This is a song Charles Manson stole from the Beatles. We’re stealing it back. – Bono
Business issues have been much on my mind of late, and not just for the obvious reasons. Gavin (Whythawk) has pounded this space with a steady stream of posts that come at us from some really different angles. The S&R crew is largely American and progressive, but he’s African and Libertarian. Unlike many Libs I know, though, he’s not a creature of pure theory – he gets his hands dirty trying to drive investment at the bottom of the food chain in a place where the bottom is about as low as it gets on Spaceship Earth.
The result, for me at least, is that I find myself thinking about how years of fat cat scandal and abuse here in America has worked to make “capitalism” a dirty word among folks to left of center. When we hear talk about markets and capitalism and business, especially as such things are fetishized in the corporate media (think about how The Apprentice has apparently made Donald Trump into something of a corporate statesman), we’re more likely to think of Nacchio, Ebbers, Rigas, Koslowski, Skilling, Lay and all things Halliburton. We think of modern robber barons, of men whose pathological greed and power-lust knows no boundaries. Men who will sit around and joke about stealing a grandmother’s retirement – a joke that my own particular dark, twisted sense of humor can parse in the right context, but certainly not in a situation where they’re actually doing it, even as they speak.
What’s frustrating here is that capitalism isn’t a privilege reserved for Republicans. It’s part of the progressive birthright, as well. Some of our most remarkable business achievements have been accomplished ethically, with a keen eye toward the ways in which the tools of capitalism can be used to create a greater prosperity for everybody. Enlightened capitalists like Richard Joushua Reynolds, for instance, created an economic base in my home town that afforded generations of working class employees an opportunity to participate in the rewards of their work, increasing educational opportunities and providing genuine security for their families. (Yeah, I know – tobacco is a somewhat problematic industry, but we’ll save that chat for another time.) Thanks to RJR’s stock investment plans, there were line workers who retired as millionaires.
R.J. Reynolds and his family played a large part in the public life and history of the City of Winston-Salem. In 1884 he served as a city commissioner. Reynolds was politically progressive especially for his time. He established progressive working conditions in his factory, with shorter hours and higher pay. He also signed a petition for a property tax to pay for public schools and voted to approve an income tax. After his death, Katharine Reynolds continued his philanthropic activities. She gave money to establish The Richard J. Reynolds High School and the R.J. Reynolds Memorial Auditorium (both are listed on the National Register of Historic Places). Construction of the school and auditorium was begun in 1919 under the direction of architect Charles Barton Keen and finished in 1924 (the school opened in an uncompleted building in 1923 after the destruction by fire of the old Winston High School).
Part of that RJ Reynolds progressive bent is something that only the locals seem to know about. The Reynolda Estate was a massive operation and required a lot of on-site manual labor to maintain. So he built a village that included housing and a comprehensive set of services for all his employees. This included building top-notch schools for the children of black workers, at a time when educating blacks wasn’t on anybody’s agenda. His black workers enjoyed conditions (and even management opportunities) that were simply unprecedented at the time.
The Reynolds family also brought Wake Forest University, my alma mater, to Winston-Salem via a massive grant of land and cash, and that institution, which has grown into a top 30 national university, today stands as the largest employer in the county and the new center of an evolving innovation-centered economy. Wake’s motto, appropriately enough, is Pro Humanitate.
There are other examples out there – feel free to populate the comment box with your own – but the point is that progressive, “Pro Humanitate” principles are not incompatible with capitalism and business.
It seems unfortunate to me that the reminder has to come from South Africa, although I’m grateful to have a colleague like Gavin aboard to provide those moments of valuable perspective.
Another of my S&R colleagues, Pat Vecchio, is taking a course this summer (for fun, apparently – he does that sort of thing a lot here lately) that has him reading Alexis de Tocqueville’s seminal Democracy in America, a book published in 1835 that today remains one of the greatest assessments of the American system ever composed. For me, the most important idea in the whole of the book is the principle of “self-interest, rightly understood.”
The principle of self-interest rightly understood produces no great acts of self-sacrifice, but it suggests daily small acts of self-denial. By itself it cannot suffice to make a man virtuous; but it disciplines a number of persons in habits of regularity, temperance, moderation, foresight, self- command; and if it does not lead men straight to virtue by the will, it gradually draws them in that direction by their habits. If the principle of interest rightly understood were to sway the whole moral world, extraordinary virtues would doubtless be more rare; but I think that gross depravity would then also be less common. The principle of interest rightly understood perhaps prevents men from rising far above the level of mankind, but a great number of other men, who were falling far below it, are caught and restrained by it. Observe some few individuals, they are lowered by it; survey mankind, they are raised.I am not afraid to say that the principle of self-interest rightly understood appears to me the best suited of all philosophical theories to the wants of the men of our time, and that I regard it as their chief remaining security against themselves. Towards it, therefore, the minds of the moralists of our age should turn; even should they judge it to be incomplete, it must nevertheless be adopted as necessary.
It’s the erosion of this essential principle that lies at the core of what we have become. In short, capitalism of the sort practiced all-too-frequently in America has been obsessed with self-interest and totally unconcerned with rightly understood.
If we’re to regain our former greatness – and please, don’t mistake affluence with greatness – we must insist on rightly understood. Capitalism must be progressive, not corrosive. It must be about creating opportunity for everyone instead of building barriers to keep wealth in and people out. And while locking the pillagers up is an important and altogether satisfying step that a moral society must take, understand what Tocqueville says above. Our collective greatness is ultimately not about grand acts but about the small, the routine, the ordinary daily acts of self-denial.
Capitalism isn’t a dirty word, and shame on us that we’ve allowed a few sick men to steal it from us. It’s time to steal it back.
:xpost Black Dog Strategic:
It’s ironic that one industry
But 1% – that’s just diving headlong down the slippery slope, isn’t it?
But you’re right. Once upon a time we had this saying that “you have to spend money to make money.” As a business consultant, though, I can tell you that we no longer seem to believe that. Cut costs, maximize “efficiencies,” all this is code for getting rid of expensive people.
It seems like all decisions are cost-based these days, and precious few are investment/return based. The shame for the news industry is that they have EVERYTHING you need to compete in this new media economy. Everything except the will to invest intelligently.
Dinosaurs can cut costs all they like, but “operational efficiency” ain’t gonna avert the path of that incoming asteroid….
Just finished Cooper’s “The Pioneers.” Some might think a novel written in 1823 about the push West in 1793 would be inspirational, a glorious Manifest Destiny Yankee Doodle Dandy kind of tale. Instead, the novel seemed to me to be about unfettered exploitation of bountiful but not unlimited natural resources like timber, failure to pursue alternative energy sources (in this case, coal), the blood lust to slaughter species, and genocide. So much for Y.D. Dandy.
What strikes me is how the writers of the Federalist Papers and the anti-Federalist papers, de Tocqueville, et al foresaw us today. Sure, their hopefulness outstripped their pessimism — indeed, they thought the promise of the United States would overcome its potential flaws — but a lot of what I’ve been reading over the past month has led me to believe that the seeds to the weeds in our society today were sown almost as soon as European settlers arrived. And it’s sad to see that the optimism of people like de Tocqueville seems irretrievably lost in our Dopplering history.
I kept wondering why you had such a mancrush on Gavin. 🙂 Now, at least, we get to the heart of the matter. 😉
Capitalism is a process, much like communism, socialism, or any other -ism you can think of. In order for the process to work optimally for everyone’s benefit, the people involved have to act rationally and with the highest possible attention to how they operate in the process. But as I said recently, people ain’t rational, and as a result, any process (and this includes government) will be tainted by the cultural, social, and even ethnic biases of those involved.
In the case of American capitalism, it has been warped by generations of the “me first”, profits-uber-alles ethic, and a desire to make lots of money quickly with as little work as possible. Our entire model of success is predicated on going from working for your pay (the wage-based model) to earning money off capital gains and dividends (the interest-based model). People are taught almost from birth to value acquisition and consumption as the end in itself, not the means to a greater end–that being building a stronger society where all can succeed.
That’s how you end up with guys like Noah over at 5E, who are so completely brainwashed by the libertarian ideology that they can’t even speak to your thesis. Even better, here’s a quote from a George Reisman essay on the environmental movement of “Green hotels:”
The ethics of environmentalism and the Greens is one of human deprivation and individual self-sacrifice. Business in contrast rests on a foundation of the pursuit of happiness and the profit motive. The one represents a joyless existence devoted to selfless service to the
I was beaten over the head in my blog a few months ago by my friends on the left due to my love of Adam Smith. They all referred to Smith’s epic “Wealth of Nations” and were able to nit pick it to death. Somehow, “The Wealth of Nations” causes some of my friends on the left a case of the vapors.
Somewhere along the line, my progressive buddies forgot that Smith did an equally epic treatise, “The Theory of Moral Sentiments,” in which he exhorts the leading capitalists to be moral people, treat their workers fairly, and provide for the betterment of the community. He had strong doubts about man’s abilities to pull off profitable business while being moral and upright. This book is a good read.
Perhaps the RJ Reynolds family were admirers of Smith.
Martin and Jeff: Sadly, Americans are extremely prone to either/or constructions. You either with us or against us. Two sides to every story. Etc. We’d be better off if we saw the both/and in situations. This is one of them – anybody who sees self-interest and morality as somehow exclusive processes is in the grips of a pathology that gives us two kinds of people: soulless robber barons and weepy, ineffectual radicals. Oc course, those are stereotypes that actually apply to very few real people, and the fact that our typing metanarratives are trying to drive us into one corner or another is keeping us from finding the sort of balance we need for actual productive change.
If a US Anglican group can leave the British Anglicans (because of their liberal stance on homosexuality) and join up with an African one (because of their conservative stance on homosexuality) then there isn’t any reason that a set of progressive US businesspeople shouldn’t take guidance from Africa as well 😉
I have never said that there isn’t exploitation within capitalism. It is more unlikely, though. Communism, autocracy … hell, any system in which the system itself is more important than the people in it will set up some people to steal from all the others.
What’s been appalling at large listed companies (especially in Europe and Japan, but in the US as well) has been the way executives have demolished the rights of shareholders. Poison pills, structured boards, special voting rights … all these things have undermined the self-interest of the actual company owners. Home Depot reached the apex last year when their then CEO limited their annual shareholders meeting to 40 minutes and refused to answer questions. He was squeezed out. Shareholder activism is on the rise. And with it a lot of that self-interest is being expressed. The more interests diverge then the better the compromise. A few people, who aren’t even the investors, deciding for everyone is a poor way to choose a future.
“self-interest rightly understood”, yip, that’s what it’s about.
“I have never said that there isn
Just like Noah responded to this question with some boilerplate psuedo-libertarian nonsense, Jeff’s response illustrates what I’m talking about. He discusses Adam Smith’s “The Wealth of Moral Sentiments,” and admits that Smith saw a problem with being able to integrate progressive, forward-thinking ideology with capitalist practice–but to him, it’s more important to needle his liberal friends for not paying attention to Smith’s multifaceted viewpoint. 😉
There’s a specific movement in the U.S. business community to change SEC rules to limit the power of “activist shareholders,” due to groups like the CALPERS bloc pushing to get their investments to branch out into more socially responsible practices. Google the phrase and you’ll see what I mean. The consumers are actively exerting their rights in the market, but the top echelons are using the law and money to shut them down. And thus the market is corrupted and distorted.
Oh, and the Home Depot shareholders sued to block Nardelli’s massive golden parachute payout, but a judge let it proceed. So the guy drives a company’s stock into the ground for five years, shuts off shareholder rights, and walks away with tens of millions of dollars.
So much for incorruptible capitalism.
Ultimately anything has the potential to be corrupted. That is why people have to be motivated to protect and preserve.
When a people cease caring about politics (and everything becomes political once more than two people walk this earth) then he/she, in effect, ceases caring about a decently regulated and properly administered society.
If such individuals rise to the top through ‘gangsta’ style tactics, behaviour and practice then a people may find themselves slaves. The shackles may not be the visible ones of old…but they will be there. The soul in harness is a terrible, terrible thing…
It is always easy to say no borders, no patrols, anything goes. It is always the harder road to have order, discpline, good practice, laws, civility, etc.
Any good parent knows…tough love in the end will allow for better growth of the individual and the ‘herd’.
Anyone who wants to play fast and loose with people…I’d fight to the death – arena, battle field…wherever.
Now I’m just a simple country novelist with a fair amount of book learnin’, so maybe I’m seeing this discussion all wrong.But it seems to me that this discussion has been missing a key part – a part that Sam probably thought long and hard about as he composed this – knowing Sam as I do to be a simple country poet with his own fair amount of book learnin’. That missing part is discussed below.The tension in American political and economic discourse – and perhaps I’m being redundant, because in American discourse the political and economic usually are as intertwined (tangled might be a more apt description) as those snakes on Medusa’s head (there’s an example of my book learnin’ coming out) – is always the same tension. It’s the tension between the two great ideas that form the basis of America’s discussion of what America should be. Those two great ideas are capitalism – which ya’ll have heartily discussed – and democracy, which I just haven’t seen discussed much at all, to tell you the truth. It is the struggle between those two powerful ideas that defines America.As Mr. Jefferson (that’s what we call him here in Virginia) “wrote” in a little document called The Declaration of Independence: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
Many of the things said here about capitalism are true.
What’s also true is that capitalism has already revealed it’s limits. Once a corporation gets above a certain size, it becomes antithetical to human life. Below that point, it encourages. Above that point it crushes. And there’s probably a fuzzy area in the middle where it kinda does this and kinda does that.
However, it’s CLEAR that capitalism has already revealed the utter limit of its ability to do us any good at all. It’s broken down at the higher levels and is PART OF THE PROBLEM at that level, regardless how great entrepeneurealism is at the grassroots level.
WE NEED SOMETHING NEW!
I agree with you and Monsieur de Toqueville, but I’m afraid its more than a ‘few sick men’ who cause the world to suffer because capitalism has run amok.
In my mind the most egregious are those thousands who enable the media to become ‘handmaidens’ to monstrous corporatism, designed ONLY to engulf the world. I sincerely regret that I have arrived at this conclusion, and wish only for a way out.
c(r)apitalism as has been warped and deformed in America means trading your brother to a gang of Aryan Brotherhood rapists in prison for a pack of smokes.
c(r)apitalism as it is currently practiced in America must either change, or die.
Changes required include:
* Eliminating the legal status of corporations as immortal persons with the full rights of U.S. citizens, but none of their responsibilities
* Shutting down loopholes by which people who make unearned income from stock options pay a lower percentage of income tax than the janitor who makes 7 bucks an hour
* Getting rid of “slap on the wrist” $50,000 fines for corporations that cause billions of dollars of damage in pollution and thousands of cancer deaths from toxic chemicals
* Getting private enterprise OUT of the prison business, the education business, the health care business, the police business, and now, with Blackwater, the U.S. army business
* Forcing corporate boradrooms to include 1/4 board members selected from labor unions (If this sounds like insane communistic propaganda, bear in midn that this is required by law in Germany)
* Forcing companies to end the “you train, I’ll hire” Catch-22 by levying a fee for training workers which must be paid whether or not thw corporatino chooses to train its workers. (If you think this is demented far-left lunacy, you should realize it’s required by law in France.)
* Ending creepy monopolies like cable companies that are single-provider broadband ISPs throughout an entire region, Microsoft, etc., etc. etc.
These changes would destroy c(r)apitalism as we know it. Good riddance. They would destroy American c(r)apitalism by introducing competition, repsonsibility, financial accountability and worker participation in American business.
The most savage enemies of true free market capitalism are the giant coroporation, which thrive on monopolies and sweetheart legislation and special legal loopholes that crush all competition and legislate guaranteed profits. The biggest subverters of the true free market in America aren’t the body-pierced anarchist hippies, but the men who sit around corporate boardrooms plotting how to extend their illegal restarint-of-trade monopolies.
If ethics is based on biological premises. Then all “healthy” social organizations will account for whatever these inherent ethics are. What makes a corporation unique among human organizations is that its owners are not ethically liable for its actions. Corporations are not greedy or selfish. They do not act for any other reason than self-preservation and capital acquisition through the legal principles that govern their operations. We write the law. Corporations will change when we decide that rational economic planning and housing, feeding, and educating every human as their birthright are more important to us than the “freedom” of a privileged few to live lives of unimaginable opulence.
While I agree that capitalism is progressive, you picked an extremely poor company to hold up as a beacon. You’ve been scammed. The only reason that RJR has paid as well as it has is to keep a union out in an otherwise unionized industry. It’s the unions at Brown and Williamson and Phillip Morris that brought the pay of the industry up so high, and RJR upped their pay so the workers wouldn’t try to unionize, which they do anyway, and which is met with vicious anti-union campaigns every time.
And workers retiring as millionaires at RJR is now a thing of the past, won’t happen any more. Back in the nineties, the pensions were greatly reduced. Now the jobs are being outsourced, and benefits for those left further cut.
And you can’t even say, well, that’s today, not then. Here’s the REAL history of RJR in the book Civil Rights Unionism – http://uncpress.unc.edu/chapters/korstad_civil.html
It’s the story of the now-forgotten Local 22 of the Food, Tobacco, Agricultural, and Allied Workers-Congress of Industrial Organizations (FTA-CIO), a mixed-race union that RJR finally crushed, using the National Labor Relations Board and the red-baiting of the fifties.
Before praising RJR, a little history would do you good. A company built upon union-busting isn’t progressive.
How about looking at a company like Phillip Morris, who did it all the right way, with good relationships with their unions that ACTUALLY raised the wages in the industry to allow line workers to retire rich, and those PM workers STILL can retire rich?
My stars, but there’s a lot of erudition goin’ down here.
I’ll keep my two cents brief: Capitalism is as foundational to America as democracy. To capitalism we rightly attribute our rise to global dominance and the achievement of the highest living standard in history.
But the world has changed. A system that was ideal when industrialism was in it’s infancy and the world’s population was too small to have a devastating impact on the environment is no longer ideal. In fact, this sacred cow has become downright dangerous.
I’m not suggesting we do away with a free market economy altogether by any means. I’m just saying that just because unfettered capitalism worked in the past doesn’t mean it will work now.
You’re not telling me anything I don’t know – maybe I should have added that what I was talking about is how things WERE, not necessarily how they ARE.
I personally don’t much care that the company’s motivations through the ’70s, for instance, had to do with keeping unions out. Unions are the means, not the ends, and if the threat of the union is sufficient to get a company to provide better pay and benefits than they could get with the union in place, then there is no need for the union.
My grandfather worked for Piedmont Airlines, another company that took exceptional care of its people (up until it got all corporatized in the 80s). Union organizers would come in, the workers would ask what the union could do for them, the union would do its pitch, and the workers would say no thanks because they were already doing better.
Unions are important in some places, but I’ve always felt like if companies would operate ethically there would rarely be a need for a union. It’s good to have the option, but people who promote the idea of Labor first, last and always are pushing an agenda that’s often as harmful to workers than the company is.
You miss my point, Sam. RJR paid horrible wages in the early days, which is why Local 22 was formed. They went back to the horrible wages until PM and B&W were unionized, and started getting excellent wages and benefits, so RJR didn’t do so out of a progressive capitalistic worldview, they did so to keep from being unionized. As the unions have receded in power, RJR have cut the benefits and real wages of the workers, as well as outsourcing the jobs. They certainly have the worldview of every other nasty corporation in America today. Anyone hired in the last ten years at RJR will NOT be retiring a millionaire.
And, BTW, the wages RJR paid were not BETTER than with a union, they were just within striking distance of both PM and B&W. They kept close enough, and with vicious illegal anti-union campaigns, they kept the unions out.
Once again, I agree with your basic argument. I reject your using RJR as an example of a company that does the right thing, because they aren’t.
I also reject your final statement – Unions give workers a voice. Even if a company is good to it’s workers, a worker only has the good word of the owner it will remain that way. With even the best companies, it’s always best to have a CONTRACT that gives the workers a voice and a way to solve problems giving the worker an equal right by law.
You’re conflating “Richard Joshua Reynolds” with “RJR, Inc.” RJR is a company with a long history, and I’m not challenging your assessment of some of their labor issues through the decades.
I’m sure there was never a time when the company’s workers were paid as well as we might all have liked – I grew up working class in that town and even where things were comparatively good, it was never a worker’s paradise.
But the accomplishments of the man are unlike anything you’ll find in the South in the 1920s and 1930s. Can we do better than he did – sure, and we should.
On the final point, you can mythologize unions all you like, but what you offer here is a glowing theory that bears little resemblance to how things actually work in the real world – kind of like how glowing theories of capitalism fail to capture the dirty underbelly of real markets. I’ve seen union leaders throw those they represent under the bus merely to further their own personal agendas, so you’re finding no takers here. The effectiveness of a particular union is contextual – it may work wonderfully or it may be worse than the company it’s up against, but it isn’t automatically ANYTHING.
Well, it looks like YOU are the one conflating Richard Joshua Reynolds and RJR. Reynolds. Reynolds died in 1918, long before RJR provided well-paying tobacco jobs. RJR was unionized by Local 22 in the forties because of the horrible pay and working conditions at the plants.
So, I can’t buy the argument of Mr. Reynolds being an “enlightened capitalist” that did great things for the community of Winston-Salem, when he was long dead and gone when those great wages happened, and they had NOTHING to do with him.
BTW, the forgotten history of Local 22 is a fascinating one. In the south, in the forties, you had a union local started by blacks, but included in whites, who worked together for a long time. Of course, red and race-baiting killed the union, and the company worked viciously to make it happen.
And, as Thom Hartmann says, without unions we lose democracy. Unions are a vital part of our nation. I’m not saying we don’t have our faults, but we are a VERY positive force in America.
You cannot trust the altruism of a corporation or the captains of industry, as the law tells the corporation it has to maximize profits and minimize costs as it’s reason to exist.
You’re really ignoring the whole point of the post. I KNOW we can’t trust the altruism of corps – not as they’re constituted today. And no, there was never a golden age where corps were all sunshine and rainbows and ponies.
You seem to want to truck in absolutes. Unions are absolutely good, corps are absolutely evil, biz owners are absolutely not to be trusted, etc. Of course, that isn’t how the real world actually works.
What we need to begin working toward is a corporate model that’s MORE responsible for the wellbeing of the worker and the community. We’ll never get to the point where we don’t have to keep an eye on them – EVER – but we can get to a point where enlightened business practice – self-interest rightly understood – is more the rule than the exception.
The first step, as I say, is for people like me to stand up and plant a flag. Capitalism isn’t the exclusive domain of robber barons.
I agree COMPLETELY with your overall point, and the wish of making a new corporate model. I just strongly disagree with either Reynolds or his company being held up as an example of a company that does the right thing, when it’s history shows it to be the exact opposite of that.
And I don’t truck in absolutes. I admitted that unions have flaws. And I realize there ARE good companies out there – look at Phillip Morris, they are a company STILL doing the right thing for their communities and the workers. But I’m a trust but verify kinda guy. Do the right thing, and give the workers a contract.
And I’m not anti-union in principle – it’s just that I’ve seen them behave as badly as the evil corporate overlords on occasion. I hear you on the trust but verify angle, as well.
It’s a long revolution, if it’s anything at all. It requires strong government oversight and an equally strong cultural foundation. I’m not sure I expect it to happen ever – we seem to be moving in the wrong direction right now, but if there is going to be productive change it’s important for people like me to keep raising hell.
I’m going to be teaching some classes in the tech management grad program at U of Denver starting in the fall. I dearly hope they let me teach ethics….
Sounds like we have a meeting of minds. To see how unions can be a strong player in better corporate governance, look at Harley Davidson and the Machinists Union and PACE, and the IAM’s High Performance Work Organization that saved Harley Davidson and made them a great company to work for and a highly competitive one.
I do believe good unions are part of the solution, not part of the problem.
one thing is certian, the same is true today as in 1897, when Tranlence Gardner first spoke his immortal words from Great Britain: Our neighbors of the East yeild porridge, when scones might bit the trouser once the fillbrighten…
but this is not to say present American strategm is altogether flawed. Certainly a dollar drawn hence or hither might be said to be a “dalliance or a debacle” regarding present expectations of one’s, shall we say: “Prospectus of Platitudes (?)……”. But, Gardner’s insights into essential truths of the “American Way,” as it were can never hide the forthright probidimous spectacalous of their, shall we say, “retarded” president. Egad, how we shudder overseas, knowing that one of our own has aligned with such a “spectacalous(!)”. Truly, capitalism, may or may not yield, said treasures of “Bancomy” – but I dread to think of the consequences with out yorn or hither. In this day and age of death shield drivle/and working class ameglaford – it is not a wise time to hem and bow to the upshift of the nottingham.
Certainly, history will bear me out. If not the entirety of the Spengler-class (shall we say).
Sir Norman Shears