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Thomas Frank’s December Easy Chair column, “More Government, Please!” focuses on the specter, raised by Republicans, of a capital strike by the nation’s “job creators.” For Harper’s online, Frank writes about the history of this rhetorical bogeyman.
On September 15, House Speaker John Boehner announced that the nation’s “job creators” — a flattering euphemism for “business owners” — were on strike. This was the proximate cause of the nation’s unemployment woes, Boehner maintained. Until those business owners received the low-tax, deregulated world they wanted, they would continue to keep their wallets in their pockets.
Boehner is not the first to imagine a strike by society’s well-to-do, but he is certainly the first conservative political leader to make a formal statement on the matter. In times past, a “capital strike” was a thing to deplore, not something to be announced proudly with the obvious expectation that the world would promptly surrender to capital’s demands. But times have changed.
Herewith, a brief history of the capital strike.
There were two distinct “capital strikes” during the administration of Franklin Roosevelt. The first, which is still referenced on the website of the Securities and Exchange Commission’s historical society, consisted of a decline in new stock and bond issues in the first years of the New Deal.
The second was a more general revolt of business interests, which were supposedly struggling to preserve laissez-faire political conditions by withdrawing investment from the economy in 1937, sabotaging the recovery and the chances of President Roosevelt. Secretary of the Interior Harold Ickes delivered a ferocious iteration of this theme in December of that year, warning that “the United States is to have its first general sit-down strike — not of labor, not of the American people — but of the sixty families [a then-popular term for what we now call “the 1 percent”] and of the capital created by the whole American people of which the sixty families have obtained control.” Should Americans yield to the demands of the walkout, Ickes warned, “then the America that is to be will be a big-business Fascist America—an enslaved America.”
Roosevelt’s future Attorney General, Robert Jackson, hit upon the same theme, denouncing the “capital strike” and deploring monopoly and the concentration of wealth. It was, suggests historian Alan Brinkley, “the bitterest attack on private wealth and corporate power ever to have come from the New Deal.” Reading Jackson’s words today and understanding that they came from the mouth of a high government official is a startling experience:
Our democratic forms of government offer a periodical chance at election time to check and change political administrations. But there is no practical way on earth to regulate the economic oligarchy of autocratic, self-constituted and self-perpetuating groups.
With all their resources of interlocking directors, interlocking bankers and interlocking lawyers, with all their power to hire thousands of employees and service workers throughout the country, with all their power to give or withhold millions of dollars worth of business, with all their power to contribute to campaign funds, they are as dangerous a menace to political as they are to economic freedom.
Perhaps this was the historical episode that inspired Ayn Rand to write Atlas Shrugged, the thousand-page 1957 novel in which politicians badmouth business, and business leaders launch a vast counterattack — a capital strike — that does indeed bring the nation to its knees. As Rand’s entrepreneur-hero John Galt announces in one of the book’s most famous passages: “We are on strike, we, the men of the mind. We are on strike against self-immolation. We are on strike against the creed of unearned rewards and unrewarded duties. We are on strike against the dogma that the pursuit of one’s happiness is evil. We are on strike against the doctrine that life is guilt.”
Historians, for their part, have generally regarded the Roosevelt Administration’s talk of a “capital strike” as either a gross exaggeration or a conspiracy theory. David Kennedy, in his landmark 1999 book, Freedom From Fear, says the theory had “little basis in fact.” According to Brinkley’s Liberalism and Its Discontents (1998), Roosevelt himself once asked the FBI to investigate a conspiracy of business leaders on evidence Brinkley calls “extraordinarily frail: an unsubstantiated letter from a hotel waiter in Chicago who reported overhearing a conversation among railroad executives.” Conrad Black, no mainstream historian, seems to represent the consensus in describing “capital strike” talk as a “conspiracy theory” in his 2005 biography of Roosevelt.
Now, let us historicize the historians. When those books were written, the idea of a “capital strike” was something you denied, something everyone knew could not really be taking place. Markets didn’t work that way: economic power was (and always will be) too diffused and decentralized for such a concerted effort. But let us get a few years into the Big Recession and see how the consensus changes. Here is columnist Amity Shlaes, telling us in 2009 that a capital strike really did happen back in 1937, and that capital strikes will happen again whenever governments treat banks too badly, tax too assertively, or spend too liberally: “Today, too, capital ponders going on strike,” she writes. “And without big policy changes the economy will face similar consequences.”
Great Depression historian Robert McElvaine is just as perplexed by this line of thinking as me.
Then again, perhaps Shlaes is right. After all, we live in a time when political blackmail works: The bank bailouts and bonuses of 2008 and 2009 were done on an emergency basis, lest the geniuses of Wall Street shrug off their burden and abandon us to Great Depression II. The Republican strategy during last summer’s debt-ceiling fight was simply to point a gun at the global economy’s head. And now, in 2011, the Speaker of the House tells us not only that capital strikes happen, but that the capital strike is happening now. John Galt lives, reader, and your task is to bow down and hail the Big Business America Harold Ickes feared — or be dropped forthwith into the poverty and darkness you no doubt deserve.
More from Thomas Frank:
From the April 2016 issue
Chances that a Soviet woman’s first pregnancy will end in abortion:
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In San Antonio, a 150-pound pet tortoise knocked over a lamp, igniting a mattress fire that spread to a neighbor’s home.
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