Capitalism, corporations, Trump: Alternatives, Part 4

Part 4: “Capitalism, corporations, Trump: Alternatives?

I’ve considered corporate power in a capitalist system in Part 1. Then examined how corporations translate their economic power into political power in Part 2. Then in “Enter Trump.” Part 3, I considered the ways he and his administration are buttressing the power and interests of the mega-corporations and the rich in Part 3.

In this fourth and final part, I want to share some perspectives on how to respond to the profit-oriented corporate power in a capitalist system that requires continual growth, now combined with the ascendance of a right-wing administration in the White House that has authoritarian, if not neo-fascist, components. See in-depth analyses of the ideological thrust and right-wing policies of Trump and his administration in two excellent books: John Bellamy Foster’s Trump in the White House: Tragedy and Farce, and Brian Klass’s The Despot’s Apprentice: Donald Trump’s Attack on Democracy.

The Daunting challenges

Corporate power

As you know, the consolidation of corporate power and the uncompromising positions coming out of the White House and Republican Congress pose profound and systematic threats to democracy, justice, peace and diplomacy, or anything like a sustainable environment. We should bear in mind that the capitalist system gives great power to those who own and control the major means of production for profit. They control vast resources, enjoy oligopolistic positions in markets, have operations in many communities across the country on which local people depend, reach millions of people through massive sales efforts, have a profound effect on the distribution and availability of credit through mega-banks that are bigger than ever, have a global reach through branches and subsidiaries in other countries, and employ internationally complex production chains involving contractors and sub-contractors to keep labor costs as low as they can. (For a general description of supply chains, go to: https://en/wikipedia.org/wiki/Supply_chain.)

Mega-corporations have arrangements with foreign governments of all kinds to gain access to markets, minerals and rare earth materials crucial for electronic devices, to avoid environmental regulations, to avoid unions and collective bargaining, and to sell weapons. Martin Hart-Landsberg provides an in-depth analysis of the inequitable and exploitative global economy in his book Capitalist Globalization.
The U.S. weapons makers sell more weapons to buyers in other countries, including huge sales to the repressive theocratic monarchy in Saudi Arabia, than any other nation in the world. Thom Shanker provides recent evidence on U.S. arms sales in an article published in the New York Times entitled “U.S. Sold $40 Billion in Weapons in 2015, Topping Global Market” (https://www.nytimes.org/2016/12/26/us/politics/united-states-global-weapons-sales.html?_r=0). Here are two key points from the article.

First, “[t]he United States again ranked first in global weapons sales last year, signing deals for about $40 billion, or half of all agreements in the worldwide arms bazaar, and far ahead of France, the No. 2 weapons dealer with $15 billion in sales, according to a new congressional study.” Second, “[d]eveloping nations continued to be the largest buyers of arms in 2015, with Qatar signing deals for more than $17 billion in weapons last year, followed by Egypt, which agreed to buy almost $12 billion in arms, and Saudi Arabia, with over $8 billion in weapons purchases.”

Corporate power and its effects on government

The corporate and government elites use their power to dominate government. And what do they want? By and large, the corporate executives and the rich want government policies that facilitate the profits of the corporations for which they work and in which they are financially invested. This translates into their support for lower taxes and less effective government regulation. They want, further, the privatization of government assets and functions and access to fossil fuels on public land, onshore and offshore. They often favor an “American First” foreign policy militarily but want trade agreements that give extraordinary power to corporate interests over consumers. Certainly, the military-industrial complex wants the government (i.e., taxpayers) to spend ever more money on weapons and a “modern” nuclear bomb force, and the deployment of troops all over the world. And it has been content to go along with the continuation and escalation of brutal and counterproductive wars, directly in Afghanistan, Iraq, and Syria or indirectly through support of Saudi Arabia’s brutal war on Yemen.

Then there is the increasingly blatant class and “racial” warfare these powerful interests wage, reflected in reduced government support for virtually all programs that provide benefits for the great majority of the population, high rates of inequality overall, the stagnation of wages and increasingly precarious position of most workers, the growth of the security-surveillance state, the militarization of local police forces, the stigmatization and attacks on immigrants, the irrational and punitive “war on drugs,” the high incarceration rates, especially of African-Americans and Latinos for minor drug offenses, and the extreme economic marginalization of former prisoners, disproportionately of color. Note that there “are over seven million Americans who are either incarcerated, on probation, or on parole, with their criminal records often following them for life and affecting access to higher education, jobs, housing.” Moreover, “Court-ordered monetary sanctions that compel criminal defendants to pay fines, fees, surcharges and restitution further inhibit their ability to reenter society” (Alexes Harris, A Pound of Flesh: Monetary Sanctions as Punishment for the Poor)

What can be done?

In this context, what can be done? Well, there is a lot that is being done. There is opposition reflected in electoral politics and efforts to elect progressive candidates to positions in government, spurred by the hope that Democrats can do well in the 2018 elections. Bernie Sanders has been an inspiration for some of this. Some fight against Republican voter suppression and gerrymandering efforts, while others fight for campaign finance reform and public financing of elections. There are continuing demonstrations, rallies, and protests of all sizes as, for example, people protest fossil-fuel pipelines and fracking, and for renewables and a green economy. There are community efforts to better regulate or shut down corporate businesses that pollute the environment and endanger the health of nearby residents, often communities of poor people or people of color. There are organizations that take stands against racial and gender discrimination and for fair and equitable and affirmative government policies. They are countless issues on which people rally: to preserve net neutrality, to strengthen public schools, to protect and enhance important government programs like Medicaid, Medicare, and Social Security, to end the policies that lead so many people of color to prison and a loss of opportunities afterward, to support alternatives to agribusiness, and to institute a universal health-care system. As extreme weather events occur with increasing regularity, there is also a growing awareness of and related actions on how government emergency in the wake of hurricanes in Texas, Florida, Puerto Rico and parts of the Caribbean Sea is insufficient and biased in favor of the interests of corporations and the wealthy. Recently a high-school student movement has emerged in response to the mass murder at the Marjory Stoneman Douglas High School in Parkland, Florida.

The question that lingers is whether all this activity will be enough for center-left political forces to achieve majorities in the U.S. Congress and in state legislatures now controlled by Republicans. There is a question, among many, about what strategic goals are best for bringing together the various reform efforts into a politically effective political force that will have the power to reverse and replace Trump’s irrational climate change policies that dismiss climate change as a hoax?

There are at least two general strategic alternatives, largely still only aspirational. One is focused on reforming parts of the existing system, that is for example, limiting or discouraging particular expressions of corporate power through taxation or regulation. The other is focused on creating alternatives to corporate power in those industries that do great damage to the public or environment.

I’ll use global warming as an example to illustrate the two strategic approaches. As you well know, this is a growing problem of existential proportion that threatens to destroy the conditions that have made our societies and civilization possible. Globally, carbon emissions from burning fossil fuels, deforestation, and degradation of soils are steadily rising. Bob Berwyn reports, for example, that global CO2 emissions are going to break all records in 2017 (http://insideclimatenews.org/news/12112017/climage-change-carbon-co2-emissions-record-high-2017-cop23).

The Reform approach – e.g., A carbon tax

The first strategy calls for reforms of the current political/economic system that will fix the various aspects of the system that are problematic without major changes in how corporations are governed and generally operate, with profits as their central goal. Many of the references above are in this category. This is a general approach, with a multitude of variations, that is most familiar and most often pursued. So, with respect global warming, reformists would have government foster through regulatory initiatives, tax incentives and government subsidies by putting a cap on allowable emissions, imposing a carbon tax, promoting energy efficiency, subsidizing solar and wind power, encouraging consumers to by high efficiency appliances. The government may also set an example by installing solar panels on government buildings and military installations. This is not an exhaustive list, but it identifies some of the most discussed “reforms” with respect to the problem of global warming.

Take the carbon tax proposal. According to physicist, author, and blogger Joseph Romm, a carbon tax is “a tax on the carbon content of hydrocarbon fuels or on the carbon dioxide emitted by those fuels when they are converted into energy” (Climate Change: What Everyone Needs to Know, pp. 172-173). He elaborates as follows:

“In economics, the total economic harm caused by a pollutant such as carbon dioxide can be considered an external cost that can be estimated and added to the price of that fossil fuel. If the ‘social cost of carbon’ could fully account for all of the costs to society of emitting hat pollutant, and if the tax were equal to that social cost, then businesses and other entities would reduce their use of fossil fuels in the most optimum and efficient manner… there is a large range in estimates of the social cost of carbon” (p. 173).

“A number of countries have a carbon tax. Norway and Sweden introduced carbon taxes in 1991. Many other European countries also have a price on carbon content of fuel. In 2012, Australia introduced a $24 per metric ton carbon tax for major industrial emitters and some government entities. Much of the money was returned to the public in the form of lower income taxes or increased pensions and welfare payments. By mid-2014, the tax had cut carbon emissions by as much 17 million metric tons, according to one study” (p. 173).

“In 2008, Canada’s province of British Columbia (BC) launched the first economy-wide carbon-tax in North America. It is ‘revenue neutral,’ which is to say that the revenues raised by the tax are returned to consumers and businesses in the form of lower personal and corporate taxes. If some of the revenues were used to pay for government spending, such as increased research and development into clean energy technologies, it would be revenue neutral. The BC tax started at $10 per metric ton of carbon dioxide, and it hit $30 a metric ton in 2012. That translates into approximately $0.25 a gallon of gasoline. From 2008 to 2012, one study found that fossil fuel consumption fell 17% in BC….” (p. 173).

Romm points out that many countries don’t have a carbon tax but “do place a large tax on petroleum-based fuels, such as gasoline and diesel.” He continues: “These taxes are often substantially larger on gasoline than a typical carbon tax would be, but they pay for road repair and offset other externality costs associated with fuel consumption” (p. 174). They lack the redistributive impact on incomes that a revenue-neutral carbon tax would have, but they foster the use of small cars and public transit, which in turn have the effect of lowering carbon emissions.

According to a survey conducted in September and published by Yale University in its Environmental Research Letters, the “majority of Americans support implementing a carbon tax as a way to curb fossil fuel emissions.” The results are based on a nationally representative survey of 1,226 American adults. Respondents were given ten different ways to spend the revenue from a carbon tax. Daniel Oberhaus, reporting on the Yale study, writes that “if a carbon tax were implemented, 80 percent of respondents said they would favor using the revenue from this tax to develop clean energy and improve US infrastructure, such as roads and bridges” (https://motherboard.vice.com/en_us/j5ge4b/majority-of-us-supports-a-carbon-tax-and-wants-to-spend-the-money-on-renewable-energy).

The study found that “the average American household was willing to pay around $177 per year in a carbon tax on its energy bills, which by itself would amount to $22 billion in revenue annually.” More than 70 percent of those participating in the survey were willing to see “some portion of the carbon-tax revenue to compensate coal miners whose jobs are affected by a reduction in the use of fossil fuels.” One important policy implication is that the survey indicates widespread support for a carbon tax that is used by government for expenditures on desired programs. Ideally, it would be a tax on all carbon-based consumption, both for businesses and individuals.

There is little doubt that a reform such a carbon tax is a positive step in efforts to curb carbon emissions. However, the concern is that the government may not be able to adequately enforce the law. Historically, corporations and wealthy individuals have been adroit in finding ways to avoid the full impact of governmental tax – and regulatory – policies. Keep in mind also that there are other changes that would be included in a reformist approach, namely, encouragements to reduce our individual use of fossil fuels in our everyday activities, to have government subsidize renewables, to cap carbon emissions at their sources, to keep fossil fuel operations out of public land, onshore or offshore, to recycle and reuse the stuff we buy and thus reduce our individual and collective energy use. These are all reforms that are worthy of our support.

There is one surprise, at least upon initially hearing about it. Journalist John Schwartz reports in an article for the New York Times on June 20, 2017, that Exxon Mobil, BP, Royal Dutch Shell and Total S.A., all among the large oil corporations in the world, are now supporting “a plan to tax carbon emissions that was put forth this year by a group of Republican elder statesmen” from pre-Trump administrations, calling themselves the Climate Leadership Council (http://www.nytimes.com/2017/06/20/science/exxon-mobil-tax.html?_r=0).

If implemented, the CLC plan would set the initial tax at $40 per ton of carbon dioxide produced and raise more than $200 billion a year. Over time, the rate would rise, and, if it works, have the effect of dampening demand for fossil fuels. But wouldn’t such a tax have the effect of reducing profits? And aren’t profits what it’s all about in the corporate world? The big oil corporations are attracted to the plan because of is expected positive public-relations effect, while rightly thinking that it has little chance of being implemented by the Republican majorities in the US Congress or signed into law by Trump. Nonetheless, the public statement of support for a carbon tax is good for their reputation and that’s good for business. There are three other attractive aspects of the plan for the oil giants, though not for most of us. The plan “calls for scrapping Obama-era regulations intended to fight climate change.” The oil corporations can “simply pass the cost of new taxes on to customers.” And the plan “also says companies that emit greenhouse gases should be protected from lawsuits over their contribution to climate change.”

In the final analysis, a genuine and fairly constructed and implemented carbon tax is a reform worth supporting, if it does not end up in higher prices and the weakening of government enforcement of clean air and clean water regulations.

Addressing the limits of reform

Of course, it seems to be totally unrealistic to think that any such reforms, conservative or liberal, will be legislated in the present Republican-dominated US Congress and with Trump in the White House. However, even if the Democrats were to win majorities in the US House and US Senate in 2018, and even if there was then a move to implement such reforms, and even if subsequently a relatively progressive president replaced Trump in 2020, the corporations would still retain their power under the reformist agenda to make basic investment decisions as they now do, that is, to make decisions about what is produced (e.g., fossil fuels or renewables), where its produced (e.g., depending on how accommodating government here and abroad are), how its produced (e.g., by fracking or by solar and wind power), how much is produced, and the rate at which renewables replace fossil fuels. And the prospects are awful if the present right-wing juggernaut continues. In this case, corporate power will be intensified. There will be an increasingly de-regulated, tax-adverse, bottom-line obsessed, and grow-or-die capitalist system that requires corporations to give priority to the interests of their stockholders before all other interests, except perhaps when it comes to the salaries and bonuses of the top executives. Climate change deniers and the big oil and gas corporations will prevail, to the detriment of us all.

Now there are those who say that even under the best political circumstances, reform of US energy policy and of the fossil fuel giants is not sufficient to curtail, let alone reverse, the accelerating and increasingly catastrophic climate change that is upon us. They want a structural transformation of the energy industry. They want the big fossil fuel corporations to be de-privatized or nationalized. This is a position that is outside the political mainstream narrative and, under present circumstances, even less likely of success than the reforms already discussed. However, proponents of the nationalization option say that this is the only definitive way to deal with the power of the mega-energy corporations and thereby curtail and reverse disastrous climate changes.

The implication of the nationalization position is that, in the current political-economic situation, one paramount goal is to educate people about four things with respect to the reform proposals. One, reform of the energy system is not sufficient. Two, reform is not going to occur. Three, efforts to reform the system mislead people on what can be accomplished in the present system and keeps them from understanding what genuine change entails and what is necessary to achieve it. Four, only significantly diminishing or eliminating the power of the fossil-fuel mega-corporations will achieve the desired result of sufficiently reducing fossil-fuel emissions to avoid further and accelerating climate-related catastrophes. This means nationalizing the mega-oil corporations.

The nationalization option

This proposal is like the call for a single-payer, universal health care system. In both cases, the power of the government or a democratic structure and the public interest would replace corporate power. That means eliminating the insurance and pharmaceutical corporations in health care and transforming the control of the largest fossil-fuel corporations. There are at least two versions of how to nationalize the big oil corporations. One would be to learn from, considering and perhaps adapting the practices that are most efficient and consistent with a democratic system. According to Wikipedia
“F]ully 65% [of the world’s oil and gas reserves] are in the hands of state-owned companies such as Saudi Aramco, with the rest in countries such as Russia and Venezuela” (https://en.wikipedia.org/Nationalization_of_oil_supplies).

In these cases, the government sets the policies and makes the major investment decisions, while experts and skilled workers who are government employees carry out the actual work of extracting, processing, and distributing the oil and gas. The other position on nationalization, advanced by Bruce Lesnick, among others, is to create an energy industry that is run in a decentralized and “democratic” manner. He says the slogan should be “Nationalize the energy industry under workers’ control.” His key points are as follows:

“Policy, priorities and directions for the new energy sector should be set by a national board comprised of delegates from regional energy committees as well as elected representatives of the workers within the energy industry, workers in other industries affected by energy policy, scientists and engineers” (https://ecology.iww.org/node/1940).
“All energy policy representatives should be elected and subject to immediate recall. For compensation, they should receive no more than the average pay of those they were elected to represent.”

Lesnick argues that such a nationalization project is moral, legal, and can be done.

It is moral because the energy industry owes a huge debt to society. Companies have received “tens of billions of dollars every year in government subsidies.” Publicly supported academic research “has laid the foundation for a great deal of the technology and innovation that allows the energy industry (and others) to turn a profit.” The industry has spawned huge external costs, including “the depletion of resources, destruction of the environment, and poisoning of communities….” A 2010 study by the National Resource Council “put these costs [born by the public] at $120 billion for the year of 2005 alone.” Indeed, the energy industry has “been blithely churning out greenhouse gases” for generations. They owe the public big time. Nationalization of fossil fuels, or of the biggest fossil fuel corporations, is legal because, Lesnick contends, the rights of people and the planet have priority over “the desire by a few for private profit.” It is doable, given that the majority of the oil and gas produced worldwide is carried out by state-owned entities. If they can do it, so can we.

Writing for the In These Times, Carla Shandier also makes a case for the nationalization of the fossil fuel industry (http://inthesetimes.com/article/20700/nationalize-the-fossil-fuel-industry-carbon).

The majority of coal, oil, and gas reserves are owned by for-profit corporations, according to Shandier’s report. She points out that “more than 80 percent of all combined oil and gas production in 2015 came from resources outside of federal control.” Just ten US oil and gas companies “control close to a quarter of all American proven oil and gas reserves.” Given the calamities accompanying and the rapidity of climate change, Shandler argues that “[a] future government may have no choice but to de-privatize control of these reserves, the great majority of which are owned by mega oil and gas corporations. She also offers a method by which such de-privatization could occur.
“While the U.S. has hundreds of such companies [fossil fuel companies], the reality is that only a few of these together control the vast majority of proven reserves in the country. Take oil and gas, for example: Ten U.S.-based, publicly held companies [i.e., owed by stockholders] control close to a quarter of all American proven oil and gas reserves. A targeted buyout of fossil fuel majors would not only make up for lost time, but it could prevent vast amounts of CO2 from entering into the atmosphere through a managed decline in fossil fuel production….”

Shandier refers to precedents. During WWII, the government took over “vast swaths of the national economy.” George W. Bush cut subsidies to tobacco producers “while providing a $10 billion buyout to help farmers replace lost income, retire or transition to growing different crops.” During the Great Recession of 2007-2009, “both Bush and Obama Administrations de facto nationalized a number of companies, including financial institutions, insurance companies and even General Motors.”

Closing thoughts

There are plenty of ideas for reforming and some for radically transforming the U.S. fossil fuel industry. They are to be greatly appreciated. The proposals shine a light on what alternatives are worth fighting for and help to reinforce the commitments of progressive officials in government, scientists, experts and activists, while educating average citizens. There are daunting obstacles. We are faced with a retrograde president and Republican Party, unprecedented corporate power, and billionaires, and tens of millions of Americans who go along with their right-wing, reactionary, counterproductive agenda.

While the reform approach may not target the foundations of corporate power and the profit-first economy for fundamental changes, they do have the value of educating the public, galvanizing the active engagement among some segments of the population, educating many others, and slowing down if not stopping reactionary energy policies. But, in the end, it may take more than such reforms to curtail and reverse the carbon dioxide emissions of the fossil fuel corporations. So, the call for nationalization is appropriate and logically sound, but not widely understood or even recognized.

I pose, finally, two questions. One question is whether the reform agenda and the more radical agenda calling for structural and systemic changes can be complementary or whether they are they inherently contradictory? One tentative answer is that they ideally could be combined, each applied simultaneously to different sectors of the economy. The other question is whether we have the time for enough change to occur, given that the climate is changing so fast and in so many increasingly catastrophic ways. As of now, the climate issue does not appear to be a one that is being highlighted in Democratic primaries. And, generally, there is almost no discussion in government of the nationalism option, with the exception in health care of a single-payer, universal health care system – but that is in in political infancy.