Caring Corporations, The Sequel

Once upon a time, the standard story of business and labor in America was simple. Corporations dominated until the 1930s depression destroyed affluence. Then business and political executives who led capitalism gaily off speculative cliffs had their credibility destroyed. The private welfare states created by a few large companies to limit discontents and avoid unions withered away. Big labor and big government joined big business in the pantheon of national power. Paternalistic managers died off like dinosaurs. Ideas of corporate community also went mostly extinct. Corporations were no longer the keystone to insuring economic security and good jobs. Welfare capitalism was replaced by the welfare state. Workers in the 1920s owed their living standards to wildly varied entrepreneurs; those after the 1930s primarily owed theirs to federal labor laws, unions, and the Social Security Act. Liberals and organized labor won the most important battles for thirty years. The New Deal fundamentally transformed U.S. society.

But historical orthodoxy had a problem. By the 1970s, it no longer explained events. Unions which had won all the important battles were losing the war. Organized percentages of the workforce first plateaued, then dropped steadily. By the early 1990s, the AFL-CIO had fewer dues-paying members than when formed in 1956, and about the total number its member unions possessed half a century before. Government regulations and social insurance programs also fared badly. Efforts to make Social Security fully or partly “voluntary” and to allow the better-off to opt out went mainstream. Democrats and Republicans alike delighted in equating Social Security with a private annuity incompetently run by faraway bureaucrats. Entrepreneurship entered its second decade of ideological high fashion. Varied forms of labor-management cooperation including profit-sharing, stock-sharing, and team-based organization were lauded. Fearsome 1980s economics hit America’s heavy manufacturing and agrarian heartlands without a liberal resurgence. The 1990s resembled the 1920s far more than the 1930s. Pre-Keynesian economics was a norm of discourse again. Such liberals, as remained, talked more about efficiency than equity and focused on issues of “identity” and “self-esteem” while fearing creationism in the schools.

What had gone wrong? By the mid-1970s, leftist academics blamed labor and political leaders for taking corporate bribes to thwart the masses. About a decade later, some also blamed the masses themselves (so long as they be white and male) for racism, sexism, and other oppressions. The right, meanwhile, unrolled beatific visions. Capitalism was always and inevitably an incredible growth machine. Only errant government policy produced problems that undermined longer-run universal economic advantage.

Professor Sanford Jacoby argues that most of what passes for business, labor, or management history these days is full of ideological gush and scholarly blind spots. The right always over-emphasizes economic and other interests workers and managers hold in common. The left, meanwhile, always over-emphasizes the degree to which the Depression de-legitimized businessmen and the degree to which it legitimized unions in the minds of the vast majority of Americans. Academics are victims of their own false dichotomies.

History, says, Jacoby, is not academic either/or. All things go on all the time. Corporate leaders did not stalk off the stage like villains in a Victorian melodrama during or after the 1930s. They did not swirl their capes about their shoulders and mutter “Curses, foiled again!” Instead they stayed active and engaged, awaiting positive developments. A minority of large successful manufacturing and retailing firms avoided unions with “kindness and occasional ferocity” (p. 7). Less than twenty years after the apparent triumph of New Deal liberalism and AFL-CIO laborism, welfare capitalism began to re-emerge as an alternative to both. This rebirth occurred because of increased global competition and a shift away from undifferentiated mass production; a Knowledge Revolution and the growing importance of skilled, educated workers; a quiet educational revolution and a less quiet but equally important revolution in the number and variety of working women in the labor force; and the inability of...