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'''Capital strike''' is the practice of the [[bourgeoisie]] withholding capital to achieve some kind of outcome that is favorable to them.<ref>{{Cite journal|last1=Young|first1=Kevin A.|last2=Banerjee|first2=Tarun|last3=Schwartz|first3=Michael|date=2018|title=Capital Strikes as a Corporate Political Strategy: The Structural Power of Business in the Obama Era|journal=Politics & Society|language=en|volume=46|issue=1|pages=3–28|doi=10.1177/0032329218755751|issn=0032-3292|via=[[SAGE Publishing]]|doi-access=free}}</ref> Capital strikes tend to occur in response to democratic gains which threaten profits, such as worker strikes demanding higher wages, or government policies such as [[rent control]] or [[nationalization]].<ref>{{Cite web|date=2019|title=Capital Strike|url=https://www.shmoop.com/finance-glossary/capital-strike.html|url-status=live|archive-url=https://web.archive.org/web/20210311163315/https://www.shmoop.com/finance-glossary/capital-strike.html|archive-date=March 11, 2021|access-date=March 11, 2021|website=Shmoop}}</ref> | '''Capital strike''' is the practice of the [[bourgeoisie]] withholding capital to achieve some kind of outcome that is favorable to them.<ref>{{Cite journal|last1=Young|first1=Kevin A.|last2=Banerjee|first2=Tarun|last3=Schwartz|first3=Michael|date=2018|title=Capital Strikes as a Corporate Political Strategy: The Structural Power of Business in the Obama Era|journal=Politics & Society|language=en|volume=46|issue=1|pages=3–28|doi=10.1177/0032329218755751|issn=0032-3292|via=[[SAGE Publishing]]|doi-access=free}}</ref> Capital strikes tend to occur in response to democratic gains which threaten profits, such as [[Strike action|worker strikes]] demanding higher wages, or government policies such as [[rent control]] or [[nationalization]].<ref>{{Cite web|date=2019|title=Capital Strike|url=https://www.shmoop.com/finance-glossary/capital-strike.html|url-status=live|archive-url=https://web.archive.org/web/20210311163315/https://www.shmoop.com/finance-glossary/capital-strike.html|archive-date=March 11, 2021|access-date=March 11, 2021|website=Shmoop}}</ref> | ||
The term can refer to a capital strike by a single investor<ref>{{Cite web|last=Dane|date=February 20, 2011|title=Foreign Investor Explains Capital Strike Against Chile|url=http://brophyworld.com/foreign-investor-explains-capital-strike-against-chile/|url-status=live|archive-url=https://web.archive.org/web/20200719180111/http://brophyworld.com/foreign-investor-explains-capital-strike-against-chile/|archive-date=July 19, 2020|access-date=March 11, 2021|website=Brophy World}}</ref> or a large group. Capital strikes are commonly invoked as the business-owner/shareholder equivalent of a [[Strike action|labor strike]], and are often tied to the concept of [[capital flight]]''.<ref>{{Cite book|last=Epstein|first=Gerald A.|title=Capital Flight and Capital Controls in Developing Countries|publisher=[[Edward Elgar Publishing]]|year=2005|isbn=9781781008058|location=Cheltenham, United Kingdom|pages=6}}</ref>'' Capital strike was originally a derogatory term,<ref>{{Cite web|last=Frank|first=Thomas|author-link=Thomas Frank|date=April 2013|title=To Galt's Gulch They Go|url=https://thebaffler.com/salvos/to-galts-gulch-they-go|url-status=live|archive-url=https://web.archive.org/web/20200921120333/https://thebaffler.com/salvos/to-galts-gulch-they-go|archive-date=September 21, 2020|access-date=March 11, 2021|website=[[The Baffler]]}}</ref> but has been used more neutrally in modern politics.<ref>{{Cite web|last=Karlgaard|first=Rich|author-link=Rich Karlgaard|date=December 22, 2008|title=Capital Is On Strike|url=https://www.forbes.com/sites/digitalrules/2008/12/22/capital-is-on-strike/#3ee5dded6075|url-status=dead|archive-url=https://web.archive.org/web/20200925142931/https://www.forbes.com/sites/digitalrules/2008/12/22/capital-is-on-strike/#3ee5dded6075|archive-date=September 25, 2020|access-date=March 11, 2021|website=[[Forbes]]}}</ref><ref>{{Cite web|last=James|first=Frank|date=September 15, 2011|title=Boehner Lobs Supply Side Shell In Fiscal Trench War With Obama|url=https://www.npr.org/sections/itsallpolitics/2011/09/15/140512590/boehner-lobs-supply-side-shell-in-fiscal-trench-war-with-obama|url-status=live|archive-url=https://web.archive.org/web/20200925172506/https://www.npr.org/sections/itsallpolitics/2011/09/15/140512590/boehner-lobs-supply-side-shell-in-fiscal-trench-war-with-obama|archive-date=September 25, 2020|access-date=March 11, 2021|website=[[NPR]]}}</ref> | The term can refer to a capital strike by a single investor<ref>{{Cite web|last=Dane|date=February 20, 2011|title=Foreign Investor Explains Capital Strike Against Chile|url=http://brophyworld.com/foreign-investor-explains-capital-strike-against-chile/|url-status=live|archive-url=https://web.archive.org/web/20200719180111/http://brophyworld.com/foreign-investor-explains-capital-strike-against-chile/|archive-date=July 19, 2020|access-date=March 11, 2021|website=Brophy World}}</ref> or a large group. Capital strikes are commonly invoked as the business-owner/shareholder equivalent of a [[Strike action|labor strike]], and are often tied to the concept of [[capital flight]]''.<ref>{{Cite book|last=Epstein|first=Gerald A.|title=Capital Flight and Capital Controls in Developing Countries|publisher=[[Edward Elgar Publishing]]|year=2005|isbn=9781781008058|location=Cheltenham, United Kingdom|pages=6}}</ref>'' Capital strike was originally a derogatory term,<ref>{{Cite web|last=Frank|first=Thomas|author-link=Thomas Frank|date=April 2013|title=To Galt's Gulch They Go|url=https://thebaffler.com/salvos/to-galts-gulch-they-go|url-status=live|archive-url=https://web.archive.org/web/20200921120333/https://thebaffler.com/salvos/to-galts-gulch-they-go|archive-date=September 21, 2020|access-date=March 11, 2021|website=[[The Baffler]]}}</ref> but has been used more neutrally in modern politics.<ref>{{Cite web|last=Karlgaard|first=Rich|author-link=Rich Karlgaard|date=December 22, 2008|title=Capital Is On Strike|url=https://www.forbes.com/sites/digitalrules/2008/12/22/capital-is-on-strike/#3ee5dded6075|url-status=dead|archive-url=https://web.archive.org/web/20200925142931/https://www.forbes.com/sites/digitalrules/2008/12/22/capital-is-on-strike/#3ee5dded6075|archive-date=September 25, 2020|access-date=March 11, 2021|website=[[Forbes]]}}</ref><ref>{{Cite web|last=James|first=Frank|date=September 15, 2011|title=Boehner Lobs Supply Side Shell In Fiscal Trench War With Obama|url=https://www.npr.org/sections/itsallpolitics/2011/09/15/140512590/boehner-lobs-supply-side-shell-in-fiscal-trench-war-with-obama|url-status=live|archive-url=https://web.archive.org/web/20200925172506/https://www.npr.org/sections/itsallpolitics/2011/09/15/140512590/boehner-lobs-supply-side-shell-in-fiscal-trench-war-with-obama|archive-date=September 25, 2020|access-date=March 11, 2021|website=[[NPR]]}}</ref> | ||
==Examples== | ==Examples== | ||
It is difficult to determine with any certainty when a decline in business investment is the result of a "capital strike" against certain policies or a response to other economic factors. Most often, the phrase "capital strike" is used to describe resistance to labor-friendly or left wing reforms which are perceived or intended to be against the interests of business owners and investors. | It is difficult to determine with any certainty when a decline in business investment is the result of a "capital strike" against certain policies or a response to other economic factors. Most often, the phrase "capital strike" is used to describe resistance to labor-friendly or left wing reforms which are perceived or intended to be against the interests of business owners and investors. | ||
*U.S. President [[Franklin Roosevelt]] argued that the | *U.S. President [[Franklin Roosevelt]] argued that the Recession of 1937 was caused by a capital strike organized to undermine the [[New Deal]] and his new taxes on high incomes.<ref name="A Financial History of the United States">{{Cite book|last=Markham|first=Jerry|title=A Financial History of the United States|publisher=[[M. E. Sharpe]]|year=2002|isbn=9780765607300|volume=II|pages=234|author-link=Jerry Markham}}</ref> | ||
*In December 1978, banks financing the debt of the city of | *In December 1978, banks financing the debt of the city of Cleveland, Ohio engaged in a capital strike by refusing to roll over the city's municipal debt when the Mayor, Dennis Kucinich, refused to sell the publicly owned electric company, the Cleveland Municipal Light Plant.<ref>{{Cite web|title=History|url=https://www.cpp.org/history|url-status=live|archive-url=https://web.archive.org/web/20200930152032/https://www.cpp.org/history|archive-date=September 30, 2020|access-date=August 23, 2020|website=[[Cleveland Public Power]]}}</ref> Cleveland would later enter default. | ||
*French President | *French President François Mitterrand is said to have faced a capital strike<ref name=":0">{{Cite journal|last=Devine|first=James|date=Fall 1989|title=Paradigms as Ideologies: Liberal vs. Marxian Economics|journal=Review of Social Economy|volume=47-3|issue=3|pages=305|jstor=29769465}}</ref> when capital fled France following the 1982 nationalization of a large number of private firms and other labor market reforms.<ref name="French Lessons">{{Cite news|last=Eaton|first=George|author-link=George Eaton (journalist)|date=October 7, 2017|title=French lessons: what Corbyn can learn from Mitterrand's mistakes|work=[[New Statesman]]|url=https://www.newstatesman.com/politics/uk/2017/10/french-lessons-what-corbyn-can-learn-mitterrands-mistakes|url-status=live|access-date=February 19, 2019|archive-url=https://web.archive.org/web/20201112021442/https://www.newstatesman.com/politics/uk/2017/10/french-lessons-what-corbyn-can-learn-mitterrands-mistakes|archive-date=November 12, 2020}}</ref> | ||
*Chilean President [[Salvador Allende]] is said to have faced a capital strike<ref name=":0" /> when investment fell after his election as he was the leader of a left-wing coalition that proposed large-scale nationalizations and far-reaching economic reforms.<ref>{{Cite web|date=January 29, 2021|title=Salvador Allende|url=https://www.britannica.com/biography/Salvador-Allende|url-status=live|archive-url=https://web.archive.org/web/20210211200858/https://www.britannica.com/biography/Salvador-Allende|archive-date=February 11, 2021|access-date=March 14, 2019|website=[[Encyclopædia Britannica]]|language=en}}</ref> | *Chilean President [[Salvador Allende]] is said to have faced a capital strike<ref name=":0" /> when investment fell after his election as he was the leader of a left-wing coalition that proposed large-scale nationalizations and far-reaching economic reforms.<ref>{{Cite web|date=January 29, 2021|title=Salvador Allende|url=https://www.britannica.com/biography/Salvador-Allende|url-status=live|archive-url=https://web.archive.org/web/20210211200858/https://www.britannica.com/biography/Salvador-Allende|archive-date=February 11, 2021|access-date=March 14, 2019|website=[[Encyclopædia Britannica]]|language=en}}</ref> | ||
*U.S. President [[Barack Obama]] was sometimes said to have faced a capital strike during the | *U.S. President [[Barack Obama]] was sometimes said to have faced a capital strike during the Great Recession, including then Speaker of the House John Boehner saying that "job creators in America are on strike" in response to uncertainty over the Obama administration's economic policies.<ref name="Chiang">{{Cite news|last=Chiang|first=Lulu|date=September 15, 2011|title=Boehner: Job Creators in America are 'On Strike'|work=[[CNBC]]|url=https://www.cnbc.com/id/44536913|url-status=live|access-date=February 19, 2019|archive-url=https://web.archive.org/web/20200920185450/https://www.cnbc.com/id/44536913|archive-date=September 20, 2020}}</ref> | ||
*A February 2021 article in the socialist magazine ''[[Jacobin (magazine)|Jacobin]]'' argued that companies such as [[Amazon (company)|Amazon]], [[Kroger]], [[Lyft]], and [[Uber]] were threatening to use capital strikes during the [[COVID-19 pandemic]]. As examples, they pointed out Uber and Lyft threatening to cease operations in [[California]] if [[California Assembly Bill 5 (2019)|California Assembly Bill 5]] were enforced and Kroger announcing they would close two stores in | *A February 2021 article in the socialist magazine ''[[Jacobin (magazine)|Jacobin]]'' argued that companies such as [[Amazon (company)|Amazon]], [[Kroger]], [[Lyft]], and [[Uber]] were threatening to use capital strikes during the [[COVID-19 pandemic]]. As examples, they pointed out Uber and Lyft threatening to cease operations in [[California]] if [[California Assembly Bill 5 (2019)|California Assembly Bill 5]] were enforced and Kroger announcing they would close two stores in Long Beach, California after the city council passed an ordinance requiring grocery stores to increase pay for their workers during the pandemic.<ref>{{Cite web|last=Press|first=Alex N.|date=February 15, 2021|title=At Kroger and Amazon, Capital Is Going on the Offensive|url=https://jacobinmag.com/2021/02/capital-strike-kroger-amazon-long-beach-dch1|url-status=live|archive-url=https://web.archive.org/web/20210218112347/https://jacobinmag.com/2021/02/capital-strike-kroger-amazon-long-beach-dch1|archive-date=February 18, 2021|access-date=March 11, 2021|website=[[Jacobin (magazine)|Jacobin]]|language=en-US}}</ref> | ||
==Impacts== | ==Impacts== | ||
Capital strikes have historically impacted economies and governments in a variety of ways and provoked a variety of responses. | Capital strikes have historically impacted economies and governments in a variety of ways and provoked a variety of responses. | ||
Revision as of 03:11, 15 October 2021
Capital strike is the practice of the bourgeoisie withholding capital to achieve some kind of outcome that is favorable to them.[1] Capital strikes tend to occur in response to democratic gains which threaten profits, such as worker strikes demanding higher wages, or government policies such as rent control or nationalization.[2]
The term can refer to a capital strike by a single investor[3] or a large group. Capital strikes are commonly invoked as the business-owner/shareholder equivalent of a labor strike, and are often tied to the concept of capital flight.[4] Capital strike was originally a derogatory term,[5] but has been used more neutrally in modern politics.[6][7]
Examples
It is difficult to determine with any certainty when a decline in business investment is the result of a "capital strike" against certain policies or a response to other economic factors. Most often, the phrase "capital strike" is used to describe resistance to labor-friendly or left wing reforms which are perceived or intended to be against the interests of business owners and investors.
- U.S. President Franklin Roosevelt argued that the Recession of 1937 was caused by a capital strike organized to undermine the New Deal and his new taxes on high incomes.[8]
- In December 1978, banks financing the debt of the city of Cleveland, Ohio engaged in a capital strike by refusing to roll over the city's municipal debt when the Mayor, Dennis Kucinich, refused to sell the publicly owned electric company, the Cleveland Municipal Light Plant.[9] Cleveland would later enter default.
- French President François Mitterrand is said to have faced a capital strike[10] when capital fled France following the 1982 nationalization of a large number of private firms and other labor market reforms.[11]
- Chilean President Salvador Allende is said to have faced a capital strike[10] when investment fell after his election as he was the leader of a left-wing coalition that proposed large-scale nationalizations and far-reaching economic reforms.[12]
- U.S. President Barack Obama was sometimes said to have faced a capital strike during the Great Recession, including then Speaker of the House John Boehner saying that "job creators in America are on strike" in response to uncertainty over the Obama administration's economic policies.[13]
- A February 2021 article in the socialist magazine Jacobin argued that companies such as Amazon, Kroger, Lyft, and Uber were threatening to use capital strikes during the COVID-19 pandemic. As examples, they pointed out Uber and Lyft threatening to cease operations in California if California Assembly Bill 5 were enforced and Kroger announcing they would close two stores in Long Beach, California after the city council passed an ordinance requiring grocery stores to increase pay for their workers during the pandemic.[14]
Impacts
Capital strikes have historically impacted economies and governments in a variety of ways and provoked a variety of responses.
- The Roosevelt administration took an aggressive stance in response to the recession and alleged capital strike. Roosevelt railed publicly against monopoly business interests,[15] and signed into law a total of $3.75 billion worth of new congressionally allocated government spending to be divided among government recovery agencies, which helped spur economic rehabilitation.[16]
- Disinvestment and international market pressures forced the Mitterrand government to reverse course on economic policy, making significant cuts to public spending, raising individual taxes, and setting a hard ceiling on deficit spending.[11]
- While the capital strike, often manifested through the intentional under-production of necessity goods, damaged Salvador Allende's government,[17] it maintained significant popular support among working class Chileans[18] until it was overthrown in a 1973 U.S. supported coup that put in place a more business-friendly Military Junta lead by General Augusto Pinochet.
- Under pressure from large firms withholding investment, the Obama administration pursued several pro-business reconciliation initiatives such as cutting corporate tax rates, pursuing free trade deals, and limiting government regulation,[19][20] but still signed into law mild financial regulations, the Affordable Care Act, and the 2009 American Recovery and Reinvestment Act.
Conditions under which capital strikes are effective
Given that capital strikes have succeeded or failed in a variety of situations, predicting what conditions favor them is particularly difficult. Some have put forward that capital controls are one key method by which governments can mitigate the effectiveness of disinvestment and capital flight,[11][21] but their usefulness has been disputed.[22] The effectiveness of modern purported capital strikes in Greece and Venezuela have been attributed to the sheer size and reach of the financial firms involved.[20]
In popular culture
A capital strike is the premise of Ayn Rand's novel Atlas Shrugged.
See also
References
External links
- Employers Threaten Walkout Chosun Ilbo February 9, 2006