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PLANTATION: A PROFILE
It has been abundantly shown that the members of a small coterie,comparable in relative size to the owning class of the Banana Republics and otherunbenign polities, own and control all important economic enterprises in the UnitedStates. And now that we have a latter-day insight into the ownership and controlof the individual parts, it remains to be shown into what whole these parts fit.
The thesis of this chapter is that the economic system as awhole is principally owned, and mainly though not wholly controlled but certainlydecisively influenced, by or on behalf of hardly many more than 500,000 biologicalindividuals (as distinguished from fictitious persons such as corporations). In turn,the political system is very concentratedly influenced. The instrument of this highlypersonal influence-control is the large corporation, an Archimedean lever. Ownershipin some degree may be claimed by perhaps 10 per cent of the population, most of itin tiny bits, but outside this slice it is largely confined to chattels. Few Americansown more productive property, directly or indirectly, than do benighted Russians,Chinese or Latin American descamisados. This fact is no doubt difficult forthose conditioned by domestic mass-media propaganda to accept; yet intractable factit unquestionably is.
Firms in Operation
The number of American firms in operation as of 1963, the mostrecent date for which the information is available, was 4,797,000, an increase of22,000 over 1962. 1 This figure did not include agricultural enterprisesor firms of professionals such as physicians and lawyers. Nearly half, or 2,032,000firms, were in retail trade, most of them small local retail stores, often in hockto local banks.
Sole proprietorships at the end of 1961 totaled 9,242,000 andpartnerships 939,000. 2
Gross national product, or the totality of goods and servicestransferred to consumers by all agencies, public and private, amounted to $554.9billion in 1962. 3 It approximated $600 billion in 1965 and may have exceeded$700 billion before this book is published. The national rate of economic growthrose to 5.5 per cent in 1965.
Sales of the 500 largest industrial corporations amounted to$229.08 billion in 1962, or nearly 42 per cent of gross national product. About 65per cent of these sales, or $149.4 billion, were made by the 100 largest industrialcorporations, $36.2 billion by the next 100, $20.5 billion by the third 100 and $13.2by the fourth 100. 4
The Treasury Department for tax purposes has a category of "activecorporations," numbering 1,190,286 in 1961. This category with sweeping catholicityincludes corporations in finance, insurance, real estate, services, nonallocablebusinesses and agriculture, forestry and fisheries. Excluding all such and retainingonly the mining, construction, manufacturing, transportation, communication, electric,gas and wholesale as well as retail trade industries in order to obtain a categorycomparable with that of the big industrial enterprises we have been considering,we have 675,074 active industrial enterprises. 5
The total assets of all these 675,074 active industrial andtrading enterprises were $561.778 billion in 1961 6 compared with totalassets in the same year of $186.769 billion for the 500 largest industrial companies,$125.734 billion for the 100 largest. 7 In 1962 the assets of the 500had risen by more than $10 billion. More than 30 per cent of the industrial assetsof the country, then, was confined to 500 of the largest companies.
Actually, in 1961 companies with assets of $50 million and moreamong all active corporations, industrial and nonindustrial, well above the rangeof "small business," held the bulk of assets and most of the net income.
The number of such companies was 2,632 or .2 per cent out ofthe 1,190,286. The $50-million-asset-plus companies held $812.396 billion out oftotal corporate assets of $1,289.516 billion, or nearly 65 per cent. Their net incomewas $30,027 billion out of $45,894 billion, or 66 per cent of all corporate net income.
Confining ourselves once again to active industrial and tradingcompanies, we find that 1,073 constituting the $50-million-plus class had assetsof $346.922 billion out of total industrial and trading assets of $561.778 billion.,or more than 60 per cent, and net income of $24.151 billion or 70 per cent, out oftotal net income of 35.916 billion. 8 Again, one central corporation oftenowns many other large ones. The big corporations are not always detached entities.
Summarizing, 2,632 active corporations or slightly more than.2 per cent of all active corporations (almost always dominantly owned and controlledby less than .1 per cent of their stockholders) held nearly 65 per cent of all corporateassets for 1961 and got 66 per cent of net corporate income. These 2,632 corporationswere those with individual assets of $50 million or more. In the industrial-tradingcategory alone less than .2 per cent ( 1,073 out of 684,075) of corporations, withassets of $50 million or more, held more than 60 per cent of assets and derived 70per cent of net income.
The vast number of enterprises below the $50-million asset class(and almost 60 per cent of them had assets of less than $100,000) perform only ashrinking marginal amount of the business of the country. We can therefore with theutmost caution say that most of the productive activity of the United States is inthe hands of a tiny number of very large corporations largely owned and completelydominated by a small coterie, almost a junta.
This fact is shown, too, in the figure of $302.536 billion fortotal sales of the 1,073 largest industrial and trading corporations for 1961, whichwas nearly 60 per cent of gross national product. 9
What have been cited are official government figures and assuch may be suspect to some persons who profess deep distrust of all government activity.Let us, then, turn to strictly business sources.
"The 7,126 U.S. companies with more than 100 or more employees(2.5% of the nation's 286,817 manufacturing corporations) account for 90% of totalmanufacturing assets and 83% of sales," says a widely circulated business directoryin referring to 1961. 10 "The nation's top 13 employers, firms with100,000 or more workers, have assets of $37.9 billion (15.3% of total U.S. manufacturingassets) and sales of $47.1 billion (13.6% of total sales)."
No matter which source one turns to, the same prospect unfolds:intense concentration. Slightly more than 7,000 managements, often interlocked, accountfor 83 per cent of all sales!
Whoever owns and /or controls the large corporations, then,obviously owns and/or controls the lion's share of the productive system, We havealready shown how untenable is the idea that such ownership is widely diffused amongmillions of small shareholders. The small shareholder in the United States standsin the same relative position to the large shareholder as the rank-and-file Communistin Russia stands to the party leadership. Useful, he nevertheless need not be seriouslyconsulted. He carries no more weight than the rank-and-file employee. Corporativelyspeaking, he is a nonentity, an unperson.
The Cannibalistic Merger Movement>
The smaller enterprises, moreover, are being steadily squeezedout of business or absorbed by the giants, most of which became giants by the cannibalisticprocess.
There have been three periods in this century marked by wavesof American mergers--1900-10, the 1920's and the years since World War II. From 1920through 1929 there were 6,818 mergers; from 1930 through 1939 there were 2,264; from1940 through 1949 there were 2,411; from 1950 through 1959 there were 4,089; andfrom 1960 through 1963 there were 1,978. In most cases larger companies absorbedsmaller ones; in some cases many small companies were suddenly combined into largeones. 11
The word "merger" in actual practice almost invariablyindicates that large companies are involved; it is rare for really small enterprisesto figure in mergers. Thus in the decade 1951-61, of 3,736 mergers involving the500 largest industrial and 50 largest merchandising firms--almost all the mergersthere were--the largest 100 industrial companies absorbed 884 firms, the next largest100 absorbed 1,059, the third largest 100 took in 577, the fourth largest 100 absorbed453 and the fifth largest 100 absorbed 431 firms. Among the merchandising companiesthe largest 50 took in 332 other companies. 12
In the years 1948-60, 33.4 per cent of assets acquired by mergerwent to companies with assets of $50 million or more and 34.3 per cent of acquiredassets went to companies with assets of $10-$50 million. Assets acquired by companieswith less than $1 million of assets amounted to only 1.6 per cent. The same trendcontinued into the 1960's up through 1962, the latest date available. 13Since then, the merger movement has taken a new spurt.
The small enterprise, at least rhetorically beloved by manysmall-town congressmen, has also been steadily driven out of business by failure,a traditional hazard of genuine businessmen as distinct from corporate manipulators.In the period 1921 through 1935 there was a yearly average of more than 20,000 failures(excluding railroad bankruptcy proceedings), with aggregate liabilities averagingmore than $500 million and average individual liabilities between $21,000 and $27,000.From 1936 through 1940 the yearly average was 12,064 and in the 1940's it was a littlemore than 5,000. But in the 1950's the figure started burgeoning again, from 8,058in 1951 to 14,053 by 1959. In the 1960's it is exceeding 15,000 annually.
Most of these failures are of very small firms. Only in 1961did aggregate annual liabilities cross $1 billion, where it remained thereafter through1963, our latest date. In no year has the average individual liability exceeded $100,000.14
The figures tell little of blasted hopes in the uneven racetoward business success.
It is almost a cardinal rule that only small businesses go outof existence through bankruptcy. The word is encountered only academically on thehigher corporate circuit.
One of the effects of the propaganda about business success(propaganda based on a meager number of instances) is to encourage each year thousandsof illusion-ridden citizens to jump into the business whirlpool. Unskilled in logicalanalysis, they optimistically accept the lopsided findings of Time, Fortune andthe Wall Street Journal as representative fact. All they accomplish in mostcases, sooner or later, is to enrich with their small bankrolls the coffers of suppliersof business equipment, which is later knocked down to the highest bidder at bankruptcyauction sales. There is a thriving business in the United States dealing, year inand year out, with bankruptcy itself.
By every known sign, entering into business for oneself in theUnited States is now, and always has been, a highly risky affair. Many are called;few are chosen. And most who remain in business do so on the thinnest of survivalmargins, constantly financed by short-term bank loans, the constant prey to recessions,regional strikes or even vagaries of the weather. A simple run of unseasonable weatherregularly drives out of business hordes of hopeful operators of small resorts, hotels,stores and service enterprises. Many are hopelessly in debt. But in addition to misfortunesof local circumstance there stand in the background the asset-heavy large enterprises,which survive all vicissitudes, like granite cliffs against the sea. Not many Germanenterprises survived the military disasters that engulfed the Reich this century;but the Krupp family's steel enterprises, for one, did survive and, indeed, are flourishingnow as never before. Krupp in Germany could no more be vanquished by overwhelmingnational calamity than could Du Pont in the United States. What would survive anyevent, perhaps even atomic warfare, would be titles, patents, formulas, certain keypersonnel and organization charts. One would, as the saying goes, have to get thecountry "moving" again. And who can do this better than Krupps, Du Ponts,Rockefellers, Fords, Pews, Gettys, Rosenwalds and their kind? For, among other things,they have gathered unto themselves administration of the technical "know-how."This is what they have, over and beyond money: general far-ranging administrativeauthority.
Business versus the Corporation
As applied to the larger enterprises the term "business"has become a euphemism, no longer expressing the intended content of the word. Theman who owns and operates a small independent shoe store is a businessman. So, itis implied, are Henry Ford II, J. Paul Getty, Crawford H. Greenewalt and Roger Blough.Yet these latter basically have no more in common with the small tradesman, eitherin outlook or mode of operation, than has a juke-box entrepreneur with a musician.
Among the defining characteristics of any business enterpriseis that it can fail, can go out of business through bankruptcy. It is risky, in short.But the major corporations can no more fail than can the public treasury. Their risksare all marginal. Their massed financial reserves and other assets are absolute guaranteesagainst total risk and failure. Beyond this, they are so thoroughly woven into thevery warp and woof of society that they are the peculiar anxious and constant concernof sovereign power itself.
This last has been shown in this century in particular in thecase of railroads, many of which through gross financial mismanagement--"milking"--havegone through bankruptcy proceedings in which unpreferred creditors were squeezedout with heavy losses. But reorganization proceedings under the supervision of thefederal courts have restored them to formal financial health, often under the samemanagement, bankers and holders of senior obligations. For the railroads serve avital function in modern society.
The large industrial corporations have never yet had to be individuallybailed out of financial difficulties by the government, for they have not experiencedoverwhelming individual financial difficulties. Their financial position has beenmade too secure by monopolistic and semi-monopolistic practices, at times formallyadjudicated illegal.
What kind of business is it, then, that is impervious to failure,one of the most basic possible experiences of business in history? If it is indeeda business, then it is something distinctly new in business history.
Close students of corporations feel driven to employ variousdevices to differentiate the big corporation from the ordinary corporation, whichmay indeed fail. There was first widely used the rather imprecise term Big Business.But, as we have noticed, the big corporation is different from the smaller corporationin crucial ways other than mere size. It is not only big but it cannot fail, cannot(as the saying goes) go out of business. Some specialists then introduced the termsuper-corporation, 15 which is better, as it indicates at least some sortof superiority or supremacy. But what is the superiority? The fact of being failureproof?Size?
The big corporation, as a matter of fact, is not a businessenterprise at all, at least not in the sense that business enterprise has been understoodthrough history and as it is commonly understood even today. The linguistic habitsof people have simply not kept abreast of institutional change.
The big corporation, it is true, does business, engagesin trade. But so do the government trading enterprises established by Soviet Russia,which seek profits but which are nevertheless not thought of as businesses or businessenterprises. By definitional ukase they are excluded from the business category.
A writer on economic affairs, reflecting on AT&T, showsawareness of the inapplicability of the term "business" to the functioningof the large companies when he says: "AT&T today is less a company thana quasi-political state." 16
But not only is AT&T a quasi-political state; many otherlarge corporations are in the same category and, indeed, like AT&T have foreigngovernments among their large stock-holders. The stock is held as a national treasuryasset. But it is not the participation of governments as investors that makes theseentities quasi-political states; they are that even without any government stockholding.They are, too, more than an integral part of the economy. They are an integral partof the functioning political system, their acts and plans focusing the attentionof legislators and political administrators, just as the acts of legislators andpolitical administrators are of paramount concern to them. Their interests and thoseof government officials at many points overlap and interlock.
The big stockholders and managers of these quasi-political states,again, are stockholders and managers in some sense different from people ordinarilyso recognized. They not only have more power than the common run of stockholdersand managers but they must continually pass judgment and act on a wider spectrumof eventualities, a spectrum as wide indeed as that of any top government leader.What the president of the United States is thinking about is, more often than not,precisely what the big corporate people are thinking about, often in the same terms:war or peace, balance of international payments, treaties, unemployment and wages,gross national product, interest rates, consumer finance, national debt, taxes, etc.,etc.
Because referring to these men as corporate leaders or big stockholdersor magnates is imprecise, and confusing as well to many (for what, really, is a bigstockholder, a man owning a million shares worth $1 each or a million shares worth$500 each?), I have coined a new term for them. They are, according to this term,finpols-- financial politicians. Their political mentalities and acts areshaped by their propertied and institutional positions.
Although not recognized by the general public as politicians,whom cartoonists still regressively depict as men in broad-brimmed black hats wearingstring ties and black frock coats, much of the daily activity of the biggest propertyholders--the finpols-- is identical with the work of government leaders. Theyare, first, diplomats--so much so that they can be quickly shuttled into the highestformal diplomatic posts. They are, too, manipulators of public sentiment throughadvertising, public relations subordinates and corporately controlled mass mediain general. They make or cause to be made speeches on fundamental public questions,seeking to persuade. They select subordinates, conduct negotiations with governments,hire and fire high-level corporate personnel, manipulate political parties and, aboveall, make decisions of national and international import. Most crucially, they have,like the very top governmental leaders, vast financial resources at their fingertips,resources for which they are far less strictly accountable than most government leadersworking within constitutional frameworks. They can, and at times do, buy legislatorsand judges. Most--repeat: most--legislators are on their payrolls.
As far as that goes, many of them or their aids can and do withoutso much as shifting gears go right into top government posts, where they feel perfectlyat home. When Robert McNamara went from the presidency of the Ford Motor Companyto become secretary of defense, he simply stepped from one to another large organization.The horizon of Nelson A. Rockefeller hardly broadened when he stepped into the governorshipof New York. Even though he had not previously been in any very high administrativepost, the transition from the universal concerns of the Rockefeller family to thoseof New York State was hardly a move into a wider domain.
These quasi-political states or super-enterprises, then, area reality. The men with the biggest stakes in them and at their helms are littledifferent from government leaders in function, outlook or means at their disposal.To most cases they far overshadow the domains of all except the highest politicalleaders. Revenues for AT&T in 1964 exceeded revenues of the thirty smallest Americanstates, nearly equaled the three richest. No governor of any American state presidesover an enterprise nearly so vast, complicated or minutely far-reaching. No senatorhas in his jurisdiction any comparable domain. As Desmond Smith points out, the netincome of AT&T's Bell Systern, after taxes, is approximately equalto the national income of Sweden. Bring a few of the other large companiesinto a cluster and one sees how many other long-established nations they togetherexceed. France becomes a minor operation, comparatively. The big corporations accountfor most of the American gross national product itself, and most of the nationalincome as well. One can almost justifiably say: They are the United States.Take them out of the picture and what would be left?
AT&T is certainly a gigantic affair, an octopus or super-octopusif you will. But it has many near counterparts at home and abroad: General Motors,Standard Oil (New Jersey), Ford Motor, U.S. Steel, Socony Mobil Oil, Du Pont, Bankof America, Chase Manhattan Bank, First National City Bank, Manufacturers HanoverBank, the big life insurance companies (Metropolitan, Prudential, Equitable, NewYork and John Hancock), Sears, Roebuck, Great Atlantic & Pacific Tea, Royal DutchShell, Unilever and still others.
These are not businesses at all as the term has been historicallyunderstood. They are clearly more like governments, or government departments, andwould be more aptly termed finpolities. Their influence on formal government,direct and indirect, conscious and unconscious, is enormous. Their influence, indeed,is so often peremptory that it might better be described as in the nature of (quasi-decretal.For such entities, through agents, often tell governments, in secret conference (theUnited States government included) what they must do and what they, cannot do. That,I submit, is power. And, if governments fail to comply, at the very least they willlose the considerable cooperative power of the finpolities.
"The 'top' or 'pure' executive largely symbolizes organizationalauthority. He is a politician," says David T. Bazelon in a general analysis(The Paper Economy, Random House, N.Y., 1963, p. 37).
Crown, Baronnage and Church
Historians in surveying the late Middle Ages of Europe oftenorganize their narrative around three focal centers: the Crown, the Baronage or Nobilityand the Church. These were the three often rivalrous, sometimes embattled, powercenters of the times. The Crown came to be held by a family line that had emergedfrom the Baronage and gradually extended its sovereignty over it. In its struggleit ran into a powerful rival in the Church, represented by the pope, who claimeduniversal dominion in the name of God. In time the Crown, linked to rising nationalism,was victorious over the barons and, finally, also over the Church. Strongly centralizednational governments emerged, these contending brutishly down through the centurieswith each other for imperial power. The most recent climactic acts of this recurrentEuropean drama were colossal World Wars I and II.
Utilizing this same sort of schema it is possible to discernanalogous power centers in the United States today. There is the central governmentroughly (and blindly) occupying the position of the late medieval Crown. There isthe restless baronage in the form of the finpols and upper corporate magnates(corp-pols), seeking to bend the Crown to the purposes of their corporatebaronies and dukedoms. Crown, Church and Baronage in medieval times, although contendingfor power against each other, were not always at swords' points; sometimes they cooperated,sometimes they fell apart and fought or intrigued one against the other. At timesthe Crown itself was overturned, to be succeeded by some dominant baron.
Among many additional differences in the situation, though,is the fact that the modern financial baronies have emerged under the protectionof the Crown; the medieval Crown, per contra, emerged from among the competingBaronage, subdued it. The medieval Crown rose as a challenge to the Baronage; themodern financial Baronage has risen as a power challenge to duly established pseudo-democraticgovernment.
In their overlapping aspects, government and finpolitiesare almost identical, a fact most apparent in time of war and in matters of defense.The so-called defense industries are such an indispensable part of government todayas to have given rise to the concept of the Warfare State. Company boardrooms aredepartments of the Department of Defense or, looked at another way, the Departmentof Defense is a special branch of the big-company boardrooms.
In dealings with the upper strata of government the finpolsappear as equals, very much as prime ministers of a foreign state. When the chairmanof AT&T, General Motors, Standard Oil or U.S. Steel sits down with the presidentof the United States to discuss some issue of mutual concern we witness a genuinepolitical "summit conference." It is far more than a conference betweena big leader and an informed citizen. It is more like a conference between a medievalking and a powerful baron, a potential kingmaker or kingbreaker.
On the whole, most of the time, the relations between the presidentof the United States and the leading finpols have been cordial. Actually mostof the presidents of the United States appear to have admired and stood in awe ofthe finpols-- men who have mastered or have been put in mastery of the mysteriouslife-giving market.
There have been periods, usually short, when relations betweenthe two, like relations between the medieval Crown and the Barons, have become strained.But much of this strain, arising from groping attempts of government to regulatethe far-ranging finpols, has been a sham, improvised to deceive a gulliblepopulace. The aim has been to leave the president of the United States looking goodin the eyes of the populace, preserving his image as a strong and puissant leader,but to give the finpols their way concretely although perhaps in some newpackage. Thus, although we live under increasing government regulation, much of theregulation is purely token. And if the finpols do defy the government andbreak the law in some billion-dollar foray--they will, if caught, be forthrightlyfined up to perhaps $50,000 or $100,000!
National policy with respect to the finpolities has beenparalyzed by ambivalence relating to two ideas. There has been, first, the strongnational belief in competition. Without competition the national history itself wouldbe seen as without meaning, simply a record of random activity. On the other hand,there has been admiration for advancing technology, linked purely by associationwith the corporations, and with bigness. Americans generally admire competition,advanced technology and pure bigness. The fact that one must choose between competitionand corporate bigness has been evaded. It is logically impossible to have finpolityand competition, yet few are willing to make a choice between the two.
"Bigness itself is no crime" is a statement oftenmade in classrooms and in writing by apologetic academicians with their eyes on thebig corporations. And they are tautologically correct; bigness cannot be a crimebecause it is a pure abstraction. But to be a big corporation, as we haveseen, is almost always and invariably, as the fact happens to be, to be an adjudicatedcriminal corporation. The proper reply to the professor who utters the empty truismis this: "But bigness in a corporation always, as a factual matter, involvescrime."
Presidents McKinley, Theodore Roosevelt, Taft, Wilson, Harding,Coolidge, Hoover and Eisenhower were deep in the confidence of the finpolsand, despite harsh words at times purely for public consumption, got along very wellwith them. Theodore Roosevelt demagogically referred to them as "malefactorsof great wealth." But the finpols, always, despite harsh public language,managed to get their way, sooner or later. Corporate concentration for example, continuesapace despite the hullabaloo of antitrust.
Where the desires of the finpols and the government becameclearly divergent was in the 1930's, with the country beset by the deep crisis ofunemployment initiated by the finpolities. The formula under which the finpolshad prospered finally came apart, and government felt the need to improvise. Thereensued a period of tension and genuine hostility between finpols and government,which was finally poulticed over by the advent of World War II, in which the finpolsand finpolities were very much needed. The fusion of the finpolitieswith the national government, with many finpols taken boldly into the nationalgovernment under the rubric of patriotic effort, was again complete, and was solemnlyrecemented during the Eisenhower Administration. President Eisenhower frequentlyexpressed his admiration for the finpols and gave them a prominent role inhis administrations.
In the 1960's the finpols remain restored to grace innational affairs. Most of them at the moment seem to agree that the government shouldbe allowed to engage in somewhat wider social maneuvers than finpolity wouldordinarily approve. Presidents John F. Kennedy and Lyndon B. Johnson, seeking torebuild Franklin D. Roosevelt's synthesis of electoral support, have been allowedto engage in much social-program maneuver. And the finpols have been concededmany of their demands--removal of price controls, lower taxes, etc. President Johnson,like President Eisenhower, has professed great admiration and respect for the finpolswho are, after all, under the equal application of the laws entitled to as much considerationas, say, the ordinary workman. The finpols, then, are an integral part of"The Great Society," in which there is obviously a great deal of lucreto be made filling profitable government contracts for cement, steel, aluminum, copper,textbooks, rockets, space machines, tanks, recoilless rifles, schools, hospitals,sanitoria and bird baths.
In place of the Church today, there are the Intellectuals. Inso saying I realize that my remarks lose credibility for many American readers, forintellectuals are not highly esteemed in the American mass-media or, presumably,among most of the populace. As I don't want to take the space to lay down a detailedargument supporting my case for the Intellectuals as a domestic Third Force let me,aiming right between the eyes of the dubious, simply remark that Karl Marx and V.I. Lenin were intellectuals. So, for that matter, were Winston Churchill, AlbertEinstein, Thomas Jefferson., Benjamin Franklin and John F. Kennedy. Not all intellectuals,to be sure, have attained comparable eminence. But they are nevertheless presentin their various ways.
It is the intellectuals, as a group, who preside and wrangleover the undulating frontiers of ideology, philosophy, scholarship and science, inall of which they may be said to have, by popular default, a vested interest. Mostbroadly (and abstractly) they preside in some disorder over values. And althoughtheir concrete power today is not comparable with the power of the medieval churchmen(themselves the intellectuals of their day, supported by the propertied and psychologicalpower of the Church), it is nevertheless implicit. It is the general task of theintellectuals to make sense out of the established order, if that is possible; butthe more the established order fails to make sense in the minds of the intellectualsthe nearer it is to ultimate rejection or modification. If a basic political operatingrule is that all men are entitled to the equal protection of the law and Negroesand others are flagrantly denied such protection, it is the intellectuals who aremost sensitive to the contradiction between rule and action and who therefore denythat the system is what it virtuously claims to be. By the test of its own rules,by the way, ours is not an operationally virtuous system.
The fact of the importance of the intellectuals as a class hasnothing at all to do with the strength or virtue of the intellectuals as individualsbut has everything to do with the ultimacy of systematically applied thought. Hitlerthrew the intellectuals out of his system, preferring to rely upon what he calledhis intuition. As a consequence he lost, among many other things, priority in thematter of the atom bomb. The currently split and diminished Reich stands as a monumentto his folly. The Russian politicians, supposing Leninism to be ultimate politicalrevelation rather than a restricted set of tactics, keep the intellectuals underclose restriction; the expression of free thought is not permitted in contemporaryRussia. Nevertheless, the Russian intellectuals do maintain some under-the-surfaceferment in the Soviet Union. They are a force, however feeble, but of vast potential.
One of the latter-day difficulties of the finpols andthe finpolities on the American scene is that since 1929 they have lost thesympathy of a considerable segment of intellectuals. Far fewer today than in the1920's believe that what's good for General Motors is good for the United States.Much about the specific enterprise of General Motors, indeed, increasingly failsto make human sense in the minds of intellectuals, despite the herculean labors ofpublic relations men. And in view of the emergence of a vast hereditary establishmentof property, it is blindingly clear that huge money rewards are not merited compensationfor some overpowering social contribution as in the creation of an industry. If Carnegie,Rockefeller, the original Du Ponts, Westinghouse, Ford, Hartford and other nineteenth-centurymen made such a contribution, a debatable point in itself, it is certainly plainthat their heirs have not. Today, the biggest money rewards in the American systemcome from simply sitting and listening to the reading of a will, which can scarcelybe construed as a social contribution. Intellectually, it looks medieval.
It is a mistake, though, to suppose that it was the post-1929denouement alone that caused the defection of many intellectuals from the old andeasy ways of thinking. It was the literary intellectuals more particularly, committedto humanistic values, who reacted most strongly to the national experience after1929. But public policy with respect to the new weaponry, from the atomic bomb onward,raised increasing doubts about the direction of events among scientific intellectuals,many of whom now look upon the joint policies of the government and the finpolitieswith an increasingly dubious eye.
Yet it is the relations between the finpols and the pubpolsor public politicians that occupy the foreground, with the intellectuals kept inenfeebled attendance under steady public disparagement as "long hairs"and "impractical theorists" rather than in forthright restriction as inRussia. Finpols and pubpols are generally bedfellows, the latter probablythe more ardent in the relationship, but increasingly there are signs of strain asthe pubpols recognize, with some bewilderment, that in many ways their interestsare incompatible. Can it be, they seem to ask themselves in dismay, that what isgood for General Motors is not always good for the administration in Washington?What Big Business wants, in short, no longer always seems to harmonize with whatthe White House believes is required. The naive king, friend to all men, begins tofeel that the barons are perhaps plotting against him.
The divergence of interests, not wholly closed since it widenedunder Franklin D. Roosevelt in the 1930's, seems likely to grow wider in the courseof world change. The pubpols, like the medieval kings, may be obliged to struggleagainst the baronage, a prospect few of them can relish in view of their not toosecret admiration for them. But as interests diverge and strains grow greater, thecentral government (like the medieval Crown, simply by reason of its wider responsibilitiesand inherent powers) seems bound to triumph, although by that time the central governmentmay have been transformed into a more viable version of the Corporate State thanwas ever seen in Italy and Germany prior to 1945. There is indeed a discernible swingtoward such a Corporate State, of which the finpolities would be integraland guaranteed formal parts (with big ownership stakes assured under some saving,perhaps socialistic, formula), and most of the smart money would no doubt bet onits emergence. Yet, in the time remaining before its advent, will the intellectualslook upon its coming with favor?
Informally, we are already well into the era of the CorporateState, of which the Warfare State is only a subdivision. Practically, it alreadyexists as long as the pubpols find their interests running parallel with thoseof the finpols. A difficulty for the latter, though, is that the pubpolsare sometimes obliged by the far-scattered facts confronting them to interpret thegeneral situation differently, as President Kennedy did in the case of steel pricesand as President Johnson did in the case of aluminum, copper and steel prices.
Although AT&T is a finpolity, a vast dukedom littleshort of a full polity, the domain over which it presides is parochial in comparisonwith the relatively universal domain of the United States government. AT&T is,comparatively, narrowly specialized in its interests.
And it is the narrow specialization of profit-interests of allthe finpolities that, at times, makes their acts and policies inharmoniouswith those of the government of the United States, whose necessary task is to harmonize,at least roughly, a wide variety of foreign and domestic problems and interests.The government, often to its distaste, must deal with a far more complicated situationthan any finpolity deals with.
Such being the case there is always the potentiality of a clash--perhapsa serious clash--between the central polity and all or some of the finpolities.There can be no doubt which way the hand would go if all the chips were ever down.A question that arises at this point, unanswerable yet, is this: will the intellectualsbe able to come forward with some solution or set of solutions more attractive thanthe looming and gradually emerging Corporate State or ultimate finpolity?
Although the medieval Crown won out in its struggle with thebarons and the intellectuals of the day, when it attained its final victory it wasby no means the same Crown. It had been modified and battered in the struggle. Forthe intellectuals in the course of time caused it to be changed almost beyond recognition,most dramatically in the French Revolution. While much remains the same today, asthe effort to re-establish something like the Holy Roman Empire in the guise of aUnited Europe, the content, the outlook and the methods of the European governmentsare all different, largely owing to the efforts of the now secularized intellectuals.The slogan "Liberty, Equality and Fraternity," which exploded the emotionsof men, did not come from king, nobleman, soldier, peasant or businessman. it, likemodern science as a whole, came from the intellectuals.
No suggestion is intended here that some sort of establishedscript or historical cycle is being followed or even that the same sort of structureconfronts us that confronted medieval Europe. It is only that the interactive, usuallymuted, tug-of-war among government, the big corporations and the intellectuals stirsmemories and seems to be at least a dim replica of an earlier internal struggle.
My own view is that although the big corporations and theirdominant owners and managers, the finpolities and the finpols, arestill unquestionably powerful they are in a long-term slipping position as far asultimate general dominance is concerned. Too many counter-forces are emerging onthe world scene.
That this is so has been shown both by Presidents Kennedy andJohnson, neither of whom was personally hostile to the corporate crowd. PresidentJohnson has appeared to admire it as intensely as President Eisenhower and maintainsclose relations with it.
Yet situations arose which showed that, when the chips weredown, a president who knows his own mind and interests can and must quickly bringthe finpolities to heel. It has been demonstrated, in brief, that a politicalleader with a firm knowledge of the mechanics of government and the balance of forcesin society can successfully assert the priority of the general interest over thespecial interests. Franklin D. Roosevelt did it most spectacularly, able as be wasto act in the name of an unquestioned emergency. But neither Presidents John F. Kennedynor Lyndon B. Johnson needed the excuse of an overriding emergency when they vetoed,only temporarily to be sure, the price increases of some of the most powerful industries.President Johnson, by releasing stockpiled government aluminum and by threateningto reallocate government orders for steel, showed that indirect government counter-actionis always possible if the finpolities threaten to run away with any situation.This fact was probably always known to dominant Republicans, for which reason theyhave shown such marked partiality for a long line of mediocre and subservient presidentsfrom Grant to Hoover and Eisenhower. Not a single Republican president since Lincoln,nor most of the Democratic, causes the pulse of a reader of American history to quickeneven slightly. When honest, they were dull and inactive. When energetic, like TheodoreRoosevelt, they were fakers; and when stupid they were calamities. No historian ofany standing among his peers would deny it.
In a certain sense every big corporation is a hostage to presidentialand even congressional ire, which alone explains the Republican partiality for figureheadpresidents and congressmen of the worm's-eye view like Dirksen, Halleck, Hickenlooper,Curtis, Mundt and Hruska. Any corporation can be investigated and, in fact, the entirecommunity of wealth can be inquired into via officially mobilized scholarship aswas shown in the Temporary National Economic Committee's investigation. And all investigationsdisclose some state of affairs hitherto unsuspected and deplored by the more intelligentsegment of the populace, leading to cries for change.
Trend toward Multi-Finpolity
The finpolities, in any event, are much more than merelylarge corporations. Indeed, even in their purely functional aspects they are notsimply what the public thinks them to be.
AT&T, the man in the street supposes, is devoted to telephony,General Motors to making automobiles, Sears, Roebuck to merchandising, Great Atlantic& Pacific Tea to distributing groceries--all true. But these companies, and others,do much more, and the trend of each corporation now is to become a general enterpriseengaging in any and every sort of activity that is profitable, related or not toits original line.
Let us examine a few of these multifaceted corporations, ormulti-finpolities, from among the largest corporations, taking as our modelone from real life.
What happens, let us first ask, if a big corporation loses itscustomers, its raison d' être, as the old-time wagonmaking companieslost their customers with the advent of the automobile? Does it then go out of business?As many cases attest, the answer is No. As a huge financial reservoir it merely entersinto one or many other businesses, provided they seem potentially profitable. Theydo this, too, if their original business enters upon a prolonged downtrend. The bigcorporations, in short, are Protean.
As good an example among many is International Telephone andTelegraph Corporation, the world's tenth biggest industrial employer with 195,000workers in 55 countries, and the thirty-fifth largest American company assetwise.Its name suggests it to be devoted to international telegraphy and telephony butsuch is not at all the case. For as the Wall Street Journal justly remarked,it "sometimes seems no more than a scavenger-like monster, madly grabbing upeverything in sight, always ready to strike again." 17
it is difficult to tell precisely what business IT&T isreally in aside from the business of making money. In this respect it is like a bank,and all the big corporations are, banklike, large pools of capital; what they produce,aside from profits, is secondary. And if what they produce does not bring in profitsthey simply switch to producing something else. Nearly all are holding companies,not operating companies as commonly supposed.
IT&T was founded in 1920, originally to run the telephoneand telegraph companies of Cuba and Puerto Rico. It expanded into other countries:Spain, Belgium, Rumania, Australia, Latin America, the Philippines, etc. It alsobuilt up a manufacturing arm second in its field only to Western Electric.
But international political upheavals and wars deprived it ofmuch of its operating territory. IT&T was quite literally forced out of businessin many places.
After World War II it took a new lease on life and became ageneral holding company for all manner of enterprises. As its president told theWall Street Journal, its criteria for buying a company are only two: "The companyshould be growing faster than ITT. And it should have plenty of room to grow as theindustry it is in grows."
"The executive steps into his Avis rent-a-car," beginsthe Wall Street Journal account, "drives to his broker's to check onhis Hamilton Mutual fund shares, mails the quarterly premium for his American UniversalLife Insurance policy, checks on financing some capital equipment through KelloggCredit Corp., fires off a cable to Britain and then motors to Camp Kilmer, N.J.,for a session with the purchasing agent at the Federal Job Corps there. It's justa routine morning dealing with a variety of matters, but so far the man's businesshas been entirely with divisions or operations of the inappropriately named InternationalTelephone & Telegraph Corp."
IT&T now owns and operates the Aetna Finance Company; theAmerican Universal Life Insurance Company; part of the Great International Life InsuranceCompany; Hamilton Management Corporation and Hamilton Funds, Inc.; Avis, Inc.; KelloggCredit Company; the Mackey Telegraph and Cable System; Coolerator Company; KelloggSwitchboard and Supply; Kuthe Laboratories, Inc.; Federal Caribe, Inc.; AirmaticSystems Corp.; Haves Furnace Manufacturing and Supply; Royal Electric Corp.; thetelephone system of the Virgin Islands; L. C. Miller Co.; Jennings Radio Manufacturing;American Cable and Radio; Alpina Buromaschinen-Werke and Edward Winkler Apparatebauof Germany; a large group of Finnish, French, Swiss and English companies; NationalComputer Products; General Controls Co.; etc. It owns scores of companies throughoutLatin America and Europe in almost everything related in any way to using or producingelectrical equipment, as well as many companies without the slightest relation toelectrical equipment. It is a credit-insurance-investment-electricaI equipment-generalworld communications-transportation-chemical-computer-engineering-general servicecompany. You name it, IT&T does it, almost, so long as it is highly profitable.
An extreme case, it will be said, but far less extreme thanone might suppose. IT&T is more like a standard model of the emerging Proteanfinpolity. AT&T itself is not radically different.
General Motors makes automobiles at home and abroad. But italso makes giant Diesel locomotives, industrial apparatus, a full line of householdelectrical appliances (refrigerators, stoves, washing and drying machines, dishwashers,etc.), airplane motors, earthmoving equipment and a variety of other items, and itcan retool and make anything whatever in the electro-mechanical line. As easily asnot, it could make airplanes, intercontinental missiles, submarines or space ships.Whatever it does not make it does not make because it doesn't want to. Thus far itsautomobile line is its main source of profit. Ford Motor is similarly in the householdappliance field and heavily committed to electronics, including TV sets. Both ownan assortment of underlying material-supplying companies. Both are really multi-facetedstates, and with their credit companies and dealership-franchise arms are not verydifferent from IT&T.
The diversified mixture of products of each was achieved bycombining many different existing companies, as IT&T has done in a broader spectrum.In the case of some companies the product mixture has come about gradually. In thecase of others the decision to diversify has come suddenly, as though recognizingan opportunity that others stumbled upon earlier. Companies suddenly and radicallyshift their operating emphases, always in quest of maximum return on capital.
Thus, W. R. Grace and Company, eighty-fifth in corporate size,originally operated ships to Latin America (the Grace Line) but more recently hasdiversified its activities so that it is now a big chemical and fertilizer producer,banker, Latin-American manufacturer, exporter-importer and oil company. This formership operator and banker now derives 65 per cent of its sales and 66 per cent ofits pretax earnings from its chemical division. As in the case of IT&T, we mayask of W. R. Grace: What, really, is its business?
Sears, Roebuck and Great Atlantic & Pacific Tea would bedefined, correctly, as merchandising enterprises. But each owns a great many supplementalmanufacturing and financial enterprises which have been developed or acquired. Eachdoes much more than mobilize, stock and deliver a wide variety of merchandise. A&P,like many of its counterparts, would ordinarily be described as a vast retail grocerychain. Yet it now also carries a big line of cosmetics, pharmaceuticals, householdhardware and certain items of clothing (aprons, gloves, etc.). It and Sears, Roebuckand their smaller counterparts are obviously on the way to becoming general nationalmanufacturing and merchandising enterprises oriented toward the ultimate consumer.Sears, Roebuck is usually thought of as a mail-order house; yet it operates chainsof department stores as well, and engages in the general insurance business. In manyphases it is a manufacturer. Both are giant transport companies.
What is Du Pont? A big chemical combine, it will be said. Butit is also a big manufacturer of synthetic textiles, paints and explosives. It canbuild, and has built, nuclear energy plants. It could just as easily build cities.The big oil companies are chemical companies as well as huge operators of seaborneshipping, tank-car fleets and continental pipelines, and some of the big chemicalcompanies are becoming to some extent oil companies. What is Tennessee Gas Transmission?A transmitter of natural gas, of course; but it is also a huge chemical, petroleumand fertilizer enterprise as well as other things.
The trend among all the big companies is increasingly towardnonspecialization and to the merging of seemingly incompatible enterprises, as whenColumbia Broadcasting acquires the New York Yankees baseball club and IT&T acquiresAmerican Broadcasting. Radio Corporation and other electronic firms acquire big bookpublishers with a view to gaining literary and educational properties. Many big newspaperenterprises also publish books, magazines and operate TV and radio stations, pulpand paper mills, deepwater ships, etc.
AT&T itself, publicly looked upon as "the telephonecompany," operating about 85 per cent of the nation's telephones, long owned99.8 per cent of Western Electric, manufacturer of telephones, switchboards and awide array of electrical apparatus. AT&T is also heavily committed to researchand holds patents relating to the whole electronic field, including computers. Itis deep in the satellite enterprise.
What all the expansion reflects is: investment of earnings notpaid out. As we have noted, payouts incur additional taxes for stockholders; retainedinvested earnings are not taxed, are like money in the bank and get accelerated depreciationallowances. As there are not sufficient opportunities at home, the companies arenow acquiring foreign enterprises at a great rate--in France, Germany, Belgium, Switzerland,Japan, everywhere--and since World War II have invested abroad about $40 billion.Ownership is preferred over income.
The cases cited are not at all untypical. One could go on fora long time detailing odd combinations of corporate activity. Thus, Hunt Foods &Industries, Inc., originally the Ohio Match Company, in addition to making and marketinga broad line of food products operates companies in lumber, glass, aluminum, realestate, chemicals, glass and metal containers, gin, paints, varnishes, wallpaper,floor coverings and so on. It has a line of big corporate investments that is everybit as odd as the IT&T labyrinth. It is, first, the largest stockholder in WheelingSteel, with 8.8 per cent. It owns 22.7 per cent of Canada Dry and 35.8 per cent ofthe McCall Corporation, publisher of McCall's Magazine, Redbook, Bluebookand the Saturday Review. It has it 4.5 per cent interest in ABC-Paramount,giving it a foothold in film-making, radio and television broadcasting.
Let us take a more sober-seeming company, the Mississippi RiverFuel Corporation, originally formed to transport natural gas by pipeline from Louisianato St. Louis. There was first formed the Mississippi River Corporation to exchangestock with it, and this company now owns 94.2 per cent of the Mississippi TransmissionCorporation, 100 per cent of several cement companies and 58 per cent of the ClassA stock of the big Missouri Pacific Railroad. As the change in its name suggests,it is apparently going to concern itself with everything in the Mississippi Valley,perhaps the Valley as a whole.
The Illinois Central Railroad may become its rival, might evenmerge with it. For the railroad has caused to be formed Illinois Central Industries,Inc., with which it exchanged 95 per cent of its stock; and Illinois Central Industrieshas already acquired a big electrical equipment maker. As its name suggests, it isready to operate anything along its right of way from Chicago to Florida and theGulf of Mexico.
Operating companies become holding companies and some of theholding companies become general investment companies such as Adams Express Company,until 1918 a leading express and money-order house that sold out its business toAmerican Express and transformed itself into a closed-end investment trust. The chiefdifference between a standard investment trust and a heterogeneous holding companyis that the latter holds a dominant to 100 per cent interest in companies in whichit plays a directorial role; the investment trust has only a fractional positionin each company and is not involved in the management. The investment trust is apure rentier.
The time, then, is near at hand when a company's name will giveno clue at all to its line of business apart from the business of making money.
Studying the reasons for the crazy-quilt expansion, the FederalTrade Commission in 1955 noted them as follows:
Building new capacity adds to existing capacity and intensifiescompetition; but by buying, a manufacturer acquires additional capacity without addingto total capacity and may also reduce some external competition. "These competitiveconsiderations are especially important if he is diversifying into products new tohim, but in the production of which others are well established."
Selling companies are motivated to sell because they lack thefinancial resources for expansion. Here lies the opportunity of the resource-richcompany.
"The same factor is to be noted in instances in which acompany having surplus cash not immediately needed in its operations invests it inthe securities of other companies, either in the same or an unrelated industry. Suchinvestments may subsequently prove to be the initial step in acquisitions carriedout either as further investment and diversification of the acquirer's business,or as a means of salvaging the investments already made.
"Tax savings possible under various provisions of the InternalRevenue Act granting more favorable rates on capital gains as compared with the ratesapplicable to operating profits of corporations and personal incomes of individuals,the provisions covering tax-free exchanges of stock, and the provisions governingthe carrying forward of past operating losses as credits against future earningsare also important factors." 18
Said the Federal Trade Commission stiffly: ". . . the economicforces and motives discernible are not per se different from those upon whichall business judgments are based respecting the ownership and exchange of propertyin a free economy. The operation of these forces on a large scale, however, carrieswith it such adverse economic effects on third parties, and on the economy as a whole,as to bring their unrestrained operation into conflict with public policy and law."19
What is happening may perhaps be better depicted by showingit as a small fictitious model, as follows: One man, owning all of the highly profitableSuper-Cosmos Corporation, is causing it to hold back most of its earnings, thus enablinghim to bypass personal income taxes. With these withheld tax-free earnings he isgradually buying up all other companies, large and small, causing them alsoto hold back earnings in order to buy other companies which in turn generate profitsto buy others, etc., etc. If this Super-Cosmos Corporation paid its earnings to himin dividends he would be heavily taxed and not richer but poorer. As it is, he growsricher and richer, owns more and more property, expands and expands, so that finallyhe owns every shoe-shine stand and peanut stand. He finally owns every single enterprisethere is,
It is not true, of course, that one man is doing this. But severalclusters of men, capitalists, are doing something like it and are producing the strangemultifarious sort of companies we have noted, which are becoming typical companiesamong the biggest ones. And concentration is being intensified.
What of the antitrust laws? Why don't they prevent the erectionof these huge, expanding multifarious trusts or finpolities?
The average citizen is not aware that the antitrust laws arehighly selective in their application at those relatively rare times when the pubpolsdecide to make them operative. Their application is permissive, not mandatory. Theavowed purpose of the antitrust laws is to protect competition. Thus, if a companyin one line of business tries to take over a company in the same line of businessthey may be called into play; also, if a company through ownership in a functionallyunrelated company--such as Du Pont in General Motors--seems likely to divert subsidiarybusiness from others to itself, they may also be put into play.
As it is said, the antitrust laws forbid only horizontal mergersor horizontal restraint of trade. Under those laws General Motors could not acquireFord Motor or vice versa.
But other kinds of mergers are not forbidden.
There are possible, for example, vertical mergers. Here a manufacturingcompany may acquire suppliers, all the way back to the mine or field, or may acquiredistributors to the retail market. This does not appear to be illegal unless competitionis directly affected with someone in the same line of endeavor. Actually,the company that engages in vertical mergers, far from ending competition, is externallyintensifying it, forcing others to do likewise or to fall behind in the blind racefor dominion.
There are, too, circular mergers, in which a company acquiresa good many companies, neither in exactly the same line of business, but the wholetending to come back into a closed circle so that all these companies only or largelydo business with and for each other, excluding others from the magic circle. Sucha combination might well come under fire of the antitrust laws, particularly if theWhite House occupant decided to parade his muscle.
There are, finally, these latter-day heterogeneous mergers andacquisitions we have discussed and in which the large companies now so largely figure.The antitrust laws do not apply against them because the various acquisitions arenot in directly competing lines. A ship company that acquires chemical companies,an automobile company that acquires a household-appliance-maker or a telegraph companythat acquires insurance companies does not appear to have acquired any of its competitors.
But in a very real sense basic competition is diminished. Forlarge pools of liquid capital, retained profits, acquiring most of the economy forthemselves, are gradually ending competitive endeavors in making money and inrunning enterprises. As far as economic creativity is concerned, competitionhas been stifled at its very roots. Most of the population is in the process reducedto the passive status of the Russian and Chinese populations but by different means.
The antitrust laws, as justice Oliver Wendell Holmes noted,are a joke. They have signally failed to preserve competition, their avowed intent.While the economists go about vainly seeking perfect monopoly, a single company ina single industry making a single item, and debate among themselves the semanticdifferences of oligopoly, monopoly and price leadership, we see around us a risingand all-embracing financial monopoly, quasimonopoly or semi-oligopoly. Itisn't that there is monopoly in one industry--such as steel, oil or motors--but thatindustry in general totality is monopolized in ownership, control and direction bya very few people, the rich and super-rich. The moneybund is a concrete literalreality rather than a hyperbolic figure of speech.
The next step may be the merging, as it becomes profitably tax-saving,of the huge heterogeneous trusts. There is nothing in the antitrust laws as now written,seemingly, that would prevent the merger of U.S. Steel with Great Atlantic &Pacific Tea and the fusion of this combination with IT&T and W. R. Grace. Anotherpossible combination among many is General Motors, Sears, Roebuck, Standard Oil ofNew Jersey and Heinz pickles. Why not? They don't offer competing products or services.They are simply competitive in making money, which is the mainspring of all the activity.Take away the money-making incentive in the form of extremely peculiar tax laws andsuch mergers would not occur.
What is happening is not only of economic and political concernbut is of profound cultural concern. Under the system of many competing enterprises,each independent of the other, independent and candid voices were encouraged. Theold-time merchant, for example, was often a man of forthright, informed opinions,which he forcibly expressed. The object of going into business for oneself in theAmerican ethos was to become "independent," so that one needed nobody'spermission to speak out, or anyone's aid or charity.
The institutional foundations of independent expression, however,are being as eroded under spreading corporate giantism as under Communist or Fascisttotalitarianism. Neither finpols, their managers or employees dare speak outon anything for fear of compromising the corporate image before a heterogeneous public.What does the corporate crowd really think about birth control, religion in the schools,civil rights, conscription and the like? Nobody knows because they play it cool,say nothing. The mass media under their control are similarly noncommunicative, carryingwater on both shoulders, reflecting the world as an entertaining circus of clowns,idiots, heroes, villains and random events. The growing corporate philistinism spreadsslowly over the seats of learning.
To what extent can an employee of any one of the multiple partsof the corporate octopi commit himself on public questions? As a middle-range executiveof the Super-Cosmos Corporation, to what extent can he express himself on, say, traditionalversus progressive education? If he manages to make himself effectively heard oneither side he is sure to make a large emotion-ridden crowd angry. Indeed, the moreeffectively he speaks on any aspect of a topic the angrier they get. They send lettersto the management of the company, threatening to raise a boycott against its manybranches, subsidiaries, affiliates and coordinates. But rarely do matters go thisfar; if they do, the offending middle-range executive is told to "lay off, forgetabout different approaches to education, stick to business."
As nearly everybody works for one or the other of these finpolities,nearly everybody is reduced to mouthing mild banalities if called upon to speak atall. Everybody toes the approved corporate line, designed to avoid making anybodyangry about anything. "Don't be a trouble maker," is the operational motto.Meanwhile, the world itself poses more and more difficulties. As for politics, leavethat to the pubpols and their minions. As General Motors goes, so goes thenation: I'd die for Standard Oil: I have but one Ford to give to my country: Fifty-four-fortyor AT&T: Nylon ueber alles.
Independent merchants and lawyers, once noted for their forthrightviews on public affairs, spoke out as the occasion seemed to require. Now that theyare gone down the corporate drain, theirs and other voices are frozen in corporatesilence. In their place the finpols, if they feel anything of public concernrequires attention, summon their public relations men, legislative representativesand lawyers and map out a quiet undercover campaign--but only as the interests ofthe finpolity itself dictate. Do the political parties themselves need anoverhauling? That is something best left to the pubpols, "Mind your ownbusiness" becomes the prevailing rule. "Live and let live."
The outcome is much the same as though a totalitarian regimehad imposed its will. The organization man in the grey flannel suit becomes endemic,not only on the corporate circuit but in politics and the groves of academe. Theindependent, autonomous mind is more and more seen as an eccentric, a knocker, atrouble-maker, an agitator. "Don't rock the boat," he is admonished. "Youare simply playing into the hands of our enemies abroad. Be patriotic and rally behindthe four-square guesswork of Mr. Big."
The uniformity is perfectly reflected in the glacial technicalslicknesses of the watered-down mass media. The pay-off comes in one catastropheor the other--Bay of Pigs, Vietnam, Watts. Catastrophe itself becomes endemic, built-in--asin the ghettos.
The source of it all surely is found in the need to preservethe well-being of the really huge investments of the finpolities. Any realor apparent deviation from a bland public-relations norm, in word or deed, can hurtprofitability, and this is the new unforgivable sin. For as profits go down, unemploymentrises, parents despair, children grow hungry. Then riots begin, suicides proliferate.It is easy to see that the general well-being depends wholly upon the well-beingand good temper of the finpolities. The national maxim becomes, "Shuttip."
A difficulty in writing about corporations is that the ideaof a corporation brings different things to people's minds.
What people usually think of when they think of corporationsis the engineering structure owned by the corporations. People sometimes visit corporations,as they say, by which they mean they visit their plants or offices.
Nevertheless, nobody, not even a corporation lawyer, has everseen a corporation, which as a juridical concept is beyond sensory experience andalmost as impalpable as a metaphysical abstraction. Yet one can sue or be sued bya corporation, injure or be injured by one. The corporation is actualized, concretized,only in a set of papers, the provisions of which the courts stand ready if necessaryto implement. Whatever is tangible about the corporation is in these papers--itscharter of incorporation, its by-laws and the titles to its properties. Even whena corporation owns a single plant and office combined, one cannot go and look atit; one can look only at its properties, which it can sell or otherwise dispose ofand still remain intact in full corporativeness.
Public relations departments, in presuming to show the corporationto public view, in almost all cases show only some of its property, mostly consistingof engineering enterprises. All the leading 200 corporations listed in Appendix Bare the legal representatives of such engineering enterprises. The corporation itselfis a business--or finpolity; the business is an adjunct of an engineeringprocess, which could be carried on by other legal means.
While there may be little difficulty in seeing U.S. Steel, GeneralMotors, AT&T and their industrial counterparts as operators of engineering enterprises(a brief visit to their plants will convert doubters), there may be some difficultyin seeing certain other companies as conducting such operations. The electric, gastransmission and railroad companies, of course, all clearly stand out as operatorsof engineering enterprises. But there might be some opposition to the assertion thatSears, Roebuck, Great Atlantic & Pacific Tea and R. H. Macy and Company are alsooperators of engineering enterprises. It is nevertheless herewith asserted that theyare.
Even if we eliminate all manufacturing--that is, machinefacturing--fromtheir jurisdiction, they remain engineering enterprises, their engineering functionbeing to gather, transport, store, display, deliver and offer to view a great varietyof merchandise. Their engineering task is logistical. Of course, if anybody wishesto deny that R. H. Macy & Company is engaged in engineering we need not worry;one either sees the point or not. But it cannot be rationally denied that all theso-called industrial and public utility companies are engaged in pure engineeringas well as in trade for profit.
Engineering is one form of applied science, and we find theindustries, taken altogether, using the full range of mathematics, physics, chemistry,biology and even, more or less to suit the taste, the social proto-sciences. Withmore or less growing consciousness they apply pure science to their problems of production.The discovery of a new scientific principle, such as is involved in the transistor,is instantly incorporated into radios. New self-directed machines (automation) areinstalled on production lines as soon as they are created.
Now, if anyone wishes to contend that all these corporate engineeringplants are marvels of modern human ingenuity, he will not bear any demurrer fromthis observer. He may find, instead, that he has a rival in eloquent advocacy, forI would be the first to agree that all these big corporations in their engineeringaspects are among the wonders of the modern world.
But we are not considering them in this aspect--we are takingthis showy aspect wholly for granted. We are considering them only in their corporateaspect, their juridical and quasi-political as well as financial-economic aspects.One not only concedes but proclaims and insists upon the fact that E. I. du Pontde Nemours and all the others have marvelous plants and general offices, based uponthe latest scientific principles.
Few of the finpols, however, are au courant withtheir enterprises in their scientific and engineering aspects. Like the man in thestreet, they couldn't tell one much about molecules, atoms and sub-atomic particlesnor about the principles of mechanics. Their knowledge has to do largely with principlesof accounting and finance, law, cost analysis, taxes, prices, political negotiation,marketing, general organization--and profitability. They are largely creatures ofthe executive suite and boardrooms and the higher political caucuses rather thanof the plant. They know far more about tax structure than about atomic structure.
And it is just these societal aspects, their particulararea of interest, that is our area of interest. We take for granted the work of thescientists in the laboratory and the technicians and engineers in the plants. Theyhave those, too, in Soviet Russia and Communist China where, however, they do nothave finpols.
Portent of good or evil, depending upon one's point of view,it is nevertheless a differentiating descriptive fact.
What most basically confronts us is not only different legalsystems but different types of legal systems. The finpols and finpolitieshave come into historic view, chiefly with the aid of modern technology which theyneither invented nor developed, in our sort of political system They constitute ourproblem, if problem they are, and this problem is in the truest sense political ratherthan economic or technical.
We are, then, interested in the finpols and finpolitiesfrom a political point of view. We do not identify the corporations in their essenceeither with their plants, which are among the most praiseworthy structures in theland, or with their products. While nylon to the average citizen may connote Do Pont,to us it connotes only chemistry. What Do Pont connotes to us--and Ford, Rockefeller,Mellon and the rest--is finpolity.