What do a recent analysis of the Detroit bankruptcy crisis, and recent revelations of wide-scale corporate spying on citizen activists, have in common? They both suggest that we need to revitalize the public sphere, democratize economic policy, and dismantle the hierarchy created by material inequality.
New reasons for building community power and dismantling the power of private capital are manifest every day. Wallace Turbeville’s November 20 report on the Detroit bankruptcy concludes that the exacerbating factor in that city’s financial problems–what is literally holding Detroit back from addressing the crisis–are the risky financial instruments with which Wall Street stuck Detroit. The “complex financial deals Wall Street banks urged on the city over the last several years” included interest rate swaps containing provisions wildly favoring the banks, as well as devastating credit rating downgrades.
An important point in Turbeville’s conclusion is the contradiction in ethical duties present in private finance of public endeavors.
The banks and insurance companies were in a far better position to understand the magnitude of these risks and they had at least an ethical duty to forbear from providing the swaps under such precarious circumstances.
But, of course, as private corporations, the banks and insurance companies’ main ethical duty was to their shareholders, private investors who stood to benefit from Detroit’s risky deal. This is, above all, a reason for democratically-run, public finance.
Meanwhile, it’s looking like private corporations are (as Walter Brasch once called them in the context of consumer spying) the new “Big Brother.” Stuart Pfiefer covered this in the LA Times on November 20, and both Bill Moyers and Democracy Now! reported on it this morning as well. From Pfiefer’s article:
large companies employ former Central Intelligence Agency, National Security Agency, FBI, military and police officers to monitor and in some cases infiltrate groups that have been critical of them, according to the report by Essential Information, which was founded by Ralph Nader in the 1980s.
“Many different types of nonprofits have been targeted with espionage, including environmental, anti-war, public interest, consumer, food safety, pesticide reform, nursing-home reform, gun control, social justice, animal rights and arms control groups,” the report said…
The conclusion of the report’s author is serious:
“Corporate espionage against nonprofit organizations is an egregious abuse of corporate power that is subverting democracy,” said Gary Ruskin, the report’s author.
Revelations of corporate spying highlight the material powers possessed by economic entities: political powers, powers over people’s lives, “bio-power” as the Foucauldians call it. Fighting against state police power is hard enough. When corporate America practice police state tactics, that fight gets harder, because we can’t vote the violators out of office. We can subject them to tort actions, but not the kind of judicial review available when we’re fighting the oppressive arm of the state.
Building accountability into our political institutions is hard enough without the impunity and out-of-proportion power of our financial institutions. We need the same kinds of checks and balances in both.
Matt Stannard is Development Director for the Public Banking Institute, and Editor of PoliticalContext.org.