Saving Private Capital

US corporations are sitting on $2 trillion and the public sector is suffering massive budget shortfalls. Yet the Economist can't imagine the two are connected.

The Economist says US corporations are sitting on $2 trillion, the cash remaining uninvested due to a dearth of profitable investment opportunities.

In the same article, it points out that US government investment in infrastructure is among the lowest in the world and reels off a litany of dysfunctions arising from this.

The Economist, which is forever Saving Private Capitalism, suggests that this is “a good time to bring in private money to make up for the lack of public investment.” It calls, in short, for public-private partnerships.

This is how neoliberal mystification works. It simply doesn’t occur to the Economist to think that there might be a connection between the surfeit of cash in private hands and a shortfall in public investment. Or, to put it another way, between growth strategies predicated on low corporate taxes and public sector funding shortfalls. And this is a ubiquitous ideological move. Whenever something in the public sector needs to be funded, be it hospitals or higher education, neoliberals simply declare as a common sense that it cannot be funded out of taxation. (Because, you know, taxes are bad.) Thus, either pricing mechanisms must be introduced or, as is increasingly common, private sector enterprises have to be encouraged to invest on extortionate terms.

As we have seen with private finance initiatives and public-private partnerships, this only results in further fiscal crises. Worse than that, it often results in hideous failures, as gargantuan capitalist consortiums extract ever higher fees for schemes that either don’t get finished or are eventually built with less capacity.

This solution is, however, typical of the fusion between state and capital that is particular to neoliberalism. Deployed in this context, it amounts to the US government opening up the public sector to profit-making opportunities for private capital, to help absorb spare capacity and overcome infrastructure dysfunctions on terms amenable to capital. It is a very neoliberal mode of crisis management.

A simpler solution, more cost-efficient and more likely to actually generate the desired infrastructure, would be to just appropriate the money in taxes and invest it through the public sector. This isn’t a radical idea — it is normal capitalist state behavior. It is just that, for some reason, even the relatively sophisticated public discourse of neoliberalism cannot acknowledge this option.