by Mary Harrington
Saturday, 4
April 2020
Weekend read

What is the future for America Inc.?

The Covid pandemic has thrown this question into sharp focus
by Mary Harrington
The Reagan government cut social spending, deregulated industries and relaxed antitrust rules

What is the proper relationship between corporations, society and government? This question is increasingly urgent as businesses worldwide plead for government support to get them through the economic disaster of coronavirus. This week’s long read pick, by Matt Stoller at American Affairs, offers some indications as to how (at least in the United States) this debate may develop as we emerge from lockdown.

Business leaders are confronting ‘a crisis in corporate America’. Productivity is foundering, energy companies seem unable to stop setting bushfires in California and social media is inflaming political polarisation. Stoller traces the evolution of this situation through the regulatory changes that brought it about.

In the 1980s, Stoller writes, ‘the American economy was still in many ways a New Deal society’: unionised, dotted with small businesses, highly structured regulations governing utilities, and public infrastructure. But international corporations were increasingly struggling between these obligations and the intensifying aggression of global competition.

The Reagan-era Business Roundtable argued that business was capable of meeting its social obligations without this raft of regulations. In response, government cut social spending, deregulated industries and relaxed antitrust rules. Industries consolidated, strikes reduced, inflation stabilised and stagnant areas of the economy roared to life.

But, as Stoller notes, the new normal ‘also began weakening the bonds between CEOs and the corporations they ran’, and over time saw ‘the end of stakeholder capitalism and in some ways the erosion of the CEOs’ own power thanks to the replacement of CEOs by financiers at the top of the food chain.

Leveraged buyouts, asset-stripping and the new age of private equity drove economic concentration even as their advocates paid lip service to competition. Stoller shows how the Clinton administration, ostensibly left-wing, embraced the financiers even more enthusiastically than Bush had before him. The days of deregulation, offshoring and the deliberate ceding of manufacturing to China arrived, even as the fall of the Berlin Wall encouraged business leaders and those benefiting from globalisation to hail ‘The End Of History’. Meanwhile, the benefits seemed sufficiently widespread that “financial power, markets, and social justice seemed to go hand in hand.”

International terrorism, the Great Crash, the rise of China, the opioid epidemic, ‘flyover country’ and now coronavirus have exposed in ever more painful form the hubris of that millennial moment. After a decade of financier-driven governance dedicated to short-term value, Stoller observes, corporate assets and infrastructure are creaking, while the companies are running low on R&D, social capital, long-term vision and productivity. Meanwhile, the American population as a whole is tiring of laissez-faire leadership: “They want to be governed.”

Even the Business Roundtable, driver of the laissez-faire model, has disavowed the ‘shareholder value only’ vision of corporate purpose in favour of a vision that “includes customers, suppliers, communities, employees, and shareholders in a stakeholder model.” The question, Stoller suggests, is what is to replace the disintegrating laissez-faire consensus. Will it be a ‘corporate liberalism’ that amounts in effect to governance shared between big business and the state? Or a new mobilisation by government to break up overmighty corporations in favour of broader competition and a thriving marketplace of smaller businesses? Stoller is sceptical of ‘corporate liberalism’ as a force for the public interest, saying of the giant corporations:

They want the government to stand up to China, for example, but not in a way that would force them to move supply chains. They want antitrust action against their opponents, but not themselves. They would like regulation to benefit the common welfare, as long as it is voluntary where they are concerned.
- Matt Stoller, American Affairs

Corporatism or activist government in the interests of the public and small businesses? This, as Stoller sees it, is the new battleground in corporate America. One way or another though, “The libertarian era of financier power is over.”

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Fraser Bailey
Fraser Bailey
2 years ago

Thanks for that, and for the link to the Matt Stoller article. I only discovered Stoller a week or so ago, via the Jimmy Dore podcast. He’s very good.

2 years ago

Is Mary Harrington concerned about the future of Communist China inc, or about globalist plans for ‘one world’? I heard all that talk about ‘the Chinese future’ has just died, given their creation and cover-up of the crime of the century. The corollary is that we’re going back to strong nations, strong leaders, and strong borders in a world threatened by communist and Islamist tyranny and militarism. Maybe Unherd writers concerned about social justice could write about the 1m+ Chinese Muslims now in ‘re-education’ camps, wondering if their organs will be harvested, as a topic more relevant to our new future

2 years ago

Unherd has become another leftist mouthpiece. You’ll help nothing like that

2 years ago

Which would you rather, a large number of rebellious Uighurs being taught that it is not right to kill people just because they are different, or the same people ( who want to turn Xinjiang into Eastern Turkmenistan ) being forcibly moved to the narrow and almost inhospitable Wakhjir corridor that links China to Afghanistan ? Have you not noticed that Islam would possibly NOT win any prizes for ‘ peaceful co-existence ‘?