Are corporations engaging in a "capital strike"?

[Dawson Leery]

"Capital strike refers to the withholding of new investment in an economy. A capital strike can occur when banks decide to raise lending standards or minimum loan requirements to individuals and business entities, and decide to sit on cash reserves, rather than take many loan risks, until a later point in time. A capital strike can occur when governments pursue policies that investors consider "unfriendly" or "inflexible."

http://en.wikipedia.org/wiki/Capital_strike

The purpose of this "strike" would be to keep unemployment high until they can get a Republican into power (as Republicans are more friendly towards the wants of the oligarchs than the Democrats are)

[nadinbrzezinski]

1. They have, for at least a year

[Dawson Leery]

2. What do you suggest can be done about this?

[Capitalocracy]

4. Prove we don't need their capital

Find business opportunities with lower startup costs, demand the government do more hiring instead of less. Fight back and fight hard. Demand higher wages through unions and lobbying for living wage legislation, making it impossible for them to operate without releasing more capital and putting more money into the hands of actual consumers.

[socialist_n_TN]

10. Yes fight back MILITANTLY against this

Even occupying factories and shops. Strikes, general and wildcat. MILITANT demonstrations and protests. The same things that have always worked to SCARE the exploiters. Solidarity amongst the working class.

[Harmony Blue]

22. So true

No wonder I see more and more people join credit unions.

[villager]

12. Exactly -- withdraw our economic participation from them, permanently

n/t

[nadinbrzezinski]

5. IT would take government action

but the government is not willing to act.

At that level it requires, perhaps, we even change how we do trade.

At a lower level, WE the people need to find alternatives and support smaller businesses.

In my mind this is not unlike the attempted coup against FDR. The difference, this is working.

[Ship of Fools]

7. unions, unions, and oh yes, unions

[hack89]

3. No - companies don't like to lose money

any investment in growth is too great a risk.

[nxylas]

6. Going Galt?

I don't think it's about getting Republicans into power, though, I think it's more about shoring up their ability to profit from "austerity measures", whichever party pushes them.

[guruoo]

17. Raise cost of living. (price of goods, services). Suppress wages. Park the $$$ offshore.

Raising the cost of living by charging more for goods and services
while at the same time employing forced, systematic employment churn to both reduce, and suppress wages

Then they take the savings, and park it offshore.

[BOG PERSON]

8. no, because the US government is very accommodating and business friendly

a capital strike would happen if a populist/patriotic bourgeois guy comes to power in a developing economy. somebody like hugo chavez or evo morales. ours is a highly developed economy, where government is anything but hostile to business interests and there is practically zero working class strike activity.

[socialist_n_TN]

9. Well I voted yes, not because I disagree with the thrust

of your post, but simply because, even though the Dems ARE business friendly to a fault, the large capitalists think that the current Republican are MORE business friendly than the Dems. In the capitalists mind, they are in a position to have it all now instead of the huge portion of the loaf that the Dems are giving them.

Also, since the Republicans nowdays are, for all practical purposes authoritative fascists, the capitalist class believes they can have it ALL WITHOUT THE BOTHER OF ELECTORAL POLITICS IF THEY SUPPORT THE REPUBLICANS.

[BOG PERSON]

16. that's a little alarmist

why would liberal capitalism start abhorring electoral politics all of a sudden. this is among its main contributions to the world, after all. there's no political instability, no working-class revolt, not even the remotest challenge whatsoever to the domination of capital in the USA. so there's really no reason for capital to take a friendly right-liberal party like the republicans and screw up the system by steering it in a fascist direction at the expense of a friendly left-liberal party like the democrats.

[socialist_n_TN]

23. Because they think they are on the cusp of

having it all rather than just MOST of it. And they don't abhor the TRAPPINGS of electoral politics, they just want to make sure that they don't have to WORRY about electoral politics interfering with absolutely ANYTHING they want to do. And the best way to do that is to make sure that an authoritarian, business friendly party is "elected" every time.

Maybe it's alarmist, but I don't even seeing them PRETENDING very hard anymore. Do you?

[BOG PERSON]

27. they already have it all

multiparty democracy consisting of precisely TWO liberal parties, each competing to represent US capital; a legal working/middle class that is married to the well-being of the monied class; a big fuck-off military ready to annihilate any obstacle to US capital.. what more could they ask for?

mitt romney??

[socialist_n_TN]

28. There are still crumbs that are falling from the table

and the fascist party can help them gather those crumbs back in better than the business party.

[socialist_n_TN]

35. I love synchronicity.

:) Trotsky, circa 1030 on the rise of the Nazis in Germany with the support of the bourgeoisie:

"The bourgerisie is leading it's society to complete bankruptcy. It is capable of assuring the people neither bread nor peace. This is precisely why it cannot any longer tolerate the democratic order. It is forced to smash the workers by the use of physical violence...."

I believe that the capitalist class sees that within the next decade or so, that it is not going to be "...capable of assuring the people neither bread nor peace." So it's looking to the fascist party to be in control when the shit hits the fan.

We shouldn't make the mistake of the SDP and the Communists in Germany in 1930 and spend time splitting when the fascists are united. WE need a united front to fight the fascists who are backed by the capitalist class.

[Skink]

11. Would you rather they go back to liar loans?

didn't we just argue that they should be required to hold on to more capitol rather than print money in the form of loans.

[Dawson Leery]

13. We want them to make legitimate investments.

They are holding 2 trillion in cash, and still are not hiring all the while demanding tax cuts and even less regulation.

[Dawson Leery]

14. see this

http://www.outsidethebeltway.com/the-capital-strike-of-2010/

[The Magistrate]

15. Absolutely, Sir

[readmoreoften]

18. The idea that capitalists are upset about Obama is absolutely ludicrous.

Democrats are just as friendly to the wants of the plutocracy as Republicans. The Republican party is a quasi-fascist plutocrat party, while the Democrats are a simply plutocrats. The idea that finance capital is in a conspiracy against Obama is kooky, especially since he has all the worst banksters on his financial team.

[DeadEyeDyck]

29. though I voted yes, I have to agree that Wall Street

supported Obama by nearly 70%. Wall Street is not the street it was in the 50's. It wants to work with government to prosper.

But what business wants more than anything else is certainty. ALL investigates are predicated on future predictions. Investors do not like change. Even Hope and Change rattles them. And we are in the age of Pigmalion.

I am a fat cat and I am sitting on sacks of dollars. Static money ALWAYS loses value but do I risk it in an economy that may be souring. But the economy sours because nobody wants to invest. It is a conundrum.

[Cid_B]

19. Nope... If they thought they could make money...

... they would. It is a dumb businessman who consciously holds back his business in hopes of screwing over Obama.

I think businesses don't have a sense of stability. They don't know what will happen in 6 months or 2 years or 5.

[SanchoPanza]

20. Believing in capital strikes assumes facts not in evidence.

I.E. That the vast panoply of American business interests are both willing and capable of engaging in systemic collusion for political ends.

Fears of a capital strike are not new. The anti-monopolists of FDR's administration, people like Harold Ickes, Sr. and Robert Jackson, firmly believed that a capital strike was occurring during the Great Depression. That the reason credit remained tight and unemployment remained high was a plot to undermine the New Deal, and this view gained more steam as the economy went into a double-dip recession in 1937. But, truth be told, business interests are rarely on the same page about anything. Continuing with the New Deal example, a large number of business interests supported the policies of the Roosevelt administration because they could use agencies like the National Recovery Administration to undermine competitors. Plus, not every millionaire in the 1930s was a psychotic anti-communist like Irenee du Pont.

The reality of a unemployment crisis is not one of conspiracy, but of perverse incentives. What we've been experiencing over the past three years has not been a capital strike, but capital flight. The initial credit squeeze caused a severe drop in demand, as businesses and households lost access to credit, and businesses halted future investment and cut expenditures in order to not lose money. In simpler terms, when you're producing more things than what is being purchased, you produce less things until you're no longer generating a surplus so you can turn a profit once again.

The perverse side of this incentive is that cutting expenses entails firing employees, which, in turn, causes households to cut spending and further reduce demand for goods and services. This is the "cyclical" in cyclical unemployment. In such an atmosphere, capital retreats to safe investments (or in the case of a liquidity trap, which we're in, they'll simply hoard cash) with the expectation that the crisis will soon abate, but doing so actually makes the situation worse. Keynes called this the Paradox of Thrift.

This is a more realistic explanation than every or a majority of corporations in America refusing to hire people for political purposes. That's kind of conspiracy mongering is unnecessary and often counter-productive. You don't need conspiracies for bad things to happen. You just need a scenario where someone can profit off of someone else's misery, and those with economic power will generally race against one another to see who can make money the fastest.

[Turbineguy]

21. Not as such

it's more a case of herd mentality.

[strawberryfield]

24. The logic is wrong here

If you use the word "strike", you are implying a collective agreement to act in a certain way. Corporate A holes don't think that way. They look out only for their narrow self interest. They will turn on other corporate a holes just as quickly as they turn on their own consumers and workers. If they think there is a buck to be made by investing, they will do it and fuck everybody else.

[Harmony Blue]

25. I don't think the logic is necessarily wrong

It could be argued the owners of NFL franchises collude with one another to form a united front. It is not far fetched to believe that big business is united on this Capital Strike to force political change that is most favorable to them in the future.

[JoePhilly]

26. No, and Yes.

During the recession, many companies suffered because they had insufficient cash on hand to pay month;y bills. The banks were unwilling to give short term credit, and that hurt business.

Banks are still slow to give credit.

And so, many business are building up their cash positions. They don't want to get caught short again. And so, the are slowing new hiring. They are building up cash reserves.

Its not a strike ... its a hedge against future down turns.

The problem is that while this is a smart long term act, in the short term, it slows the recovery.

The same is true as average American families work to reduce their debt and increase cash reserves. Their individual position might become more stable, but their lack of spending slows the recovery.

[Horse with no Name]

30. I believe so

Until they don't have to pay any taxes on their profits and have guarantees that we will subsidize their losses and until they have NO regulation--they will continue.

This could be stopped very easily.

They NEED the consumers. Congress could levy HEAVY taxes, reinstitute tariffs, and take away ANY tax break for ANY corporation that has removed jobs and taken them overseas.

But, the corporations KNOW that they have purchased enough people in Congress to pave the way to screwing us all.

I think they have too.

[Taitertots]

31. They are without question doing exactly that

Bankers are withholding hundreds of billions of dollars from the economy.
http://www.newyorkfed.org/research/staff_reports/sr380.pdf

The reason is that we let them get away with sabotaging the economy for their own benefit. It is outside partisan politics.

[quaker bill]

32. No, it just looks that way

People are not investing in making more stuff because no one is buying stuff. We have managed to fall off the cliff in the wealth distribution curve. The wealthy have the money to sell each other stuff, but there just aren't all that many of them, and they already have most the stuff they need.

The rest of us do not have the money to buy more stuff, and the wealthy are cutting our pay even more. You can only get back to a healthy and balanced economy by pumping wealth back down to the mass of consumers, those who will spend it.

Once wealth gets this far away from the bulk of the people, it is really difficult to get it flowing back.

[mmonk]

33. They make investments worldwide now.

They don't need us to make profits. That is the nature of globalization and capital flight and/or retention of profits for bonuses. Many are looking for the next fast profit with the least capital expenditure.

[defendandprotect]

34. Fed gave 0% money to corporations .... they invested them in Treasury notes at 3.5% and 4%....

that's according to Sen. Bernie Sanders!!

Are they freeing up any of that money -- think there's a tug of war going on

between elites/capitalists and their political machinery --

GOP wants Obama to fail -- capitalists want more billion dollar contracts?


Something was recently loosening up -- but door seems to only be ajar re employment?

[Dawson Leery]

36. kick