Epochs do not change on a dime. Yes, the era of market extremism is waning, Republicans' ratings are plummeting, and, the polls agree, more of us believe that Elvis is hiding in the hills with the Shining Path than still have faith in American big business. But none of this means that the liberal era, or hour, is upon us.
The liberal moment, perhaps. The all-but-unanimous congressional enactment of Paul Sarbanes' financial-reform bill was such a moment -- and how long has it been since American liberalism had one of those? But just one week later, the same discredited corporations that the Sarbanes bill took aim at still had enough clout to get a renewal of the president's fast-track authority through the very same Congress.
Welcome to politics in a time of interregnum. Everything has changed and nothing has. The corporate and financial sectors, as they periodically do, have blown themselves up but, through the logic of capitalism and through simple inertia, they retain vast power. Liberal forces have high hopes for the next election, but are themselves only beginning to stir. Twenty-five years in eclipse have weakened them, union membership has eroded, progressive state and local governments are almost nowhere to be found. Liberal organizations have been playing defense for so long that they don't seem to have an offensive team to send on to the field. A recent Prospect survey of progressive groups found that hardly any had an agenda for reforming big business that went beyond the Sarbanes bill and expensing stock options.
The decisive exception here is labor. AFL-CIO President John Sweeney's strongly worded July 30 Wall Street speech made clear to the public what has been clear to class-conflict cognoscenti for some time: that labor is the one sector of our society with a burning interest in, and some damned good ideas about, systemic economic reform. In his address, Sweeney called for giving workers the right to elect the trustees of their retirement funds, making all corporate directors independent, and forbidding management to spend company funds on electing its preferred candidates (and giving workers first dibs on the assets of miscreant companies gone bust). He also pushed the envelope on executive stock options, calling not simply for expensing them but further indexing them to the companies' performance (so that CEOs can't cash in stocks that appreciate just because the market is booming) and suggesting that such options be banned altogether (because, in fair companies as well as foul, they tempt executives into short-term thinking and dubious deals).
Some of these proposals are new; some emerge directly from the multitude of shareholder challenges unions have hurled at corporations over the past five years. Indeed, anyone wanting to see labor and capital go at it these days should probably skip the plant gate (where union power ain't what it used to be) and go straight to the annual shareholder meeting. Unions have a cool $3 trillion invested in pension funds, and in the Sweeney era, with the assistance of the AFL-CIO's Office of Investment, they've amassed enough leverage to credibly challenge corporate behavior. In just the past year, Disney banned consulting by its auditors when a resolution from the Plumbers Union fund demanding that reform won 42 percent of shareholder support, the Service Employees won 48 percent backing for a resolution to curb golden parachutes at Citigroup, and pressure from union-pension funds forced Boston's State Street Bank -- for years, the deep pockets behind efforts to privatize Social Security -- to abandon its campaign.
Many union leaders see corporations' fall from grace as a chance -- perhaps the last -- to rebuild the waning power of both unions and a democratic government. "So long as corporations rule the earth," says one union official, "we're not really going anywhere." Other activists talk of reconceiving big business altogether. "The proper mission of the corporation is to create wealth for society," says Ron Blackwell, the AFL-CIO's director of corporate affairs. "It's not simply to make money for CEOs or even shareholders; that's not why society created corporations."
Union chieftains have no illusions that Congress or the president -- even if both are Democratic after 2004 -- will embrace such an agenda. But with America's largest companies now facing a pre-planned slew of union-led shareholder challenges, and with the stock exchanges eager to restore investor confidence, labor thinks some of its reforms can be realized without having to turn to Washington. The AFL-CIO is in discussions with the New York Stock Exchange about tightening requirements for listed companies. "Some sectors of business will come over," says one union president, "and some -- the arbitrageurs, say -- we can isolate as enemies."
This is actually the same approach that Franklin Roosevelt took in his fight to enact the original Securities Exchange Act in 1934. The big Wall Street traders and speculators wanted no scrutiny of their dealings; the upstart firms that marketed stocks to understandably spooked small-time investors wanted regulations enacted, and FDR secured their support.
And note the date of that act: Congress passed it in May 1934, four and a half years after the crash and more than one full year after FDR became president. The death of the old order does not mean the birth of the new. Epochs do not change on a dime.