and friend of Donald Trump—are in dirty industries and fight climate science and the euthanasia of the carbon sector. Steve Schwarzman, head of private equity firm Blackstone, was a Trump advisor and loyalist until it became untenable. Blackstone itself is a public company, at least in name, but Schwarzman holds 42% of the voting rights and outside shareholders have little say in how the company is run. Though he defended Trump after the Charlottesville race riot, he’s since turned on him, but still supports Republican candidates generously. Private equity is driven by an asset-stripping strategy; Koch, Hamm, and Co. are driven by a nature-stripping strategy. It’s not a long-term plan.

Schwarzman is not alone among right-wing moneybags in opposing Trump, though he’s late to the party. Along with Koch, who never liked him, entities like the Club for Growth are trying to block him from getting the 2024 nomination, but while Trump’s star has faded some, he still has a lot of loyalists and the MAGA mass base isn’t likely to get excited by anyone the money wing comes up with. This looks to be a split between private capital and the regional petite bourgeoisie that provided something of a mass base.

A few words about that mass base. Since the 2016 election, analysts have talked about much of Trump’s support coming from the white working class. That’s misspecified. Though they may code as working class to metropolitan elites, a lot of those supporters don’t have many scratches in the cargo beds of their giant pickup trucks. As a 2019 paper by Thomas Ogorzalek and collaborators put it, they’re nationally poor and locally rich—a provincial petite bourgeoisie, lawyers, accountants, car dealers, contractors. That has long been a base for right-wing politics, but it’s a larger and richer stratum than it was in the heyday of the John Birch Society. Those sorts were heavily represented in the Capitol riot of January 6, 2021. The Congressional Freedom Caucus is their political representative.

The center-left has nothing like that. It has some billionaires, but they’re not organized like the Koch Network and its cousins, nor do they have anything like that ideology or an ideological distribution system. Koch, via his advisor Richard Fink, followed the Mont Pèlerin Society’s model of political influence, starting with peak intellectuals like Friedrich Hayek and Milton Friedman, spreading out and down through think tanks, and then to the pundits and publicists who try to sell their line to the masses. As Burton Yale Pines of the Heritage Foundation put it back in the 1980s, “Our targets are the policymakers and the opinion-making elite. Not the public. The public gets it from them.”

and on the center-left…

Center-left politics lacks any of the energy or drive of the right’s. Its vehicle, the Democratic Party, is haunted by a structural contradiction: it’s a capitalist party that has to pretend otherwise, carefully, for electoral purposes. For the first time in decades it has a leftish wing and the leadership isn’t happy about it. In early February, 109 Democrats in the House of Representatives voted for a Republican bill “denouncing the horrors of socialism” and attributing 100 million deaths to it, more than the 86 who voted against it. (Ten years ago, you probably couldn’t have gotten that many “no” votes, but ten years ago the bill probably would never have been introduced.) The party reshaped its primary calendar to lead with South Carolina, one of the most conservative states in the country, which is likely to put any leftish candidate at an early disadvantage. Sure, Senate majority leader Chuck Schumer goes to fundraisers for DSA-affilitated candidates, but he’ll be on the scene to defend the means of production against expropriation if and when it becomes necessary.

To some degree, Biden has bent to the influence of that internal party left. The pandemic relief bill was very generous, and the infrastructure and climate legislation, while well short of what it should have been, is far from trivial. Biden and the Congressional Democrats passed a bill to subsidize the domestic chip industry (essentially giving them the money they spent on stock buybacks over the last decade to do real investment), a form of industrial policy which would have been poison to 1990s Clinton Democrats. Largely overlooked in the general discourse, the legislation offers a big kick to unionization as well. As the New York Times put it recently, “Tucked into all of those laws were measures to give unions the power to effectively tell employers: You must pay union-scale wages and use union apprenticeship and training programs, so you might as well hire union workers.”

But there looks to be limited support for these reindustrialization and climate schemes among the big bourgeoisie. When I interviewed the political scientist Alfredo Saad-Filho about Brazil last week, he said that that country’s bourgeoisie no longer has a national project. Once it wanted to industrialize, to develop Brazilian technology to a world level. Then it tired of that and just wanted to speculate in finance and real estate and loot the Amazon. Last time he was president, 2003–2010, Lula promoted industrialization, a policy that was reversed when the right wing took over; he plans to do it again. But it has almost no bourgeois constituency. It all sounded very familiar to me.

It reminded me of the famous passage from The Class Struggles in France, where Marx described how “the finance aristocracy, in its mode of acquisition as well as in its pleasures, is nothing but the rebirth of the lumpenproletariat on the heights of bourgeois society.”

woke capitalism

This split within the bourgeoisie is pronounced on climate. On the class’s center-left, there’s Lawrence Fink, head of BlackRock (which got its initial funding from Blackstone—it’s a small world), the world’s largest money manager, with $10 trillion under its flag. Fink has made a big deal out of using his investment clout to promote what in the trade is called ESG, environmental, social, and governance standards. (Governance refers to how corporations are run, not public policy.) It’s very weak tea. A couple of years ago, an alumnus of BlackRock’s ESG program, Tariq Fancy, wrote a multipart polemic denouncing it as pure hot air, a sales gimmick concocted by bankers who travel the world in private jets talking about how bankers could save the climate. But they can’t.

A large portion of BlackRock’s capital is invested in index funds that arrange their holdings to match standard market measures like the S&P 500. (I’ll have a bit more to say about these in a bit.) Since both theory and practice have proved that it’s nearly impossible to beat the market unless you’re George Soros or Warren Buffett, index funds have come to dominate the investment landscape. But by definition that means that BlackRock is limited in how much of the stocks of malefactors it can sell. It could lobby their CEOs, but since the firm couldn’t punish it by selling the stock, the CEOs have no incentive to listen. It can sell stock of carbon emitters in actively managed funds, but it doesn’t look to have done much of that.

As ineffectual as this all may be, it has enraged the right, which is now on a campaign against “woke capitalism,” or what the irrepressible Marjorie Taylor Greene calls “corporate communism.” Republican states are withdrawing pension assets from BlackRock management, and Florida Gov. Ron DeSantis is making ESG into one of the fronts in his war on wokeness. (The Republican campaign against is ESG is facing some pushback from bankers though.)

Some of this is political posturing, of course, and some of it emerges from the right’s view of non-fossil sources of energy as unmanly, but it also reflects the party’s heavy financial reliance on the carbon sector. It’s long been a voice for dirty industry, but it has only gotten more dedicated to the cause as the Dems make more gestures in a climate-friendly direction. No other conservative party in the rich world approaches the GOP’s level of climate cretinism. But Fink’s climate activism, if you can call it that, is unusual in Corporate America. And if you think, as I do, that capitalists lack a spontaneously developed politics and must often be organized in their own long-term interests by the political class, then Biden’s weak leadership and low approval ratings aren’t up to the task.

capitalist self-abolition

I mentioned index funds earlier; let me develop that some. I got interested in ruling class studies when I was writing my book Wall Street, specifically around the question of who runs large corporations. The answer is not self-evident. By the mid-1990s, when I wrote most of the book, the so-called shareholder revolution, which broke out in the late 1970s and early 1980s, was well along in its work of transforming how corporations are run. In the late 19th and early 20th centuries, as the form of the modern public corporation was taking shape, financiers had the upper hand. They supervised mergers and dominated corporate governance. But with the 1929 crash, they fell into disrepute, and in the early decades after World War II, financial operators had almost no influence over management. It was the era of John Kenneth Galbraith’s new industrial state, when a technocracy allegedly took precedence over pre-Crash doctrines of profit maximization. Corporations were still mighty profitable in the 1950s into the late 1960s or early 1970s, but shareholders had become vestigial to how firms were run. Share ownership was dispersed among millions of individual shareholders, who couldn’t have come together to speak with anything like one voice. In the early 1950s, households owned over 90% of stock outstanding; pension funds, under 1%, and mutual funds not much more. By the late 1970s, the household share slipped under 60%; pension funds’ share to almost 20% and mutual funds another 3%.

With the intellectual leadership of finance professors like Harvard’s Michael Jensen, and the monetary leadership of investment shops like Kohlberg Kravis Roberts, the era of managerial dominance came to a brutal end with a round of takeovers and shareholder-forced restructurings. The technostructure was replaced with an intensified devotion to profit maximization, specifically in the form of maximizing stock prices. The growth in institutional ownership, replacing the individual ownership made takeovers easier to negotiate and management easier to lobby.

To Jensen and the practitioners of Jensenism, corporate managements were too complacent and not focused enough on getting profits and stock prices up. The point of unwelcome takeover attempts was to wake up the laggards—and make some money by slimming them down and putting the squeeze on their workers.

As the 1980s turned into the 1990s, pension fund activism replaced hostile takeovers as the prime mode of enforcing the corporate order. The pension fund share of stock ownership hit a high of 27% in 1986 and the household share under 45%. The pension fund share would decline as employers cut back on pension coverage, but now the household share is under 40%, and mutual funds are over 20% and pension funds, 10%. While the ultimate beneficiaries of pension and mutual fund assets are individuals—disproportionately better-off ones, of course—the money is run by professional managers who are economically and politically part of the financial aristocracy.

So entrenched is the practice of maximizing stock prices that firms have been devoting a huge share of their resources over the last few decades to buying their own stock to boost its price. One of the central achievements of the shareholder revolution was to transform managerial pay from a regular paycheck into something dependent on the stock price. The point was to get CEOs to think like shareholders, and not princes of their own realm. It has worked. Nothing shows this alignment of interests like the fact that since 2000, big firms have spent just over half their operating profits on buying their own stock; this makes both shareholders and CEOs, who are paid based on the stock price, very happy. Before 1982, buybacks were largely illegal; now they’re approaching a trillion dollars a year in the US. Keynes was, no doubt, something of a starry-eyed liberal when he wrote (in the wake of the ’29 crash) that the point of investment was to defeat the dark forces of time and ignorance, but it’s now hard to believe that was even once a pleasant myth.

The fight over control of big corporations between shareholders, meaning professional money managers, and top management, over the last several decades was an interesting intra-family squabble. As every Marxist schoolchild knows, the capitalist class owns the means of production, but when you look at the matter closely, the who and how of that aren’t self-evident. And there’s a new wrinkle. As I said earlier, index funds of the sort that BlackRock runs—and along with BlackRock, there are two other giants, Vanguard and State Street—now own about a quarter of the stock represented by the S&P 500 index, a category that is almost synonymous with Corporate America. Among the rationales for making stock prices so central at the outset of the shareholder revolution 40 years ago was that they were supposed to serve as real-time grades on corporate performance because they reflected the wisdom of the crowd, which would buy winners and sell losers. So, a low price relative to profits or underlying assets was a sign of chronic underperformance that invited the discipline coming from takeover artists (or, as Alan Greenspan once called them, unaffiliated corporate restructurers). But index funds can’t sell, which compromises the alleged signaling mechanism. And managers of index funds, who seem like sitting ducks for replacement by ChatGPT, have no incentive to lobby management and management has no incentive to listen, as I said earlier. So, what does ownership mean here? What function, even by the standards of bourgeois finance, do shareholders serve? Maybe it’s time to revive Marx’s observation that the joint stock company marks “the abolition of the capitalist mode of production within the capitalist mode of production itself.” I’ll concede there are some details to work out here though.

off to the bunkers

I’ll conclude by returning to a theme I brought up earlier: the shrunken time horizon of the US ruling class. The current motley crew looks nothing like the set who planned the post-World War II order. They emerged from—or recruits were assimilated to—an ethnically and socially homogenous WASP aristocracy who felt themselves above quotidian distractions and rank commercial temptations. Of course, it was all in the interest of long-term accumulation under US guidance, but it was all successfully planned and executed (at least until things started slipping some in the 1970s). Now with the US in a long process of imperial decline, our planning elite seems fragmented and lost. You have Republicans criticizing Biden for not having shot down the Chinese balloon quickly enough, and Democrats acting as if it was an act of heroism. Our rulers don’t act like they have any good idea about coping with the rise of China, except with bellicose and one hopes ineffectual gestures, because God knows, we don’t want bellicose gestures to lead to an actual war.

And we have a capitalist class that has apparently given up on the future—incapable of dealing with the climate crisis, a truly dire threat, but also consuming capital rather than investing it. Net investment—net, that is, of depreciation—by both business and government—has been falling relative to GDP for decades. The vast flow of free money and 0% interest rates from the Federal Reserve has been channeled into an impressive set of bubbles: the most extended valuations of stocks in US history, crypto, unicorns, housing. It used to be normal to have one particular asset lead the way in a speculative orgy, whether it was stocks in the late 1990s or housing in the following decade. Now we’ve got multiple and serial bubbles that have only been partly deflated by the Fed’s tightening moves of the last year. And Wall Street is dearly hoping the central bank will reverse those moves in a few months and resume the cheap money flow. The bond vigilantes of the 1980s and 1990s, always on the lookout for an inflation that needs to be crushed, have largely disappeared.

I’ll give the last word to Etienne Balibar, who has diagnosed the affliction precisely. “We realize now that our ruling class is no longer a bourgeoisie in the historical sense of the word. It does not have a project of intellectual hegemony nor an artistic point of honor. It needs (or so it thinks) only cost-benefit analyses, “cognitive” educational programs, and committees of experts. That is why, with the help of the pandemic and the internet revolution, the same ruling class is preparing the demise of the social sciences, humanities and even the theoretical sciences.” The bourgeoisie no longer has any civilizational project, national or otherwise. Live for today, and if the water rises, they can just move inland. Or to their underground bunkers.


fresh audio product: behind the AI hype, Brazil as Lula returns

Just added to my radio archive (click on date for link):

February 9, 2023 software engineer Dwayne Monroe on the reality behind the hype around ChatGPT (and the sinister implications of AI) • political economist Alfredo Saad-Filho on Brazil’s political landscape as Lula returns to the presidency

Fresh audio product: the war in Ethiopia, a common South American currency?

Just added to my radio archive (click on date for link):

February 2, 2023 Ann Neumann, author of this article (sorry, probably paywalled), on the bloody war in Ethiopia • two views on a proposed South American currency arrangement launched by Brazilian president Lula, one from Andres Arauz, the other from Brian Mier

Fresh audio product: British rot and the fight for abortion rights 50 years ago

Just added to my radio archive (click on date for link):

January 26, 2023 Josh White, author of Goodbye United Kingdomon that country’s trajectory of decline • Felicia Kornbluh, author of A Woman’s Life Is a Human Lifetalks about the fight for abortion rights in the late 60s and early 70s, and how it must be part of a larger struggle for reproductive justice

More on union density

A couple of follow-up points to Thursday’s post on falling union density.

manufacturing leads the way down

Headline figures on private sector union density (the share of the employed belonging to unions) obscure an important fact: the downtrend is largely a story of the decline in manufacturing. Over four-fifths—88% to be precise—of the fall in the number of unionized workers since 1983 is accounted for by the loss of union jobs in manufacturing. Since 2000, it’s 84%. The history is graphed below.

Union density manuf'g and non

The raw numbers are stunning. From 1983 to 2022, private employment grew by 49.1 million, but union membership fell by 4.7 million. Of that 4.7 million decline, 4.2 million were in manufacturing. Over the same period, private sector employment outside manufacturing grew by 53.6 million, and union membership there  declined by 546,000. 

If union density is ever going to turn around, it’s going to have to happen in services. Manufacturing has shrunk from 27% of private employment in 1983 to 12% today. It’s subject to harsh international competition and easily offshored (though maybe not as easily as in pre-covid times). Services are largely shielded from international competition and are not as easily moved. Of course, it’s a lot easier for me to type those words than it is to make it happen.

union advantage

There’s a good reason employers hate unions: they make employment more secure and raise wages. On the security issue, to take one example, as I noted in Thursday’s post, a smaller share of union workers were laid off in the early covid days than nonunion workers. More generally, it’s much harder for bosses to fire unionized workers than nonunionized ones on a whim (and under the doctrine of at-will employment, which prevails in most states, bosses can indeed fire workers on a whim).

And the evidence on pay is strong: weekly earnings for the average union worker are 18% higher than the nonunion worker. As the graph below shows, union workers enjoy a premium for all major demographic groups except Asian men (almost certainly a function of their disproportionate presence in tech, a high-wage, low-union sector).

Wage by demo & union status 2022 

Unions also raise the wages of traditionally discriminated-against workers. For example, nonunionized women working full time have a weekly wage 82% that of nonunionized men; for the unionized, the ratio rises to 90%. (These comparisons are for full-time workers. Since more women than men work part-time, this is not a comprehensive portrait of the gender gap. Nonunionized black women have a weekly wage 70% that of white men; a union raises that to 74%. For black men, the numbers are 77% and 84%. And so on, as in the graph below. The only exceptions to the rule are Asian men and women (though unions do raise pay for Asian women). 

Wage gaps & union status 2022

Yes, there are many things wrong with American unions. But they still do a lot for their members, and everyone should have one.

Data notes 1) Nonmanufacturing is overwhelmingly services, but it also includes mining and construction, which are classified as goods-producing. Together they account for less than 7% of private employment. Though it was never huge, mining’s share of private employment has declined a lot over the decades, from 1.5% in 1983 to 0.5% last year. Construction’s share, however, has been steady, at just under 6% of private employment. 2) Not included in these union density numbers: workers who are not members but are nonetheless “represented by” unions, meaning they’re covered by a union contract even though they’re not paying dues. They’d add about 10–12% to the union count but adding them wouldn’t change the fundamental story. One might consider them free-riders. 3) BLS union data by industry begins in 2000. In 2002, there was a change in the official industrial classification scheme that makes earlier data not strictly comparable to later. While this matters to purists, the break is barely visible in the data and doesn’t at all change the long-term picture. 4) The BLS doesn’t publish the pre-2000 data on its website; the unpublished history was generously furnished by BLS staff.


Fresh audio product: Afghanistan and port ecology

Just added to my radio archive (click on date for link):

January 19, 2023 Matthieu Aikins, author of this article (among many), on the situation in Afghanistan with the US gone and the Taliban in control • Christina Dunbar-Hester, author of Oil Beach, on the ecology of the ports of Los Angeles and Long Beach

Union density keeps falling

As it has for thirty-seven of the last fifty years, the share of the workforce belonging to a union, aka union density, fell in 2022. It’s risen in only four years in that span; it was unchanged in nine. The grim history, reported this morning by the Bureau of Labor Statistics, is graphed below.

Union density history 2022

In 2022, 10.1% of the employed belonged to a union, down from 10.3% the previous year. The decline was led by the public sector, where density fell from 33.9% to 33.1%, a decline of 0.8; the private sector was down a mere 0.1, to 6.0% (an all-time low in a history going back to 1900).

As the graph shows, private sector density has been in a long decline from its 1951 (!) peak of 34.7%. Public sector unions had a good run from 1973 to 1994, when they peaked at 38.7%. But public sector density drifted lower over the next decade and a half, a decline that accelerated markedly after then-Wisconsin governor Scott Walker launched his war on public sector unions in 2011.

Unionization rates vary widely by state, from over 20% in Hawaii and New York to under 3% in North and South Carolina. The graph below breaks the 2022 density numbers into quartiles. Note that the highest rates are in the Northeast, upper Midwest, and on the Pacific Coast; the lowest are in the South, particularly the old Confederacy. The unweighted average of the former Confederate states is 4.4%; for the non-Confederate states, 10.8%.

Union density map 2022

Variations aside, most states have seen declines since 2019 (33, counting DC as a state) and almost all have since 2000 (47 of them). Here are graphs of the top and bottom ten over each period.

Change in union density by state, 2000 and 2019 to 2022

Many books have been written explaining the reasons behind this dismal history, and while this is no place to go into detail, I’ll list a few prominent reasons: the relentless hostility of employers (going back to the 19th century, when Pinkertons were hired to shoot strikers), extremely union-unfriendly labor law, and a pervasive consciousness of self-reliance among the masses—though unions have been polling very well lately, with 71% of those surveyed by Gallup approving, up from 48% in 2009, in the depths of the Great Recession. (Crises often don’t encourage militancy.) But the other obstacles, employer hostility and a miserable legal environment, make it very hard to translate approval into actual union membership.

I’ll have more to say in the coming days, but for now I’ll conclude this the same way I have for the last several years:

There are a lot of things wrong with American unions. Most organize poorly, if at all. Politically they function mainly as ATMs and free labor pools for the Democratic party without getting much in return. But there’s no way to end the 40-year war on the US working class without getting union membership up.

Note on sources: The public sector data for 1973–1999 comes from Barry Hirsch and David Macpherson. Private sector data for 1900–1964 comes from Leo Troy and David Sheflin’s Union SourcebookLater data is from the BLS.

Fresh audio product: the right speaks

Just added to my radio archive (click on date for link):

January 12, 2023 Emily Jashinsky of The Federalist on the GOP: the meaning of the speaker fight, and what is the base of the Freedom Caucus anyway? • Sohrab Ahmari, co-founder of Compact Magazine, offers a left–right hybrid

%d bloggers like this: