Remember all that stuff about how, in the era of globalisation, footloose capital can go where it likes and do what it likes? Apparently governments would elbow each other aside in their eagerness to do its will. Somehow I don’t think this is how it feels to Tony Hayward, chief executive of BP.
By stock market valuation at the end of March, BP was number 18 in the Financial Times’s Global 500 ranking of companies. But this hasn’t stopped the US political establishment targeting BP over its responsibility for the Deepwater Horizon oil disaster.
Of course, Hayward’s public humiliation before the House of Representatives Committee on Energy and Commerce on Thursday last week belongs to an old US political ritual.
For example, at hearings in May 1933 Jack Morgan, heir to the JP Morgan banking empire, was roasted for Wall Street’s role in precipitating the 1929 financial crash. The hearings, masterminded by the Senate Banking Committee counsel Ferdinand Pecora, led to the Glass-Steagall Act that broke up the House of Morgan and imposed restrictions on the banks. It took them over 50 years to break loose.
The crash of 2008 provoked a wave of Congressional hearings at which various bankers – most notably Dick Fuld, chief executive of Lehman Brothers – received almost as rough treatment as Hayward. But this theatre of humiliation has yet to give rise to anything like the restrictions on banking imposed in the 1930s.
With BP, however, the sky seems the limit. The Financial Times commented on Saturday: “Two months ago, a BP bankruptcy was unthinkable. Now it is thinkable but still very unlikely.”
Of course, BP and Hayward deserve everything they get. Naomi Klein wrote very eloquently in last Saturday’s Guardian about the Deepwater Horizon disaster as a symbol of capitalism’s reckless destruction of the planet.
But Klein was describing the logic of capital itself, nothing peculiar to BP. All the Congressmen who cheerfully damned Hayward are signed up champions of capitalism. Most support offshore oil drilling, despite the catastrophe it has given rise to.
As for Barack Obama, Klein points out that, “with cosmic bad timing, just three weeks before the Deepwater Horizon blew up, the president announced he would open up previously protected parts of the country to offshore drilling.”
This helps to explain why Obama and the Democrats in Congress are being particularly ferocious in their attacks on BP. With the mid-term elections coming in November, they are trying to avoid getting any of the blame for the spreading oil slick in the Gulf of Mexico.
But more is involved than simple domestic politics. I haven’t the slightest doubt that the fact that BP is a foreign company has made it open game. This isn’t so much to do with nationalism as such, or anti-Britishness or whatever.
BP is the top British company on the FT Global 500. Ten out of the 17 companies ahead of it are American corporations, despite the supposed decline of the United States.
It may well be true that 40 percent of BP’s shareholders are American. Nevertheless, it is far more important to British capitalism than it is to US capitalism. American politicians still have far closer links to US companies than to their foreign counterparts. It is the Wall Street banks’ formidable lobbying power that has so far saved them from serious punishment for the crash.
Of course, the US, as the strongest state in the world, is in a particularly powerful position to push foreign companies around. But the German government is refusing to pay General Motors (GM) the subsidy that it promised when GM proposed to sell off its European subsidiary – a decision that GM later reversed.
The Deepwater Horizon catastrophe therefore doesn’t just dramatise the destructive logic of capital. It illustrates negatively what the bank bailouts demonstrated positively – the close links that bind together nation-states and the firms based on their territory.
Footloose capitalism is a myth.