Martin J. Sklar on corporate liberalism

The giant business corporation is a type of institution which has made possible economic growth and creation of wealth on a scale never before seen in history.  It also is a concentration of economic and political power that is dangerous to a free and democratic nation.

One of the great issues of American public policy, for more than a century, has been how we the people can get the benefit of the corporate form of organization without allowing it to swallow up everything else in American life.

Marty Sklar, a college classmate of mine at the University of Wisconsin in the 1950s, went on to become a historian whose field of study was this issue.  I didn’t keep in touch with him after college, but I recently read magazine articles paying tribute to him as a historian on the occasion of his death.  I was intrigued enough to get a copy of his major book, which is out of print.

The Corporation Reconstruction of American Capitalism, written in 1988, is about the debate over corporate monopoly and anti-trust law in the era when corporations first came to dominate the U.S. economy.

It covers roughly the same period and issues as Altgeld’s America, but in a very different way.  Ray Ginger’s book is about the hurly-burly, corruption and violence of street-level politics and labor struggles in Chicago, while Sklar’s book is about high-level discussion of public policy.

American statesmen saw that corporate trusts and monopoly represented a dangerous concentration of power, which farmers, laborers and independent business owners could not withstand.  But at the same time, these same corporations increased economic efficiency and productivity and raised the American material standard of living to a level never before seen.

I remember Marty in his college student days as a strongly committed left-wing radical.  But in his book, he seems well-content with the workings of American capitalism and American statesmanship.

Monopolies and trusts in the 19th century USA were subject to the English common law, which held that no contract in “restraint of trade” is enforceable.  That is, all the grocers in a town may agree among themselves to set a minimum price for bread and milk and that is not against the law, but if one of the grocers breaks the agreement, the others have no basis to sue for breach of contract.

The Sherman Anti-Trust Act of 1890 outlawed conspiracies in restraint of trade, but it did not outlaw monopoly.  There was nothing in the act to prevent one grocer in a town from buying up all the other grocers or driving them out of business.  Small businesses actually received more protection under the German cartels, under which prices were fixed at a level that enabled them to stay in business.

Under some interpretations of the Sherman act, any form of bargaining above the level of the individual, including collective bargaining by a labor union, could be considered a conspiracy in restraint of trade.  A law that allowed monopolistic business, but not labor unions, had obvious drawbacks.

Then, too, the bigness of big business was not necessarily a bad thing.  The creation of nationwide supply and distribution networks, the creation of production systems that integrated the whole process from raw materials to the sale of the finished product, made for more greater efficiency than every existed before.

Then, too, increased competition was not necessarily a good thing.  A business with high fixed costs might lose less money by selling its products at a loss than by sitting idle.  Competition could, and sometimes did, force businesses to operate in the red.

How to solve these problems, and still prevent a few giant corporations from controlling the whole U.S. economy?

Sklar described three basic approaches to the corporate monopoly problem, represented roughly by Theodore Roosevelt, William Howard Taft and Woodrow Wilson in the 1912 Presidential campaign, taking into account that all three changed their ideas over time, and that their ideas overlapped.

Roosevelt believed that corporate monopoly should be accepted a fact of life and supervised by the executive branch of government for the common good.  He recommended a regulatory authority to set broad economic goals, approve or disapprove corporate acquisitions and mergers and broadly regulate prices.

He would have created something like Japan’s Ministry of International Trade and Industry, which guided the emergence of Japan as great world economic power after World War Two.

Taft saw a need for some minimum corporate regulation, but was worried as much or more about excessive governmental power than about excessive corporate power.  He thought corporations should be regulated mainly by laws enacted by Congress and enforced by the courts, without an important policy-making role for the executive.

Wilson favored legislation against certain anti-competitive practices, but with exceptions for “reasonable” restraint of trade and for labor unions and farmers’ organizations.  His administration favored legislation to protect workers from abuse and to aid farmers.  He thought national economic policy should be set by coprorate executives, working with rather than under the federal government.

The result, according to Sklar, was a “corporate liberalism” that took into account the ideas and interests of corporate business, small business, farmers, labor and consumers and arrived at a reasonable compromise acceptable to them all.

Sklar is credited with coining the expression, “corporate liberalism,” an expression that, to me, implies that liberals are witting or unwitting tools of corporate power.  But in this book, Sklar depicted corporate liberalism as a good thing, not a bad thing.  It reflects the willingness of politicians and corporate executives to make reasonable compromises that accommodate all major interests, without any one group monopolizing power.

This, as he saw it in 1988, was the enduring genius of American democracy.  This is how I, too, saw things in 1988.  The events of the past 15 years have made me see things differently.

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The following links are to articles giving a more rounded picture of Sklar and his thinking.

Vanishing Act: You’ve probably never heard of Martin J. Sklar, but you should have by James Livingston for The Nation (October 2014).

Martin J. Sklar and the Search for a Usable Past by John B. Judis for The New Republic. (June 2014)

A Eulogy for Martin J. Skar, 1935-2014: Historian, Patriot and Socialist by Ronald Radosh for The Hudson Institute (May 2014)

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[Added 12/30/14]

The United States as a Developing Country: Studies in U.S. History in the Progressive Era and the 1920s is Sklar’s other published book, with three articles from the late 1960s, three from the 1980s and one written for the book itself, which was published in 1992.

The title is his way of saying that all countries, not just Third World countries, are “developing” countries because their economic and political systems are constantly evolving.

In the earlier articles, he criticized intellectuals who say they’re alienated from American society.  He said that if they are true revolutionaries, they should be trying to understand their society and change its direction.  If they are not revolutionaries, they should stop pretending and embrace society as it is.

In the later articles, he says the direction of change is determined by a balance of ideas and tendencies, both capitalistic and socialistic.  Intellectuals should be willing to make their contribution to The Mix, as he called it.

Another of his ideas is the foggy (to me) notion of “disaccumulation,” based on the fact that, in the 1920s, the number of American services-producing workers for the first time exceeded the number of goods-producing workers, which is contrary to the Marxist nation of capital accumulation based on increasing exploitation of labor.  What it does, according to him, is make possible the employment of large numbers of people, including academics, whose work does not directly benefit capitalists.

He expressed confidence in the last article, published in 1984, that American love of individual freedom and commitment to the rule of law is so firmly established that the USA will never be in danger of a European-style dictatorship.  I thought so, too, back then.

[Added 10/17/2019]

What I didn’t realize in 1988 was that both anti=trust law enforcement and meaningful corporation regulation had been abandoned, with the support of leaders of both parties.  Corporate leaders no longer saw a need to compromise and accommodate the interests of working people, consumers and communities.  Matt Stoller’s blog provides good insight into current monopoly power.

LINK

BIG by Matt Stoller.

 

Tags: American capitalism, anti-trust law, corporate liberalism, corporate monopoly, corporate reconstruction, Martin J. Sklar, Theodore Roosevelt, William Howard Taft, Woodrow Wilson