Capital Strikes and the Origins of US Legislation: Pro-business and Progressive Reforms under Obama

• In Event: 3246 - The Politics of Public Policy

Abstract

In response to the financial crisis, the Obama administration initiated a host of legislation designed to advance the interests of business. Often those initiatives contradicted Obama’s campaign rhetoric, which had promised that he would tax the wealthy at higher rates, pursue trade deals that benefited workers rather than corporations, and regulate business more closely. In this paper, we argue the disjunction stemmed less from the president “selling out” than from the power of the capital strike – the threat of corporate disinvestment from the economy if certain policy concessions are not made to business. Faced with this threat, the administration sought to rekindle “business confidence” so that banks and businesses would ameliorate the recession by making more loans and hiring more workers. Through case studies of major policy initiatives of the Obama administration—including healthcare and financial reform, climate legislation, and the repeal of the military’s DADT—we show that the power of capital strike threats exerts powerful influence on the origins of both pro-business as well as progressive legislation.

Authors

• Tarun Banerjee, University of Pittsburgh

• Michael Schwartz, Stony Brook State University

• Kevin Young, State University of New York at Stony Brook