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The Business of America

Emmet Oliver

The Land of Enterprise: A Business History of the United States, by Benjamin C Waterhouse, Simon and Schuster, 280pp, €28, ISBN: 978-1476766645

Calvin Coolidge, thirtieth president of the United States, is really only remembered these days for a) being president during the Roaring Twenties and b) for not saying very much during the Roaring Twenties. He was once approached by the writer Dorothy Parker, who told him she’d made a bet with a fellow who said it was impossible to get Coolidge to say more than two words: to which the tight-lipped Coolidge acidly replied: “You lose.”

While Coolidge may have spared his words, he gave us one great piercing aphorism that probably to this day sums up the essence of the country he led for a spell. “The chief business of the American people is business,” Coolidge said in 1925, and it is this supposed general truth that many find explains this great contradictory nation. It also may explain specific American political and social phenomena, including ones we live with today, all the way from President Donald Trump to the Internet.

While Coolidge’s observation seems rather definitive, the real relationship between business and America has been a little more ambiguous, as it has been in other parts of the world, including in Ireland where buccaneer business executives like Michael O’Leary are loved and loathed in equal measure. But in terms of historical accuracy, Coolidge was right: the business of America literally from its foundation as a group of settlements on the east coast was business. The first English colonies – Virginia and Massachusetts ‑ were actually private companies. The founding fathers made sure the constitution, drafted in 1787, affirmed the central place of business in early American politics. The Civil War pivoted on the issue of slavery which again was linked directly to the business of cotton farming. Earlier, the Revolutionary War was about taxation of goods and services and a key constituency in that conflict were British businessmen and merchants exporting to America. Without their pressure on their own parliament, America might not have become independent until well into the nineteenth century.

While Benjamin Waterhouse’s new book persuasively demonstrates Coolidge’s axiom (via a simple and neat chronological history), it makes a bigger impact by teasing out the ambiguities that mark the relationship all societies have with business and the capitalist instinct. It also shows how the professed respect for business and financial undertakings generally in the USA often collide with other American “values”, such as rugged individualism, anti-authoritarianism and distrust of concentrations of power. A central thread is the question of how we ‑ that is society in general ‑ handle or manage business and the profit motive. Do we regulate it? Do we accommodate to it in some structured way? Or do we try and blunt the very instinct itself and design an alternative model? Or as many eras of American history show, do we simply live with the fact that we are ambiguous about business (and money) and think to ourselves, “that is as it should be”?

American business has thrown up its share of characters who neatly sum up the ambiguity. Take Henry Ford and you see much to dislike. Hateful racial views that eventually earned the respect of Hitler on one side of the ledger; on the other side he evinced a populist devotion to improving the lot of the downtrodden through the ‘’miracle’’ of mass production, Waterhouse observes.

Take virtually any industry or sector that has thrived in twentieth century America and this ambiguity raises its head. Aviation is now perceived to be a negative force environmentally, but for many decades it has been the main force bringing people and families closer together and shrinking the world in mainly positive ways. Same with the Internet: good and bad outcomes again float into view: same with financial services, and so on.

What leaps from the pages of Waterhouse’s book is the feeling that business is something that happens to us, good or bad. But in fact we are its masters, even if we are often reluctant to take up this role, believing instead that invisible hands (or animal spirits as Keynes named them) guide the capitalist system and we should not get in the way. This is the view that permeated much of the societal and governmental response during the long expansion of business in America in the nineteenth and twentieth centuries. However the business world that emerges at the end of the twentieth century is a very much tamer, meeker beast than its earlier, red-in-tooth-and-claw, incarnation, not that you would suspect this from the prevalence of political slogans suggesting that unfettered capitalism and globalisation, driven by the Davos elites, are reducing us all to oppressed wage slaves and automatons.

Over Waterhouse’s full sweep of US business history you can see a central thread illustrating how US business has been declawed over the centuries; where industrial factories once belched out noxious fumes from giant smokestacks, now companies cower in the face of criminal enforcement action from the EPA for serious violations of environmental laws and regulations. (At least this was the case until the recent tampering with the EPA’s mandate by the Trump administration.)

In its essence, the capitalist instinct or profit motive will always be with us and without adequate oversight and regulation can run rampant again, just as it did in earlier eras. What checks or modifies the atavistic nature of business, Waterhouse’s book suggests, is old-fashioned regulation and government oversight. Leaving aside the incumbent, US presidents of all stripes (but particularly Democratic ones) have believed in this for a long time and have eagerly assumed the role of prosecutor-in-chief when business overreaches morally and ethically. Before a roaring crowd in 1936, a few years into the Great Depression, Franklin Roosevelt lacerated “reckless” bankers and war profiteers, shouting to the multitudes “I welcome their hatred.” While this kind of tough talk and tough regulation can often temper excessive “animal spirits”, it is also frequently just ordinary human progress and evolution that forces itself upon business.

Waterhouse’s opening chapters offer a lengthy consideration of slavery. While Marx and others simply said that slavery and capitalism were incompatible, the author takes a different view. “The history of slavery was deeply intertwined with the history of capitalist development in the sixty years after American independence.’’ Slavery was eventually abolished by a stroke of Lincoln’s pen, but ultimately the Civil War was to show that as an economic system it was no match for the emerging alternative championed by the North ‑ industrialisation.

As US society morally turned away from slavery, it had to make its mind up quite soon about the social conditions and repercussions on society of industrialisation and the factory system. At first the factories of the North were not welcomed. Thomas Jefferson in particular championed an alternative world view which privileged agrarianism, and particularly small-scale family farms. “Let us never wish to see our citizens occupied at a work bench,” he declared. This debate, in one form or another, still hangs over American business today. Does government, acting as an instrument of the people, try to shape and channel business and capitalism, or does it just leave business people to it, hoping that the results are broadly beneficial?

For those who favour a type of shaping, further questions are prompted. Should government promote enterprise and how should it then choose between different sectors? Business or deal-making by definition produces winners and losers and this stirs strong passions, making promoting certain sectors or constituencies a risky pursuit, even more so when you take these concerns onto the global level, as in the area of trade for instance.

The interactions of business and politics occupy a large portion of Waterhouse’s book and what we learn from the history of US enterprise is that every politician is in favour of business once his voters are counted among the winners. This is why globalisation and the rise of China causes such political disruption in the US. Most US citizens are supportive of US business success, but they may not be so supportive of business success itself, especially from a competitor nation. When the US is perceived as the loser in a global business setting you get a Donald Trump, or in an earlier form, an Andrew Jackson, who won the presidency in 1828 with a campaign built on helping out the little guy and assailing the big banks, the “draining the swamp’’ of its day.

The type of campaigns unleashed by a Trump or a Jackson play to a core American suspicion of business, or at least of business on the grand scale where power is very concentrated. Waterhouse chronicles the rising power of “robber barons” such as Cornelius Vanderbilt and particularly John D Rockefeller and shows how their power was so far-reaching that even a country as positively disposed to the free market as the US decided enough was enough. By the 1890s a staggering 90 per cent of the oil produced in the United States was refined through Rockefeller’s Standard Oil. Just twenty years later this Leviathan was slain, Standard Oil was declared by the courts to be an illegal monopoly and forcibly divided up into thirty-four regional companies (like ExxonMobil, Marathon and Chevron) as “progressivist” politics mounted a serious challenge to the unimpeded march of business. Progressivism was never about a lurch to the socialist left or a deep questioning of capitalism itself; rather it was inspired by a feeling that business had simply become too big and was no longer “working for” ordinary Americans. It was about knocking the edges off business, not dismantling it, giving Main Street a chance to occasionally put one over on Wall Street.

Soon American business realised that it needed to do things to influence society at large. It needed to advertise, it needed to engage in philanthropy, it needed to set up business associations to make its case directly to government. In many ways these three pillars of American business remain in place today, and they are met by counter-forces in the shape of business regulators, the law and civic society, incorporating campaigns and NGOs.

With President Dwight Eisenhower lighting the touch paper by railing against the “military industrial complex”, the 1960s were a particularly tough time for business in America. Political activists, Waterhouse demonstrates, viewed the business corporation as an integral part of the “system’’ that crippled dissent, promoted imperialism and stifled free expression. Consumer advocates were for the first time taking on companies directly on everything from defective and dangerous cars to health and safety in the workplace. Business found itself on the back foot in the 1970s too, although by the close of that decade it had perfected the art of lobbying and influencing the legislative process, which meant that the next decade was a better period as far as most US executives were concerned.

But a more significant trend was by then starting to become evident as the US moved from a manufacturing economy to a services one. The process took a few decades but between 2001 and 2012, 63,000 American factories were shut down, taking five  million jobs with them. During the same period China added 14.1 million new jobs and everyone got used to words like “deindustrialisation’’ and “outsourcing’’. This type of dizzying, globally occurring change is hard to regulate or shout down from a political podium: hence the boiling frustration that bubbled up from America’s heartlands and rust belt in the 2016 presidential election.

At home in the US, things have come to something of a score draw between business and the rest of society. The two sides still eye each other up, but the contest is devoid of any real “kill or be killed” intent. Some commentators talk of a postcapitalist society, but drill down through the messages in campaigns like that of Bernie Sanders for instance and it is all about regulating business, not abolishing it. The game itself is not being questioned, more the rules and the standard of refereeing. In that sense perhaps one can argue that American business has finally chalked up its biggest success.

1/6/2017

Emmet Oliver is a former business editor with the Irish Independent, Sunday Tribune and Irish Times and business writer with Bloomberg. He also spent several years as a communications executive with IDA Ireland, working with overseas companies.

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