 everyone for joining us today and very warm welcome to everyone. I sincerely hope you and your loved ones are all safe and well. It's great to see so many people joining. If you want to comment on the chat box from which part of the world you're joining from that would be great. So yeah, so today we're going to be focusing on corporations and COVID bailout saviours. And by way of introduction, my name is Marnvi Lada. I'm a bachelor's student at SOAS studying economics and politics and I'm going to be operating today. So today's webinar is the 12th webinar in the economics of COVID-19 series. It's a series organized by the Department of Economics at SOAS alongside the Open Economics Forum, which is a student association part of the Rethinking Economics Network, which aims to introduce plurality in economic debate. I'm just going to start by saying a huge thank you to everyone behind the team, behind the scenes story that's working to make the webinars happen. They've been incredibly fascinating to learn from. So if you haven't been able to attend any of the previous webinars, they have been recorded and they're available on the SOAS economics page and they've also been recorded and uploaded onto the SOAS Open Economics Forum Facebook page. This webinar will also be recorded and uploaded as soon as possible. To keep up with the data on the future events, feel free to follow our social media accounts. I've put them in the chat box and keep the conversation going with the hashtag economics of COVID. So you can check that out as well. So today's speakers are Dr. Carolina Alves and Dr. Farwa CL. So Farwa CL is a postdoc at the Global Development Institute at the University of Manchester. She's the co-editor at Developing Economics and a co-convener of both DEECON and the Business and Development Working Group of the Development Studies Association. Her research interests include development aid, political ecology, corporations, industrial policy, corporate social responsibility, private sector and international development. She tweets at Farwa CL. And Carolina Alves is a Joan Robertson research fellow in heterodox economics at Gerson College University of Cambridge. She is also a co-editor at Developing Economics, a co-founder of DEECON. Now it currently sits on the advisory board of rebuilding macroeconomics and is a council member at the Progressive Economy Forum. Carolina's research interests include macroeconomics, money, monetary and fiscal policy, public debt financialization, Marxist economics and Latin America. And she tweets at CAC RIS Alves. So yeah, that's my introduction. I'm going to pass it now to Farwa. So hi everyone. Thank you very much for joining us and thanks a lot to the Open Economics Forum and SOAS Department of Economics. There's a lot of work which goes behind the scenes, especially coordinating this and arranging everything. So thank you so much for having us. I'm going to go right into the discussion. So to get us started, I'm going to start with the point of inequality and the impact of the pandemic. In the SOAS series alone, we've heard some very important talks on regional, sectoral and country responses to the pandemic. And in some ways, or the other, most talks have touched upon this tension between the concept of developed countries and developing countries. For the first time, the very notion of vulnerability and structural inequality in the context of poverty and institutional weaknesses are being associated with developed countries outside academia. And in this context, the role of the corporate sector needs to be better understood, we think. At an organizational unit, as an organizational unit which serves as an engine of trade, commerce, finance, some remnants of innovation, as well as acting as a vehicle for political lobbying, the corporation has all been at the heart of the capitalist system. Of course, it has also played a very powerful role internationally. And the purpose of our talk today is to look at corporations broadly in the US and the UK and highlight the socio-economic relations which bind corporate empowerment with inequality. So I'm going to be talking about three things and then Carolina will follow. The first, I'm going to talk about the role of the corporate sector before the crisis. Second, on how corporations have responded to the crisis. And I'm going to focus on some of the ways in which the profiteering has been happening. Third, I'm going to talk about corporate philanthropy and governance. And then Carolina will focus on the nature of bailouts, which have favored the corporate sector disproportionately in comparison to households. And we're trying to develop this term of bailout saviours in the context of the current pandemic. And I hope we have a time to discuss that. So even for this very brief talk, I think it's helpful to mention the origins of the modern corporation which line the Imperial Joint Stock Company. Although joint stock companies existed in ancient China and Japan, East India Company was different as a colonial enterprise involved in manufacturing, trade, and financial services, as well as having its own army. So its political role in siphoning wealth from one part of the world to another was undeniable. However, later literature on theory of the firm takes a sort of disjuncture. On the one hand, you have the rise of so-called robber banners or this idea of monopoly capitalism in the form of corporations. But there is also this push towards understanding how the corporation works or the mechanics of it. So a lot of literature focuses on the organizational theory of the firm. There is emphasis on the M firm or diversified model of the firm which is focusing on divisions within a firm, resource allocation, and mechanisms which help coordinate different activities in the firm. Williamson, Chandler, Penrose are some of the pioneers of that literature. But there is a move towards a very technical understanding of the firm and a disjuncture from the socio-economic. Having said that, I think there were standard texts like Berlin memes writing in 1932 which are focusing on the concentration and political role of the firm. Following from that, the 1960s transformation of companies towards financial managerialism completely transforms the previously limited speculativities of the firm. Conglomerates now leverage their individual firms on financial markets, reorganizing firms to avail opportunities on capital markets and end up with an aggressive merger and acquisition through highly politicized processes. So the financialization of the firm sets the ground for the now very famous story of shareholder revolution of the 1980s which accelerated against the circulation on financial markets, empowered shareholders, civilized share buybacks, and initiated the phenomena of shareholder activism to the ends of unmooring dividends from productive investment, a phenomena we see now as being very normal. The rise and crash of the 2001.com bubble unfolded in this setting. The decline of U.S. manufacturing since the 1970s found a temporal fix with liberalization, the rise of venture capital, and growing equity investment in tech companies. Sorry. Also, without revival of industrialization, the shift from one asset class to tech class enabled growth also on the back of outgoing outsourcing. But the implementation of a very loose monetary policy could not sustain corporate profits until the 2001 crash. In spite of the crash, central bank intervention continued to incline towards lower interest rates, compelling new search for investments in areas such as some prime mortgage, as well as enabling the rise of platform capital, which I will talk about a little later. We now have a lot of information about the corporate failure leading up to the 2008 financial crisis. But the point to note is that no concerted efforts on on the regulatory front were implemented to curb the excesses or share of share buybacks, moral hazard. And if you consider the four trends in the 2008 crisis for assistant fall and income share of labor, this has been written about from heterodox economists point of view at length since the 1970s, the dissonance between productive investment and financialized accumulation, something I just mentioned with respect to the role of the firm, the privatization of public goods, which has been an ongoing phenomenon. And fourth, a point which is missing here is the global skyrocketing of debt, global debt skyrocketed to 113 million just before the crisis, and mostly dominated by private debt. What's important to remember in terms of bringing this whole story together of corporate rise and inequalities, the fact that while companies were in possession of something like $2 trillion in cash, 42 million Americans were in food stamps. And this is just before the crisis. One last point that I wanted to mention before I move on to the next slide is this idea of the North side divide, which I don't think gets enough attention, especially with relation to the corporate sector. A lot of core activity, which happens continues to extract wealth from one part of the world to another. And we can see that in the global value chains phenomena, we see that with tax havens, corporations in developing countries, and in other countries actually don't have the same luxury of indulging in this corporate heaven activity that a lot of northern companies do, as well as this sort of commodifying of knowledge through patents. So there is a disproportion, which is ongoing and which we see in the rise of the coalition. When it comes to the current pandemic, the response of the US and the UK can be fairly described, I think as one of colossal mismanagement. This course was both implicitly and explicitly about the opportunity cost of prioritizing certain lives over others. So on the second of April, for example, there is a there are news headlines about shortage of ventilators. And one reason why doctors are forced to focus on patients with better survival rates. And also the fact that both countries have a very high mortality rate. This failure, I think, has to be understood as a result of the interplay between hollowed state capacity and corporate opportunity. That is the empowerment of one hasn't taken place without the disempowerment of another. By this, I exclude the state's capacity to respond to the needs of the private sector, which is ongoing. But it does involve an erosion of the social contract of welfare and social policy. If we're talking about the corporate's ability to capture on this gap, there are many examples, you just have to pick up their newspaper and you'll find tons of examples right now. But I will focus on the response of the health sector. So in the US, the strategic national stockpile, a reservoir of life saving pharmaceutical and medical supplies was basically inadequate. Only 16,600 ventilators were available. Many were outdated. And this, of course, was caused by a diversion of resources away from the hand from the public sector. But also as a result of private equity takeover of a handful of companies involved in domestic manufacturing of ventilators. The repurposing of productive value chains to companies like Tesla and Ford meant a lengthening of the duration of response to the emergency. Also incurring high cost, but also distributing the high cost to other logistic giants such as Amazon and Walmart. In the UK, we see a very different set of problems with the Brexit climate, but the favoring of giant corporations over SMEs and middle-sized companies is also ongoing. So to give you an example, one domestic company was actually exporting to the EU while there was a shortage of ventilators in the UK. At the same time, of course, there is piecemeal privatization of the NHS and a very strange model in the US in which private hospitals are investing in hedge funds, private equity, and continue to sit on hordes of cash while sort of taking money away from the public hospitals. And we know, of course, that the private insurance in the US does not respond in spite of all this investment. A second phenomena which has been really discussed right now with respect to corporate activities is dissonance between rising stock exchange and the real economy. We know already, of course, that the stock exchange is not sort of reflective of the economy and has been for a very long time, but fluctuations in recent months have been incredible. And this is owing to the rise of platform capital. People have very different definitions, but I define platform capital quite loosely as an intermediary, which could be data driven. So for example, Facebook, but also exists as a combination of e-commerce and logistics, such as Amazon. So this ability of platform capital to rise to this extent, especially in the current pandemic, is astonishing. Giant tech companies, for example, individuals have become millionaires, whereas 39 million Americans are right now unemployed. So we're really in this universe of trillionaires and and bread lines. But apart from that, there's also incidences of other corporate activity, which is quite worrying. So recent research publication by Transnational Institute and Corporate Euro Observatory points towards the possibility of litigation scenarios by some MNCs against states under the investor state dispute settlement. So basically states can, multinationals are considering suing states based on COVID revocation of contracts. At the same time, I'm sure you've read in the UK, the Bangladesh garment sector, which has been suffering is trying to claim a really large amount of money from a UK retail company, but it's not unsuccessful, but it's not successful at the moment. So I think we're talking about an economic model in which companies are able to benefit from a forced major or an unforeseeable event, a natural disaster. And this economic model clearly there's something very wrong happening here. In this context, finally, I want to talk about the rising role of corporate philanthropy. So the pandemic has also made visible the changing global governance model, which is heavily determined by corporate activity. This can be described in three ways. First, the role of corporation in multilateral governance, second, the digitalization of social policy, and third, the reproduction of global platform capital. The ongoing beginning of multilateral governance previously run by nation states has been under discussion a lot, especially with focusing on the UN. But not enough is mentioned, I think, on the role of the UN as a contracting body which outsources many of its major operations to private companies. These range from basic logistical services to humanitarian relief and even research and development. So reduction in state funding and reliance on corporate funding has a huge reorientation for the UN. The pharmaceutical lobbying in the WHO, for example, has pushed our research and development, which favors expensive drugs and obsesses over acquisition and strategies for patenting. And this, of course, has a major implication for any area of innovation. Gates Foundation now is the biggest donor, but I think I want us to imagine the possibility of a WHO, which had it continued to work as it was planned, would have built the health capacity of the entire country. So we're talking about a vaccine-building capacity or now a response to a pandemic which could have been uniform, had the WHO been empowered to do what it was built to do. And we can talk about the need for a vaccine right now and what to do about it, but this was a really big missed opportunity because of the changing governance model. Second is governance and digitalization of social policy. Since private tech companies are involved in producing and providing social safety net providers, projects domestically, as well as internationally, they will increasingly rely on tech to collect information. This could have repercussions for privacy breach, but also involve a welfare surveillance model in which social safety nets are based on certain social conformity behavior. We already see this happening in some countries. A data-driven re-engineering could become part of social policy with commodification as a main driver. But having said that, of course, we need to remember that there are problems with philanthropy in itself. So for example, the Silicon Foundation Fund, one of the largest philanthropic funds, which is a pool of funds coming by major tech companies actually allows tax breaks to these companies without the need to spend this money immediately. So money is being parked, it's kind of a tax break, and it's not certain what is going to happen. That is another kind of power, and we don't know where this money would be disseminated or how. Finally, there is the very important part which we see happening a lot. It's the reproduction of the global platform capitalism. What I mean is the inclination of tech giants to give to other tech companies as donations. So if you see Twitter, Facebook, Amazon, Alibaba Gates Foundation, and if you isolate Twitter from this list and look at how it's distributing this money for the pandemic specifically, it's actually giving to a lot of major platform companies as well as small platform companies. So companies like GiveDirectly, GoFundMe and $1 billion is not given entirely to one platform capital. There are multiple platform capital companies, and when they give, every company of course takes a share for the services that is provided. And then a very small amount is actually given to this area of need, but this sort of rent capture at every step of the way is on the rise, and it has very major implications for developing countries as well. We now know that the health sector in developing countries has been completely decimated because of structural adjustment policies and mass privatization. And in some cases, GoFundMe and these other companies are actually coming as saviours for a lot of very small modern operations and very small elements. And these global linkages could be in the form of franchise, so a company sitting in the UK or US and a local venture then forming a chain, but there are also very different layers of how this process happens. So with these three processes and a lot of other activities which is strengthening corporate philanthropy, there's also the phenomena of bailout, and I will now give the floor to Carolina to talk a little bit about what that looks like. I think her sound is all very good. Yes, is that enough? Yeah, great. Thank you. Thank you very much for having me here today anyway. So I will try to push a little bit further on some of the aspects that Fawa was mentioning, but specifically regarding to the bailout of corporations, which basically is the response to the Codiv-19 crisis, particularly from this business perspective. And then while doing that, I also take our attention to what the bailout actually means for society now and also in the future. So the current situation is, as we know, there are uncertain and things are changing constantly and so are these policies and measures. So we've been trying to adapt here and keep up with all these changes. But as far as I know by now, I can probably, I have probably identified over 10 measures ranging from tax reliefs to loans to business in the UK. And I'm sure we can probably criticize all of them, see ways to improve all of them, and saying how they're not efficient enough or how they could be well designed. And that indeed would be probably a talk or a paper that we can write and discuss with constructive criticism. But what I decided to do today is, and I thought would be more interesting, was to go and discuss a broader point that I think we should reflect on, which is basically how we think, how we elaborate, how we implement social and economic policies, having as reference the market and the corporations within our capitalist system. And that's important. And I think if we do that, if you have clarity about this, then we can get into the technical aspects of this bailout, we can get into the implications of this bailout, and then start coming up with a plan to improve it or even just ditch them all together. So I do think this is a very important discussion because if our starting point is that there is a unbalanced power relation between capital and workers, or if you like conflict, then what you're saying basically is that there is one consequence of any corporation bailout, which is a burden that is shifted to working people who actually end up paying the cost of this bailout in a way or the other, which as a consequence will end up exacerbating the qualities in society. So just to give you an illustration, and I'm going to mention an example that actually Fawa brought to my attention in the couple days, which is the case of the British Airways that has been relying on the government's follow scheme since April, but now just came up with the possibility of cutting over around 12,000 jobs. And I think what's important here is to give the background of what's happening, right? So yes, VA is going through that process, but if you look back in the last five years and see VA also engaging with probably around 3.6 billion pounds to shareholders that have been dividends and shares buybacks. It is also in this background the question of the International Airlines group, which is the group that managed the British Airways, that has been sitting on a reserve of 8 billion pounds as it goes back to some of the points that Fawa made. And we should also consider that actually the same group has been able to guarantee state loan of around 3 million from the Spanish government. So despite all these, this cooperation is actually going to probably cut more than a quarter of the workforce, the official workforce. And not only is also proposing some adjustment regarding job contracts, which probably reflect more precariousization of labor. So it's doing this kind of, you know, trying to illustrate what's happening. If we contrast that to some talks within the UK government to be guiding what to do after the crisis, right? With all the steps that's probably heading to because of that scheme, we're going to need to freeze public sector pay or rising regressive taxes. So looking to this and say, okay, companies of government are now liberal, but it also brings to the discussion something that we've been looking into for a very long time, which is this power imbalance between capital and labor, which to go back to some of the Fawa's points as well, it takes the share constant transfer of wealth, money from society to shareholds and financial spectators, which I don't want to get into that in detail for now. So yes, there is an argument, which is we need to keep businesses doing the crisis, right? This is the fact, yes, but we have to understand that there is much more involved in the logic of corporations market and then how this leads to that policies, that economic policies, that social policies. And I think this crisis is somehow giving a golden opportunity to revisit this. Okay, so let's try to recap something that is somehow very obvious in that context, which is the role of corporations society. So how corporations are important for our current society in the way we're organizing production? Yes, they generate jobs. We can't disagree that they generate, you know, in the monetary economy, which is our economy, this is very important because we keep the monetary flow going through the system. So if money you pay bills, we then pay our debt and keep things going. And that's actually very important if you look, especially in the UK in the last 40 years, where the public sector has been gone through so much cuts in market practices that have deprived society from the state provision. And in cases where it hasn't just deprived society from state provision, it has actually deprived sector through areas such as health and education. So more than ever, households, workers, they need that money, that monetary input, kind of having access to some businesses. So of course, we can see how corporations are important, we can see the argument to have it to keep them afloat, although we also have to consider that they don't do that for charity. Of course, corporations, they are business big. But this is like the obvious case. You can see corporations like this is fine, they have to exist. But it's the other side, which is less obvious in the sense that it's not highlighted up as much as it should in terms of being a structural problem, which is like these corporations that now they are very quickly lining up for bailouts from food factories, in fact, contribute very little to that own institution they are asking help for. And they are complaining about contributing. I think the comes to taxes, right? How these corporations actually, they have mastered the art of tax avoidance with help, actually, of big accounting firms such as Lloyd, KPMG, and so on. So what happens here is not the tax avoidance itself, it's how actually these corporations, they actively move to this offshore tax haven. And what that means is that they have a set of implications, which there are many people looking to that in a very interesting way. For example, we know that in that case, governments, they start competing with each other to kind of offer a highest level of tax subsidies. So they can attract that firms that but the consequence is the capacity of these governments that they provide to their citizens. So there's a lot of little things involved there. And the interesting aspect for us as well is how then we see these corporations relying on taxpayer funds structures such as roadway or law and order energy, but they constantly try to avoid paying their share for the government in terms of providing the services. So it is very interesting as well from the economic perspective, because what we have there is basically like economic and a financial rationale where taxes, they are seen as expenses rather than a payment to the government. And the moral argument is not there either. So what that means is it takes these corporations or the rationale behind these, they have to minimize their costs and taxes basically cost. So if you want to run your business in a smart way, you have to reduce that cost. And there are all the aspects here, for example, the relationship between corporations and the environment. People, economists looking to that discussion, they know the efforts that are necessary in terms of regulations. And in terms of fines to kind of bring these corporations to stop polluting, for example, we know that the corporations they involve within the government to avoid any policy that you kind of resolve in terms of production. And of course, there's the scary thing about the carbon, which we know that also these corporations are within these corporations, and accept the idea that if you want to avoid global warming, we have to leave a very large proportion of the fossil fuels we already know that exist in the ground. So there are many things you can go and talk. I think the labor market, the regulation, something that heterodox economists are really looking and show how corporations welcome labor deregulation because, of course, you allow them to cut their costs. And for me, what that gives us is this very clear conflict between society and corporations' interest, which makes us wonder if you have that in our mind, which is when the economic crisis they hit, okay, a lot of workers, you know, it's still a priority, or when you have economic crisis is the environment is still a priority. And I think if you keep that in mind, if you highlight this opposite interest between society and corporation, we can design, you can think of social economic policies differently. We can bring a more nuanced discussion to the rhetoric, oh, we need to keep this in the flow. And we can also bring more complexity regarding the discussion of the implications of the corporation bailout, because right now, basically, these implications relate to the government deficits and how the government is going to find a way out that problem. But they are much more involved if you frame the discussion in terms of that conflict. And that's not new, but I want you to bring that to the discussion of the CODIF-19 rescue package for corporations. And just to head to the end of my talk and bring some examples here, I think the argument in a way is simple. We do have, you know, both sides of the economic and political spectrum making the case for bailout corporations. And I very much, although as economists, kind of agree with some measures such as, you know, the retention scheme and tax holiday. But what I want to say is that we have to be clear about this conflict, because if we are very clear about that, we can see that these measures, they shift that cost to the working people, as I mentioned before, in most vulnerable people. Now, this is a very difficult argument to make for two main reasons. One is the historical context we are, where, you know, there is, as I said, rhetoric about keeping corporations alive and the question of wages and the question of how we're going to bring the economy back on track straight away after the crisis. But I think the other difficulty is that by the end of the day, this is an argument that has to be empirically. We need empirical analysis that go through these schemes, these reputable packages, and trying to show the implications of the diverse developments of this conflict in each of these schemes. So, and basically what I'm arguing here seems very simple, but it's not because what I'm asking is that we consider that macro policies, they are biased in favor of capital and against labor. And that is a very interesting argument to make at a theoretical level, but the empirical level is much more difficult. And there are people within the heterodox spectrum trying to make that argument. I highly recommend the Institute of Public Policy Research Report on who pays who's who wins. I think that's the name, sorry, where they are basically saying, you know, they're looking to this massive state intervention and trying to show that some of these measures, the job rotation scheme, for example, or the small and medium-sized business loan, they seem very progressive, right? But then you would be progressive. They are somehow intervening or trying to change the balance of the power in society. And the term they use is, you know, if that intervention would actually affect the balance of wealth and power in economy. So if you see it that way, so these policies, they can be progressive. And I finish you with a concrete example regarding the job rotation scheme, because I think it is one of the most important policies in that context. We can look at it from the perspective of household as well, and, you know, it's unprecedented in the UK. And we can go through that job scheme, the job rotation scheme, and get into the details, right? Get into the technical aspect of it. So we know that the menu is excluded from that support. We know that this doesn't stop the question of total hazard that Faro brought before, which is workers, they can still get fired. We know that, you know, it's just 8% of the wages. So by the end of the day, household, they are experiencing a very significant loss of income. So we can go through these technical issues which, in a way, I'd say that even if you can call them technical, if you visualize that in this broader conflict dimension, probably can see that design is actually a fail to grasp how some of these policies would somehow fail to protect workers and households. But what I think is important here is to, and that's where I'm going to end, and that's the data I get from the EPP report, which is they have estimated that 40% of the net cost of the furlough scheme, job retention scheme, will be spent on rent and debt repayment. So around 10 billion, if considering just three months of lockdown, and 20 billion, considering six months of lockdown. So households, they basically, they wouldn't have a way to meet these obligations without that scheme. But what is very interesting here is that that money is basically going to banks and landlords, and that's the contrast they are making the report, which basically can be considered as a implicit bailout for banks and landlords. Of course, the banks and the landlords can come in and defend themselves in that sense. But what we're trying to do here is to show that there are the consequence of the crisis and how each segment of society are taking the heat of the crisis, not even in distributed, right? In that case, clearly banks and landlords, they're going to keep the continued inflow of income. And that, of course, will exacerbate inequalities. And it doesn't really help us to take this opportunity to somehow find a way to restructure society in a fair way. So this is where I finish. There are many other examples to go through, which is basically can be framed in terms of moral hazard and how these companies, these corporations, they need a proper check if we're going to bail them out. But I would move away from the moral hazard aspect and bring the conflict aspect for us to do that analysis, and you can go through the questions. And I think we have to be very clear and sharp here that the government bailout of business, right? It has cost for society as a whole, and that has to be debated in a theoretical, empirical way that's convincing, so we can approach policy makers and then make the case that we have to redesign that policies. And that's it. Thank you.