Nationalize Them

You don’t see this in The New York Times every day:

THE Barclays interest-rate scandal, HSBC’s openness to money laundering by Mexican drug traffickers, the epic blunders at JPMorgan Chase — at this point, four years after Wall Street wrecked the global economy, does anyone really believe we can regulate the big banks? And if we broke them up, would they really stay broken up?

Most liberals in Washington — President Obama included — keep hoping the banks can be more tightly controlled but otherwise left as is. That’s the theory behind the two-year-old Dodd-Frank law, which Republicans and Wall Street are still working to eviscerate.

Some economists in and around the University of Chicago, who founded the modern conservative tradition, had a surprisingly different take: When it comes to the really big fish in the economic pond, some felt, the only way to preserve competition was to nationalize the largest ones, which defied regulation.

The other worthwhile part of this piece is a reminder that nationalization isn’t just some horrible sin that only bad people like Soviets have committed; it’s happened in the US, and not even that long ago:

We tend to forget that we did, in fact, nationalize General Motors in 2009; the government still owns a controlling share of its stock. We also essentially nationalized the American International Group, one of the largest insurance companies in the world, and the government still owns roughly 60 percent of its stock.

The author of this op-ed, Gar Alperovitz, presents nationalization mainly as a strategy to preserve competitive markets, but another potential benefit of this strategy could be accountability.  Big corporations don’t answer to anyone but big shareholders and management, which is part of what makes them so dangerous.  Nationalization could be a way to add some sort of democratic accountability to these firms.  Of course, that depends on how democratic your government is, and the US government appears to be increasingly less so.  But if you want an economy “of the people, by the people, and for the people”–and why not aspire to that in the economic realm if we do in the political?–some good strategies seem to be nationalization of some of the larger industries and some form of worker ownership/management of smaller and medium-sized firms.  This latter approach, which often takes the form of worker cooperatives, has worked marvelously for Spain’s Mondragon Corporation and seems to be prospering among the Evergreen Cooperatives, of which Alperovitz happens to be a leading theorist and backer.

Image by lambdachialpha

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