There is no real public discussion either in the media or by presidential candidates to make the changes necessary to democratize the economy. We have seen a general move to an increasingly regressive tax system in the past 30 or 40 years in the US and Europe. Public boards should make corporations and banks more accountable.
Story Transcript
PAUL JAY, SENIOR EDITOR: Welcome back. This is part 2 of our conversation with Professor Leo Panitch. Leo, so we’re talking about democratizing the economy. And to get concrete, we’re not going to have some big, radical change in the next year or two. People are going to be very severely affected by this economic crisis. So let’s talk about what kind of smaller steps need to be taken, especially what should we be demanding from our politicians? From union leaders? From ourselves?
LEO PANITCH, PROF. OF POLITICAL SCIENCE, YORK UNIVERSITY: Well, I think I could come up with a couple of examples, and we can talk about them, Paul, but I think this is precisely the point, that it’s something that you and I ought to be talking through together in terms of trying to think about the kinds of reforms that would lead on to greater democratic control of the banks and the corporations and what they do with what is really our money, what is the public’s money, really. And the problem with democratic capitalist societies—the United States, Canada, the European ones—is that we don’t have that public discussion. We have a discussion around should there be more taxes, should there be less taxes, should there be more state, should there be less state, should there be more regulation, less regulation. But fundamentally the questions you’re posing, you know, what type of reforms could we have that would really democratize the economy would subject these massive corporations that control our lives, whether they’re banking or industrial, to democratic accountability and control?
JAY: Do you see any of that in the dialog that’s coming from the presidential candidates?
PANITCH: None. Absolutely none. Zero. I don’t think that any of them has raised that for a moment. You know, at a minimum, one might say that the major mortgage, public mortgage, Fannie Mae and Freddie Mac corporations ought to be democratized in light of what’s just happened. You might say that the regional banks that make up the Federal Reserve Bank ought not just to have publicly appointed representatives on them, and not just the big bankers in every region on them, but have democratic representatives elected directly to them. Nobody raises these things. It’s not on the agenda. And it’s part of the failure of the media that they don’t ask those questions of the candidates. So when they speak of change, they speak of fundamental change, they speak of radical change—
JAY: Real change.
PANITCH: —you know, I mean, they aren’t challenged on this. It is mere rhetoric. And it’s playing within a very, very narrow spectrum, given the range of problems people have. We know this about Clinton and Obama, but you know, even between McCain and Clinton and Obama in terms of anything that would amount to real change, give me a break.
JAY: The Bush tax-cuts gets talked a lot about. McCain wants to make them permanent. Obama and Clinton talk about a different kind of tax structure. Is there something in that?
PANITCH: Sure. We’ve just seen a general move to a increasingly regressive tax system in the United States. Not only in the United States, but as the United States goes, the rest of the capitalist world goes. It’s horribly regressive, increasingly falling on sales taxes, a reduction on corporation taxes, all through the last 30, 40 years. It’s all about the ideology of competitiveness, whereby in order to compete in the world, you have to let the people who do the investing take away the vast majority of what is produced in the society. It’s been horrific. And there’s no question that we need a progressive tax system again. That’s not enough itself, because the tax system still leaves the control of what’s produced and what’s invested in their hands, and they will therefore always have the argument that unless you give us what we want, we won’t invest. And that’s why you do these things, that’s why you give them these tax breaks. Partly it is, of course, that they pay off the politicians, but it’s also that they have the hammer insofar as they have the control over investment.
JAY: So we don’t have the answers of what the model really looks like right now. End this interview by raising the questions we should be trying to answer over the next month.
PANITCH: Well, I think we first of all need to ask how, when plants are being closed down, or even when there’s massive layoffs, as there’s going to be not only in the industrial sector but now in the service and banking sector in this recession, whether corporations have the right to make those layoffs on their own, or whether they have to justify them before publicly elected boards, whether there has to be a commitment on the part of those corporations to invest in alternative employment, which would itself be democratically decided as to what projects would be undertaken. Heaven knows the United States needs massive infrastructure projects, whether it’s rebuilding the dams around New Orleans, or whether it’s rebuilding the highways in Minneapolis, or what have you, and bridges. These things are needed, and they ought to be things that corporations pass over their control over to publicly elected boards. You know, those are just the beginnings of examples. You know, back in 1976, the American Congress passed a piece of legislation which required banks to reinvest their assets, a certain portion of their assets, commercial banks, in the communities in which they were located. That’s a pittance in terms of what’s needed, but it shows it’s not impossible even in the middle of the crisis—and ’76 was an economic crisis—to win the kinds of things from Congress that would head it in the right direction.
JAY: Certainly these things have been done in wartime, where economies have been told by government how what corporations’ rights are changes drastically during a war, at least in theory and often in practice. And Americans are being told they’re in a war, but certainly there’s been no effect on the economy, and how it’s structured, and who makes the decisions.
PANITCH: That’s right. Part of the problem with that, though, has always been that in order to run industry and finance—and governments have done it during the war—they have brought the captains of industry and finance into the state to do the running with them. And in that way, the captains of industry and finance have known, when the war is over, it would pass over to them. And it did. And all of the assets that are built up during the war have been handed over to these bankers and industrialists virtually free after having them come in and been one-dollar-a-year men during the war. So it’s always been run, in a sense, in conjunction with the ruling class, not against the ruling class. And what we’re talking about would be something that would be a class struggle. I think one needs to reintroduce that concept into everyday discourse. You know, there was a time even in American politics when people understood that language. And although people are constantly now talking about class in the sense of each of them trying to appeal to the white working class or the black working class—they don’t use the word class all that often.
JAY: No, no. It’s middle class.
PANITCH: Yeah, they usually say middle class. Occasionally you will find a reference to workers or so on. I mean, that’s really what goes on at every election. There’s an appeal to the majority of people who are working class people, and we need to be finding an adequate discourse, not least in the media. And once it’s done in the media, the politicians will accommodate. Nothing happens in the world if it doesn’t pass through the media. And this is why what you’re doing is so essential.
JAY: Thank you very much, and thank you for watching. If you’d like to join this conversation—What does democratizing the economy mean? —Please write to us, please send us videos, and let’s start this conversation. What should we be demanding from our candidates, from our politicians, from our union leaders, from ourselves? What does democratizing the economy mean? Thanks for joining us.
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