Under Every Blackrock

 “The Capitalists of the 21^st Century – an Easy to Understand Outline on the Rise of New Financial Players,” by Werner Rügemer, 2019

This is a complex, heavily detailed study of the rise of financial entities outside the regular banking system – shadow banks, private equity investors, hedge funds, boutique banks and venture capitalists.  Interlocking directorates have been supplemented by interlocking ownership across the U.S., Europe and Asia.  Shadow banks, private equity and hedge funds like Blackrock/Blackstone, KKR, State Street, Rothschild, Vanguard, Fidelity, Berkshire Hathaway, T Rowe Price and Bridgewater, etc. have partial ownership of a vast array of large, medium and small companies, even more than outfits like the ‘vampire squid’ Goldman Sachs. Firms domiciled in the U.S. dominate the world economy financially.  Internet firms like Apple Inc. are also owned by these players. 

It's not written journalistically or even academically, but like a stilted notebook.  Rügemer covers ownership stakes in the U.S, U.K., Germany, France, Switzerland, Italy and a few in China; mergers, takeovers and acquisitions; ties to governments, capitalist think tanks and security agencies; the web of associated players in rating agencies, auditors, consultants, lenders and exchanges; derivative products, trading and debt strategies; media; and ultra high net worth individuals, famous individual capitalists and politicians involved in these organizations.  For instance Emmanuel Macron, a former banker and finance minister, is now president of France.  He was key to privatizations in that country led by these firms.

The goal is always short-term profit.  These firms are either unregulated or lightly-regulated by compliant governments. As a consequence jobs are shed, low pay and benefits prevail, unions spurned, shareholders shafted, companies dismantled, privatization pursued, social values ignored, pollution is a by-product, debt is loaded onto purchased companies and national sovereignty is a joke.  For instance, the U.K. is now the most foreign-owned country in the world, all the absurdity of Brexit aside, due to its pursuit of Thatcherite neo-liberal dogma. 

These firms and people are part of a trans-national capitalist class that binds global capital together, including its political side.  Rügemer never mentions Russian economics, but focuses towards the end of the book on what China is doing, calling it “communist-led capitalism.”  He details how China's “Belt and Road” initiative made loans and builds infrastructure in Italy.  But the Chinese state also bought ownership stakes in many Italian firms, representing their reformist 'mixed economy' approach of state-directed capitalist efforts.  China’s Tencent has a large ownership stake in Uber, which is a world-wide outfit undermining taxi drivers and paying a U.S. average of $8 an hour in 2017.  But Uber is thankfully banned in China.  Go figure.

Rügemer mentions how the ostensible ‘oppositions’ - Labourites, Social Democrats, Greens and Democrats – go along or join these rapacious actions. The states and their international representatives in sovereign wealth funds like Norway, IMF/WTO/ECB and the Federal Reserve also participate.  It is almost complete, across the board collaboration, except among trade unions and actual Left political forces like Die Linke and others.

Standard monster banks have to deal with millions of small customers whose wages, pensions, transfer payments and deposits create massive paperwork, while the ‘alternative’ banking system only deals with the wealthy, which is why they employ far fewer workers.  This book shows, contra people like Michael Hudson, that financial and industrial capital are completely intertwined.  As Marx wrote long ago, neither could survive alone.  Of course fictitious capital is far more invasive now than in Marx’s time due to the global reach of capital, but it is not disconnected from industrial or 'productive' capital.

Rügemer has long sections on Silicon Valley tech firms, their work with the military, government and political parties, and shabby digital outfits like Uber.  He calls GAMFA – Google, Apple, Microsoft, Facebook and Amazon – the largest cartel in world history.  This is all familiar stuff.  These firms are also owned by the new “capital organizers.” He points out that Israel has the most start-ups of any country in the world per density, many dealing with security and surveillance issues like the corrupt NSO Group which produced the Pegasus spy-ware.  He covers how Wikipedia’s ‘opinion’ side is mostly written or adjusted by paid writers in favor of certain entities.  He also looks in detail into the familiar ‘military-digital-spy’ complex, an update of Eisenhower’s military-industrial complex.  Among those is the penetration into Ukraine by U.S. and European capital, a preliminary geo-political move to tear it out of Russia’s orbit.  He also hits at how the term ‘free trade agreement’ is a relic of the past, not reflecting the interlocking nature of the modern world economy in services and ownership.

CHINESE CAPITAL & STATE

Rügemer discussion of China is the most significant in its pursuit of the oxymoron - “communist-led capitalism.”  China is attempting to free itself from dollar imperialism via the partially state-controlled value of the yuan, non-IMF loans and very low interest rates.  Chinese state banks do not follow IMF rules and are looking overseas, not for quick profits, but longer-term.  The 1980s began the slow development of 50/50 joint projects with capitalist corporations from many countries inside China, which also mandated local involvement and technology transfers in exchange for very cheap labor wages and benefits, long hours and no unions. Apple was in Shenzhen in 1981, for instance. 

Rügemer shows how the state’s close involvement in production has propelled China into a leadership position in electric transport – cars, buses, scooters, batteries, rail, charging stations, solar and wind sources – even after a late start.  Vehicles that use large amounts of gasoline have been banned from production.  Volvo was purchased by a Chinese firm and is now committed to go all-electric.  Chinese electric firms have production plants in 5 other countries. Private Chinese firms Alibaba, Tencent and Baidu all play a role.  China has seen the largest increase in renewable energy, while Europe and the U.S. fell.

After China joined the WTO in 2001, ‘special zones’ were formed and foreign corporations were allowed to own 100% of a production facility. Foxconn, Walmart, Amazon and others rely on these operations. Credit card payments now account for 80% of all transactions in China through private Alipay and Wechat, while China is developing its own state-owned ratings agency.  Rügemer realizes that the supply of rare earths and other components of electric vehicles is limited, so this model of transport might change again.  All the new ‘financial controllers’ of ‘western’ capital are active in China too and are now allowed to operate independently.  Blackrock and Ant Financial can go head to head. 

Outside of China, 20,000 Chinese private and public entities have ownership interests in 140 countries as of 2015, 7 years ago.  It is more now.  In Europe, they first focused on the poorer states like Portugal, Italy, Cyprus, Greece and the Balkans.  Now 2,000 Chinese companies have ownership interests in Germany, a much larger economy.  Rügemer reports that unions, shareholders and suppliers prefer Chinese takeovers to ones from Blackrock because vicious neo-liberal methods like job losses, company 'reorgs' and on-loaded debt are not used so much.

Rügemer does not see China as a ‘textbook’ socialist state, an ideal or a finished situation.  He has no clear definition of its class character and does not use the words ‘transitional’ or workers’ state to describe it.  He’s aware of the many strikes carried out by the Chinese working class and also about their inert company unions.  A 2006 Chines labor law partially based on ILO principles was weakened after threats by capitalists.  Even that weak law has been ignored. The right to strike is still illegal, as it was banned in 1982, though strikes are not put down as brutally as in some countries like India. Some Chinese companies use tax havens just like 'western' ones. China has instituted its own version of the neo-liberal financial ‘credit number’ - the ‘social credit’ system - which involves social activity but keys in on debt too.  While he characterizes land ownership as temporary, the leases, like Mexico, can run for many years and can be freely exchanged.  So in practice land ownership has become privatized.

In response to a massive wave of strikes in 2008, the state started to support minimum wage laws, some health insurance and a ‘social security’ benefit. Wages have improved on average, far above the stagnant example of India and even above those of some eastern and central European states.  He contends that China is the only country in the world where the living standards of the whole population have risen over the decades. The Chinese economy went from centrally-planned to a mixed economy during those years.  Part of this progress was using ‘protectionism’ against predatory practices by overseas firms. Over 1 million managers were prosecuted for malfeasance, including within the CCP – which shows capital has a corrupting influence.  He lastly discusses the U.S. and allies' imperial plan to surround China militarily, cripple it financially and undermine it from the inside as part of a Euro-Asian new cold war.

The book is an excellent source for detail on any major world company you can name and it is indeed heavily littered with familiarities and also secrets.  But it does not have an index, so good luck. 

Prior blog reviews on this subject, use blog search box, upper left, to investigate our 15 year archive, using these terms:  “The Global Police State;” “Giants – the Global Power Elite;” “The Great Crash” (Galbraith); “Who Gets Bailed Out?  Who Gets Buried?” “Flash Boys” (Lewis); “99 Homes;” “The City – London and the Global Power of Finance (Norfield); “What Piper Plays the Tune?” “Liquidated – an Ethnology of Wall Street;” “The Great Financial Crisis” (Foster); “China – the Bubble That Never Pops” or the word 'China."

And I bought it at May Day Books!

Red Frog

July 24, 2022