The New Robber Barons


As we approach the 1996 elections, commentators everywhere are remarking on the high state of voter anxiety. Anxiety about jobs, about security, about their children's prospects, about their own future. They see corporations laying off thousands of loyal employees, downsizing. They see manufacturers letting go their own workers and buying products made by nonunion labor more cheaply elsewhere, outsourcing. They see companies moving their entire plants to Mexico and Southeast Asia where labor costs are lower. They see employers who have long demanded their loyalty show no loyalty at all to them, when weighed against profits. And they see Wall Street applauding and Congress apparently unconcerned.
Meanwhile, they see chief executives' compensation increasing over 30% in 1995, with those who have downsized most effectively receiving the biggest bonuses. The chairman of AT&T, for instance, who let go 40,000 employees in 1995, granted over $15 million in salary, bonuses, and stock options. In short, they see capitalism rampant, a new breed of Robber Barons riding high, unscrupulous gougers who have abandoned their posture of "social responsibility" and go for the fast buck while the going is good.
This concentration of wealth and power in the hands of "captains of industry" is nothing new, dating back to the earliest days of the industrial revolution. As early as 1811, in Lancashire, England, hand loom weavers who saw their jobs taken away by cheap, mass produced factory products, rioted and smashed the machines.
The Luddite riots were a visceral response, lashing out at the perceived cause of distress, and not unrelated to laid off workers today who go back to the plant and shoot the supervisor.
But neither violence against man nor machine stemmed the progress of technology. The nineteenth century, dominated by the growth of industry and mass production, produced a new-rich capitalist class and also a class of exploited factory workers-including children-who huddled in grimy industrial cities. It also led to the founding of the trades union movement to organize workers to bargain collectively for better wages and working conditions, and to the philosophical analysis of capitalist society by such thinkers as Marx and Engels who propounded "scientific socialism" as a new social ethic. They looked beyond capitalism to a society where greed and exploitation would be replaced by equality and rational planning, and private property would no longer be necessary.
These Utopian ideas found practical application in widely different forms. In the west they influenced the evolution of the welfare state and the growth of government conceived as regulating the excesses of exploitive capitalism and protecting the rights of employees. In the east they were transformed by Lenin and Stalin into Soviet Communism, which produced not a "dictatorship of the proletariat" but of a dominant leader and a new bureaucratic elite, the Communist Party. A mixed legacy.
Today the western nations have each evolved a different balance between government welfarism and entrepreneurial capitalism. Soviet Communism eventually fell of its own weight, in part because it failed to mobilize the entrepreneurial energy of its people. But American capitalism too has its imbalances, in particular those resulting from the decline of the trades union movement and the failure of government to safeguard the economic rights of citizens.
The decline in the influence of both trades unions and government can be traced to the growth of the new global economy. Unions lose their bargaining power when employers can threaten to close down plants and move abroad. And governments have had little control over where international corporations choose to relocate. For their part, consumers have shown little loyalty to the "made in America" label, preferring to shop for value irrespective of country of manufacture. The American public, moreover, has largely elevated itself psychologically into a new middle class and abandoned its old working class solidarity. This new middle class sees itself as would-be capitalists rather than as victims of exploitation, and has been successfully manipulated by right wing rhetoric to blame its misfortunes not on corporate greed but on the poor and the welfare dependent.
Yet most people today would agree that chief executive compensation is obscene, especially when compared to employee sacrifices, and many times higher than CEOs receive in other countries. At the same time, those countries offer workers more job security and unemployment compensation, together with national health insurance and superior benefits. Global competition may impact all national economies today, but America is the country where employees are the most adversely affected, because government is least concerned to protect its citizens from economic exploitation. Big business likes to see its workforce worried, because anxious workers are less likely to make wage and other demands.
When Americans get mad as hell and decide they won't take it anymore, their recourse is to form organizations to protest, to petition, and to vote for those who respond to their needs. So where today can those angry at the growing disparity between rich and poor go to protest? How can they speak out in force on rogue corporations, instilling in them a social responsibility they clearly don't feel?
A few weeks back PBS "News Hour" invited two chief executives to express their views on corporate downsizing. One was the New England factory owner whose plant had burned to the ground, yet who kept on his workforce and vowed immediately to rebuild. To him, loyal employees clearly mattered. The other was a former CEO of Scott Paper Company, who echoed the Milton Friedman philosophy by asserting that a corporation's only responsibility was to its stockholders, and laying off workers was just too bad.
My response was to vow never again to purchase another Scott Paper product-a fleabite, but if enough fleas are biting, a company can be made to feel very uncomfortable where it hurts-on the bottom line. If consumers were to target all the irresponsible downsizers by not buying their products, perhaps we could restore some sense of responsibility to the corporate boardroom.
"Workers of the world unite! All you have to lose is your chains!" said Marx, a rallying cry that resonated round the world. He envisaged an international brotherhood of employees standing solidly against exploitation. Today the world's employees are divided and leaderless, played off one against another by the forces of the new global marketplace. But maybe consumers of the world can unite, voting with their pocketbooks not to buy tainted goods-the products of the corporate greed that sacrifices people to profits.
The Robber Barons were brought into line by the attacks of "muckrakers" whose books and articles exposed their rottenness. Upton Sinclair's The Jungle and Ida Tarbell's History of Standard Oil provoked such public outrage that Congress was forced to pass regulatory legislation. Today we need a new breed of muckraker to expose the excesses of big business and restore the balance between capital and labor. Who knows, Congress may then respond to the needs of abused workers, rather than wringing its hands and pocketing the PAC money.
What is needed today is a new New Deal which guarantees work for every willing worker, which values people above profits. Just ask the citizens of those European countries who pay higher taxes than we do if they want to trade places with Americans. No, they tell us, we want to live in a caring country, one in which our government has the clout to keep greed under control. This is the true legacy of Karl Marx, not the nuttiness of a world without private property, but a society in which the economic rights of all its members are respected and protected. In that regard, America still has a long way to go.

Copyright © 2003 The Baltimore Chronicle and The Sentinel. All rights reserved. We invite your comments, criticisms and suggestions.

Republication or redistribution of Baltimore Chronicle and Sentinel content is expressly prohibited without their prior written consent.

This story was published on May 03, 1996.