Sam Smith, 2000- The biggest lie in Washington not directly involving President Clinton is that a free market cures all ills. Even the late Governor of Louisiana, Earl Long, understood that the economy was more complicated than that; he once said that he only opposed to three isms: communism, fascism, and snake-oilism.
The official economics of the day fits comfortably into the latter category. For example, one would never guess listening to the drones of NPR and PBS that if there were, in fact, a free market in this country, they would be out of work along with conservative economists and other welfare intellectuals sinecured at state universities. There would also be approximately 10,000 unemployed Washington lawyer-lobbyists, the defense industry would crash, and all the airports would have to close.
For the truth is, as with every society that has ever existed, economies of all sorts are not only a conglomerate but a part of, and dependent upon, a huge number of values, rules, systems, and characteristics that comprise a culture. We can no more isolate the use of money or labor from these factors than we could declare society to be henceforth based on “free eating.” It is fortunate, however, that economists discovered money as the organizing principle rather than, say, defecation. Otherwise, instead of the GDP, we would have to listen to Eleanor Clift or George Will pontificating on the latest trends in the Gross National Movement. Aside from avoiding that mishap, though, the monomaniacal obsession with the flow of money offers little in the way of insight. It is — there is really no better word – childish, for it simplifies reality into infantile dichotomies beyond all logic and evidence.
You need look no further than the free marketers themselves to see how false the notion of a free market is.
Would a truly free market, for example, tolerate a government official with as much arbitrary power as Alan Greenspan? Can one — as a matter of logic rather than economics — love both the Federal Reserve and a free market? Isn’t monetarism really just a form of socialism that favors capitalists instead of workers? Certainly, if one thing has not characterized the last two decades it has been any semblance of restraint on the willingness of government to inject itself into our lives. An era that has been devoted to the free market has simultaneously been the most intrusive in history. Even if its economic goals had been attained, the market would have been the only thing still free. In the name of a free market we have indentured ourselves to a government overflowing in every other regard with contempt for personal liberty. In many ways, concepts such as the “market economy” and “monetarism” have actually gilded the lily of power they pretend to oppose. They provide a comfortable cover for what the government is really about.
As Peter Jay once noted, introducing Margaret Thatcher to monetarism was like showing Ghenghis Kahn a map of the world. Thatcher had a mean and narrow view of life; she didn’t even accept the existence of community, declaring once that “there is no such thing as society. There are individual men and women, and there are families.” Thatcher wrapped herself in economic slogans that justified greed not only to accomplish economic ends but also to deal with gays and abortions and everything else she didn’t like. In her paradigm, the free market and Victorian tyranny formed a sort of civil union. By the time Reagan, Bush, and Clinton were through with the concept of’market capitalism,’ they had created a gaping corporate exemption from common morality and decency. The market not only offered adequate justification for any act, it had replaced God as the highest source of law – with its commandments readily available in every airport bookstore.
Until the Reagan-Bush-Clinton era it would have been next to impossible to find a culture that had survived for long on the notion that the unfettered, rapacious flow of money and goods was the core of human existence.
Elsewhere commerce also looked to bottom lines, but they included those established by church, community, government, and tradition.
Of course it could be argued that the capitalists were no worse than Marxists as single-factor fetishists. I know, for example, that I can usually stop an eruption of Marxist rhetoric for at least a few minutes by asking the simple question: who will run the restaurants in Utopia? I find few people even on the hard left who wish to eat and drink the product of collectivism for the rest of their lives.
Marxists and capitalists share an obsession with money and a taste for annoying, cliched mantras about it. They also share a willingness to reduce the complexity of human existence to just a couple of choices. Nonetheless, it makes more sense to devote our attention to the capitalists because they are doing far better job of making everyone go along with them.
One of the reasons a free market is so hard to come by is because it has never existed. In modern times the drug trade comes closer in some respects than more legal activities, but even there monopolies and murders interrupt the flow of capital goods. The form of capitalism known as “free trade” doesn’t even come close, else one wouldn’t need 2,000-page agreements, the World Trade Organization, and free marketers being flown to appointments in China on Clinton Air after paying vigorish to the Democratic National Committee. And while millions of small business people around the world attempt to live by free competition, everyone from the local Mafia to government bureaucrats want a piece of their action.
The constraints, however, are far more than merely law or lawlessness. A World Bank official once told me that someone in his agency had noticed that women in a certain third-world village had to row daily across a broad lake in order to reach the market. Using the efficient analysis of first-world MBAs, it was determined that what these third world women needed were some outboard motors.
And so motors were bought and distributed. Within a month or two, however, every one of them had fallen overboard. At which point, the bank discovered a noneconomic truth: the women actually liked rowing together across the lake, finding it a convivial communal activity.
The notion that such factors as social mores or religious values take precedence over efficient cash flow did not really become odd in this country until the 1980s. The term capitalism wasn’t even invented until the middle of the 19th century and the early robber barons carried out their business without a manic need to publicly justify their addictions. Part of the previous privilege of wealth was that no one had to know what you did with it. It wasn’t until the 1980s that the proselytism of greed became so ubiquitous that even otherwise humble and ordinary human beings began using words in ordinary conversation like entrepreneur, bottom-line, strategic vision, and market driven.
When you come down to it, much of this language is not that of management but of marketing. It is almost as if the ghost of Willy Loman had risen from the dead to exercise some supernatural vengeance on the nation. Not only is the salesman and hustler fully alive; he is all of us everywhere all the time. From the several thousand advertising messages we confront daily; to the hour we spend reading, listening, or viewing them; to the 77 distinct images in one 60-second GE commercial; and finally to the massive shift in the work day in which the production of propaganda has replaced the production of products — we have become a nation obsessed with fooling each other.
It is no accident, therefore, that we have elected as president a man with the soul of an Amway distributor. Nor is it an accident that he was so well prepared, with both a father and stepfather who had been in auto sales, a guiding uncle who ran a mob slot machine franchise, and a mother who hung out with gangsters at the track. It is no accident, either, that the first in an endless string of scandals in which he was involved would be a classic resort real estate scam in which half the purchasers lost their plots because of the sleazy financing involved. Bill Clinton was the bottom line of what market-driven turn-of-the-century America had come to believe in.
But haven’t we been repeatedly told that it all works out for the better in the end? Well, that isn’t what Adam Smith thought. The patron saint of capitalism said in Wealth of Nations that “consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumers . . . In the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.” The state restraints and protectionism that bothered Smith were those affecting small business. As David Korten notes, today’s economic system “bears far greater resemblance to the monopolistic market system [Smith] condemned than it does to the theoretical competitive market system he hypothesized.”
“Adam Smith’s ideal was a market comprised solely of small buyers and sellers, each too small to influence the market price of the commodities exchanged. Thus, Smith’s concept of a competitive market was one in which there were no large business with monopolistic market powers.”
He started with the premise that each product has its natural price, which included the average of ‘natural rates of wages, profit, and rent, at the time and place in which they commonly prevail.’ . . . Smith was opposed to any kind of monopoly power, which he defined as the power of a seller to maintain a price for an indefinite time above its natural price . . . Adam Smith also assumed that investors have a natural preference for selling close to home. In other words, Adam Smith assumed that capital would be rooted in a particular place.” Nor can historical justification for the boomer barons be found in the history of our own country, though the “market economy” is often mentioned as though imbedded in the Constitution.
It is true that the American Revolution was an economic as well as a political victory, triumphing over a system in which only the nobility and a few large merchants held economic power. But the definition of economic freedom at the time was quite different from that used by today’s corporate chief executive seeking yet another tax break. Early free Americans widely believed that one was entitled to the “fruits of your labor” and no more. They opposed the concentration of property because it would allow property owners to seize political power.
There was already more than a little experience with this. In a review of The Making of New World Slavery by Robin Blackburn, Eric Foner points out that by 1770, “profits derived from slavery furnished up to a third of Britain’s capital formation, and slave-grown products had became ubiquitous in England, emblems of a rising bourgeoisie and common even in the working class…
“Now, as then, commerce unrestrained by social control ends up stripping economic relations of all moral content, while the drive toward fulfilling market demands at the lowest possible price created widespread indifference to the conditions under which marketable goods are produced. Today’s Chinatown sweatshops and Third World child labor factories are the functional equivalents of colonial slavery in that the demands of the consumer and the profit drive of the entrepreneur overwhelm the rights of those whose labor actually produces the salable commodity.”
The reason for this can be partly found in the cult of modern management. John Ralston Saul puts it plainly in Voltaire’s Bastards, “Management cannot solve problems.
Nor can it stir creativity of any sort. It can only manage what it is given. If asked to do more, it will deform whatever is put into its hands.” Saul gives a devastating example of the limits of technocratic management:
The Holocaust was the result of a perfectly rational argument — given what reason had become — that was self justifying and hermetically sealed. There is, therefore, nothing surprising about the fact that the meeting called to decide on “the final solution” was a gathering mainly of senior ministerial representatives. Technocrats, Nor is it surprising that [the] Wansee Conference lasted only an hour — one meeting among many for those present ~ and turned entirely on the modalities for administering the solutions …. The massacre was indeed ‘managed,’ even ‘well managed.’ It had the clean efficiency of a Harvard case study.
Marshall Rosenberg, who teaches non-violent communication, says that in reading psychological interviews with Nazi war criminals what struck him was not their abnormality, but that they used a language that denied choice: “should,” “one must,” “have to.” Adolph Eichmann was once asked, “Was it difficult for you to send these tens of thousands of people their death?” Eichmann replied, “To tell you the truth, it was easy. Our language made it easy.” Asked to explain, Eichmann said, “My fellow officers and I coined our own name for our language. We called it amtssprache — ‘office talk.'” In office talk “you deny responsibility for your actions. So if anybody says, ‘Why did you do it?’ you say, ‘I had to.’ ‘Why did you have to?’ ‘Superiors’ orders. Company policy. It’s the law.'” Yet for all the words devoted to the Holocaust, go into almost any bookstore and you’ll find infinitely more works on how to manage, manipulate and control others – and how to use “office talk” ~ than you will about the skills of a free citizen.
Some of most important lessons of the Holocaust have thus been missed. For example, in Hitler’s Germany even the pogroms were part of national economic planning, seizing Jewish shops and companies and replacing Jewish workers with the Ayrian unemployed. Hitler argued that “private enterprise cannot be maintained in a democracy,” and denounced “the freedom to starve,” in a country which had known as many as six million without jobs. Wrote William Shirer, “In taking away that last freedom, Hitler assured himself of the support of the working class.” The link between business and fascism was clear to German corporatists. Auschwitz was not just a way to get rid of Jews, it was also a major source of cheap labor. As Richard Rubenstein points out, “I.G. Farben’s decision to locate at Auschwitz was based upon the very same criteria by which contemporary multinational corporations relocate their plants in utter indifference to the social consequences of such moves.” I.G. Farben invested over a billion dollars in today’s money at Auschwitz and, thanks to the endless supply of labor, adopted a policy of deliberately working the Jewish slaves to death.
In such ways do economics and freedom become intertwined. Those who think it can’t happen here should consider that four days before Mussolini became premier, he met with a group of industrialists and assured them that his aim “was to reestablish discipline within the factories and that no outlandish experiments …. would be carried out.” In Friendly Fascism, Bertram Gross notes that Mussolini also won “the friendship, support or qualified approval” of the American ambassador, Cornelius Vanderbilt, Thomas Lament, many newspapers and magazine publishers, the majority of business journals, and quite a sprinkling of liberals, including some associated with both The Nation and The New Republic.
Similarly, an upcoming book will accuse General Motors of playing a key role in Hitler’s invasions of Poland and the Soviet Union. “General Motors was far more important to the Nazi war machine than Switzerland,” says Bradford Snell, who spent two decades researching the history of the world’s largest auto maker. “Switzerland was just a repository of looted funds. GM was an integral part of the German war effort. The Nazis could have invaded Poland and Russia without Switzerland. They could not have done so without GM.” Early free Americans were not what we think of as capitalists. The Constitution was written for people and not for corporations. Free enterprise was not mentioned in it.
During the entire American colonial period only about a half dozen business corporations were chartered. In the first 20 years after the Revolution only about 150 corporations were chartered. Each of these charters required that the corporation be in the public interest.
Jefferson to the end opposed liberal grants of corporate charters and argued that states should be allowed to intervene in corporate matters or take back a charter if necessary.
These early Americans were, however, deeply commercial. One reason for this was that commercial activity allowed you to break free of the social and economic restrictions of a British economy based on nobility and monopoly. Americans didn’t want to work for such a system; they wanted to work for themselves. And they weren’t concerned about competition because there wasn’t much.
With the pressure for more commerce and indications that corporate grants were becoming a form of patronage, states began passing free incorporation laws and before long Massachusetts had thirty times as many corporations as there were in all of Europe.
Still it wasn’t until after the Civil War that economic conditions turned sharply in favor of the large corporation.
These corporations, says historian James Huston: . . . killed the republican theory of the distribution of wealth and probably ended whatever was left of the political theory of republicanism as well. . . .[The] corporation brought about a new form of dependency.
Instead of industry, frugality, and initiatives producing fruits, underlings in the corporate hierarchy had to be aware of style, manners, office politics, and choice of patrons ~ very reminiscent of the Old Whig corruption in England at the time of the revolution — what is today called “corporate culture.” Concludes Huston: The rise of Big Business generated the most important transformation of American life that North America has ever experienced.
It truly represented a counter-coup against the values of the American Revolution. It dramatically undermined both political and economic freedom, corrupted politicians and ransacked national assets. It replaced the feudalism of the monarchy with the feudalism of the corporation.
Perhaps the most important event occurred 110 years after the launching of the Revolution. In 1886, the Supreme Court ruled that a corporation was a person under the 14th Amendment and entitled to such constitutional protections as those of free speech.
With this fiction, the court helped to boost the corporate takeover of America. As Morton Mintz pointed out in the National Law Journal, this case ignored the fact that “the only ‘person’ Congress had in mind when it adopted the 14th Amendment in 1866 was the newly freed slave.” Justice Black observed in the 1930s that in the first fifty years following the adoption of the 14th Amendment, “less than one-half of one percent [of Supreme Court cases] invoked it in protection of the Negro race, and more than 50 percent asked that its benefits be extended to corporations.” During this same period the courts moved to limit democratic power in other ways as well. For example, the Supreme Court restricted the common law right of juries to nullify a wrongful law; other courts erected barriers against third parties such as banning fusion slates.It was during this time that the myth of competitive virtue sprouted, helping to justify the rapaciousness of American business. It was a time when J.P. Morgan would come to own half the railroad mileage in the country — the same J. P. Morgan who got his start during the Civil War buying defective rifles for $3.50 each from an army arsenal and then selling them to a general in the field for $22 apiece. The founding principles of what we now proudly call the “American free market system” flowered in an era of enormous bribes, massive legislative corruption, and the creation of great anti-competitive cartels. It was a time when the government, in a precursor to modern industrial policy, gave two railroad companies 21 million acres of free land.
It was also the time that American workers, who had once used commerce to free themselves from the economic and social straitjacket of the monarchy, found themselves servants of a new rigid hierarchy, that of the modern corporation.
As persons, corporations could inject themselves fully into civic life (such as influencing campaigns and politicians) while still repelling public interference in their own affairs. They could construct barriers on civil liberties grounds against efforts to control their greed. Many of the rights that corporations secured by law came even as blacks and women were still struggling towards full enfranchisement.
The political movement of populism did battle with the new corporations but lost, as did the eurocentric socialists who followed. Save during the Depression, generations of Americans would come to accept the myth of the free markets and free enterprise.
Americans went along with the rising power of corporations in part because these companies provided higher incomes and ever-increasing jobs. But about 25 years ago, these two conditions began to disappear. No small part of today’s political tension stems from the rising power of big corporations even as their social and economic contribution to America declines.
For many years the effect of the free enterprise myth was mitigated by competing perspectives, but since the 1980s, economists have firmly established themselves as the official judges of human progress, replacing such numerically challenged trades as philosophy, anthropology, religion, political science, and history. They have used as their paradigm a free market and a prohibition against holistic thinking in all its forms.
The free market doesn’t exist in real time (else there wouldn’t be 10,000 corporate lawyers and lobbyists in Washington trying to rig it). The free market and its wonders largely exist in the minds of economists, politicians, and the media. It is said, for example, that such policies are rewarded by economic growth when, in fact, the Reagan-Bush-Clinton era has been one of unusually low growth, matched in the 20th century only in 1910-19 and during the Depression. Here are some things, however, that have grown:
– The downgrading of living standards for such mystical purposes such as “global competition” and “economic growth.”
– A subculture of narcissistic, avaricious, bullying, exploitive commercial cavaliers suffering from deep social dyslexia.
– The false measurement of virtue, progress, success, and happiness by short-term economic markers that deny or devalue achievements in other areas.
– Commercial viruses, a.k.a. advertising, that hack into our visual and aural space as effectively as a computer hacker invades someone else’s web site.
All this is propelled by a stunning propaganda machine, described by Martin Blonksy as a “semiosphere, a dense atmosphere of signs triumphantly permeating all social, political, and imaginative life and, arguably, constituting our desiring selves as such.” So effective has it been that even workers have accepted the free market mythology. As Sister Souljah said once, “They think that if they’re not doing all right they’re an individual failure. They can no longer draw the relationship between their lack of success and the system which is set up for them to be unsuccessful.”
Richard Sennett in The Corrosion of Character pinpoints some of the personal consequences of work under the new capitalism:
The end of long-term work. A young American today with at least two years of college can expect to change jobs at least eleven times in the course of working, and “change his or her skill base at least three times during those forty years of labor.” An executive of ATT put it this way, “In ATT we have to promote the whole concept of the work force being contingent…. ‘Jobs’ are being replaced by ‘projects’ and ‘fields of work.'” Says Sennett, “Promotions and dismissals tend not to be based on clear, fixed rules, nor are work tasks crisply defined.” One of the consequences of this approach is that it “corrodes trust, loyalty, and mutual commitment.”
Technology limits personal control. Under the old capitalism even dull and routine work typically required some level of individual control over a machine, such as understanding how to get it running again when it broke down. The desire for such mastery hasn’t disappeared. For example, Katherine Newman in a study of servers at McDonald’s restaurants found that these workers quickly sprung into action when something went wrong. This was not the case, however, when a machine broke down at the modern bakery that Sennett studied: “Though simple to use, the dough-kneading machine was complex in design; its computer operating system was opaque, as industrial designers say, rather than transparent… At the bakery that day, the electricity was shut off, a telephone call was made, and we sat for two hours waiting for the service saviors to arrive from the firm which had designed the machines …
Once the plug was pulled on the electricity, the waiting workers were morose and upset … The bakers were not indifferent to the elemental fact of getting a job done. They wanted to be helpful, to make things work, but they couldn’t.”
A misleading language that, for example, encourages risk without outlining the nature of that risk. Business books use comfortable images such as a gardeners’ “repotting” to explain the lack of stability in the modern corporation. The key fact one needs to know about risk – but which isn’t explained in the new capitalism – is that all risk regresses to a mean. In other words, your chances of getting a second full house are exactly the same as they were when you got the first one, which is to say not very good. The same principle works when moving to a new job. Statistically, in fact, one study found that your chances of “moving up” in such a shift were less than if you stayed at the old job.
– The free market ends at 55. The number of men aged 54-65 still in the workplace dropped from nearly 80% in 1970 to 65% in 1990. The rate of involuntary dismissal has doubled in the last twenty years for men in their 40s to early 50s. Combined with a later age at which the young become significantly employed, this has greatly narrowed the life span of individual usefulness.
– A false sense of cooperation and teamwork: It is popular for firms to refer to their employees as “partners,” “associates,” or “team members.” Among the results, Sennett observes, is to lessen management’s responsibility; it is, after all, only “coaching” the team. Such language also makes it difficult, “if not fatal,” as Laurie Graham found in her study of a Subaru-Isuzu plant, “for a worker to talk straight to a boss-coach about problems in terms other than team cooperation; straight talk involving demands for higher pay or less pressure to boost productivity was seen as a lack of employee cooperativeness. The good team player doesn’t whine.” The new capitalism has greatly expanded the potential for failure.. The winner-take-all market is a competitive structure which makes it easy for large numbers of educated people to fail. Downsizings and reengineerings impose on middle class people sudden disasters which in an earlier capitalism were mainly confined to lower classes.
Such strains put a burden on workers that is generally underrated. A 1999 British study found that employers could expect to lose two out of five workers as a direct result of too much pressure. Nearly one in three employees reported health strains, and more than one in four said their sex life had suffered because of their work. The biggest complaints: Work unappreciated by superiors Inability to balance work and home life Too much stress Too much work Managers fared no better. A contemporaneous survey by the British publication, Management Today, found that 55% of manager respondents felt frequently stressed at work and 50% said they were too busy to create proper relationships outside of the office.
As with so many aspects of our lives, we are stymied in addressing such problems in part because our culture frowns on those who confront them. Even in such elite corners of information as book reviews and public broadcasting, we find a cultured ignorance perpetuating the deceptions of the corporate world. After all, if NPR thinks we live in an “free market democracy,” who are we to argue? If Jim Lehrer’s Newshour is willing to explain patiently and somberly the wonders of multi-nationalism, who are we to point out that one of his major corporate underwriters paid a $100 million fine for international price fixing? This conspiracy of silence also dumps down the memory hole the problems of the non-college educated, the farmer, small businesses (which actually produce most of the new jobs in this country), young males, and those otherwise not qualified for capitalist celebration. It slides over massive criminality by corporations. It ignores such historical truths as the fact that American business grew faster during the rise of the labor movement than it did after it learned how to suppress it. It ignores the true variety of economic systems that have, and can, exist in favor of a trite and false dichotomy between capitalism and socialism.
Such distortions can have profound consequences. The collapse of the Russian economy following the breakup of the Soviet Union was due, in no small part, to extraordinary exploitation by western “free market” advocates, encouraged by an absurdly low valuation of the country’s stock market. It was said that the Russian market – with a capitalization of only $20 billion – was the cheapest place to drill for oil and natural gas. Reported Solomon Brother’s: All Russia’s newly privatized companies, which represent some 5 percent of world oil reserves plus the world’s second-largest forestry reserves, massive mineral assets and its huge network of utilities, telecommunications and industrial capacity could be bought f o r . . . little more than twice the market capitalization of Peru.
Russian expert Stephen Cohen of New York University would later remark, “I think a strong case can be made . . . that the Soviet system did not collapse but was abolished by Mr. Yeltsin and his allies. If so, it may be that President Gorbachev’s much scorned gradualism and goal of a mixed economy, base on combining marketization and privatization with whatever was viable in the old state system, were (and may still be) the best way to reform Russia, and other Soviet republics.” Neither are we stuck with the rigid economic models that have caused so much individual and aggregate pain.
There are all sorts of mixed economies. There are big consumer cooperatives like Land of Lakes Butter and the United Services Automobile Association that have thrived happily amongst conventional capitalists. The town of Green Bay, Wisconsin, holds its professional football team in community ownership. As a result, it’s about the only professional sports team in America that we know won’t be moving to someplace else. There are options such as various forms of local currency, including one called “time dollars” under which people earn time credits that can be redeemed in services.
Perhaps most significantly, as individuals we prove again and again the limits and liabilities of promiscuous capitalism by personal actions that mitigate its evils and compensate for its failures. Every labor union, every act of charity, every anti-sweatshop group, every barter, every voluntary activity for the good of the community, every code of conduct that defines the morality of commerce, every deal foregone for reasons of decency, every time someone does something for someone and says, “think nothing of it,” is a revolt against the Church of the False Profits.
The impact of these non-capitalistic activities can be enormous. Nike sales dropped 27% after news of the company’s sweatshop practices were widely circulated. The Trends Report of 1997 found three out of four customers willing to switch equal quality brands if one is associated with a good cause. A Business Week survey found that 95% of Americans don’t think a corporation should only exist to make money. A report published in Management Accounting found that “one investment dollar out of every ten is placed with ethical of social criteria in mind.” Further evidence of the options available can be found by comparing cultures. For example, in American Exceptionalism, Seymour Lipset cites an eight year study of 15,000 managers and executives in six countries that found that while 40% of Americans agreed that “the only real goal of a company is making a profit,” only 8% of the Japanese managers felt the same way. All but one percent of the Americans expected that their employment at a company would be of limited duration, while a majority of the Japanese thought they would be employed at their companies for life. And while 85% of the Japanese believed that the best way to pick someone for a position was to meet and discuss the selection until almost everyone had agreed on someone, only 38% of Americans felt that way, preferring a simple majority vote.
Even in this country there are many companies that have offered alternatives to the compulsive, controlling, and often corrupt capitalism so often used as the prototype.
Three frequently cited are L.L. Bean, Tom’s Soap, and Ben & Jerry’s. Interestingly, each began in New England in a culture with a tradition of respect for the individual and integrity in personal dealings. The companies shared an understanding that business is as much a part of the mosaic of life as church, school or volunteer fire department.
Despite all the changes that have occurred in this country, one still arrives in Maine, New Hampshire, or Vermont expecting to be treated well and one still leaves rarely disappointed.
Of course, as L.L. Bean has shown, such behavior is not a purely altruistic act. Traditions of fair-dealing survive because they work well for everyone, including the company. Nonetheless, the Thatcher-Clinton years have also taken their toll on LL Bean which, like so many other large corporations these days, has hyped the image of what it is supposed to be even as the reality behind the image was fading.
And Bean found itself in trouble. Its problems began in part when the company hired some Boston consultants in 1998 who advised it to “restructure” the corporate offices into “eight strategic business units” such as LL Home, LL Kids, and LL Sports. The firm also suggested a number of dubious moves popular with contemporary techno managers.
Soon the company found itself also faced with a major unionization effort by the Teamsters, which sent the Bean workers a memo: We thought we would be able to predict your response and that we knew what to expect based on our experience.
However, we have been blown away by the number of phone calls urging us to pursue an affiliation with the workers at LL Bean.
The story was told in articles by Lisa Chmelecki of the Forecaster newspaper, both of whom deserve a national press award for engaging in that rarest of journalism enterprises: in-depth and unfavorable reporting on the biggest corporation in town. Here’s some of Chmelecki’s story: [The Boston Consulting Group] assigned managers to each unit and they told everyone that they had to reapply for their jobs,” said one employee who had worked there for 15 years. According to Kayser [a former employee] and the others, almost every corporate employee had to submit a resume and one-page essay describing their aspirations as an LL Bean employee. They also had to submit a list indicating the positions for they were applying.
“All work stopped for at least three months,” Kayser said. “Nothing got done, because we were all printing off resumes and were being encouraged to spend time meeting with the managers who would be hiring u s . . . ” “I never even had to write a resume before,” Fox [another ex-employee] said.” There was so much pressure to prove ourselves, to go around strutting our stuff. My record should have spoken for itself.”…
“LL Bean is not the company I went to work for six years ago. The attitude has changed. Now, it is strictly about numbers. People are dispensable.” [Another worker told Chmelecki] “there was a time when LL Bean talked to the [employees] before making any major changes and there were management people that looked after the little guy — not so today.” LL Bean is the state’s third largest employer with a staff of 4,400. The changes taking place are a metaphor for the corrosive effects of brutal capitalism and the bizarre management principles that have accompanied it. These changes, according to one recent survey, find 56% of employees nationally saying their company does not genuinely care about them and a similar percentage saying that they have no strong loyalty towards their firm.
Another company that, until it was sold, provided an alternative model was Ben & Jerry’s. In 1992, Ben & Jerry’s sales jumped 36% while profits rose 79%. Early that year Ben Cohen wrote a letter to shareholders in which he said The most amazing thing is that our social values – that part of our company mission statement that calls us to use our power as a business to improve the quality of life in our local, national and international communities — have actually helped us to become a stable, profitable, highgrowth company. This is especially interesting because it flies in the face of those business theorists who state that publicly held corporations cannot make a profit and help the community at the same time, and moreover that such companies have no business trying to do so.
Needless to say, some business observers remained skeptical, especially when Ben decided to take a six-month sabbatical. Forbes ran an article in March reporting that Ben had quit as CEO after coming down with “a bad case of the guilties” over the company’s financial success. The day the magazine hit the streets, the company’s stock lost ten percent of its value. By November, however, Forbes had to admit that B&J was still on its list of the 200 best small companies in America — for the third year in a row.
Another New England businessman, Tom Chappell of Maine, started an natural ingredient toothpaste firm in 1974 with a $5,000 loan and a few investors. By 1981 his firm was doing $1.5 million in sales and has been going strong ever since.
A few years later, however, Chappell found himself telling a minister friend, “I’m tired of creating new brands and making money.” In his book, Soul of Business, Chappell recalls, “I had never thought such a sentence would come out of me. But there I was, asserting that though I was very successful, I felt empty.” Chappell’s remarkable solution was to go to Harvard Divinity School. He returned later, not only revived, but with theologian Richard Niebuhr in tow. He gathered his board — including a business school dean and a Washington lawyer — to listen to Niebuhr and discuss their assigned reading, Martin Buber’s / and Thou. After the talk, the board broke up into small groups, augmented by some local ministers and staff members, to discuss “how we might apply Buber’s ideas to our lives and business practices.” The Washington lawyer later told Chappell, “This was the most exciting thing I’ve done in a long time.” What Chappell had learned was this: Beliefs drive strategy. Your ethics can form the foundation of smart analysis and clear thinking. Your personal values can be integrated with managing for all the traditional goals of business …. You can be a hard-ass competitor and still run a business with a soul ….
Good profits and good prophets were not, it turned out, mutually exclusive.
Having spent considerable time in Maine, such things don’t really surprise me. From childhood on I have run into traits that while not unique to Maine nor universal in Maine were nonetheless in considerably greater supply than, say, in the more powerful parts of Washington. I make no claim as to the persistence of these traits nor do I to wish to romanticize them. After all, when I first went to Maine as an eight-year-old there were four times as many acres in farmland as there are today and much else has disappeared as well. Still throughout my life certain Maine values have floated on the surface of my experience like lobster buoys off the starboard bow. Among them:
• Integrity: Integrity is not just honesty but a quality in which all the parts fit together. Watertight integrity on a ship, for example, means that the bulkheads are not three feet thick in one place and rusted out elsewhere. Today those at the top often undervalue completeness, consistency, reliability – preferring the momentary impact, the single-minded pursuit, the exceptional event.
Distinguish yourself in these and what else you do doesn’t matter. Thus it is enough to be an adviser to the president; the fact that you are also a toe-sucking, ego-puffing purveyor of short-term cynical political gimmicks becomes of little import.
• Community: An anthropologist once contrasted a village community and a suburban development. A village she said was “a not-for-profit, organic, open ended, humanscale social event, which becomes visible in its buildings and pathways.” A suburban development, on the other hand, was a “dependent social unit with no internal reason for its existence.” It lacked “work, resources, kinship, political or religious independence, and cohesion.” As a village is to the development, so community is to a large corporation. And when we look at those who run such corporations you find people who concern themselves not with the growth and strength of community but to building great developments; who think not about the social events but about buildings, branches and outlets.
Nonetheless, and contrary to current mythology, community traditionally had a great impact on the nature of business. Today’s rhetoric denies it a place and derides those who advocate it as “activists,” as if maintaining the social compact was some sort of revolutionary act. I observed this conflict between old and new ways recently at a meeting in a small Maine town. The CEO of a chain of boat yards had flown up from Connecticut to tell the community why his firm could not save an 19th century building that was the last link with the town’s shipbuilding past. The evening progressed as such debates do until a young contractor arose and spoke directly to the CEO. He earnestly explained how, in a small town, business was done in a different way than that with which the executive might be familiar because everyone in the village had a connection with others there. Then he added, “I work knowing that if I do a bad job on somebody’s home, someone in this town is going to tell my parents about it.” Can you imagine Michael Saylor or Steve Case saying that?
• Respect: I noticed early the difference in the way people in Maine treated each other compared to, say, the segregated south. The prevalence of independent farmers, craftspeople, the fishing industry and small business helped to create a culture of respect and a flattened hierarchy of power.
• Cooperation. The relationship between, say, farmers or fishing boat captains defies the simplistic competitive cant of capitalist economics. Yes, there is competition, but at the same time there is an unusual degree of cooperation, described well by anthropologist James Acheson in The Lobster Gangs of Maine:
The relevant social unit for most fisherman is not the fishing industry as a whole; it is the men fishing for the same species with the same gear in the same area. They share skills and a common knowledge of the means to exploit and market a certain product . . . Although they are direct competitors, lobstermen are the most useful people in one another’s lives . . The men in each gang are involved in an elaborate dance-like interaction in which cooperation must be balanced with competition, secrecy with openness, and sharing with self interest.
• Ecological wisdom: One can not spend much time on the water or in rural Maine without learning what Barry Commoner calls the four lessons of ecology: Everything is connected to everything else Everything must go somewhere Nature knows best There is no such thing as a free lunch.
Both as an avid sailor and as a young man working on a farm I could not have said it so simply or elegantly, but I learned it anyway. In Washington and corporate America, on the other hand, the environment is just another special interest group with which to negotiate, to ignore if you can and appease if you can’t.
o Self-reliance and the appreciation of the real. My time in Maine has been graced by an extraordinary number of men and women who practiced the art of self reliance on land and sea. I was taught how to get through hurricanes, how to move a house on skids, how to jack up a barn – and all that was before I even got to college. I am reminded of the importance of simple skill and effort each time I look at the loose stones still holding that 100 year-old barn upright. On the other hand, one of the most discouraging parts of covering national politics, is the lack of skill and the assumption that words alone can replace this deficiency. As Michael Parenti has put it, reality has become radical. And slogans have replaced common sense.
My own belief that commerce is properly wrapped in the holistic web of culture has been strengthened by a Quaker education. It has been said that the Quakers came to this country to do good and did very well. This, as for many early Americans, was not only a matter of choice, it was a necessity. As with so many later immigrants, commerce was part of the escape route to freedom and a better life.
Interestingly, the values espoused by Quakers – particularly trustworthiness — served them well in business; in both England and America it led to major accumulations of wealth. A descendent of a prominent Quaker thinker established Barclay’s Bank, the Quaker Lloyd family built another of England’s “big five” financial institutions, and the Cadburys started a chocolate firm.
Being a fairly literate and conscientious crowd, Quaker entrepreneurs left a useful paper trail of reflection, selfjustification and remorse on the question of blending commerce and conscience. A common theme was the one laid out early by George Fox:
“There is the danger and temptation to you of drawing your minds into your business, and clogging them with it; so that ye can hardly do any thing to the service of God, but there will be crying my business, my business! “
In 1839, John Sargent fretted On going to my brickfield I was thoughtful as to my partnership with Cardiot, and that my wood-burning business alone might be sufficient to me, and perhaps more to my spiritual advantage than being too much cumbered with business.
Martha Routh, whose school had outgrown its quarters, also worried about mergers and acquisitions. She visited a possible new site:
“As I passed from room to room I was attended by a secret but clear intimation that I was not to entangle myself with a greater number of scholars than the house we already had would accommodate, so 1 entirely gave up the thought and found peace.”
David Ferris, in 1855, was concerned about the rum he was selling:
“Being unwilling to lose the profits of this branch of business, I adopted an expedient to soothe my pain; which was to refuse selling it to such as I thought would make evil use of it. But this did not answer my expectations; for they would send for it by those who were not suspected. At length I was made to relinquish the profits made on this article; and trust to Providence for the result.”
Which, it turned out, made “no great diminution” of his business.
As Quaker businesses grew they carried their traditions with them. The big English firms of Cadbury, Fry and Rowntree built whole communities for their workers and, in America, Quaker firms even welcomed the idea of unions. Writes Robert Lawrence Smith: Quaker businessmen recognized that unions were essential as a means of communication between management and workers. Many saw collective bargaining at its best as similar to the search for consensus that goes on at Quaker meetings for business. Viewed this way, negotiations become a method for bring about an enlightened resolution or synthesis of different points of view. One result is that, by and large, workers at Quaker businesses have been able to reach fair contract terms without resorting to strikes.
As late as 1951, a British Quaker industrialist was still addressing his colleagues this way:
The greatest source of waste arises through lack of cordial cooperation between employers and employed. Our aim should be to induce all to work as hard and as intelligently as if they were working for themselves …
Remember, there is no such thing as “labor.” The working force is made up of a number of individuals each having a personality different from the rest. They are sensitive as we are to encouragement and discouragement, as easily aroused to anger and suspicion, to loyalty and to effort.
Did the speaker’s words conceal certain hypocrisies or perhaps represent paternalism parading as equality? It is not unlikely. But the question is not whether Quaker business people lived up to their professions of conscience but whether such professions positively affected the nature of their businesses. History strongly suggests that they did and that personal witness in the marketplace worked better for customer, worker, and owner than did an economy unnagged by conscience. Actions are seldom better than the beliefs that drive them.
We live in a time that attempts to deny this, that wishes to give commerce alone an exemption from all the moral and philosophical constraints that help to define a decent working culture. This is done in the name of fraudulent computations of the market and by mistaking greed for efficiency.
This, rather than theoretical arguments over neatly dichotomized economies that have not and will not exist, should our central question about commerce. The smart individual of business has always been marked by a pragmatism surmounting ideological commitment and blithe bromides. What has traditionally kept commerce on track has been a complex network of social controls and individual conscience. Not just competition but the fact that the owner of the bank belonged to the same church as his customers. Not market share but a fair market. Not just a new customer base but customers you had to face.
Far too many have suffered from the self-serving dicta of the new capitalism which has replaced the Bill of Rights with the commerce clause, chained virtue to poverty, and made itself a slave to its quarterly addictions. The counterfeit economy that has been foisted upon us has served none of us well, not even those who have been in its strongest advocates. For example, Robert Kurzon, a 1990 graduate of that corporate auxiliary, the Harvard Law School, interviewed his classmates for Esquire and found “those who have left law, especially law firms, seem happy.
Those who have not are suffering, or, worse, resigned.
They talk about losing themselves. These are strange times in the workplace, and one need only look to Harvard Law School for example.” A number were even afraid to talk to him for fear of losing their jobs. Said one, “I hope you find someone who will talk — God knows there’s enough of us suffering out there.” Said another, “My dream is to become a clerk at Barnes & Noble. … I’ve got the store picked out. I literally fantasize about this,”
Among those who did escape one ended up as a comedian and another shifted his practice to representing taxi drivers in traffic court.
Behind much of this angst is an economy that has separated even its own practitioners from the support, sense, discipline, and integrity that comes from blending one’s ambitions and values with those of others and from knowing and accepting that in economics, as in ecology, there is still no free lunch.