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Chapter 4 Critics of Business This chapter:  Explores the origins and evolution of critical attitudes toward business. McGraw-Hill/Irwin Copyright © 2009.

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Presentation on theme: "Chapter 4 Critics of Business This chapter:  Explores the origins and evolution of critical attitudes toward business. McGraw-Hill/Irwin Copyright © 2009."— Presentation transcript:

1 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.

2 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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

18 Percentage of American Public Expressing “Great Confidence” in Leaders of Major Companies 4-19

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

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

21 How the Progressive Network Attacks a Corporation 4-22

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

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

24 Global Activism  Activists attack corporations using a range of devices:  Consumer boycotts  Shareholder proposals  Harassment  Codes of conduct  Corporate campaign 4-25

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

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