What's a Small Business?

Small concerns make the best of it

It Depends Who You Ask.

Richard Mellor
Afscme Local 444, retired

I was talking to a friend of mine the other day who is a small business owner. I’ve known her and her husband for a long time, long before they opened a business.

On April 3, the US government approved $350 billion for small business that are being savaged by the pandemic. But my friend was as mad as hell that getting stimulus money for their business was not an easy process. At the time we talked she had received none. This was not an isolated incident.

Many small concerns were getting the same treatment, then we were starting to find out that major companies were getting small business loans. Business Week reported that a biotech company with 700 employees was approved for a loan. And to rub salt in the mom and pops wound, this company had paid a multi-million dollar settlement to the justice department, for what, I do not know.  Another company with 1270 workers, almost half of them outside the country according to Business Week, was also approved for a loan. How did this happen?

Business Week, owned by Michael Bloomberg, is a serious journal of capitalism. It wrote that this situation arose due to “obscure federal rules that in 2016 redefined what constitutes a small business.” Why were these rules obscure? Talk to any working man or woman in the street and there’s pretty much total agreement about what a small business is. It’s the locally owned plumbing business, the barber, the grocery store, bar or restaurant. It’s not KFC, Safeway or CVS or the Apple Store or AT&T.

The Small Business Administration wrote rules that set size limits by industry so that companies with as many as 1500 employees qualified for loans “as much as $10 million”, and so do steelmakers with 1000 workers. The result of the writing of these “obscure” rules led to companies in more than 300 industries to be classified as “small” even though they have more than 500 workers. Methinks obscurity is not an accident.

So when the US Congress created the Paycheck Protection Program back in March and disbursed the $350 billion in April, it used size standards to determine how the businesses in the various industries could tap in to that money. The problem was that the “obscure” 2016 federal rules referenced above were still in place and the small folks got screwed. They were “….left to compete with far larger companies….” says Business Week. That’s what I make of this.

I’m not a business writer but it seems the mom and pops, local concerns which is what millions of us working folk consider small business, got the old “rope a dope”, (Thank you Muhammad Ali). The initial $350 billion was “tapped dry” in 13 days. Since then, another $320 billion has been appropriated form the US taxpayer. Next time they close that fire station, can’t repair that dam, close that hospital or whine about the USPS needing a cash injection of $5 billion think about all this.

And here’s a statistic that reveals what boon a little obscurity can lead to. “2% of the approved applications for the U.S small-business bailout sought loans of more than 2 million, they accounted for 28% of the total funding.” . And while there have been “1.2 million loans for $150,000 or less… " this accounted, “….for only 17% of the $342.3 billion processed” says BW.

Readers will recall that there was quite a public outcry about this and the government has backed off with Trump telling the large companies to “stay out”. Local concerns or what people would call community businesses, do not normally have lobbyists and cannot bribe the politicians in the same way. They cannot compete with big capital and are at its mercy.

This economic and social crisis is revealing the rottenness and corruption that is like a cancer in the US political and economic system that cannot be cured. The rules weren't simply obscure because some dimwit wrote them. The politicians that write the laws write them on behalf of the manufacturers, Wall Street, the big banks, the hedge fund managers and private equity folks. They compete among themselves for public funds but will never represent the interests of small business or the working class. It’s not possible in our system of production.

As a union activist in the workplace for 30 years I learned that some agreements are best kept vague, some words and phrases when vague can serve your interests, but in this case the law wasn’t vague and it was obscure for a reason. The outcry in dangerous times has forced the perpetrators of obscurity to take a step backwards and be a little more cautious. The present situation is very explosive. It's not unlike the video's that are bringing to light the murder of black folks by cops and white supremacists; without them many of these incidents would never see the light of day.

The US elite, or ruling class cares not about a local community business that feels the weight of the big banks, the insurance companies, the health industry, the power of big capital day in day out. But they will be used as an ally in big capital’s war against workers. The middle class, small capitalists or petit bourgeois whatever name we give to this section of society, finds itself sandwiched between these two powerful forces, big capital on the one hand and the working class on the other. It is a class in times of heightened class struggle, when the organized working class is moving forward, that can turn in either direction or at least, sections of it can. Power attracts. The balance of power between these class forces will determine the relationship this intermediate layer has between one or the other of them.

It is important therefore for the organized working class to win allies from this section of society. When I ran for Oakland CA City Council 24 years ago, a major demand of my campaign was a $10 an hour minimum wage. There were small business owners who simply couldn’t afford to pay that and stay in business. I remember the owner of a coffee shop who hired three or four workers explaining that to me after one of the campaign debates. It's not as if he opposed it on principle. I informed him I was not a small business candidate but a candidate of the wage worker. But that should not end there.

Someone like that can be an ally of the organized working class like many of them who are facing extremely difficult times today can. They have landlords, normally big landlords, the largest landlord groups in the US today are hedge funds capital management companies and so on. The solution to this dilemma is the nationalization of the financial service industry, banks and so on. Eventually under the ownership and management of workers and consumers. In this way small business can have access to capital and cheap loans. The health and pharmaceutical industry must be publicly owned. Why should a local business with 12 employees, some part-time perhaps,  be responsible for providing health care? Then there’s the insurance industry that not only decides whether we have access to medical care or not but bleeds small firms dry.

The united working class is the only force in society that can change society and build a democratic, rationally planned socialist system of production based on human need rather than profits. The ruling elite will always use racism, religious discrimination, sexism, the fear of foreigners to undermine that unity and the power that results from it.

Appeals from big capital will be made to the small capitalists as comrades in arms, but in a decaying system, opportunity does not knock as frequently as it once did which gives the organized, conscious working class an opportunity to appeal to sections of this middle layer, many of whom have been wage workers themselves.

We see the power of workers at Amazon and as online shopping increases this power will become more evident breathing new life in to the organized labor movement, held back by a conservative pro-market leadership for decades.

This Pandemic has changed history. Nothing will be the same and that includes the historic struggle for the reins of society between those who do no work and those who do it all.