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I've been following with interest the peculiar Bizarro World of Republican politics, that weird, topsy-turvy world in which one of the classic Republican blowhards of the last thirty years -- the namesake of the "Gingrich revolution" -- has apparently decided that financial capitalism embodies an ethic of greed. In this sense, Newt has already given a tremendous assist to the Barack Obama campaign, a pre-general election salvo against the kinds of deregulated capitalism that Mitt will be championing after the inevitable nomination. The anti-Mitt, anti-Bain attack ad that Newt recently released, to much public fanfare, could easily have been produced by a Democratic campaign strategist, barring some cheesy aesthetics.

But over the last couple of days, stinging from accusations that his ad might be seen as an attack on the entire free enterprise capitalist system, Newt, as is well known, has been trying to walk this one back. The ad, we are told, is not an attack on the underlying "system"; it is, rather, an attempt to make a personal individual accountable for the decisions he made at Bain.

I'm not at all surprised to see Newt furiously re-jiggering his argument. The ad was clearly too Bolshie for the Republican base, and so now he has to convince them to deny the evidence of their senses: the attacks on corporate greed, on outsourcing, and on predatory financial capital that are all implicit in that ad are only applicable, we are told, to one company -- or even one man at one company.

More on the flip.

What does surprise me, though, is that peoeple here seem inclined to let him make this tactical retreat. From the FP diary that I linked to above, Jed Lewison argues,

You have to be blinded by partisan loyalty to believe Romney's argument that criticizing his record at Bain is the same thing as criticizing the entire system of free enterprise. As Gingrich said, the questions about Romney's record at Bain are about a specific individual and a specific style of activity.

This may be true, in it of itself. It's true that the types of activity Newt highlights as a negative legacy of Mitt's Bain years are not necessarily universal across the free enterprise system.

But at the same time, the specifics of the Bain case -- "vulture capitalism," a company sweeping in and cannibalizing a struggling company by laying off its work force and lavishing pay raises on its higher executives, "creating jobs" through the wonders of outsourcing -- are not at all unusual in the system of free enterprise. They have become key elements of the business compact of the last quarter century, an ethic of creative destruction that the scholar Joseph Schumpeter described more than half a century ago, and which has become the rallying cry of the financial sector during the rise of the brave new post-Reagan economy of neoliberalism.

Everyone at this site is well aware of this history. Beginning with the efforts of figures like Thatcher and Reagan, the world was made safe for a new paradigm in which Wall Street financial speculation, and the concomitant financial bubbles of the 80s, 90s, and new millenium, would become the key drivers of the new economy. Rather than investing in physical plant, like the old manufacturing companies, advocates of the new corporate ethos would push for companies to sell off lagging divisions, take over lagging companies to strip them of their assets, and "turn around" the fortunes of struggling corporations by making cuts to the work force. In fact, nothing could be a surer sign of "success," under this perverse new arrangement, than if a company was laying off workers: such a move was proof positive that that company was taking its shareholders seriously. The stakeholders, in the meantime -- those who depended upon the company's largesse for their livelihood, or depended upon its responsible stewardship of local communities and the environment -- were essentially kicked to the curb.

All of this was going on at Bain, and it has gone on in innumerable corners of the economy since the late 1970s. Far from being an outrageous one-off case of bad corporate stewardship, Mitt's tenure at Bain was just following the playbook of postmodern capitalism: as Jia Lynn Yang points out in this intriguing profile of the Mitt/Bain debacle, the corporate strategy at Bain was a feature, not a bug, of the present socioeconomic compact.

In this respect, for those of us who are trying to demonstrate precisely how damaging a Mitt presidency would be, I think it would behoove us not to let Newt off the hook here. Rather, we need to follow his argument through to its logical conclusion -- that the callous treatment of workers documented in Newt's ad was not a case of bad personal decisions or maverick leadership, but rather a case of Mitt adhering faithfully to the free market ideology that he has himself espoused throughout his campaign.

It's like many here have said: if Mitt wants to be thought of as a businessman, let's look more closely at what he means by that. We need to tease out the precise consequences of that worldview, that way of looking at the American electorate as a pool of potentially downsizable workers, interchangeable fodder units for the playful machinations of financial capital.

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Comment Preferences

  •  Tip Jar (0+ / 0-)

    Nothing requires a greater effort of thought than arguments to justify the rule of non-thought. -- Milan Kundera

    by Dale on Thu Jan 12, 2012 at 12:17:19 PM PST

  •  I agree with Thom Hartmann on this subject. (1+ / 0-)
    Recommended by:
    Dale

    The Media and Republican's are getting this out there in the "discussions" now, so when October rolls around it will be "old" news and the media will refuse to bring it up when the Dead from the Neck up followers of the Republican party start paying attention right before election time.

    It will then be framed as Old news the Democrats and Liberals stirring up to bring Mitt Romney down....

    "They aren't "job creators". They are money-makers, and they often destroy jobs in the service of their money-making. --Joan in Seattle

    by Paddy999 on Thu Jan 12, 2012 at 02:05:32 PM PST

  •  One correction. It is NOT troubled companies (1+ / 0-)
    Recommended by:
    Dale

    that Bain and other Corporate Raider go after.  Rather, in the Harvard MBA business model it is called a "Cash Cow".

    The Cash Cow is a profitable company in a stable market with a lot of cash on its books.  Bain raids the cash, usually including the workers pensions funds.

    The washing machine company in the video is a good example.  We still have washing machines so this market was not being "destroyed".  What Bain did is lard up the company in debt, cut back on operations to make profits appear to be growing.

    Eventually, the debt is to big to service but Bain is long gone having taken their profits out via fees.

    Along with the workers and their town the last investors are also left holding a bag of worthless paper.

    Vulture is the wrong term, Vampire Capitalism is a much better description of what was done.

    •  Thanks, Cordyc. (0+ / 0-)

      I just heard NPR's Marketplace take this up. I sometimes make the mistake of thinking that Marketplace, owing to its presence on NPR, is a "progressive" financial news show. But tonight, once again, I'm reminded that "progressive" and "politely thoughtful" are not the same thing: Kai Ryssdal gets this guy on to talk about private equity firms, and he proceeds to claim that recent talk about private equity has excessively "politicized" their work; that the actual work of private equity firms is benign and neutral; that no major surgery is done on the companies that private equity investors agree to take on.

      The rhetoric may have been hip and pseudo-ironic, in the usual Marketplace vein, but the overall tone was that of a condescending 1950s patriarchal "expert" telling us not to worry our pretty little heads about these firms. Just more proof, if any was needed, that NPR is less "progressive" than it is designed to make center right conventional wisdom palatable to progressive listeners.  

      Nothing requires a greater effort of thought than arguments to justify the rule of non-thought. -- Milan Kundera

      by Dale on Thu Jan 12, 2012 at 04:08:06 PM PST

      [ Parent ]

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