Many conservatives have contended that the free-market capitalist system unfettered by big government is the ideal political and economic system.
Perhaps the one American economist most admired by conservatives was Milton Friedman (1912-2006). Among others that he strongly influenced was the U. S. Federal Reserve Chairman from 1987 to 2006, Alan Greenspan.
In 1999 Freidman stated that he would eliminate most U. S. cabinet departments, including those overseeing commerce, education, energy, and labor (some of this material and references for it can be found in my An Age of Progress?). But it was also Freidman who contended that “the social responsibility of business is to increase its profits.” In The Cultural Contradictions Of Capitalism: 20th Anniversary Edition, prominent sociologist Daniel Bell wrote that “in its products and in its advertisements, the corporation promotes pleasure, instant joy, relaxing, and letting go,” and that this situation left “capitalism with no moral or transcendental ethic.”
We can grant that capitalism can have many beneficial effects and that other systems like socialism can have their defects, nevertheless the essence of capitalism is the selling of goods and services and making a profit. It has no higher moral goal. Essentially an economic system, it provides no adequate answers for how to deal with such problems as unsafe working conditions, unfair business practices, pollution and other environmental degradation, public health, slum housing, or the abuse of child labor. This absence of any higher comprehensive social philosophy led to efforts to supplement it by providing an overall philosophy of the public good. This absence led to Progressivism.At first it was a diverse movement of many who thought of themselves as “progressives.” It appeared in western Europe and then spread to the United States, becoming especially evident in the Progressive Era (1890 to 1914). As one historian characterized this trans-Atlantic movement, it attempted “to limit the socially destructive effects of morally unhindered capitalism, to extract from those [capitalist] markets the tasks they had demonstrably bungled, to counterbalance the markets’ atomizing social effects with a counter calculus of the public weal [well-being].”
The U.S. progressives in this era were a diverse group of reformers including socialists like the writer Upton Sinclair and the frequent Socialist presidential candidate Eugene Debs, but also Theodore Roosevelt, who after serving as a Republican president earlier, ran in 1912 as the Progressive Party candidate against the Democrat Woodrow Wilson and the Republican William Howard Taft.
Seconding Roosevelt’s nomination at the Progressive convention was social settlement worker and peace advocate Jane Addams. In the campaign Roosevelt charged that Taft was too beholden to big business. The Progressives advocated the prohibition of child labor, improvements of women’s working conditions, woman suffrage, and comprehensive social insurance (for such occurrences as sickness, unemployment, and old-age poverty). Although they obtained more votes than the Republicans, the Democrats won the election.
Although they lost the 1912 election, the Progressives did have a lasting impact. By 1918, for example, most states had enacted legislation limiting the work hours of women and/or children. A Supreme Court unsympathetic to many progressive causes and Republican dominance in the 1920s slowed further progressive gains, but the Franklin Roosevelt presidency of the 1930s and early 1940s and his new Supreme Court appointments inaugurated a new period more sympathetic to progressivism. In addition, a reconstituted Progressive Party in both 1924 and 1948 put up presidential candidates.Accompanying political progressivism was a cultural progressivism. Perhaps the most eminent historian of his day, Henry Steele Commager, wrote in 1950: “Who, in the half century from Cleveland to Franklin Roosevelt, celebrated business enterprise or the acquisitive society . . . ? Almost all the major writers were critical of those standards, or contemptuous of them. . . . Most authors portrayed an economic system disorderly and ruthless, wasteful and inhuman, unjust alike to workingmen, investors, and consumers, politically corrupt and morally corrupting.” A frequent complaint of writers was that unfettered capitalism in its pursuit of profits ignored beauty.
A man who had once worked for Upton Sinclair, novelist Sinclair Lewis, reflected this criticism in his novel Main Street (1920). He depicts its heroine (Carol) walking down the main street of his fictional Gopher Prairie, which resembled “ten thousand towns from Albany to San Diego.”
In all the town not one building save the Ionic bank . . . gave pleasure to Carol’s eyes; not a dozen buildings which suggested that, in the fifty years of Gopher Prairie’s existence, the citizens had realized that it was either desirable or possible to make this, their common home, amusing or attractive.
It was not only the unsparing unapologetic ugliness and the rigid straightness which overwhelmed her. It was the planlessness, the flimsy temporariness of the buildings, their faded unpleasant colors. The street was cluttered with electric- light poles, telephone poles, gasoline pumps for motor cars, boxes of goods.
To a friend who told Carol that the Gopher Prairie women were” twice as progressive as the men,” Carol responded, “But can’t the men see the ugliness?”
Despite political and cultural criticisms and some progressive reforms, however, the power of corporations, which progressives were always wary of, continued to grow during the twentieth century and beyond. The great increase in their power was often aided by judicial interpretations of the U. S. Constitution. Already in 1886, the Supreme Court ruled that the corporation had the legal rights of a person, yet unlike a person it retained only “limited liability.” This ruling was based on an extension of the Fourteenth Amendment, originally designed to protect the right of freed slaves. In the next half century, however, more than 50 percent of the court’s decisions applying this amendment were in behalf of corporations.Among the leading corporations was John D. Rockefeller’s Standard Oil Company. In 1880 it controlled at least 90 percent of U. S. refined oil. A decade later, as the Progressive Era was beginning, Congress passed the Sherman Antitrust Act. It declared that combinations that restrained trade were illegal, but the Supreme Court often decided how the law was to be applied.
In 1895, for example, it decided that a sugar trust controlling 98 percent of domestically refined sugar did not violate the law. Yet in 1911, it did apply the law to break up Standard Oil. After the breakup, however, many other businesses continued to grow larger and mergers continued. Even some of the fragments of Standard Oil remained large and powerful. Its largest piece, Standard Oil of New Jersey (eventually known as Exxon), supplied one-fourth of all Allied oil in World War I.
By 1991, Exxon, Royal Dutch/Shell, and British Petroleum (today BP) were among the more than 30 global corporations that produced more goods and services than the gross national products (GNPs) of seven-tenths of the world’s nations. In 1999 Exxon and Mobil (another piece of the 1911 Standard Oil breakup) merged. Around this same time British Petroleum acquired two other former pieces of the old Standard Oil group with the purchases of Amoco and Atlantic Richfield.
Before the April 2010 BP oil spill it was the 1989 Exxon Valdez oil spill in Alaska that had most enraged environmentalists and progressives generally. And the legal consequences of that earlier spill illustrate one of the central concerns that progressives have with the powers of such large corporations as Exxon. They are able to afford the best lawyers and the most capable lobbyists. And after the spill Exxon litigated to reduce the monetary damages imposed upon it.
One lower court in the mid 1990s ruled that Exxon should pay $5 billion in damages, but the sum was later reduced to $2.5 billion. Then, in June 2008, after continuing litigation, the Supreme Court reduced the amount to $507.5 million. “This is good news for companies concerned about reining in excessive punitive damages,” declared the president of the U. S. Chamber of Commerce. Justice John Paul Stevens, soon to retire, was one of three dissenting judges, and he thought that Congress, not the Supreme Court, should have made some of the “empirical judgments” made by the Court majority.
Corporations have also been able to influence legislators through political contributions—made even easier by the “Citizen’s United” case a 5-4 Supreme Court decision of January 2010 that declared that the government could not ban corporate political spending in candidate elections.
And corporations can influence the media (itself mainly in the hands of giant corporations) and the general public through advertising, company press releases, and contributions to various causes. By 1999, corporate public relations employees outnumbered news journalists by more than four to one, and in many newspapers corporate press releases provided considerable content.
By this time many corporations, like the big oil companies, were multi-national in their scope and operations. Here are a few criticisms from the 1990s about their powers, which have not slackened. “The transnational corporations carry on inexorably. Increasingly flagless and stateless, they weave global webs of production, commerce, culture and finance virtually unopposed.” “The real ‘logic’ of the borderless world is that nobody is in control–except, perhaps, the managers of multinational corporations.” “Corporations exist to pursue their own profit maximization, not the collective aspirations of the society. They are commanded by a hierarchy of managers, not by democratic deliberation. . . . Hundreds of these large corporate political organizations are now astride the democratic landscape, organizing the ideas and agendas, financing electoral politics and overwhelming the competing voices of other, less-well endowed organizations and citizens.” “Public accountability is the essence of democracy. But the institutions for assuring corporate accountability at the local, national, and international levels are extremely weak.”
Although corporate spokespeople often speak of the high taxes corporations pay and the civic good they do, their power and influence has often reduced their tax-paying contributions. In 1981 they lobbied heavily for a tax cut bill signed by President Reagan that reduced corporate taxes. By fiscal 1998 corporate income taxes were contributing a smaller proportion of the federal revenues (about 11 percent of the total) than they had in 1980. By 1998 Time magazine, no opponent of U. S. capitalism, estimated that “the U. S. government’s cafeteria of corporate welfare”—including government tax breaks, subsidies, and bailouts—was costing taxpayers more than $125 billion a year.
On October 22, 2004, the Associated Press reported that “with no fanfare, President Bush Friday signed the most sweeping rewrite of corporate tax law in nearly two decades, showering $136 billion in new tax breaks on businesses, farmers, and other groups.” Concerning bailouts of corporations following the economic disaster that began late in President Bush’s second term, partly as a result of excessive government deregulation, enough has been written that no further comment is here needed.
As the 2010 BP oil spill neared and then hit the wetlands in Louisiana and threatened to also reach Alabama, Mississippi, and Florida, several New York Times’ columnists criticized both BP and the federal government. Thomas Friedman wrote, “President Obama’s handling of the gulf oil spill has been disappointing,” and he faulted him for a “failure of imagination.” Friedman added that the president “is rightly hammering the oil company executives. But he is offering no big strategy to end our oil addiction. . . . Indeed, where is ‘The Obama End to Oil Addiction Act’?”
Days later columnist Bob Herbert wrote, “The response of the Obama administration and the general public to this latest outrage at the hands of a giant, politically connected corporation has been embarrassingly tepid. . . . It [the spill] permeates and undermines the ecosystem in much the same way that big corporations have permeated and undermined our political system, with similarly devastating results.”
The LA Progressive has also featured various articles that have criticized the spill and the failure of the Obama administration to act more forcefully (see, e.g. Cyril Neville Joins Voices Crying from the Louisiana Delta). Exactly what motivated BP and other corporations responsible for the Gulf spill to be so lax about environmental precautions will become clearer in time—at a Senate hearing, executives from BP, Transocean, and Halliburton each tried to deflect some blame on to the others. But we already know that earning greater profits was part of the reason.
The federal government may have its problems and inefficiencies, but to think that it is not needed to safeguard the quality of life against corporations’ relentless focus on greater profits is indeed naive. Do we really think the multi-national corporations would put the well-being of our country, including its lands, seas, and people, before profits? As the early-twentieth-century American Progressives realized, including the former Republican Teddy Roosevelt, at times there is simply no substitute for energetic and decisive government leadership. And this is such a time.
Walter G. Moss is a professor emeritus of history at Eastern Michigan University. His most recent book is An Age of Progress?: Clashing Twentieth-Century Global Forces (2008).