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Authoritarian Capitalism and Economic Crisis in the Age of HOPE


People need to work hard, they need to play by the rules, and those of us with responsibility for economic policy need to do everything we can to make the economy work.

 

-Lawrence Summers, President Barack Obama’s top economic advisor, "Meet the Press" (NBC Television), January 25, 2009

 

 

 

Beneath the drama over how to make the U.S. economy "work again," we hear nothing in the dominant corporate-mediated political discourse about the state-capitalist authoritarianism that is on sharper-than-usual display (for those willing to look beneath "mainstream" coverage and commentary) in relation to the current economic crisis.

 

Finance capital and its many supporters and agents in the second Bush II and first Obama administrations advanced and supported the $350 billion bailout of leading U.S. banks on the grounds that this massive public transfer was required to make the economy "work." 

 

This giant public infusion hasn’t worked, thanks in part to the leading banks’ practice of using their taxpayer windfalls not to "jumpstart the economy" but to cushion their reserves through the deepening recession.

 

MAJORITY SHAREHOLDERS WITHOUT VOTES

 

But put that little difficulty aside for a moment if you can and contemplate also the despotism of what’s going on behind the scenes. We the allegedly sovereign People have become – or are about to be – the majority shareholder of key U.S. financial institutions. As NBC’s David Gregory noted on "Meet the Press" last Sunday, "the government is effectively the owner of most of America’s banks." [1] The nation’s great banking houses have become what Nobel Prize-wining economist and New York Times columnist Paul Krugman calls "wards of the state, utterly dependent on taxpayer support." [2]

 

And the citizenry is a most curious sort of majority shareholder in this era of escalated Wall Street Welfare: it can’t even vote its shares.  It has no right to appoint directors, set policy, or exercise meaningful oversight.

 

It’s called nationalization for the rich. The divided, distracted, depressed, and ever-more back-on-its heels and pink-slipped populace gets all the bad sides of nationalization and none of the good.

 

Colossal piles of the Peoples’ money are handed over to the nation’s leading financial institutions with no serious requirement that those "too-big- [and powerful]-to-fail" entities fundamentally change their behavior. The "world’s greatest democracy" grants its populace no meaningful control over the public wealth granted to the very institutions whose reckless conduct in service to the rich and powerful Few drove the economic system off the cliff.

 

This is a problem, one would think, in a nation whose founding document declares that government derives its just powers only from the consent of the governed.  As Noam Chomsky notes in the latest issue of Z Magazine: "If the government – in a functioning democracy, the public – does not have a degree of control, the banks can pour the public funds into their own pockets for recapitalization or acquisitions or loans to government-guaranteed borrowers, thus undermining the alleged purpose of the bailout.  This is what happened, though details are obscure because the recipients refuse to say what they are doing with the gift from taxpayers.  Indeed, they regard the question as outrageous…" [3]