Amazon Is Waging Class War
Let's call Amazon's cancellation of its New York City headquarters what it was: a capital strike. It's a demonstration of why we must overcome capitalists' power over investment.
Amazon’s sudden announcement that it would back out of building a second headquarters in Queens, New York — which was slated to employ at least twenty-five thousand people supposedly set to earn an average of $150,000 per year — made no sense as a business decision. Amazon had undergone a lengthy and elaborate process to pick the optimal location for its new campus. As suspected, Amazon settled on a city (actually two) that had high concentrations of workers with the needed technical skills, a major airport, mass transit, and the sorts of cultural attractions that would entice employees to move to or remain in that city.
New York and Washington met Amazon’s stated criteria. In addition, Washington is the nation’s political capital, and New York is the capital of almost everything else. Neither New York nor Washington offered as lavish financial incentives as the other applicants, which sought to make up for their less educated workforces, lack of a viable center city, and cultural wastelands via huge giveaways.
The opposition to the deal with Amazon, while intense and heartening, was likely to be defeated in the end. Governor Andrew Cuomo and Mayor Bill de Blasio had the authority to override objections from other elected officials and push through the zoning changes needed for Amazon to build their ideal campus. Governor Cuomo could have blocked the State Senate’s appointment of HQ2 opponent and Queens state senator Michael Gianaris to the Public Authorities Control Board, which had the power to reject projects like Amazon’s. Most of the actual cash subsidies and tax abatements were “as of right,” meaning that they didn’t need approval: they were payments from the city and state governments that are given to any corporation that creates enough new jobs in parts of the city classified as “distressed.”
Mayor De Blasio, in a New York Times op-ed, offered suggestions for how Amazon could have undercut and divided their opponents: “Meet with organized labor. Start hiring public housing residents. Invest in infrastructure and other community needs. Show you care about fairness and creating opportunity for the working people of Long Island City.” De Blasio said he had offered the same advice privately to Amazon days earlier. Why didn’t Amazon listen to the mayor, and to all the lobbyists they hire to the tune of $14 million plus each year and who no doubt offered similar suggestions? Why instead did Amazon pull out of New York so abruptly?
Amazon is staging a capital strike. Just as workers can withhold their labor in return for concessions, so too can capitalists. Capitalists strike to force governments to create a “good investment climate.” By that capitalists mean low taxes on their corporations and on them individually, and cuts in regulations. They also want governments to weaken or ban unions.
Most often when we think about capital strikes we look at cases directed against leftist governments in weak and poor countries of the Global South. Capitalists stopped investing in Venezuela the minute Hugo Chavez became president, as they did in Chile under Salvador Allende. However, capital strikes also are used to extract specific concessions from governments in richer and more stable countries. After the 2008 financial crisis, banks held back on lending to non-financial firms until governments in Europe and the United States agreed to not impose stricter regulations on finance.
Amazon also unleashed a capital strike on its home city of Seattle. In 2018, the Seattle City Council unanimously passed a $275 per employee annual tax on business with over $20 million in revenues to fund construction of apartments and shelters for that city’s ever-growing homeless population. Amazon responded by immediately suspending construction on a new office complex in Seattle. Amazon explicitly said it would not resume investment in Seattle until the tax was repealed. Faced with Amazon’s capital strike, the Seattle City Council quickly repealed the tax.
Seattle’s mayor, in a perfect expression of neoliberal thought, reported that Amazon and other companies would find non-monetary ways to address homelessness. “What we’ve heard from company to company as I’m talking to them is, ‘Tap us for our know-how . . . We have some of the most talented people on the globe right here in Seattle [who can provide] data analytics, dashboards, applications and software for the city’” to address homelessness. She likened such promised apps to the ones wealthier people use to book hotel rooms around the world. Of course no app can close the chasm between the tens of thousands of homeless in Seattle and the far fewer housing units available.
The same dynamic occurs in other cities, most notably San Francisco, where growing and wealthy corporations draw in numerous well-paid workers who can outbid poorer people for a stagnant or very slowly expanding pool of housing units. A similar outcome would have been inevitable if Amazon had brought twenty-five thousand highly paid employees to Long Island City, which is one of the few places in New York City where people of low and middle incomes can still afford to rent apartments.
Amazon’s capital strike in New York is unusual in that it wasn’t aimed at repealing a tax, winning a specific concession, or undoing a set of regulations. Instead Amazon just wanted to teach a lesson. Amazon sought to demonstrate that it would never recognize unions, nor would it make unionization or even neutrality to unionization a subject for negotiation with any city, state, or nation that wants to attract Amazon facilities.
We don’t yet know all the details of Amazon’s back-and-forth with New York public officials, let alone its internal deliberations, and thanks to corporate and government secrecy we may never know all. But we do know that Amazon has a long, unbroken record of total hostility toward unions. Amazon’s profits depend on its ability to ship goods at ever-lower cost so that it can undercut brick and mortar stores. Amazon accomplishes this by paying their warehouse workers as close to minimum wage as possible and even more by imposing a pace of work that injures employees who work in dangerously hot or cold buildings.
Unions negotiate and strike for better working conditions as well as higher wages. If Amazon workers were able to unionize, that corporation’s profits would be slashed. So even though the highly paid executives and technicians Amazon employed in New York probably never would have joined a union, the few construction and support workers employed in building and maintaining the new campus would have had reason to unionize. Those workers would have enjoyed the support of New York public officials who were demanding that Amazon facilitate or remain neutral in union drives in the city.
The financial cost of a few hundred unionized workers in New York would have been trivial in relation to Amazon profits. But the precedent and the resulting challenge to Amazon’s no-union business model would have been transformative. That is what Amazon moved to block with its sudden withdrawal from New York.
Most capital strikes are effective. Governments back down and do whatever capitalists demand in return for a resumption of investment. President Obama, despite his campaign promises and widespread public rage against the bankers who caused the 2008 financial crisis and resulting Great Recession, caved almost entirely in the face of the capital strike. Few regulations were imposed on banks and those that were enacted contained mechanisms allowing financial firms to lobby for revisions further undercutting those rules.
Since Amazon isn’t making a demand in this case but instead is just warning future governments and communities against insisting on the right for Amazon workers to unionize, the consequences will depend on how ordinary people interpret and react to this episode. Already media outlets, public officials and other businesses are denouncing the activists (especially Alexandria Ocasio-Cortez) who opposed New York’s deal with Amazon. As long as we leave investment decisions and workers’ rights in the hands of for-profit corporations, then the space for capital strikes will continue to expand.
The only alternative to giving in again and again to capitalists’ demands is to legislate national and eventually global limits on corporations’ freedom to make investment and employment decisions. If the minimum wage is raised to a truly living wage, then corporations will no longer be able to get workers and localities to bid against each other to attract jobs in return for lower wages. We need to strengthen occupational health and safety laws and regulations and beef up the Occupational Safety and Health Administration (OSHA)’s enforcement capacity.
Most importantly, we need to move control over investment decisions away from private capitalists and corporations to public entities that respond to mass needs and demands. There are various ways to do that. Elizabeth Warren is proposing an Accountable Capitalism Act that would require corporations with over $1 billion in annual revenue to obtain a federal charter (eliminating their ability to play states against each other) and to allocate at least 40 percent of board seats to workers. Such a model has been used for decades in Germany, the Netherlands, and the Scandinavian countries. That would be a significant first step. Bernie Sanders takes a different approach, focusing on making it easier for workers to unionize and expanding employee-owned enterprises.
But we should go further. If we were to raise tax rates on the rich and corporations back to the levels of the 1940s and 1950s, as Sanders and Alexandria Ocasio-Cortez propose, and impose a wealth tax, as Warren suggests, enough revenue would be realized so that the government could become the dominant investor. Funds could be used for a Green New Deal, to provide free education from preschool through university for all, and other projects that ordinary people rather than capitalists deem worthwhile. Investments would be made with the goal of enhancing everyone’s quality of life and the future of our planet, not for further enriching the already obscenely rich.
Within the confines of neoliberal politics and economics we have no choice but to surrender to capital strikes. But if we change the rules under which capitalists and the working-class majority live, we can defeat capital strikes and decide for ourselves how the fruits of our work will be invested. First we need to realize we have an actual choice. Then we need to mobilize to make others aware of the possibilities to transcend the grim options and non-negotiable demands that Amazon made last week in New York and that Amazon and other corporations will continue to make in the future.