It is the political economy and much more

During 1992 electoral campaign, it was recommended to Bill Clinton that he focused more on the economy than his opponent, George Bush (father). There comes the phrase “the economy, stupid” that helped him become president of the United States. However, the “economy” applied by Bill Clinton did not distribute the results of growth with equality, but rather it accelerated the concentration of wealth and decisional power. What happened and which options exist?

The invocation solely to achieve economic growth and relinquish the steering of the economy to the representatives of concentrated power generated tremendous disequilibria and inequalities. Middle and popular sectors were left behind; the trumpeted “spillover” of benefits, as usually happens did not occur. This huge economic and decisional concentration ended up producing recurrent situations of systemic instability.

Such proposition “the economy, stupid” concealed a huge pillaging of surpluses at the expense of medium and popular sectors. This and other similar experiences enable us to sustain that the determinant is the type of proposed growth and, thus, it is not simply about mystifying “the economy” but rather delve into political economy and much more to define the desired country project. This is what these lines are about.

Economy and politics are tightly intertwined, the economy conditions the structure and functioning of societies. The course and way of functioning of a country and the world do not come down from a divine mandate but rather are the construction designed by those who control the largest powers. Thus, an unbridled concentration of wealth is projected onto decisions and regulations (or deregulations) orientated towards securing privileges of the few. This is achieved by combining diverse subduing mechanisms such as manipulation of public opinion, colonizing minds, formatting subjectivities, fracturing existent societies, induced divisionism, repressive violence towards movements that resist capturing democracies.

Pillaging and over-indebtedness

History of humanity is full of episodes of pillage of subdued peoples, dominators loot. They do neither rule nor adopt measures orientated towards caring for all and the environment, they always pillage. In ancient times, they looted in the open. Today, with the advance of democratic clarification, pillage is still merciless but undercover. Dictators and their accomplices loot, liberal governments loot. If the origin and trajectory of concentrated capital were investigated, crimes and violence used to appropriate themselves of what does not belong to them would be exposed.

Moreover, there are pillages derived from the functioning of oligopolistic markets. Leading enterprises impose leonine conditions to extorted suppliers, unjust salaries to their workers, and abusive prices to consumers that need to cover their basic needs, but also to middle sectors driven to an alienated consumerism by marketing pliers.

While this happens, countries and communities are forced into over-indebtedness leaving them at the mercy of their creditors. It is a subduing mechanism for sovereign countries: they are forced into a permanent negotiation for refinancing with the extremely high cost of keeping in place policies that harm their peoples and favor the dominators.

On their hand, by debilitating the regulatory strength of States, large enterprises, local and foreign, add to the oligopolistic profit the tax evasion or elusion and the consequent capital flight towards tax havens of more lax jurisdictions. These maneuvers are materialized with the complicity of financial entities, using spurious triangulations with subsidiaries and corrupting officers responsible for preventing those white-collar robberies.

If these crimes were eliminated, the large surpluses that are flight in planned robberies could be devoted to establishing a more inclusive and sustainable country project, cancelling off social debt, strengthening a better economic system and recovering decisional sovereignty. We are not lacking resources; they are appropriated by scoundrels and their accomplices. 

New powerful actors

Among the most powerful actors of the concentrated power, there is a group of large investment funds, global in scope, and very difficult to regulate.

Let us take as an example, the largest global investment fund, BlackRock, which together with other large conglomerates suction the wealth out of multiple countries. Beyond the formal object of their activities, their executives have access to every government and to a wide range of other decision makers. It is very difficult to ignore those who manage an investment portfolio larger than the economies of France and Germany combined.

In another article, we have described the financial and managerial structure of BlackRock, appreciating how they use their power when they need to address sudden changes in circumstances. Moreover, we pointed out some of the dramatic consequences derived from their actions.

BlackRock decides its investments in function of its own views and interests. The criterion they apply to define in which, where, with whom, when and how much to invest (or disinvest) is that of maximizing profit. Any other criterion is subordinated to achieving the largest possible profit. If with time, circumstances were to change and they could consider their investment risky, they sell and withdraw. They take no roots or social or territorial responsibility. Their decision can affect workers, suppliers, a locality or a country. This lability of roots evokes the notion of “liquid times” studied by sociologist Zygmunt Bauman.

When investing, BlackRock and other large investment funds, use their power to impose privilege conditions. As of now, they only invest in sectors that offer the best returns and guaranties, the crème of the economic system. They impose prices and investment conditions very favorable to them, knowing that their presence is useful in inducing other investors to join. They start with advantages, preserving the threat of withdrawal if they were to perceive that their profit confronts with serious risks or, much worse, if global strategy of their headquarters thus decides independently of the circumstances of the country that received the investment.

The owners of the fund are the shareholders, including managers that tend to reserve for themselves a considerable amount of shares. Thus, the mandate of maximizing profit and the trajectory to achieve it do not come from a democratic power that ponders on social and environmental interests. The helmspersons of this huge economic and political firepower engage in an unbridled and merciless thirst for profit. They argue that “the rest” (incomes, habitat, education, health, security among many things that make up the general wellbeing) pertain to the State, even though such investment might generate harsh undesirable externalities (equivalent to the collateral damages of bombarding inhabited areas). Funds benefit and many people suffer the consequences of investment decisions beyond their control.

The countervailing power to concentration

A countervailing power to confront the process of concentration of wealth and decisional power are States ruled by governments oriented towards caring for their entire population and the environment. However, States are highly constraint by the power of concentrated groups.

Thus, the original challenge starts by liberating States of such domination, taking into account the political, social, and cultural singularities of each country and situation. It is not something simple, nevertheless essential to address. It will be necessary to focus important efforts onto clarifying and organizing the social base of such trajectory, dismantling the formatting of subjectivities that transforms victims into alienated defenders of their victimizers. Much to transform so that voices and not media echoes prevail, so that justice stops favoring the powerful, that education forms solidary personalities oriented towards building and caring, that health is no longer a merchandize, that the environment is recognized as Mother Earth that shelters us all.  

Countervailing power needs to be established on solid and sustainable political coalitions based on the union of middle and popular sectors; a new power capable of setting courses and trajectories, building country projects oriented towards caring for their population and not securing the profit of the few. We need sovereign States that adjust key economic variables such as consumption, investment, financing, international trade, a strategic support to popular economy, among many others, to such purpose.

Political economy makes explicit what is zealously concealed in the concentrating process and, with that, it opens strategic options for liberating captured democracies and provides instruments that allow for dismantling the engines that reproduce concentration.

By unveiling what happens, political economy enables emphasizing how critical it is to focus on all what sustains inequalities and inequities, including redistributing wealth and income, addressing firmly large evaders that flight ill-gotten capitals, transforming regressive tax structure and composition of public spending, eliminating opprobrious indebtedness, promoting local reinvestment of profits. As well as securing fair salaries and working conditions, protecting suppliers and consumers from market abuses, punishing financial speculation, discouraging all parasitic rent, responsibly caring for the environment. Well used the approach of political economy and others of similar importance in the fields of education, health, justice, culture, information, environmental protection, contribute to the task of building a country project desired by the whole society.

A final reflection, returning to the beginning of these lines: The invocation to focusing on “the economy” as if there were just one is a perverse or ignorant way of concealing interests that cannot be defended in the open. Even though Clinton’s campaign categorized as stupid those who did not adhere to the proposed challenge, in reality stupid or manipulated would be those who drown while following those who emulate the Pied Piper of Hamelin. It is better to make use of political economy and much more.

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