GM’s Concealment of Crime: Rampaging Corporatism

For ten years General Motors knew it was killing its customers, borrowing a leaf from Ibsen’s “Enemy of the People,” in which silence, complicity, and amorality become the basis for cover-up, no longer public baths but the vehicles we drive and the source of great profitability. Such is capitalism, especially its higher registers, mega-corporations too big to fail (as in the $49B bailout it received in 2009 to avoid bankruptcy). But GM culpability, in what amounts to a slaughter of the innocents, is only part of the story. There is also government, and within government the Department of Justice, specially charged literally over the course of a century with the protection of business, chiefly from unfavorable regulation and also, now with the $900M fine, a certification that all is well and, the penalty easily absorbed, GM can be restored to good citizenship within industry. The fine, reported Drew Harwell”s Washington Post article, “Why General Motor’s $900 million fine for a deadly defect is just a slap on the wrist,” (Sept. 18), is “less than a third of its $2,8 billion in profit last year,” and “a fraction” of its “$156 billion in revenue” for the same period.

We call this the interpenetration of government and business, an arrangement going back to railroad regulation and the Interstate Commerce Commission in the 1880s, but coming into full favor under Theodore Roosevelt and the Bureau of Corporations in constructing detentes with the House of Morgan affecting Morgan’s business interests. The situation has not changed, only gotten worse and grown invisible. Gabriel Kolko’s pioneering Triumph of Conservatism and Railroads and Regulation pin down the relationship, a central element in the stabilization of monopoly capitalism in which the State in providing assistance and protection to the business system has created a political and legal context for capitalist development largely immune from public control or even dissent.

That is where liberalism comes in handy. Simplistically identified with government regulation, one does not ask the intent and consequences of the regulation, its sponsors within Congress and the business/financial community (going back to the Federal Trade Commission legislation and the Federal Reserve Act), i.e., the principal actors to be regulated, who in the first instance draw up the provisions, anticompetitive in character, to ensure the security and growth of the affected firms and banks. Accordingly, administrators have the experience and enjoy a friendly relation with those subject to regulation (the revolving-door principle), an accommodative staff to execute pro-business policies, all within a framework which encases capitalism sealed against popular disapproval and public supervision and control. Ironically, liberalism, here Democrats, more than conservatism, here Republicans and Rightist fringe groups, is more advantageous to capitalism by virtue of activating and relying on the powers of the State. Without government as a partner, the largest banks and firms might encounter decentralizing trends with the rise of new competitors, unsophisticated fiscal and monetary policies, and, what only the State can do, furnish the military power to achieve market penetration and global economic hegemony.

The State is vital to capitalism, especially in its higher stages (although this was also true in its mercantilist phase), not only to construct a shield of protection for business, but increasingly, as now, execute imperialist policies as vital to its sustained growth. In the early 20th century, TR saw (and praised!) the necessary linkage between capitalism and militarism, in that only via a strong economic base—monopolism—could America have the foundation for entering into world markets and becoming a significant force in international politics. Today that base is fully accepted and taken for granted, allowing policy makers to address the needs of capitalism in its advanced stage—concentration and consolidation—without blinking an eye, while the military component likewise can be pursued for its own sake, interconnections so tight that each seems self-explanatory.

This brings us to GM, an icon of American capitalism (What’s good for General Motors is good for the country) that every nerve and fiber of government is pledged to defend. So, the token slap on the wrist, with no federal prosecution of individuals and DOJ’s deferred-prosecution agreement with the corporation. If you behave well in future, all is forgiven, your contribution to economic growth and national security deeply appreciated, and in any case corporatism, to which GM mightily advances (I define that here as integrating major business and banking with the structure of power) carries America one step closer to fascism, the synthesis of private and public systems of organization that gave rise, with minor variations, to Hitler, Mussolini, and Hirohito. Interpenetration is hardly harmless; DOJ and GM consummate a perfect marriage. I turn to Danielle Ivory and Bill Vlasic’s article in the New York Times, “$900 Million Penalty for G.M.’s Deadly Defect Leaves Many Cold,” (Sept. 18), for good background on the settlement.

Their account begins, “As the number of deaths linked to defective cars made by General Motors has steadily risen to 124, victims’ families have waited for the answer to a burning question: How will federal prosecutors hold the automaker accountable for its decade-long failure to disclose the defect? On Thursday [Sept. 17], they got their answer, and many were disappointed.” Well they might be, a 10-year suppression of evidence and in all that time no effort to fix the defect. No employees charged, deferred prosecution for three years. Adding insult to injury (and death) we learn: “If G.M. adheres to the agreement, which includes independent monitoring of its safety practices, the company can have its record wiped clean.” Actually the so-called “independent monitoring,” noted subsequently, will be conducted by firms having extensive dealings with GM, an outrageous conflict of interest which scarcely raised an eyebrow—and calls into question the sincerity of corporate repentance voiced by Mary Barra, GM’s CEO, seen below.

One mother, who lost her daughter: “’I don’t understand how they can basically buy their way out of it. They knew what they were doing and they kept doing it.’” This is to be set against the statement of Preet Bharara, US attorney for the Southern District of New York, in his defense of the settlement, an example of the whoredom of government-business relations: “’It has been a challenging case, for the agencies, for the prosecutors and for me. We’ve had to think long and hard about the appropriate resolution in this case.’” Bharara claimed the prosecutors’ principal concern was the victims, and he continued: “’I met personally with families who lost loved ones in tragic accidents involving the [defective ignition] switch and, I’ll tell you, those were among the most searing moments I’ve ever spent in my six-plus years as United States attorney.’” Still, no individual prosecutions, a deferred-prosecution plan, and from there a clean bill of health.

Why the modest settlement (significantly, Toyota had been fined $1.2B, 25% more, for a less serious crime)? Bharara praised GM for its cooperation in mitigating the penalty. Here the reporters shine, although they refrained from obvious comment of the conflict of interest: “Mr. Bharara cited an internal investigation conducted for G.M. as favorable in determining the penalties paid by the automaker. The two law firms hired for that inquiry, King & King and Jenner & Block, had previously done legal work for G.M. And court papers show that Anton R. Valukas, the chairman of Jenner & Block, who headed the G.M. investigation, helped represent the automaker in its talks with the Justice Department.” Some corporate lawyers found this arrangement “not unusual because an outside law firm that conducts an investigation knows the facts of a case,” but Deborah Rhode, of Stanford Law School, is quoted as disagreeing: “’It would be nice to know that the law firm doing the internal investigation was truly disinterested and didn’t have an interest in subsequent representation [of the same company].’” Or as Senator Richard Blumenthal and Edward Markey said in a joint statement: “’This outcome fails to require adequate and explicit admission of criminal culpability from G.M. and individual criminal actions. This outcome is extremely disappointing.’”

Yes, disappointing, but not unexpected, given the multitude of cover-ups, whether by DOJ, FDA, and virtually all government agencies charged with the legal (and indeed, moral) responsibility of safeguarding the public interest against the crimes practiced by American capitalism against the American people, in this case, “more than a decade of problems with the ignition switch, which is prone to turning off, cutting the engine and disabling systems like power steering and airbags.” As it is, prosecutors looked at only “a relatively short period of time—only about 20 months from the spring of 2012 to February 2014, when G.M. began recalling 2.6 million older cars to fix the switch—even though the first reports of the problem had been made more than a decade earlier.” Finally, Mary Barra, crocodile tears and all, speaking yesterday [Sept. 17] to 1,000 workers in the atrium of GM’s vehicle engineering center: “’Let’s pause for a moment and remember that people were hurt and died in our cars. That’s why we are here.’”

My New York Times Comment to the Ivory-Vlasic article, same date, follows:

GM is the ISIS of American corporatism. Instead of beheading, it murders through concealment. Not only are there NOT criminal prosecutions of individuals, but also DOJ should be severely chastised for this sweetheart agreement with GM.

Since the end of World War II, American business has been on a rampage of gluttonous behavior–with no restraining arm from the government. This GM case is a textbook one of the interpenetration of business and government, their common front against warranted criticism. Inevitably, this raises the question of the nature of capitalism, its predatory character under the protection of the State.

Will the $49B bailout or something similar go into the kitty to pay the fine? GM is evil. Period. Barra should be tried for criminal negligence. But we have same old, same old. Deferred prosecution is a sham. UAW no doubt stands firmly behind GM, American labor being equally corrupt as American business, willing to build crematoria if that meant jobs!

How does this treatment of GM differ from other phenomena of the State, from war and intervention, to covert action and regime change? Even Shakespeare would be powerless to capture in words the bottomless well of corruption we see here.

Norman Pollack Ph.D. Harvard, Guggenheim Fellow, early writings on American Populism as a radical movement, prof., activist.. His interests are social theory and the structural analysis of capitalism and fascism. He can be reached at pollackn@msu.edu.

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