The United States: How a Country with a Heart
Became a Business without a Soul

     American capitalism was on a roll in 1962 when I started my management-consulting career. Our country had overcome a major depression, won and paid for a world war, created outstanding colleges and universities across the nation, financed advanced education for millions of GIs, and built a huge number of effective corporations.

     People remembered the wretched excesses of the wealthy and powerful of earlier times and, through enlightened politicians and legislation, created an economic system that was fundamentally fair to both investors and workers. Not only did investors become wealthier and more numerous, but a typical working class American—working only 40 hours a week—could support a family of four.

     The income and wealth disparities that existed in the 1920s had been slightly reversed in the ’40s and ’50s, and were largely stagnant in the ’60s and ’70s. Except for minorities, this was probably the best of times ever for working-class citizens in a large country.

     But that’s not all. American capitalism was beginning to have a sense of moral responsibility. Progressive managers believed that loyalty meant something, and that it was earned and owed, by both employee and owner. Large companies all across the country shifted their management strategy away from brute force, threats and intimidation, toward improving the “quality of work life.”

     By building a climate of fairness and openness, they tried to create a sense of community. People could identify with, and take pride in, their organizations. They saw a close relationship between their own interests and the interests of their companies.

     Many smaller companies succeeded and prospered because workers started with the business and accepted low wages and hard working conditions. The implied promise from the corporate executive or business owner was: “Work hard with me, grow with me, and you will share in my prosperity.”

Broken Promises

     Since they felt they had a stake in the business, millions of workers put their best efforts into “quality circles,” productivity improvement teams and special task forces to help their organizations become more efficient and profitable. When they expressed concern that their greater efficiency might lead to headcount reduction, they were promised that, no, that wouldn't happen.

     Management consultants like me, business owners, and high-level executives explained that as productivity and profits went up, as technology improved and as the economy grew, everyone would benefit. At the time, I did not believe that I was lying. After all, that had been the trend during the 1940s, ’50s, and into the ’60s. We had become a modern, enlightened country. We believed that honest work deserved to be fairly compensated—according to this country’s improving standard of living, and this country’s cost of living.

     Economists of the ’60s agreed. They were accurately predicting the explosion in productivity that we are seeing today, and mistakenly theorized that by the year 2000, workers would have a 4-day, 32-hour workweek, with more vacation time, better medical care and educational assistance.

     Then the 1980s arrived with a vengeance. Apologists for the wealthy and powerful sold a new set of values to the voting public that allowed pro-business, anti-worker politicians to get elected. They, in turn, changed our economy from one that benefited both investors and workers, to one that now benefits investors at the expense of workers.

     Once the balance of power shifted totally in their own direction, the moral values of conservative politicians, business owners, investors and high level executives mysteriously changed—back to the way it was pre-1930, when fairness and justice had no place in business decisions.

The Friedman Doctrine

     There must be a corollary to Lord Acton’s axiom: Power corrupts and absolute power corrupts absolutely. It could be: Greed erodes moral values, and insatiable greed destroys them totally.

     The revered guru of modern corporate values, Milton Friedman, posed and answered his famous question: “So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer is, no they do not.” This is one of the most frequently quoted justifications for greed that today’s corporate executives cite.

     Unless there is a profit in it, today’s corporate executives not only feel no responsibility for how their actions and decisions affect average Americans or their local communities—they sanctimoniously claim a moral superiority for holding such selfish values.

     With their newly acquired set of old robber-baron values, investors can now confiscate the wealth that workers, professionals and low-level managers have produced over the decades and invest it outside our country—purely to benefit themselves, and with no regard for those who originally produced the wealth.

     Today, the chief executive officer’s only responsibility is to himself and his stockholders. Workers have the same status as machinery and are steadily losing whatever human rights they once had. It’s a ruthlessly one-sided arrangement. No matter how much time and effort workers spend in improving equipment or work procedures, they don’t share in the benefits. They not only have no vested interest in the organization, their work doesn’t become easier or less stressful.

     It gets worse. As a work group becomes more effective, it increases the likelihood that some of their members will be fired, and those who remain will have to work harder than they did before, with incomes that don't keep pace with inflation. Workers are told that “competition demands it”—despite record corporate profits and skyrocketing incomes for executives and investors. Of course, executives and stockholders exempt themselves from participating in the cost-cutting competition and get fabulously rich in the process.

     Although we can’t legislate morality, we can legally require behaviors that voters consider moral. We also can destroy the legislation that protects those moral values, and that is exactly what pro-business politicians, both Republicans and conservative Democrats, have done.

     All that count in today’s economy are power and the laws that control incomes. As we enter the new millennium, voters had better figure out which politicians truly respect the moral standards of fairness and justice, and have the interests of our total society at heart—rather than just the “educated,” the established and emerging rich, and the powerful.

Return Home