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Two Cheers for Large Corporations

Large corporations help those of modest incomes by selling low-cost goods to the many. They help employees by providing relatively stable jobs, by offering a discipline that many workers cannot impose on themselves, and providing career opportunities that small businesses frequently do not.  Walmart to me is the paradigm example. It has been partially responsible for the happy fact that the cost of living has been going up more slowly for the those lower on the income scale than those higher. It has employed over a million people and not generally those who have backgrounds in prestigious education or other evidence of high human capital endowment.

But some commentators have doubted whether such large corporations are good for our republic and our civic culture generally. This concern has deep roots in American history, harking back to the Jeffersonian vision of a nation of sturdy and independent yeoman farmers.  Before the modern era some even thought to make the antitrust law the legal means to sustain an economic world of “small dealers and worthy men.” 

Nevertheless, on balance large corporations are good for our civic culture, at least given the kind of modern government we have. First, these corporations do indeed still promote a work ethic, particularly in a culture where government schools do such a bad job of this. Even modest jobs at companies socialize people into work and get them started on productive life.

Second, large corporations offer the closet approximation many people will have to civic associations of the kind Tocqueville celebrated.They assemble a diverse group of people to serve a cause larger than themselves—helping others with a product or a service they need. As such corporate employees have to subordinate their individual desires for the welfare of group and follow rules even if in some cases they think they could do better without them. In this sense, a corporation, like any civic association, is good training to be in a constitutional republic where we should follow our original charter, even if we personally believe we have some better rules to add or subtract.

Third, large corporations provide social capital.  Many contribute to cultural institutions. Today, some focus on offering ways to improve K-12 education, even if they are not in that business. To be sure, their charity is not wholly altruistic. A better culture in the city of their corporate headquarters can help recruit employees, and better education can create students who are worthy of recruiting. But these actions at scale have positive effects on society as a whole.

Fourth, large corporations provide a counterweight to big government.  The Business Roundtable and Chamber of Commerce are forces for lower, not higher taxes. To be sure, businesses also create a danger of crony capitalism in which they will lobby for special privileges for themselves. But given that big government is not going away, we would still be worse off without their balance to the bureaucracy and the scribal class. And even their lobbying on behalf of their own narrow interests is somewhat useful. In its absence, most information would be generated by the scribal class and bureaucrats, who are hardly disinterested either.

In a subsequent post, I will address the complaint that large corporations more generally corrode our culture, in arguing for racial and ethnic preferences or in being hostile to religious liberty. But I hope I have shown here why they deserve two cheers from the friends of republican liberty.

Reader Discussion

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on September 09, 2015 at 13:17:58 pm

[…] John McGinnis gives two cheers for large corporations. […]

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Some Links
on September 09, 2015 at 16:23:55 pm

John--

I will try to find time to write a more thoughtful reply. For now, I wish to express my gratitude for taking the time to do as I requested--to make your case more strongly, taking into account concern for civic, as opposed to narrower economic, goods. You are gracious to take my concerns with sufficient seriousness to respond to them. Thank you.

I do not think you fully engage with them, however, both in the sense that your restatement of them does not fully capture what I am trying to say, but also in the sense that you leave out something that I believe matters. For that reason, if you will indulge me, I will attempt to restate my core contentions and anxieties.

We can agree, I think, that large enterprise is very often more efficient than very small enterprise, and that if we limit our assessment merely to economic goods, that in general more efficient leads to greater material prosperity. My anxiety, however, stems from the fact that enterprise of any kind requires a supporting governmental, social, cultural, and legal framework. Some forms of government, society, culture, and law are more desirable than others. I have termed the kind of government, society, culture, and law I think most desirable "republican." I fret that some kinds of enterprise do a better job sustaining republican society than others. And I worry that large corporate enterprise may not be best for this larger, civic purpose. I do not think capitalism will fail, in the long run, but I do think the republic might. And I worry that the form our capitalism takes may have something to do with it.

Note that everything you write above may be true, and you still have not addressed my core concern. Large corporate enterprise may do all of the good things you describe above: they may promote a work ethic; provide an aproximation of civic association; provide social capital; and provide a counterweight to large government, and they may still not be ideal for sustaining the republic.

My reservations about whether or not work in large corporations (and bureacracies more generally) is civically beneficial derives from lived experience. I have done my share of work in large corporate enterprise, both public and private. I have seen up close and personal the way careerism, and ruthless self-seeking more generally, can corrupt service to a cause larger than oneself. Bureacracies create incentives, and in my experience very often those incentives are perverse.

Eventually, when those incentives grow too perverse, they will lead to the death of the enterprise, as the internal dynamics of a firm become less tuned to what customers want or need. But, as corporations like GM demonstrate, that process can be a very long time coming. If you get the chance, explore the field of product management--talk to the professionals who inhabit it. Processes like "waterfall" and "agile" are very rarely as smooth and efficient, in real life, as their advicates claim. The perversities of career incentives can very easily distort these kinds of processes. Watching that happen, to the detriment of the larger interests of a firm is, to borrow a cliche, like watching a train wreck in slow motion.

And even when large enterprises do fail, there are strong market impulses towards growth in size, so that the young, small, and agile firms over time become decrepit, large, and ossified. That process--the long, slow, grinding away of market competition, may or may not have beneficial civic consequences. I have doubts here.

Finally, my sense is that there is substantial civic good that derives from owning an enterprise, rather than being employed by one. I think that distinction matters, among other reasons, because those kinds of small businesses promote attachment to a locality in ways that employment in a large firm does not. Patriotism begins by loving the place you live, and ownership of a local business promotes that in ways that work for a large bureacracy does not.

What you have omitted, in your comment above, is my suggestion that the larger culture of consumption has civic consequences too. Many of my colleagues with whom I discuss civic analysis are pretty pessimistic about the transformations that have occurred in our society in the last roughly hundred years. Much of that has to do with the maturation of consumer capitalism, which undercuts the healthy individualism that Tocqueville described, and fosters instead the egoism he feared. I worry there is a direct linkage between the festering soft despotism to be seen all around us today--which in turn is directly linked to a culture of egoism, as Tocqueville explained--and consumer capitalism. That particular genie is long out of its bottle--but even so, it should give us pause for celebrating this particular kind of capitalism.

I do find it interesting, purely on basis of anecdotal evidence and personal experience, that the guys who own and operate their own businesses tend to be more resistant to the culture of glorious, grotesque excess (and the deranged charcacter such ill-disciplined consumption seems too often to exemplify) than the guy embedded in product-management for an enterprise like, say, Citibank or Bank of America. That, of course, brings us back to the first part of my argument, above.

All best wishes,
Kevin

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Kevin R. Hardwick
on September 10, 2015 at 09:34:19 am

And yet the large corporations have an Achilles: They provide the capital and influence to shape the world as the owners of the stock who have the power to command action desire. Consider how the many corporations demanded that Indiana change its laws on homosexual marriage (was it 800?). A local news paper carried the headline IBM opposes Religious Restoration Act. About 15 years ago I read a book by a fellow named Black (and have since seen his works reviewed on Booktv.org. The title was IBM and the Holocaust. Seems IBM provided the punch card computers which the Germans used to locate the Jews in Europe. They were paid for their computers which the US Army gathered up at the end of World War II. The money was deposited in Swiss Banks all during the War. The Corporations can do a lot of good, but they can also do a lot of evil. Even now there are those which serve as the instruments of a breakaway civilization that is going into space at our expense, if the stuff on the internet is to be believed, and some of it can be supported by evidence.

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dr. james willingham
on September 10, 2015 at 16:23:10 pm

Yep. Been there. Done that, Kevin. Agile, waterfall, big company, middle sized company, small company, state government. Big companies and government both have their business and administrative lifecycles which leads to endless unsavorinesses. That's just the nature of things.

Having worked in those kinds of environments and been harmed in them by bureaucrats and administrators, I've learned how bad they can be, and I've come to better appreciate small company values. Did the big company and government turn me into a monster? No. They made me wiser. You too, I see.

I am quite familiar with the social evils you describe.

I am concerned not so much with the culture of consumption as I am with the practice of advertising, especially as it applies to politics. I don't watch commercial TV very often because I often can't tell if the commercial is advertising a company's product or is it selling a certain familiar politician, who I will not name. I would offer that the only reason he won a second term was because of messaging in non-political commercial advertising.

While big business does have some effect on the soft despotism you refer to, really that has more to do with the improper operation of the Constitution. Correct me if I'm wrong please: The Constitution was originally intended to have a noble Senate and President who were above the democratic political fray, which was limited to the House, and who were to moderate the acts of the very democratic House. The design quickly fell apart, which is most unfortunate. The Constitution was designed to work around a noble Senate and President. Without a noble Senate and President, the Constitution doesn't work right. It's like trying to run a diesel engine on gasoline. That will ruin the engine eventually.

The noble Senate and President were supposed to prevent the soft despotism that inevitably rises from democratic-republican government. After the Constitution was put into operation the Senate and President quickly because less-than-noble democratic offices. So now we have a fully democratic government serving under an otherwise noble republican Constitution. Because democracy dominates the government we have the various kinds of nonsense that comes with democracy: The "living" Constitution. The ever-expanding administrative state. The ongoing failure of the system of checks and balances. The biased and sometimes bizarre schizophrenic Court. The undue influence of big business (big money) on government, which is a big part of what you are talking about, I believe. Etc.

I think its fairly obvious that if the two offices were changed from democratic offices to noble offices, the noble Constitution the Framers intended us to have would be become fully operational; the government would come to its senses; rational legislation would be applied; and the damages of the past would be undone. Laws protecting the public from bad behaviors of business would become the norm, not the exception, but without trampling on our civil rights.

I'm not sure that complaining about the problems that result from unchecked democracy will bring about much if any improvements in government. I don't see any value in blaming big business, the unions, the Court (Gabe), the left, the right, or anyone else. The correct repair obviously is to apply a proper check on the democratic aspect of government by creating a noble Senate and President, per the design the Framers' originally intended.

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Scott Amorian
on September 15, 2015 at 14:54:40 pm

Scott:

If you think I am harsh on Judges, just consider what French philosopher Bertrand de Jouvenel lamented, "law has become jungle" and it is now an exercise in POWER - not a brake on governmental discretion. (And that is one his really tame comments).

But for the record: The problem is not in our (stars) or our Courts, etc - but in ourselves.

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gabe

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