Argument For Energy Nationalization

The Bayway refinery, the site of extensive environmental damage, and the subject of a legal battle between Exxon and the state, in Linden, New Jersey, February 27, 2015. A long-fought legal battle to recover $8.9 billion in damages from Exxon Mobil for the contamination and loss of use of more than 1,500 acres of wetlands, marshes, meadows and waters in New Jersey has been quietly settled by the state for around $250 million. (Angel Franco/The New York Times)

“All the forces in the world are not so powerful as an idea whose time has come.”
– Victor Hugo

Ever since scientists discovered a runaway greenhouse effect on our nearest planetary neighbor, Venus, we’ve known that climate Armageddon is a possibility. Even though Venus is closer to the Sun than the Earth, Venus’ thick cloud layer permits only one-sixth as much sunlight to reach the planet’s surface. And while Mercury is nearly twice as close to the Sun as Venus, the surface on Venus is 10 percent hotter, measuring more than 864 degrees Fahrenheit. Why is Venus so hot? Its atmosphere is 97 percent carbon dioxide.

We know that human activities are adversely affecting Earth’s climate. Scientists began to draw our attention to the link between fossil fuels, greenhouse gases and climate in the 1980s. Since then, the evidence for anthropogenic climate change hasbecome overwhelming.

All that’s left to debate is what to do about it.

Consider the balance sheet: What does the population “owe” to the industry, and what does the industry “owe” to us?

Under the current setup, energy conglomerates that owe their fortunes to fossil fuels have every incentive to dismiss global warming and to cast aspersions on climate change research. The top five oil companies (BP, Chevron, ConocoPhillips, ExxonMobil and Shell) reported combined profits of $93 billion for 2013. That’s more than the discretionary US budget that year for health, human services, Medicare and Medicaid ($80.6 billion). It’s more than 10 times the federal budget for environmental protection ($9.2 billion). The more coal, oil and natural gas that get burned, the more the climate is thrown out of whack, and the more these companies are rewarded financially.

If you give a dog a piece of meat every time it bites someone, it could reasonably be argued that you are encouraging this dangerous and irresponsible behavior. In light of environmental necessity, we might beseech the energy companies to behave responsibly, but they are guaranteed to ignore us. Why? Because they earn large sums of money when they do so. A demand for reform of energy policy may be well framed and well founded, but it is wasted wind if the current setup, which so richly rewards all of the wrong behaviors, is allowed to persist.

If we’re serious about addressing climate change, nationalization of the energy industry must become a central organizing demand.

A Necessary Step

When it comes to climate change (and other struggles), there is ample evidence that we won’t be able to accomplish what is necessary under the current economic framework. But people are instinctively leery of big changes. It’s natural to wish that we could persuade the oil companies and other bad actors to reform themselves and get with the program. It would be so much easier. But the weight of reason andhistorical evidence shows that to be a dead end. In such a case, and in the face of the rapidity with which climate change is spinning out of control, the rational way to proceed is to get to work doing what’s necessary, however unconventional or difficult it may seem. The demands put forward by the climate change movement should reflect this.

Nationalizing the big energy companies would make all the difference to the fight to curb greenhouse gas emissions. Right from the start, it would eliminate profit from the energy calculus and remove a large pool of money that’s used to manipulate government policy. It would make it possible to embark on a plan for a sustainable energy future, which would focus on the needs of the population and the planet as a whole, rather than on the reckless aggrandizement of a few. But the issue of nationalization does raise many important questions: Is it moral? Is it legal? How would it work? Is it practical? Should the owners of nationalized industries be compensated?

Human Needs vs. Profits

Let’s first examine the question of morality. Do “we, the people” have any moralright to take a key national industry out of private hands and convert it to public ownership? One way to approach this is to consider the balance sheet: What does the population “owe” to the industry, and what does the industry “owe” to us?

To begin with, the oil, gas, coal and nuclear companies receive tens of billions of dollars every year in government subsidies. In other words, a healthy portion of the profits these companies report year after year come directly out of our pockets. In the case of nuclear, it’s doubtful that the industry would break even without massive public subsidies and insurance guarantees.

In addition, publicly supported academic research has laid the foundation for a great deal of the technology and innovation that allows the energy industry (and others) to turn a profit.

The overall profits claimed by the energy corporations derive from a combination of public subsidies, destruction of the environment and wealth produced by the industry workers for which they are not compensated.

Then there are the so-called external costs of energy production. These are the depletion of limited resources, destruction of the environment and poisoning of communities that are all built in to the current industry model. These costs are “external” in the sense that energy companies don’t pay them; there are no entries for these items in their books. Instead, these costs are born by the public. A 2010 study by the National Resource Council put these costs at $120 billion for 2005 alone. This is more than the total combined, record-level profits of Exxon, Shell, Marathon Oil and Chevron in that year.

On top of all of this, we have the fact that the workers in the energy industry – as in all industries – are paid only a fraction of the value that their labor produces, while the balance is siphoned off as “profit.” So, the overall profits claimed by the energy corporations derive from a combination of public subsidies, destruction of the environment and wealth produced by the industry workers for which they are not compensated.

If all of this weren’t enough, we can add to the social debt of the energy industry the fact that for generations they have been blithely churning out greenhouse gases that scientists tell us are threatening the very survival of humanity.

So the energy companies owe a huge debt to society. What about the other side of the moral ledger? Weighing in favor of the right of the energy monopolies to continue business as usual is a body of corporate law and historical precedent that, taken together, asserts that production for private profit represents the height of nobility. This is manifest in US foreign and domestic policy, which operates on the principle that the pursuit of corporate profits is more central to “freedom” and “democracy” than free speech, human rights and other lesser notions.

So the moral contest comes down to this: How does the claim of the energy tycoons to pursue profits through private ownership and control of our energy infrastructure stack up against the right of the majority to defend ourselves from the damage, theft, abuse and destruction that have been wrought by the energy corporations for generations? The question answers itself. Defenders of the status quo would have us assign monumental weight to corporate “rights.” But only in a moral universe that values the accumulation of wealth above community well-being can corporate law and historical tradition compare with the right of the population as a whole to take action to prevent our own extinction. It’s a question of whether to prioritize human needs or profits.

The Matter of Legality

Would nationalizing the energy industry be legal? Given the strong moral case for nationalization, this question is less pressing than it might appear. One could get lost in the thickets of the constitution and federal and state law regarding corporations and private property, but we ought to recognize some basic truths:

What’s legal and what’s just is not necessarily the same thing. Many things we know to be unjust were once legal: slavery and Jim Crow segregation, for example. Many things we know to be just were once illegal: the right of women to vote, the right of workers to form unions etc. Moreover, laws are not applied equally across the board. When it comes to interpreting and enforcing the law, the rich and powerful are treated quite differently than the rest of us.

There have been a number of nationalizations in US history, the most recent being the 2009 partial takeover of General Motors in the wake of the Wall Street bailout.

The law is not absolute, but is interpreted to fit the times. Most scholars today would argue that the internment of Japanese-Americans during World War II was illegal, but few had the courage or integrity to say so at the time. Just a few years ago, same-sex marriage was illegal in most states. Today, long-standing laws forbidding same-sex marriage are being struck down left and right. Women’s right to abortion was proclaimed by a conservative US Supreme Court during the Republican administration of Richard Nixon. What tipped the balance was a massive movement in the streets. Daniel Ellsberg, who in 1971 released the top-secret Pentagon Papers, was set free, but Chelsea Manning, who released documents about the Iraq and Afghanistan wars to WikiLeaks (none of which were labeled top-secret), was sentenced to 35 years in prison. The key difference is that in 1971 a powerful, independent antiwar movement was sweeping the country.

Even where the law appears to be clear-cut, “one has a moral responsibility to disobey unjust laws,” as Martin Luther King Jr. wrote in his 1963 “Letter from Birmingham Jail.” With the moral ledger for nationalizing the energy industry pointing so squarely to the need to place the rights of people and the planet ahead of the desire by a few for private profit, any law that might be used to block nationalization of the industry must be unjust.

There may still be technical, legal grounds – both in domestic and international law – on which to base nationalization of the energy corporations. As noted below, there have been a number of nationalizations in US history, the most recent being the 2009 partial takeover of General Motors in the wake of the Wall Street bailout.

What Would It Look Like?

Suppose a majority of Americans were convinced of the need to nationalize the energy monopolies as a step toward forestalling climate calamity. How would it work, exactly?

What would not be helpful would be to create a new government bureaucracy, run from the top down by politicians whose campaigns are funded by the usual corporate behemoths. No. To do this right, we need a new national energy sector that is run completely democratically.

  • Workers in the industry should elect their own supervisors and have final say over safety and working conditions.
  • Policy, priorities and directions for the new energy sector should be set by a national board comprised of delegates from regional energy committees as well as elected representatives of the workers within the energy industry, workers in other industries affected by energy policy, scientists and engineers.
  • All energy policy representatives should be elected and subject to immediate recall. For compensation, they should receive no more than the average pay of those they were elected to represent.
  • Workers whose jobs are lost due to new priorities and directions in energy policy should be guaranteed retraining, and full union wages for as long as they remain unemployed.

A concise way to summarize the above principles in a slogan would be: Nationalize the energy industry under workers’ control!

Can It Be Done?

We know the climate is in trouble, and nationalizing the energy conglomerates seems like a fine idea, but is it practical?

So often, we confuse what is practical with what is easy. It would be easy to continue to prostrate ourselves before corporate politicians and the for-profit energy companies. We could continue to plead for reason at the next international Conference of Parties (COP), but the results are likely to be as dismal as was the case with COP1 through COP19. Time is short. The movement needs a new demand and a clearer focus.

We will not be able to stop global warming unless we break the link that subordinates the needs of the many for a rational energy policy, to the desire of a few to maximize their profits.

It’s popular to talk about the need for “getting money out of politics.” But no policy could be more marinated in wealth than allowing an entire sector of the economy – particularly one as crucial as energy – to be steered by the need to maximize profits for a handful of private owners. Since burning fossil fuels has proven highly profitable for the energy corporations, we will not be able to stop global warming unless we break the link that subordinates the needs of the many for a rational energy policy, to the desire of a few to maximize their profits. In this sense, nationalization of the energy industry is as practical as it gets because without taking this step, without changing the rules of the game, we simply won’t be able to solve the climate crisis.

Meanwhile, the United States already has a history of nationalizations – including railroads and telegraph lines (World War I), coal and trucking companies (World War II), and banks, retail companies and the airport security industry. Trouble is, these were undertaken primarily to prop up corporations and the wealthy. Many countries (Ecuador, Iran, Venezuela, Russia, Saudi Arabia, Canada, Mexico etc.) have partially nationalized oil sectors using the undemocratic, top-down model that leaves the rich in control. But in 1960, when Texaco, Esso and Shell oil refineries in Cuba refused to process oil from the Soviet Union, Cuba nationalized them under workers’ control. If Cuba can do it, so can we.

What Would It Cost?

After examining the moral balance sheet and adding up the costs, it would be hard to make the case that the energy magnates are owed a penny. Quite the reverse. Taking into account generations of depletion, destruction, pollution, devastation, state subsidies and highway robbery, the oil barons have a monumental and growing debt to society. On moral and rational grounds, these companies are owed nothing in compensation for nationalization.
There is justice in this position, but we need not hold it up as an unbreakable principle. If, by some miracle, a modest offer of compensation would induce the energy profiteers to give up the fight, abandon their claims and cooperate in transforming the industry to public ownership under workers’ control, then such a deal might be worth considering. But the starting point must be that the right of the majority to a healthy planet trumps any corporate charter.

* * *

If humanity is to win the climate fight, we need to understand what it will take and be more focused in our demands. We need to be fully cognizant of who our friends and enemies are. Only then can we build a movement powerful enough to defend the rights and needs of the majority. By calling for nationalization of the energy industry under workers’ control, we strengthen the climate change movement in multiple ways: by identifying the key obstacles in our path; by embracing our natural allies and unmasking our adversaries; by providing a strategy around which a fighting movement can coalesce; and by focusing our collective strength in such a way as to strike a real blow at the very heart of the problem.