May 17, 2023

You have to hand it to Capital, they know they are in charge and are not afraid of demanding more.

Stelantis—the weirdly named car company that used to be known as Chrysler/Jeep/Dodge/Fiat/Vauxhall/M….—is threatening governments all over the world.

First it was Canada, demanding more money from the Canadian government to continue to build a battery plant. Now it is in the UK demanding more subsidies from the UK government.

This is just the start of the corporate blackmail that will befall countries attempting to change their corporate investment regimes.

Private capital has all the money. Mostly because we gave them all the money through policies that funneled subsidies to capital through lower interest rates. These rates were maintained (too) low—paid for through low state borrowing—and companies took up huge debt to spend on everything they wanted without risk.

When this policy of cuts and subsidy failed in the lead-up to the 2009 financial crisis, central banks started printing money and cutting rates. Doubling down, as it were. Again, companies took the money and gave it to shareholders or stored it as cash. The only real investment was in technology, attempting to reach some level of productivity gains. None really appeared, but consumers flush with cash continued to buy techy things, stopping the economy from completely imploding.

Reality reasserted itself in the lead-up to and through the pandemic resulting in a multi-crisis. Inflation, lockdowns, supply chain collapses, geopolitical conflict, energy crisis, health crisis, demographic crisis, and a capital investment crisis.

So, another shift had to come to support profits.

The new paradigm is just giving money directly to companies instead of trying to hide it. With this new brazen approach—most clearly typified through the IRA in the USA—the shroud has been lifted and so to have the inhibitions. The free money has come with some unsurprising conditions in the USA: things must be made in the USA to get the money.

The first companies to move on this new policy of money gifting are car companies and oil/energy companies. The reason is that North American car companies have long had direct government profit gifts and understand how to get them. Other companies will learn from them.

VW has landed in Canada with a $13B gift from the government to build here.

Stelantis, seeing that their negotiations with the Canadian government was done poorly has very unsurprisingly demanded more after the fact. Everyone seems to understand this is what they are doing, but the analysis of alternatives to just giving them more money is absent.

The key to blackmail is to have something that the other wants. Stalantis took money and put it to build something, did not finish, and now points at the unfinished thing and says "give us more or we leave".

In the UK, Stelantis is doing the exact same thing by shuttering a plant unless the government reduces the rules around "made in the UK" parts. Essentially demanding more money and providing fewer jobs in the UK for that money.

This is a company blackmailing governments, almost a kind of corporate terrorism. Threatening, intimidating the civilian population, and causing economic damage, destroying livelihoods in an attempt to change laws.

In both cases there are alternatives to giving Stelantis more money and setting a very bad example.

There is a real socialist alternative, the state could just make batteries (and it should), let's leave that for a second.

Even under the new liberal capitalist policy frame the government has options.

The government could threaten to give the battery plant to a competitor and shift procurement rules to reduce purchasing of Stelantis vehicles and favour the new supplier. Want our money? Make stuff here. Don't make stuff, we give the money and your things you made with our money to your competitors.

This policy would be in keeping with this new policy frame of giving money to capital for profits and limit the blackmail.

Of course, our governments will not do this type of negotiating. They are still stuck in the mindset of the neoliberal era while simultaneously not even understanding their own policy shift.

One thing is clear, giving car companies control over the stuff that drives the car as well as the car is a bad idea. Car companies do not own oil companies, they should not own the energy companies or the batteries production in the car either.

One crass socialist alternative is this:

• A national company that produces batteries.
• A set of standards for batteries where the batteries are not part of the car that you purchase, but separate. Like the current fuel is not purchased when you purchase the car.
• The implementation of a swap-able battery design.
• Force private investment or public investment in charging and battery swapping stations.

In a rational world, we would have similar policy frames on the table. In the current world, it likely will not be. However, we must start thinking differently if we are to play in this new investment regime effectively.

It is a different policy frame now from neoliberalism. If the left is not willing to understand the new rules, the Stelantis blackmail will continue to happen across the economy.