Reviewed by Ruth Latta
Vulture Capitalism
Corporate Crimes, Backdoor Bailouts, and the Death of Freedom
by Grace Blakeley
Bloomsbury Publishing
Mar 2024, Hardback, 416 pages, ISBN: 9781526638076
In Vulture Capitalism: Corporate Crimes, Backdoor Bailouts, and the Death of Freedom, Grace Blakeley writes about the unholy alliance of government and capitalism. I first heard of her when, earlier this year, she gave the Ellen Wood lecture at the democratic socialist Broadbent Institute in Toronto. In this lecture and in her book she addresses the current worldwide crisis of democratic institutions. Youth in particular don’t vote because they don’t think democracy works.
Blakeley, a thirty-two year old Oxford-educated economist/journalist, says that liberal democracies under capitalism are not true democracies. As things stand now, government and capital work together to help the rich get richer and the poor get poorer. True democracy is economic democracy, in which citizens not only vote but also have real control over their lives.
We have been taught that the government and the economy are two separate things and that government control of an economy (state planning) interferes with freedom and does not work well in practice. In fact, under capitalism, we have oligarchic centralized planning. Vulture Capitalism is full of examples of large companies putting profits before people.
Blakeley says that we should ask where planning is taking place, how it’s being done and whose interests are being served:
As soon as we leave the world of small businesses…and enter into the reality of capitalism,” she writes, “we enter a world of pervasive private planning… The free market is a smoke screen behind which lies the brutal, despotic power of capitalism.
One historical example of a large private company assuming near-sovereign power over its employees was “Fordlandia,” Henry Ford’s factory town in Brazil’s Amazon rainforest. In the U.S., anti-union Ford monitored his employees’ lives outside the workplace. In the factory, while he paid employees a decent wage, he put them through assembly-line work that was repetitive, monotonous and closely surveilled.
In the 1930s, the Ford Motor Company wanted a secure source of rubber, and with the approval of the U.S. government, secured an empire of 2.5 million acres in Brazil. The managers were American; the workers, Brazilian. The former lived in a model community with all the amenities; the workers, when they came into town, were required to wear I.D. badges and forbidden to indulge in tobacco, alcohol, soccer and women.
When synthetic rubber was invented, Fordlandia failed. Back home in Detroit, Ford eventually had to accept a unionized workforce. By 2001, Chrysler, General Motors and Ford all received bail-outs of taxpayers’ money. From the days of the British East India Company to the activities of Blackwater in Iraq, corporations have exerted sovereignty with the blessing of government.
An example of capitalism wagging the dog of governments was the 1956 Suez Crisis. When Egyptian President Nasser nationalized the canal, Britain and France sent in troops to protect their capitalists’ investments. The United States threatened economic retaliation and the two former empires stepped back.
The corporate executive class and the political class overlap and think alike. While individual capitalists may compete over the short term, over the long term they work together, lobbying for lower corporate taxes, lenient regulations and changes in trade policy. The corporate executive class and the political class can easily collaborate, thanks to their social class similarities, but the working class, being large and diverse, faces a greater challenge if they want to organize in a coherent bloc, speak with one voice and exert their power.
Blakeley gives examples of local level worker planning that shows everyday people’s ability to demonstrate their capabilities and take back their power. In Britain in 1976, the workers at Lucas Aerospace tried to reorient the failing company away from weapons production into socially useful commodities. These organized workers came up with hundreds of ideas, one hundred and fifty of which were brought together in the “The Alternative Plan for Lucas Aerospace.” This plan was detailed and specific as to how to switch to making medical equipment, transport vehicles, robotic arms, improved braking systems, etc. It provided market analyses and a step-by-step transition plan, much to the senior managers’ amazement:
It was almost as if the workers had never needed managing at all, as though they were creative architects rather than obedient bees.
The entire British Left was convinced that the Alternative Plan would empower workers in socialist production without the support of the capitalist state. Instead, the Lucas company preferred to sell the firm rather than have it worker-run.
Another example is Marinaleda, a Spanish village, which was desperately poor under the thirty-six year fascist regime of Francisco Franco. Two years after Franco’s death in 1975, Juan Manuel Sanchez Gordillo formed a union and mobilized the villagers to occupy uncultivated land left by absentee landlords. In 1980, hundreds of local people went on hunger strike to demand land from the local elite. Finally the local government gave them 1,200 acres. Meanwhile, the union had formed a workers’ party which elected Sanchez Gordillo as mayor. This cooperative village agricultural project endured and is profitable.
Blakeley’s examples include “Corporation Jackson”, an umbrella organization for co-ops and community enterprises in Jackson, Mississippi, which aimed to build a base of independent power to catalyse democratization of the economy. Then there is the “People’s Plan” campaign in Kerala, India; the “Better Rekjavik” program, and the community wealth-building plan of Preston, U.K, to redirect money into the local economy, planned by local people.
One example of democratic decentralized planning at the national level took place in Chile from 1970-3. A socialist candidate, Salvador Allende, ran for president. The U.S. Central Intelligence Agency funded his opponent, who claimed that Allende would bring in Soviet-style authoritarianism and repression. In fact, Allende wanted a Chilean path to socialism, not through rigid central planning, but through democratization of the economy. When elected, Allende lost no time in expanding the social safety net. He also nationalized U.S. companies (including the copper mining corporations), which, as state-owned companies, elected workers to managerial and board positions.
Predictably, President Nixon cut aid to Chile and discouraged financial institutions from lending to the Chilean government. Shortages of consumer goods and high prices occurred. At this juncture, Allende’s government sought a way to coordinate production from the worker-run firms to make a more efficient supply and demand balance. A computer network was the answer, but Chile didn’t have enough computers, so the team leaders used 400 Telex machines instead.
Allende’s efforts to democratize Chile’s economy worked well until, in Blakeley’s words, the United States “began to screw with the Chilean economy” in 1972. In the end they funded an army coup led by General Augustus Pinochet, whose bloody rule lasted from September 11, 1973 until 1990, a year after he was arrested in London under an international warrant in connection with numerous human rights violations.
The story of the Allende administration shows how a democratization movement can transform a society, but also shows that capitalism can violently overthrow a democratically elected government. Blakeley says that socialists must work within and outside all social institutions to shift the balance of power in society in favour of workers.
For Blakeley, “socialism” is defined as the democratization of society. Instead of top-down control, true democratic socialists want “collective liberation” in which workers run production and the citizens control the government. She stresses the importance of unions and community organizing, but opposes the idea of universal basic income because it would be set at subsistence level and would not further community cooperation. She admires Sweden’s Meidner Plan, which requires corporations to put a specified number of shares into a worker fund, and to have union representatives elected to corporate boards to represent employees.
To help the poor, including people overwhelmed with debt, Blakeley supports the idea of a postal banking system; that is, banks set up through the post office to provide banking services, including small loans at low interest, and to help debtors refinance their borrowing. Regarding the powerful central banks that rose to the rescue of capitalism in the 2008 economic crisis, she says that their governing committees should include representatives from government, labour, social movements and other stakeholders and should have a majority of democratically elected members.
Other measures she advocates are strict limits on political donations and lobbying; the training and integration of migrants as an alternative to deportation; the closure of tax havens, and setting minimum requirements for transparency of tax reporting and financial flows. When audience members at her lectures ask her, “What can I do?” Blakely says the real question should be “What can we do?”
Blakeley’s Vulture Capitalism is an inspiration to those who are feeling powerless.
About the reviewer: Ruth Latta has a Master’s Degree in History from Queen’s University, Kingston, Canada, and is writing a novel about a leftist modernist artist in 1930s and ‘40s Montreal.