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Why Businessmen Distrust Their State: The Political Consciousness of American Corporate Executives

Published online by Cambridge University Press:  27 January 2009

David Vogel
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The most characteristic, distinctive and persistent belief of American corporate executives is an underlying suspicion and mistrust of government. It distinguishes the American business community not only from every other bourgeoisie, but also from every other legitimate organization of political interests in American society. The scope of direct and indirect government support for corporate growth and profits does not belie this contention; on the contrary, it makes it all the more paradoxical. Why should the group in American society that has disproportionately benefited from governmental policies continue to remain distrustful of political intervention in the economy?

It is of course possible to attribute at least some of the public distrust of government by members of the business community to political posturing; continually to denounce government is a way of assuring that the policies of government reflect corporate priorities. Wilbert E. Moore suggests:

When businessmen did, and do, make extreme, ideologically oriented pronouncements on freedom from political interference, it is surely fair to say that they do not mean to be taken with total seriousness…Often, in fact, the sayers and the doers are not the same people… [T]he extreme spokesmen of business ideology are more often lawyers and public relations men than they are practicing executives…These are generally men, who like professors and Congressmen, ‘have never met a payroll’.

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Articles
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British Journal of Political Science , Volume 8 , Issue 1 , January 1978 , pp. 45 - 78
Copyright
Copyright © Cambridge University Press 1978

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References

1 Moore, Wilbert, The Conduct of the Corporation (New York: Vintage Books, 1962), pp. 278–9.Google Scholar

2 Silk, Leonard and Vogel, David, Ethics and Profits: The Crisis of Confidence in American Business (New York: Simon and Schuster, 1976).Google Scholar For survey data that confirm the book's portrait of business attitudes toward government, see Martin, William and Lodge, George Cabot, ‘Our Society in 1985: Business May Not Like It’, Harvard Business Review, LIII (1975), 143–52.Google Scholar

3 A recent poll of ‘Fortune 500’ chief executives conducted by the magazine reported that when asked to identify the biggest ‘problem faced by business in general’ 35·2 per cent named ‘government’ (Burck, Charles, ‘A Group Profile of the Fortune 500 Chief Executives’, Fortune, 93 (05 1976), 172–7).Google Scholar

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6 The most important studies are: Hofstadter, Richard, Social Darwinism in American Thought (Boston, Mass.: Beacon Press, 1944)Google Scholar; McCloskey, Robert Green, American Conservatism in the Age of Enterprise 1865–1910 (New York: Harper and Row, 1951)CrossRefGoogle Scholar;Prothro, James, Dollar Decade: Business Ideas in the 1920s (Baton Rouge: Louisiana State University Press, 1954).Google Scholar

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10 Silk, and Vogel, , Ethics and Profits, p. 46.Google Scholar

11 Quoted in Gilpin, Robert, U.S. Power and the Multinational Corporation (New York: Basic Books, 1975), p. 136.CrossRefGoogle Scholar

12 The notion that multinational corporations are essentially a function of United States' hegemony forms the essential thrust of Gilpin's analysis.

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22 This is the thrust of McConnell's book as well as of Lowi's, TheodoreThe End of Liberalism (New York: W. W. Norton, 1969).Google Scholar Lowi writes: ‘the pluralist's embrace of government turned out to be, in its own way, as antigovernmental as capitalism’, p. 47. What weakens both the studies – a weakness made apparent by the contrast between the radicalism of their critique of private-public relations and the innocence of their solutions (McConnell advocates large constituencies, while Lowi calls for the rule of law and judicial democracy) is that the authors confine their analysis of the problem of public control of private power to one case study: the United States. It is this defect, so prevalent among students of American politics, that this essay attempts to overcome.

23 For a detailed discussion of the deep reluctance with which American businessmen acquiesced in the creation of a strong state in the post-war period in order to conduct foreign policy, see McLellan, David S. and Woodhouse, Charles E., ‘The Business Elite and Foreign Policy’, Western Political Science Quarterly, XIII (1960), 172–90CrossRefGoogle Scholar; DiBacco, Thomas, ‘American Business and Foreign Aid: The Eisenhower Years’, Business History Review, XLI (1967), 21–35CrossRefGoogle Scholar; also see a doctoral dissertation in preparation for the Department of Sociology at the University of California, Berkeley, by Clarence Lo, ‘The Home Front Quagmire: The Organization of Dissent and Economic Policy During the Korean War’. Franz Schurmann describes a similar gap between political and business elites after the Second World War. He writes: ‘But imperialism would cost a lot of money, and business was expected to pay a large share of it. Why should a business sacrifice present earnings earmarked for its own corporate expansion to a federal budget which would give them to foreign governments to generate economic recovery abroad, which would benefit America generally but not necessarily the particular business that had poured its huge corporate taxes into government.’ The Logic of World Power (New York: Pantheon, 1974), p. 27.Google Scholar

24 Thus Robert Lane contends that with the passage of time businessmen become more reconciled to regulation: ‘the period of impact yields insensibly to a more relaxed period of continuation.’ See ‘Law and Opinion in the Business Community’, Public Opinion Quarterly, XVII (1953), 239–57.Google Scholar

25 Though his view is somewhat exaggerated, Theodore Levitt's litany contains much truth. He argues:

It is not necessary to recount in detail the dismal record of American business's endless series of lost causes. Whether we talk about the Sherman Antitrust Act or the Federal Reserve Act, of the Federal Trade Commission Act or the National Park Service Acts, of the Child Labor Acts or the Securities Exchange Act, of the Wagner Act or the Fair Labor Standards Act of 1938, of the Old Age and Survivors Insurance Benefits Act or the Federal Housing Acts, of the Marshall Plan or Aid to Dependent Children Act, of the Federal Education Act, the Poverty Program, or Medicare – business as a rule fought these programs and lost. Often it fought them with such gruesome predictions of awful consequences to our private enterprise system that one wonders how the foretellers of such doom can now face themselves in the mirror each morning and still believe themselves competent to make important decisions on major matters in their own companies.

(‘Why Business Always Loses’, Harvard Business Review, XLVI (1968), 81–9.)Google Scholar

26 In a seminal article, ‘American Business Public Policy, Case-Studies and Political Theory’, World Politics, XVI (1964), 677–715Google Scholar, Theodore Lowi distinguishes among distributive policies – those that affect the revenues of an individual corporation, i.e. contracts, subsidies; regulatory policies – those that affect group interests, i.e. consumer protection laws; and redistributive policies – those that affect the distribution of resources among social classes, i.e. tax policy.

27 It is difficult to document the birth of American capitalism with precision, but the 1850S appear the most reasonable date. According to George Taylor, the 1850S witnessed ‘the emergence of the wage earner’ – a permanent working class. David Montgomery estimates that 60 per cent of the American labor force was employed by 1860. The above are cited in Foner, Eric, Free Soil, Free Labor, Free Men (New York: Oxford University Press, 1970), p. 32.Google Scholar Both Stuart Bruchey in the Roots of American Economic Growth, 1607–1861 (New York: Harper and Row, 1965)Google Scholar and Ware, Norman, The Industrial Worker 1840–1860 (New York: Quadrangle Books, 1964)Google Scholar, suggest that by mid-century the fluidity of antebellum American life had become somewhat reduced and that a more rigid industrial class structure was emerging.

28 See for example, Hartz, Louis, Economic Policy and Democratic Thought (Chicago: Quadrangle Books, 1968)Google Scholar; Handlin, Oscar and Handlin, Mary, Commonwealth: A Study of the Role of Government in the American Economy, Massachusetts, 1774–1861 (Cambridge, Mass.: Harvard University Press, 1969)Google Scholar; for a more comprehensive summary of this period, see Lively, Robert, ‘The American System: A Review Article’, Business History Review, 03 1955, 81–96.CrossRefGoogle Scholar What was distinctive about the pattern of business-government cooperation in pre-Civil War America was that it was largely carried out at the local level. The federal structure thus made the development of national political institutions to construct an infrastructure less necessary; by the 1840s, however, state authorities had become rather weak. It is the nature of the national government's role that is critical to an understanding of the political economy of American industrialism and the attitude of business toward government.

29 Hartz, Louis, The Liberal Tradition in America (New York: Harcourt, Brace and World, 1955)Google Scholar; Giddens, Anthony, The Class Structure of Advanced Societies (New York: Harper and Row, 1975), p. 207.Google Scholar

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33 de Tocqueville, Alexis, Democracy in America, Vol. II (New York: Schocken Books, 1961), p. 298.Google Scholar For over one hundred years – from the inauguration of the spoils system in 1829 to the arrival of FDR's ‘Brain Trust’ in the 1930s – the best and the brightest devoted their energies almost exclusively to the private sector.

34 Cochran, Thomas, Business in American Life: A History (New York: McGraw-Hill, 1972), p. 124Google Scholar; Hartz, , Economic Policy, p. 31.Google Scholar

35 Chandler, Alfred D. Jr., ‘The Beginnings of Big Business in American Industry’, Business History Review, xxxiii (1959), 1–31.CrossRefGoogle Scholar

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37 Warner, Rawleigh Jr., ‘On Business and Education’, Princeton Alumni Weekly, 76: 12 (26 01 1976), 8–12.Google Scholar

38 Quoted in Ward, John William, ‘The Ideal of Individualism and the Reality of Organization’, in Cheit, Earl, ed., The Business Establishment (New York: Wiley, 1964), p. 51.Google Scholar See also Hurst, James Willard, Law and the Conditions of Freedom (Madison: The University of Wisconsin Press, 1956). On p. 16Google Scholar Hurst writes: Thus the grant of corporate status became a notable issue in the years of Jacksonian Democracy. This did, indeed, involve serious issues concerning the power structure of the society; the Jacksonian polemics on this score forecast the issues in the background of the Granger movement and the Sherman Act. But, aside from the sensitive matter of banks, currency, and credit, the demand for freer incorporation, deep down, fitted the dominant temper of the times, Jacksonian as well as Whig.

39 McCloskey, , American Conservatism in the Age of Enterprise, pp. 23–4.Google Scholar

40 Prothro, , Dollar Decade, pp. 53–4.Google Scholar

41 These quotations are from Silk, and Vogel, , Ethics and Profits, pp. 188, 194.Google Scholar

42 Contrast, for example, Lowi's pattern of interest-group liberalism with Ezra Suleiman's study of the French bureaucracy in Politics, Power and Bureaucracy in France (Princeton, N. J.: Princeton University Press, 1974).Google Scholar

43 Hays, Samuel, ‘The Politics of Reform in Municipal Government in the Progressive Era’, Pacific Northwest Quarterly, LV (1964), 157–69Google Scholar; Burnham, Walter Dean, Critical Elections and the Mainsprings of American Politics (New York: W. W. Norton, 1970).Google Scholar

44 Note by contrast Suzanne Berger's study of the importance of small-scale enterprise to the Italian economy in ‘The Uses of the Traditional Sector: Why the Declining Classes Survive,’ unpublished paper. Although this paper focuses on the attitudes of the executives of relatively large firms, the contrast in the attitude of American small businessmen toward government with that of their economic counterparts in France and Italy is even more striking. American small businessmen are fierce individualists, bitterly resentful of government interference in their affairs. On the other hand, the traditional sectors in France and Italy are utterly dependent on government assistance and protection and much of their energy is directed toward securing public benefits. See Bunzel, John H., The American Small Businessman (New York: Knopf, 1962).Google Scholar

45 Birnbaum, Norman, ‘The Sociological Study of Ideology’, Current Sociology, ix (1960), 91–117.CrossRefGoogle Scholar

46 Giddens, , Class Structure, p. 111.Google Scholar

47 Giddens, , Class Structure, p. 112.Google Scholar

48 Rosenberg, Morris, ‘Perceptual Obstacles to Class Consciousness’, Social Forces, xxxii (1953), 22–7.CrossRefGoogle Scholar

49 The literature on the individualistic strain in American business ideology is extensive. See Ward, , ‘The Ideal of Individualism’, p. 51.Google Scholar Also see Wyllie, Irvin, The Self-Made Man in America (New Brunswick, N.J.: Rutgers University Press, 1954)Google Scholar; Cawelti, John, Apostles of the Self-Made Man (Chicago: University of Chicago Press, 1965).Google Scholar

50 Tocqueville, De, Democracy in America, pp. 167, 193.Google Scholar

51 Polanyi, Karl, The Creat Transformation (Boston, Mass.: Beacon, 1944), p. 19. See especially Chaps. 3–10.Google Scholar

52 Treasury Secretary Simon notes:

…if you believe in a free marketplace and in the right to succeed in business, you also must accept the other side of the coin, the right to go out of business.…I believe that if companies fail to adapt to changes in competitive conditions.… they have no claim to public support.… [T]he public should not be fleeced of taxes to keep any business alive that, like the dinosaur, has outlived its usefulness.

Quoted in Minaban, John, ‘Is Free Market A Dirty Word?’ Saturday Review, II: 21 (12 07 1975), 18–19.Google Scholar

53 Silk, and Vogel, , Ethics and Profits, p. 179.Google Scholar

54 See, for example, O'Connor, James, The Fiscal Crisis of the State (New York: St Martin's Press, 1973), p. 197.CrossRefGoogle Scholar Also see Galbraith, , The New Industrial State.Google Scholar This point is admittedly a controversial one. An observer more sympathetic to business writes:

The thoughtful and fair-minded reader will grant the difficulty of proving that the legislation business opposed has in any way seriously damaged our economy.

…[W]ith all his calculating pragmatism, all his unsentimental zeal to junk what is old and decaying, and all his eagerness to find and adopt new things for his business, the modern executive acts in a contradictory manner when it comes to new ideas about social reform and relations between business and government. He welcomes new things in his business, but not in the relationship of his business to his government and his society.

(Levitt, Theodore, ‘Why Business Always Loses’, pp. 83–4.)Google Scholar

55 Kolko, , Triumph and ConservatismGoogle Scholar, and Weinstein, , The Corporate Ideal.Google Scholar

56 For the most recent and thorough review of this debate and its significance, see Zeitlin, Maurice, ‘Corporate Ownership and Control: The Large Corporation and the Capitalist Class’, American Journal of Sociology, LXXIX (1974), 1073–119.CrossRefGoogle Scholar

57 Most studies of top management emphasize the insularity of the typical chief executive. Thus, Levitt writes:

One of the most distressing facts about so many highly intelligent business leaders I know – men whom I respect and admire – is how poorly informed they are about matters on which they have strong views. A weekly inside-dope newsletter from Washington, speeches by like-minded sycophants at association meetings and luncheon clubs, and the business press are generally very inadequate for a man's continued education about the realities of our world.…

It is no surprise therefore that the usual executive is a poor pragmatist when it comes to the externals. He simply lacks the equipment. Preoccupied with internal change and uncertainty, he generally denounces any external changes being proposed.

(Levitt, , ‘Why Business Always Loses,’ pp. 83–4.)Google Scholar

Similarly, Andrew Hacker notes:

The difficulty, when all is said and done, is that corporation executives are not very interesting people. And not the least reason for their blandness is the sort of individuals they have to become in order to get where they do.…There is not much point, then, in musing about how nice it would be if our corporate managers underwent more instruction in moral philosophy or modern sociology. The simple fact is that they are busy men, on the way up during most of their formative years, and the exigencies of the climb compel them to think of themselves rather than for themselves.

Hacker, Andrew, ‘The Making of a [Corporation] President’, in Trebling, Harry, ed., The Corporation in the American Economy (Chicago: Quadrangle Books, 1970), pp. 74–5.Google Scholar See also Randall, Clarence, ‘Business Too Has Its Ivory Towers’Google Scholar, in Trebing, , The Corporation.Google Scholar For similar appraisals, see Mills, C. Wright, The Power Elite (New York: Oxford University Press, 1957), Chap. 6Google Scholar, ‘The Chief Executives’; and Finn, David, The Corporate Oligarch (New York: Clarion, 1969).Google Scholar

58 Hacker, Andrew, ‘Is There a Ruling Class’, New York Review of Books, 22: 7 (1 05 1975), 9–13.Google Scholar

59 Literature in this tradition includes Domhoff, G. William, Who Rules America? (Englewood Cliffs, N.J.: Prentice-Hall, 1967)Google Scholar; Horowitz, David, ed., Corporations and the Cold War (New York and London: Monthly Review Press, 1969)Google Scholar; Mills, Wright, The Power EliteGoogle Scholar; Miliband, Ralph, The State in Capitalist Society (New York: Basic Books, 1969).Google Scholar

60 An important school of contemporary Marxist thought, structuralism, argues roughly this position. See Poulantzas, Nicos, Political Power and Social Classes (London: New Left Books, 1973).Google Scholar Structuralism argues that the ‘only way [the long-term interests of the capitalist system] can be protected… is through the relative autonomy of the state, through a state structure which is capable of transcending the parochial, individualized interests of specific capitalists and capitalist class fractions.’ Gold, David, Lo, Clarence, Wright, Erik Olin, ‘Recent Developments in Marxist Theories of the Capitalist State’, Monthly Review, 27:5 (10 1975), 29–41.CrossRefGoogle Scholar Not surprisingly, Poulantzas draws heavily on The Eighteenth Brumaire for his argument. An interesting sidelight about this issue is presented in Anthony Sampson's study of the multi national oil corporations, The Seven Sisters (New York: Viking, 1975), p. 310Google Scholar: ‘Dr. Kissinger, after one meeting with the oilmen (during the negotiations with OPEC), was heard to complain that they were a living disproof of the maxim of Marx, that the captains of industry always know in the end where their true political interests lie.’ The Secretary is evidently unfamiliar with recent developments in the Marxist theory of the state.

61 Soboul, Albert, The French Revolution, translated from French by Forrest, Allen and Young, Colin (London: New Left Books, 1974).Google Scholar

62 Schumpeter, Joseph A., Capitalism, Socialism, and Democracy (New York: Harper Torch-books, 1942)Google Scholar; Moore, Barrington Jr., Social Origins of Dictatorship and Democracy (Boston, Mass.: Beacon Press, 1966).Google Scholar

63 Schumpeter, , Capitalism, Socialism, and Democracy, pp. 137–8.Google Scholar

64 John Zysman advances a similar hypothesis:

One could hypothesize, for example, that where institutional structures for state leadership in industry already exist, conservative groups will use these structures to maintain stability and thus preserve their power. Where such structures are absent, not having emerged naturally as a part of the nation's industrial development, conservative groups will resist their creation and often see the state as a potential weapon in the hands of their political enemies not a potential ally. Changing the structure of industrial power and the instruments for exercising it is likely to be viewed as an attack on the position, privileges, and power of existing elites not simply a technical rearrangement for more effective industrial management.

(Zysman, John, ‘Financial Markets and Industrial Policy: The Structural Basis of Domestic and International Economic Strategies’, unpublished paper, p. 15.)Google Scholar

65 The above paragraph draws upon Epstein, Edwin M., ‘The Social Role of Business Enterprise in Britain: American Perspective’, Journal of Management Studies (forthcoming).Google Scholar Epstein writes: ‘It will be recalled that the first British Factories Acts were passed nearly a half-century before their American analogues. While a restless or over-energetic state is still instinctively the object of suspicion post-World War II Britain is unquestionably a mixed economy and is accepted as properly so by all but the most reactionary elements of the political and business communities.’ In addition, British economic and political elites are far more socially cohesive than in the United States.