Critics of Business This chapter explores the birth and life of the enduring values first set forth by Mother Jones. Chapter 4 McGraw-Hill/Irwin© 2006.

Critics of BusinessCritics of Business

This chapter explores the birth and life of the enduring values first set forth by Mother Jones.

ChapterChapter 4

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Mary “Mother” Jones Opening Case

Suffered through the death of her family from yellow fever, and the death of her business from the Great Chicago Fire.

Rose to prominence as an organizer for the United Mine Workers.

Fell out with the United Mine Workers and became a lecturer for the Socialist Party.

In 1905 helped launch the International Workers of the World.

Eventually became disillusioned with unions, but continued to speak out.

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We may forget Mother Jones, but we hear her in today’s business critics.

Origins of Critical Attitudes Toward Business

Two underlying sources of criticism of business: The belief that people in business place

profit before more worthy values such as honesty, truth, justice, love, piety, etc.

The strain placed on societies by economic development.

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The Greeks and Romans The civilizations of ancient Greece and Rome were

agrarian societies. Philosophers reasoned that profit seeking was an inferior

motive and that commercial activity led to excess, corruption, and misery. Plato believed that insatiable appetites existed in

every person, but could be controlled by acquiring inner virtues.

Aristotle believed there was a benign form of acquisition that consisted of getting the things needed for subsistence.

Epictetus and Marcus Aurelius taught that the truly rich person possessed inner peace rather than capital or property.

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The Medieval World The prevailing theology of the Roman Catholic

Church was intolerant of profit seeking. According to Church cannon, merchants should

charge a just price for their wares, opposed to our modern idea of market price.

Catholicism condemned usury. By the twelfth and thirteenth centuries,

“Commercial activity proved stronger than the fear of prison or hell.”

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The Modern World The Protestant ethic – work was a means of

serving God and if a person earned great wealth through hard work it was a sign of God’s approval.

Capitalism – free markets harnessed greed for the public good and protected consumers from abuse.

The industrial revolution created new tensions that reinforced critical attitudes about business.

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The American Critique of Business The Colonial Era

The colonists who landed at Jamestown, Virginia, in 1606 were sponsored by investors who hoped to make a fortune by discovering gold in the New World.

The Pilgrims who came in 1620 were financed by the Plymouth Company, whose backers sought to make a profit.

Trade in coastal regions expanded; inland farmers created a broad agrarian base for the economy.

Benjamin Franklin taught that God would approve the pursuit of self-interest and wealth.

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The American Critique of Business The Young Nation

In the late 1700s the economy was 90 percent agricultural.

Alexander Hamilton believed that industrial growth would increase national power.

Thomas Jefferson believed than an agrarian economy of landowning farmers was the ideal social order.

With the support of business leaders, Hamilton’s bold actions and ideals prevailed.

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The American Critique of Business 1800-1865

The first half of the century saw steady industrial growth.

Many rejected capitalism and tried to create alternative worlds. New Harmony The Oneida Community

The agrarian and socialist communes failed in practice because they were based on romantic thinking, not on sustaining social forces.

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Populists A farmers’ protest movement that began in

the 1870s led to formation of the Populist Party, which essentially died in 1896.

The populists: Advocated government ownership of railroad,

telegraph, and telephone companies and banks. Demanded direct election of U.S. senators. Sought to abandon the gold standard and

expand the money supply. Failed to forge an effective political coalition.

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Progressives Lasted from about 1900 until the end of World

War II in 1918. Mainstream political doctrine. Sought to cure social ills by using government

to control perceived abuses of big business. Progressives:

Used the courts to break up trusts and monopolies Outlawed campaign contributions by corporations Restricted child labor Passed a corporate income tax Regulated food and drug companies and public

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Socialists The originator of the modern socialist doctrine

is Francois-Noël Babeuf (1764-97) Advocated seizing the possessions of the

wealthy and giving them to the masses. Pushed for a violent overthrow of the French

regime, but was imprisoned and then beheaded. 1848 – Karl Marx and Friedrich Engels

published The Communist Manifesto. Argued that the basis for socialism was an

inevitable process of class struggle underlying and explaining the history of human society.

Under capitalism the working class is exploited.

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Socialists (continued) Marx and Engels envisioned an equalitarian

society that abolished private ownership of capital and instituted wealth sharing among all members.

Discovered historical theory that class warfare was the underlying dynamic that changed society.

“WORKING MEN OF ALL COUNTRIES UNITE!”

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Socialists (continued) United States of 1850-1900:

Child labor was widespread Factories injured and wore down workers Wealth and power were concentrated in great

banks, trusts, and railway systems Inequality between rich and poor seemed

obscene The masses suffered through financial panics

and unemployment Industrial growth created a new social working

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Socialists (continued) Unionization

Early unions tied to single companies or locations

1869 - Knights of Labor set up 1877 – beginning of violent union strikes 1905 – Industrial Workers of the World (IWW)

formed 1912 – Peak of socialism in the United States

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The Great Depression and World War II

There was a period of high confidence in big business during the 1920s, ending with the stock market crash of 1929.

As the depression deepened, anger at business grew.

Howie Long introduced a plan to redistribute wealth, but was assassinated before it could be enacted.

The war years washed away the populist/socialist/depression era image of the corporation as a bloated plutocracy.

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The Collapse of Confidence Strong public support for business collapsed in

the mid-1960s. Four strong social movements attacked big

business: Civil rights Consumer rights Environmental rights Vietnam war opposition

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Percentage of American Public Expressing “Great Confidence” in Leaders of Major

Companies

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The Collapse of Confidence (continued)

Theoretical “confidence gap” created in the 1960s.

Rising popular distrust of business gave reformers the support they needed to increase government regulation dramatically.

By the mid-1970s corporations had organized to fight.

Early 1980s – “new” progressive movement born. Corporations have too much power. Corporations have excessive legal rights. Corporations are inherently immoral.

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The Collapse of Confidence (continued)

Antiglobalism movement Perceives that transnational corporations place

profit before other lofty and enduring values. Complaints center on problems generated by

economic growth. Transnational corporations have too much

power. Multilateral agencies such as the World Trade

Organization, International Monetary Fund, and World Bank are undemocratic.

Globalization creates inequality. Corporations spread a gospel of Western-style

development around the world, erasing distinct local cultures.

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Progressive Activists Ralph Nader – consumer advocate, presidential

candidate. Recent progressive elements have created

networks of advocacy to correct perceived problems or abuses. 1800s – global antislavery campaign 1970s – campaign against infant formula makers 1980s – human rights coalition against apartheid

in South Africa

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Progressive Activists (continued)

The progressive left has combined in the fight to impose corporate responsibility Consumer boycotts Shareholder proposals Harassment Codes of conduct Corporate campaign

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How the Progressive Network Attacks a Corporation

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Concluding Observations Each era brings new personalities, new

targets, and some new issues, but the fundamental language and substance of criticism remains the same.

Industrial capitalism is a historical force for continuous, turbulent social change.

Capitalism, for the most part, brings changes that represent progress, a condition of improvement for humanity.

A broad spectrum of criticism is an important check on business power.

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