Strongman Economics Are Piss

The most futile way to fight investor capitalism.

The working man’s savior. (Photo: Getty)

A basic but accurate model of investor capitalism is: Companies have expenses, and they have profits. The job of company managers is to minimize expenses and maximize profits, to the extent possible. The huge pools of capital controlled by investors will flow to the firms that produce the highest profits, with the same inexorable logic of a river flowing where gravity leads it. In return for their capital, investors want as much of a company’s profits to be given to them as possible. An ideal scenario would be a company that has zero expenses and funnels one hundred percent of profits to its investors. All lesser figures than this are nothing more than grudging concessions to reality.

Once investor capitalism has gotten hold of an economy, as it has in America and on most of Planet Earth, it operates like a machine programmed with those few rules. Its logic is straightforward and does not change. The only way to alter its course is to impose hard limits upon it. If you do not want it to produce, you know, “slavery,” which fits quite well in its logic, you have to make rules against it. If you do not want companies to dump their toxic waste in the lake, you have to enforce regulations against it. Otherwise they will do it, because it lowers expenses and produces higher profits. This simple model explains basically all corporate behavior. We, as a society of human beings, must turn the dials that dictate the limits on capitalism, because capitalism itself is a machine that only does one thing. America’s economic inequality is a result of our failure to restrain the operations of this machine very much. We currently exist at the “You can still be considered a legitimate businessman and make billions of dollars in private equity by buying a hospital and driving down the costs by firing the people who keep all the patients alive” level of regulation. We have a ways to go yet.

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A central task of organized labor in this context is to put more of a company’s money into the pockets of its workers. Because labor is considered a “cost” in our model, this implies raising a company’s expenses. More importantly, it implies leaving less money for the investors. It violates Rule Number One and Only of investor capitalism. This is why company managers work so hard to prevent unionization. They understand that an organized work force has genuine power and that they will probably use that power to take a bigger slice of the pie for themselves, rather than continuing to take crumbs while the people at the faceless investment firm take all of the profits that their work produces.

Life under investor capitalism proceeds in this way. The investors, and the company managers who work for them (who can be called “The Forces of Capital” if you want to make them sound more ominous) try to fend off all competing forms of power that try to limit their mandate to take all the world’s profits. They buy the government to avoid legal regulations. They bust unions to avoid the power of labor. They hire sophisticated PR and public affairs firms to fight against forms of power like “a bunch of citizens who got cancer because you polluted their drinking water have decided to form a group to try to get you to clean things up.” And on and on. A human being might view these various groups as people trying to get companies to be humane, to treat workers fairly, to be responsible corporate citizens, to consider their impact on communities. But from the point of view of capital, these are all just competing forces trying to reallocate profits away from investors, who must be opposed.

Right now, companies in America and around the world are being subjected to a somewhat novel form of power: The power of the strongman. In any nation where the forces of capital have accumulated as much power as they have in the USA, there is a superficial appeal to the idea of a strongman who can put them in check. The appeal of Donald Trump to a laid-off coal miner is similar to the appeal of Evo Morales to an impoverished Bolivian campesino, in the sense that both represent a prayer for relief by powerless workers crushed and discarded by capitalism. Whether the prayer is answered, and how, is a separate issue.

In theory, a strongman leader can use his power on behalf of workers and against the interests of capital. He can, for example, nationalize foreign firms that are stripping a nation of its wealth, and invest the profits those companies are producing back into measures that benefit its citizens. The machine of global capitalism treats these efforts harshly—it tends to fight back by, for example, having its friends the Dulles brothers assassinate the pesky left wing strongman and install a more corporate-friendly leader in the country. Or, in less dramatic cases, using its political influence to impose sanctions and cut the pesky unfriendly nation out of the global economic system and create immense misery in order to pressure them to give in. Whatever the specifics, the smaller and less wealthy the nation, the harder it is for a strongman leader to stand up to global capitalism.

But the United States of America with a strongman leader? Well. That is a force to be reckoned with. We have the biggest economy and our government has the most guns. One can imagine an American strongman president who could actually twist the arm of the investment class enough to truly turn around the growth of inequality, to force a change in the distribution of wealth in this country in a direct and sudden way. For those who have become (reasonably) cynical about the power of our allegedly democratic system to produce such fundamental change—to make it so that hardworking folks can live a decent life and not struggle and not have all the money always going to a few rich assholes—the idea of a strongman doing it sounds pretty appealing.

I say all this as a prelude to focus on what our strongman leader is actually doing on this front. I’m not talking about all the normal bad stuff, the corruption and narcissism and racism and everything else, which we can stipulate that we all know. Is Donald Trump doing anything that amounts to “Populist strongman uses his power to force the greedy investor class to release its grip on all corporate profits?” In fact, he is. And the way that he is doing it reveals everything about why the hope in a strongman savior is a dead end for the working class.

Trump’s global tariffs are the deranged plan of an overconfident idiot who quite literally does not understand what a trade deficit is. But let’s set that aside for a moment. Let’s pretend that Trump is, in his own way, doing all of this because he wants to Make America Great Again and bring jobs back to the USA and create greater prosperity for American workers. It is fascinating to watch Trump impose significant new costs on companies, and then try to simply bully the companies into not raising prices in response. He told Walmart to “EAT THE TARIFFS” rather than passing on their costs. We are witnessing a classic battle between strongman economics and investor capitalism. Normal capitalist logic is to raise prices in response to increased costs (maybe even raise them a little more than necessary, in the spirit of seizing an opportunity) in order to protect corporate profits, which are the most important thing. The strongman says: No, I want you to voluntarily accept lower profits in order to comply with my will, and to make me look good, and strong, and popular. If you do not do this, I will retaliate against you; I will smear you, threaten you, unleash government agencies to harass and investigate and trouble you, make your life hell in various corrupt ways. The companies must then reassess whether they will be able to continue to maintain their profits, or whether the power they are up against is so potent that they must, at last, give ground.

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The interesting thing is that what the strongman does is a crude, corrupt, and brain-damaged version of what organized labor does. Both, in essence, are trying to use their power to create a threat to the company to force the company to change the division of its economic pie. In the case of unions, the threat is the strike, and the demand is for the investors to accept less money so that the people who actually do the work get more money. It’s a just demand that leads to a fairer and healthier society. In the case of Trump, the threat is being steamrolled by a madman wielding the power of the state, and his demand is also for the forces of capital—stockholders in Walmart, for example—to accept lower profits. But why? Here is the key, illuminating difference, my friends. The strongman is not using his power in service of a just demand that will produce a fairer world. He is aiming to reallocate corporate profits not from investors to workers, but instead from investors to “idiotic tariffs that don’t make sense.” And the tariffs, in this case, represent Trump himself—the primacy of his will, the success of his platform, his own popularity and reputation.

Is it imperative to human flourishing and to the survival of democracy that investor capitalism be opposed by some great countervailing power? Indubitably. But can that power be a strongman, a dictator type who sweeps away the pesky demands of democracy in order to save it from corporate dominance? Well, we are living through a test of that question right now. And what we are seeing is that Trump, the strongman, is not forcing a reallocation of wealth from the investment class to the working class; he is forcing a reduction in wealth for everyone. He is not trying to shift power from the investor class to the working class; he is trying to shift power from the investor class to himself. He is standing up to capitalism not in the name of the people, but in the name of Trump. He is marshaling a level of power that could be used to reimagine our economy for the better, and instead using it to just break the economy out of greed, narcissism, and idiocy.

That’s why a strongman will never be as good as a union.

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More

• Related reading: Divergence From the Interests of Capital; Your Money Is On the Table; Gangster Party; We’re All Mice Trying to Chew Through a Trillion-Dollar Tree.

• A lot of my pals who are very good writers have books coming out these days. Let me recommend just a few for you: Kim Kelly’s “Fight to Win,” a labor book for young readers. Megan Greenwell’s “Bad Company,” about private equity. Bridget Read’s “Little Bosses Everywhere,” about pyramid schemes. And Maris Kreizman’s “I Want to Burn This Place Down,” essays by an incisive essayist. Is it possible that How Things Work might score some interesting interviews with some of these authors in coming weeks? Stay tuned….

• Unionize your workplace in 2025. Contact EWOC to get started. Capitalism ain’t gonna fix itself. We gotta do it.