The American business and political problems

It may seem, on the basis of the facts we have covered so far, that the American business executive has no political problems. Such, in reality, would not be the case. Although the basic features of capitalism are not contested in the USA, there has been at least as much (and possibly more) criticism of the day-to-day conduct of corporations in the USA than in any other industrial democracy. Opinion polls show, for example, that most Americans are in favor of strict regulation of such undesirable by-products of industry as pollution, workplace accidents or occupationally caused illness and unsafe consumer goods.’

In the late 1960s and early 1970s, such sentiments found expression in newly-created or rejuvenated public-interest groups. Capitalizing on the growth in a middle-class propensity to participate in politics, increased cynicism amongst Americans over business, government and other major institutions, organisations such as Friends of the Earth, the Sierra Club and Common Cause succeeded in imposing constraints on corporations in such diverse aspects of their activities as discharges into rivers or lakes and discharges of funds to politicians as bribes or campaign contributions. Though the influence of public-interest groups declined in the late 1970s for a variety of reasons (including increased fears of inflation and the uncompetitiveness of American industry with consequent loss of jobs) the public-interest groups had secured the adoption of important laws constraining many aspects of business behaviour.

Such a surge and decline’ in criticism of business producing some permanent results is by no means an unusual phenomenon in the USA. The ‘revolt’ of poor farmers demAnclincr crnvernment controls over banks and railroads contributed to the adoption of legislation affecting those industries, even though within twenty years the Populist movement was dead. The Progressives, a loose alliance of reforming intellectuals, writers and journalists, were equally ephemeral but contributed to an even greater amount of reforming legislation on monopoly, clean food and drugs, and other constraints on business abuses. Franklin Roosevelt’s New Deal alliance of the South, farmers, unions, ethnic groups, northern cities and intellectuals lasted in its full glory for only eight years, yet changed fundamentally (and permanently) the balance between business and government power in the USA. Such challenges to business may be temporary, but are nonetheless important in their consequences.

Neither is it the case that government officials in the USA are necessarily sympathetic or close to business. Although it is true that there have been periods in which officials of agencies such as the Interstate Commerce Commission (ICC) were seen as being too favourably disposed to the industry which they supposedly regulated in the interests of the public, there have been other periods (such as the 1970s) when officials of agencies such as the Federal Trade Commission (FTC),-. the Environmental Protection Agency (EPA) and Occupational Safety and Health Administration (OSHA) were bitterly attacked by businessmen as being either uncomprehending of their problems, or even actively hostile to business. Some academic writers concluded that American government was actually more stringent in its regulation of business than the governments of supposedly more left-wing countries.8 Moreover, the strength of the laissez-faire tradition in the USA denied government an active role in partnership with industry in an ‘industrial policy’, as developed in France and Japan (except when, as in the case of defence industries, a special factor such as national security legitimated government intervention).

It is also misleading to think of the USA as a country in which government exists on a nineteenth-century scale. The growth in government in the USA may have been slower than elsewhere, but the share of GNP spent by governm6nts (federal. state and local) is now one-third. Government, in short, is a major potential customer, and one whose purchases are often affected by political pressures. Moreover, as Shonfield noted, although there are practically no nationalised industries in the USA, regulation has generally been more extensive and stringent than in other countries. Antimonopoly legislation was tougher than in Britain, water polluters prosecuted more vigorously than in Britain, and health and safety at work legislation imposed more toughly than in much more socialist Sweden. The importance of government as a customer and the problems which could arise with potential regulators meant that there were plenty of political issues for business to worry about. The celebrated popularity of capitalism as an abstract doctrine has not produced a problem-free life for capitalists.