ER Editor: We remind readers of a piece by Paul Craig Roberts we ran recently titled Economic Effects of Coronavirus Could Be Revolutionary in which he argues for nationalization and debt forgiveness. Here’s his reasoning where, crucially, he talks about organizing economic recovery in such a way where the oligarchs can’t continue gouging the rest of us:
The United States has an unprotected population and an economy in trouble. For years, corporate executives have run the companies for the benefit of their bonuses, which are largely dependent on rises in their company’s share price. Consequently, profits and borrowings have been invested in buying back the companies’ shares and not in new investment in the businesses. Corporate indebtedness is extreme and will threaten many corporations and many jobs in a downturn. Boeing is a case in point.
Economist Michael Hudson has for many decades studied the use of debt-forgiveness to restart economies killed by debt burdens. Debt forgiveness for corporations has a different implication than debt forgiveness for individuals. For corporations, forgiving debts lets those who financialized and indebted the economy and the population off the hook. To avoid rewarding them for the catastrophe they produced and to prevent widespread public outcry and distrust, nationalization is implied for insolvent companies and banks.
Nationalization would be limited to insolvent companies and financial institutions and doesn’t mean that there would be no private companies or businesses. Additional nationalization could be used to prevent strategic companies from substituting their interests for national interests, which they do when they move American jobs and factories offshore. Pharmaceuticals could be nationalized along with health care. Energy, which often sacrifices the environment to its profits, could be considered for nationalization. A successful society has to have more driving it than private profit.
For most Americans, nationalization is a dirty word, but it has many benefits.For example, a national health care system reduces costs tremendously by taking profits out of the system. Additionally, nationalized pharmaceutical companies could be made more focused on research and cures than on profit avenues. Everyone knows how Big Pharma influences medical schools and medical practice in line with Big Pharma’s approach. A more open-minded approach to medicine would be beneficial.
Even debt-phobic Germany is having to get on board with this approach.
However, is even more massive government debt simply the end of it, or has something far more sinister been planned for us on the economic level?
Capitalism is one virus away from existential disaster
Franklin D. Roosevelt and John Maynard Keynes have been knocked into a cocked hat by Donald Trump, Boris Johnson, and Emmanuel Macron, the new holy trinity of dirigiste capitalism (ER: where the state plays a strong, actively interventionist role in the economy).
According to the laws of capitalist economics, an airline which cannot fill its seats must go to the wall. If the public’s taste for ocean-going cruises dissipates either by fashion or pandemic, the cruise company goes under the relentless waves, sink or swim.
John Maynard Keynes and Franklin D. Roosevelt bucked that in the 1930s Great Depression, deciding that the fate of nations could not be left merely to the unseen hand of market forces, but that if not a heart, then at least a brain must be applied. That accountancy was not economics.
The descendants of Keynes and FDR would not normally be found in either the British Conservative Party or the GOP. Reagan and Thatcher must be turning in their graves. Because this week the prevailing capitalist orthodoxy was turned on its head and eye-watering sums of public money were splashed not by Sanders or Corbyn or Melenchon, but by their polar opposites whose whole careers have been built on denouncing the slightest bit of Keynesianism as socialism or even communism.
Unless one believes all three have experienced a Damascene conversion, one can safely say the scale of the bail-out equals the scale of the threat perceived to capitalism itself by the coronavirus epidemic. Donald Trump is getting ready to sign $1,000 checks to “every American.” Macron, under siege and thinking of the Bastille every morning he wakes up, is going to spend the equivalent of 20 percent of France’s 2019 GDP to beat this new unseen, elusive enemy.
When the pigs in Animal Farm metamorphosed into the opposite of their former selves, they began to chant “four legs good, two legs better.” For the Holy Trinity, equality was always good, but some would be more equal than others. “Public good, private better” was their mantra.
But the scale of the public health threat posed by the pandemic demonstrates beyond contradiction that private is not better than public, an economy which principally is private cannot meet the needs of the human race when existential dangers arrive.
This is not new, though it may have been forgotten.
The war-time alliance of the USSR, Britain, and America could not have prevailed if the example of Milo Minderbinder in Catch-22 had been followed. Milo, a capitalist to his core, rented out his own USAF bombers to the enemy to bomb his own side. Well, business is business.
Only strong centralised states with command economies can wage total war, and profiteering, hoarding and panic bulk buying are rightly considered crimes. The USSR already had one; Britain and America had to become so for the duration. Under capitalism, if people cannot go to work and earn money, or eat out, entertain themselves or shop, all the private enterprises dependent on these things must fail. That’s accountancy. Economics, however, requires shock-absorbers so that economic capacity, which will be harder to bring back than to protect, is not lost forever. And politics is the art of ensuring that a crash is never so apocalyptic as to raise the possibility that the people will not rise up, especially not during the Ides of March…
Boris Johnson, who just four months ago characterised the economic policies of his Labour opponent as reckless soviet-style communism, announced EXTRA public spending greater than the entire 2019 GDP of Portugal. A £350 billion package which he and his Chancellor repeatedly said was merely the beginning. We will do “whatever it takes,” they said, seven times between them. Interest-free loans, loans at attractive rates, mortgage holidays, the protection of uninsured businesses unwise enough not to have sought indemnity for pandemics, the scrapping of business rates for pubs, restaurants, retail and service industry businesses. Implied is subsidy for private airlines, privately owned airports; under-review is the potential plight of tenants, hourly wage-workers, those in the gig economy. The heartless Tories even found millions for the destitute so they could be taken off the streets, and given a space in which they might “self-isolate.”
Of course, within this bout of socialism, there are many footprints – much bigger than a pig’s – of some being more equal than others – Sir Richard Branson for example will fare much better than the Rickshaw driver in Piccadilly Circus. But it nevertheless shows that in the third decade of the 21st century, after 250 years of hegemony, capitalism has left us two pay-cheques away from penury and one virus away from existential disaster. And only the money of its victims can save it.
George was a member of the British Parliament for nearly 30 years. He presents TV and radio shows (including on RT). He is a film-maker, writer and a renowned orator. Follow him on Twitter @georgegalloway.
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