Chapter 4
Critics of Business
This chapter:
 Explores the origins and evolution of critical attitudes
toward business.
McGraw-Hill/Irwin
Copyright © 2009 by 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.
We may forget Mother Jones, but we hear her in today’s
business critics.
4-3
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, and piety.
 The strain placed on societies by
economic development.
4-4
The Greeks and Romans
 The civilizations of ancient Greece and Rome were agrarian
societies where most people worked the land for subsistence.
 There was a popular belief that the amount of wealth was
fixed.
 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.
4-5
The Medieval World
 The prevailing theology of the Roman Catholic
Church was intolerant of profit seeking.
 Accepted the idea that amount of wealth was
fixed.
 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.”
4-6
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 wealth creation in expanding economies
countered the notion that societal wealth was
fixed.
 The industrial revolution created new tensions
that reinforced critical attitudes about business.
4-7
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.
4-8
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.
4-9
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.
4-10
Populists
 A farmers’ protest movement that began in the
1870s and lasted through the 1890s led to
formation of the Populist Party.
 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.
 Succeeded in electing many state and local officials, but
ultimately failed to forge an effective political coalition.
 Refined the logic and lexicon for attacking business.
4-11
Progressives
 Lasted from about 1900 until the end of World
War I 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 utilities
4-12
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.
4-13
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!”
4-14
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
class
4-15
Socialists (continued)
 Unionization
 Early unions tied to single companies or
locations
 1869 - Knights of Labor set up
 1886 – American Federation of Labor formed
 1877 – beginning of violent union strikes
 1905 – Industrial Workers of the World (IWW)
formed
 1912 – Peak of socialism in the United States
4-16
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.
 Huey 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.
4-17
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
4-18
Percentage of American Public
Expressing “Great Confidence” in
Leaders of Major Companies
4-19
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.
4-20
Progressive Left
 The progressive left:
 Is highly articulated and specialized.
 Has a network structure that includes
foundations, research institutes;
publications; mutual funds pension funds;
unions; and groups of environmental,
human rights, and labor advocates.
 Together the network structure creates
an organizational symbiosis.
4-21
How the Progressive Network
Attacks a Corporation
4-22
Global Critics
 Corporate power increasingly challenges its
antagonists on the world stage as transnational
corporations have grown in size and number.
 A reaction to that growth is a substantial increase
in the number of nongovernmental organizations
(NGOs), which now number more than 40,000.
 NGOs animate civil society, which is a zone of
ideas, discourse, and action that transcends
national societies and focuses on global issues.
 In the 1990s an antiglobalism movement evolved
within civil society.
 Antiglobalism is united against neoliberalism.
4-23
Global Critics (continued)
 Neoliberalism – a term denoting both the
ideology of using markets to organize
society and a set of policies to free markets
from state intrusion.
 Liberalism – the philosophy of an open
society in which government does not
interfere with rights of individuals.
 Economic Liberalism – the philosophy that
social progress comes when individuals
freely pursue their self-interests in
unregulated markets.
4-24
Global Activism
 Activists attack corporations using a
range of devices:





Consumer boycotts
Shareholder proposals
Harassment
Codes of conduct
Corporate campaign
4-25
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.
4-26