Biting the Ankles of Power

William Greider begins his latest book with a quote from poet, philosopher, and Kentucky farmer Wendell Berry: “Be joyful though you have considered all the facts.” That line from “The Mad Farmer Liberation Front” captures the spirit of both Greider and his book. A reporter for 40 years, he has also been an editor at The Washington Post and Rolling Stone and is currently national affairs correspondent for The Nation. His books include Secrets of the Temple: How the Federal Reserve Runs the Country (1989); Who Will Tell the People: The Betrayal of American Democracy (1992), an investigation of the revolving door between government, business, and the K Street lobbyists; and One World Ready or Not: The Manic Logic of Global Capitalism (1999). The Soul of Capitalism is a far-reaching attempt to redefine capitalism—more is NOT better—and provide a new national narrative. The fundamental problems of this country are economic, he insists; their solutions depend upon knowing how finance capital works and using that knowledge to create change. In recent decades the United States has undergone a financial revolution that has gone virtually unrecognized in the press. Fiduciary institutions, not individuals, are the leading stockholders; some six trillion dollars—the deferred wages of working Americans—have “the potential to reshape the nature of American capitalism.” Even the very wealthy, he writes, “now stand in the larger shadow cast by these [fiduciary] institutions,” which “resemble an eight-hundred-pound gorilla that declines to throw its weight around.” His dream is to have that gorilla throw its weight around. Meanwhile, he finds hope in disparate means of tweaking the system such as worker-owned businesses, ESOPs (employee-owned stock ownership plan), in the handlful of innovative labor leaders struggling to use the tools and institutions of capitalism to improve workers’ lives, in a Baltimore temp agency run by ex-cons, in a California-businessman-turned Green Party gubernatorial candidate who’s figured out a way to make widespread solar-powered housing financially attractive.

The critics have been skeptical. “Greider’s thesis is at one level indisputable: For better capitalism, better capitalists would help,” wrote economist and Observer contributor James K. Galbraith in The Washington Post. “But there is a tendency here to the romantic, which can only obscure the hard political struggles we face.” Greider replies that there’s also tendency for progressives and people on the left to be overly pessimistic. After speaking at last month’s Green Festival in Austin he met with the Observer; excerpts of that conversation follow:

Texas Observer: The critics seem to have been baffled by this book, referring to it as “romantic.” How do you respond to that?

William Greider: What I’m suggesting is that the deep-rooted problems in our society, from inequality to environmental destruction, flow mostly from the economic system and that government has not and will not succeed in overcoming them. That’s a very offensive view for people who were schooled in the liberal reform tradition of the 20th century. I understand that, but I still think it’s true. So, if it’s true, how can we begin to consider changing the nature of capitalism? Those are not trivial ideas; they’re structural. They’re about power. How can you get hold of it. The fact that they’re old ideas, for the most part—that they have been tried and failed in the past—doesn’t really bother me so much. That’s often the case. I’m trying to get people again—as they did 80 years ago or 120 years ago in Texas and elsewhere—to start a serious conversation about those kind of changes. I don’t want to get into a Ping-Pong game with my friends, but people who think of themselves as progressives, whether on the Left or whatever, don’t understand how grim they sound—especially to younger people—because their dialogue is essentially about calamity and failure. I don’t think progressives will gain until they are able to tell a larger story about the future—what they think they can do to make this country whole.

TO: We’re always told that we have to start with the political process. You’re saying something different, that real change starts in the workplace.

WG: It’s not just different, it’s intimidating to some people. The conditions and quality of work have been degraded in this society over the past 20 or 30 years, not just for the working class and not just for the working poor, but very high up the occupational level. It is to me a fundamental reason why reviving representative democracy may very well start in the workplace, not in election issues, not in changing parties or all the other reforms that people talk about. Why don’t we hear anybody talking about it in politics except for a few brave characters like Dennis Kucinich and a few others? We all know why. To deal with that issue head-on would put them in a collision with the super-structure of financial and corporate power. I wish they had the nerve to do it but I do not accept—in fact it angers me—that because they can’t talk about these things, the rest of us should just let it go and hope for the day when there are enough liberal Democrats in Congress. I think people who say you have to look at politics first are making a case for a system that’s broken down and I don’t see any prospect that it’s going to change.

TO: In your talk here in Austin, you sounded the way people must have more than 50, 60 years ago in backroom meetings, strategizing for Brown v. Board of Education.

WG: This is not imminent by any means. But fiduciary institutions that hold savings, pension funds, mutual funds, and others are fundamentally violating their trust relationship because they’ve put that capital into funds that literally damage the people who are supposed to own them. Beyond that, they invest short-term and they lose billions and trillions of dollars following the narrow advice of Wall Street. So, then I say, “This would make a good lawsuit, wouldn’t it?”—for people who are willing to think inventively about the meaning of that fiduciary relationship. This is a long story and civil rights is exactly the comparison. That took 20 or 30 years of very smartly crafted legal terms to essentially say you can’t have a legally sanctioned caste system in America. I don’t have any illusions about how hard it is, but this system is far more vulnerable than people imagine and I hope to be part of those ankle biters who make it more vulnerable by pointing this out.

Something like 60 to 65 percent of Enron shares were fiduciaries. Somewhere between 25 and 50 billion dollars was lost by working people through their pension funds on Enron. If I could get the schoolteachers of America mad about that and public employees of other types—policemen, firemen, civil servants … I’m not an activist, organizer type, but I’m trying to inspire some agitation. Lawsuits are just one very narrow way. I do think some of these funds—maybe not many at first—will be sensitive to this kind of pressure. And they already are. Seven of the largest state public employee funds from CALpers to Connecticut wrote the Securities Exchange Commission opposing the SEC’s draft proposal for how shareholders get a voice. They objected because this proposal is a jerry-rigged artifice designed to make it almost impossible. Now these seven funds have something like 650 billion dollars among them. That’s real power. We don’t know yet how the SEC will respond. But if they’ll come together to do that—here I’m leaping into the unknown—will they come together to target a particularly malicious corporate management that is really doing destructive things, not just to their porfolio, but to society at large? Simply by saying, “We’re not going to touch this company until they change their management.” They could buy big stakes in the company and literally have an ownership position—not a majority, but big enough to influence the future. They could elect directors, on and on. This is a big change and very scary for people who direct pension funds, for obvious reasons because it really puts them in the middle. And I think that ought to happen. It’s not easy to achieve, obviously. First you have to organize the schoolteachers whose money is at stake and then you have to organize the money and then you have to go to Wall Street, to all the major banks and brokerages and say, “We’re going to play a new game. We’ve got some values that are being trampled; they’re values that matter to our members. If you don’t start honoring these values then we’re going to take our money elsewhere.”

TO: You’re trying to redefine capitalism, but in focusing so much on the United States in this book, you’ve been accused of being too “American-centric.”

WG: I wrote a very long book about the global economy, which I tried with some success—I won’t say that I really succeeded—but I tried to take the global view as opposed to an American-centric view. With the new book, I didn’t want to retell the global story. Also I think that this country is not inhibited or prevented by the global system and its competitive pressures in doing the things I’m talking about in The Soul of Capitalism. That will always be cited as the reason we must move the factory to China: We have no choice, blah, blah, blah. One of the many reasons why is that the different advanced economies around the world that are successful have different structures within their capitalism. None of them are utopia; they all have faults and vulnerabilities.

TO: And they’re all under pressure to change.

WG: They are under tremendous pressure, but you know what? They’re reforming some of their welfare state programs and they’re tip-toeing around their labor laws, but Europe is so far resisting the maxims of global finance that say, basically, cut back all of this cushion you have for people, break up your labor laws, so we can fire people more cheaply. If you look at Japan, Americans keep saying “Rationalize your system, make it ‘transparent’ like ours.” And the Japanese heeded that with some skepticism, to put it mildly. Then they fall in this deflationary process, which has been going on for 10 or 12 years. The American version is, “Oh, these stupid Japanese. They just don’t understand. If they’d just do what we do—which is throw people over the side and get on with it—they would have all their problems solved. The Japanese resist, I think, because they don’t want to be like U.S. society and there are deep historic and cultural reasons why they don’t. I’m not holding up Japan as an ideal, I’m just saying that it’s a much more complex story of what makes capitalism go than Americans have been told.

There’s an issue that I recently wrote about in The Nation. The European parliament has just passed a new regulatory system for Genetically Modified seed that says, “Okay, you can market these Monsanto products or DuPont, but you’ve got to put it on the labels.” Of course, they understand that if you do that in Europe, these products fail. Europeans have a deep cultural distrust for starters, but also they have had experience with mad cow disease. Industry had assured everybody that it’s okay to feed ground-up animal meat to animals. And it’s not; they didn’t know what they were talking about. They were lying, in fact. And big food multinationals are going to comply in Europe and then come home to the United States and tell our politicians, “You can’t do that. It would raise our costs; it would be less efficient. These GM seeds are harmless.” America has been so propagandized in the last generation, not only by the narrow idea of efficiency in American business but also by the inevitability of global pressures.

TO: There’s a danger that when you write a book called The Soul of Capitalism it will scare people. It sounds New Age-y; it reminds people of a president who’s always talking about faith-based initiatives and religion.

WG: It scares some people. A lot of young people come up and thank me for putting these issues in terms of morality. They’re not talking about morality per se. Neither am I. They’re talking about our world values that come with being a human being. To them that speaks more clearly than more complex economic arguments. If that sounds New Age to old liberals, I would say that’s their problem. If you go back in history toward the early formation of the labor movement, toward the idealism of the New Dealers, to progressives before them, and to much of the 19th century, the starting point was always, “How do we allow people to improve their lives when the economic system prevents them?”

It comes down to optimism. Do you still think it’s possible for this country to take on these big structural questions of capital, power, and ownership—and change? I do. I think a lot of people on the Left, whatever their rhetoric, may sound like basically those questions are all solved. They can’t be changed. And we’ve got 50 years of history to support them. I have no doubt of that. But I just don’t think that’s where the country is.

TO: What’s the most positive, hopeful thing you’ve seen during your reporting of The Soul of Capitalism?

WG: It’s cumulative. It didn’t start with this book, and it sounds cornball, but my experiencing of America tells me that this is a pretty remarkable country filled with smart people on the whole, who are basically trying to do good given their circumstances. That it’s full of energy and ideas. I’ve met people all over this country in the last few years who are way down the road on this further than I am, like some of the environmental activists, some of the labor people who have been struggling to make ownership a core value again, some of the business guys who are running employee-owned companies and doing it in imaginative ways. Even some of the capitalists. I’m not talking about Sandy Weil at Citibank or Robert Rubin. I’m talking about homespun business owners and managers who recognize that there’s something profoundly wrong with the way standard companies work and they have the power to change it, so they do.

An example is Peter Camejo, the Green Party candidate for governor in California. He was on these debates and everybody says, “He’s a really smart, interesting guy.” He’s full of ideas, wonderful ideas that sound very plausible. Why doesn’t somebody in regular politics at a minimum say, “Why don’t we have Camejo to lunch and talk to him?”

We don’t have to embrace the Green Party or do any of that. He’s got a blueprint for the mass-marketing of solar. The real barrier to making solar a standard feature in homes is financial; it’s not ecological values. People would love to have it. These are changes that are not really dramatic on the surface, but actually sow deep change. If you go back and study what happened in the New Deal, a lot of what happened were kind of crackpot ideas that suddenly became compelling because the country needed them. That’s the spirit I want to see in politics again.

Support for this article was provided by the Observer‘s Maury Maverick Jr. Fund for Cantankerous Journalism.