Book Selection of the Month: "The Corporate Reconstruction of American Capitalism, 1890-1916”

ToddSeavey.com Book Selection of the Month (September 2010): The Corporate Reconstruction of American Capitalism, 1890-1916: The Market, the Law, and Politics by Martin J. Sklar (plus Constitutional Chaos: What Happens when the Government Breaks Its Own Laws by Judge Andrew Napolitano)

Sklar’s dry but important 1988 book was brought to my attention by conservative Ronald Radosh, father of Daily Show writer Daniel Radosh, party guest of puzzlemaker Francis Heaney, and philosophical foe of New Republic’s John Judis, who has sparred with Ronald Radosh over the true meaning of Sklar’s work.

This tome details how law, society, and even morality itself were reshaped to accommodate the rise of modern corporations a century ago, but Sklar, unlike Marx-influenced Judis, has come to see Obama and his latter-day Progressive ilk as akin to fascists, creating a corporate state that does more to funnel money (and special legal protections) to big business than to aid the general populace. According to Radosh, Sklar has even come to prefer decentralization-promoting conservatives such as Newt Gingrich, seeing them as more nearly in the spirit of anti-statist early socialists. (It’s complicated.)

But in this book, Sklar focuses on the days of Teddy Roosevelt, Woodrow Wilson, and William Howard Taft, a figure who looms larger in Sklar’s account than in most political analyses of that era. Sklar argues that rather than seeing any of these presidents as true trust-busters or proto-socialists, we should see them as attempting to navigate a historic transition away from American capitalism dominated by small-scale individual owners and toward a more regulated, centralized, but still capitalist system in which much-feared newly-enlarged corporations would routinely turn to government for regulatory approval or guidance.

Roosevelt in many ways appears the most frightening figure from a laissez-faire, libertarian perspective (at least on economic matters), intending with his New Nationalism to make corporations virtual extensions of the executive branch, without even congressional approval needed to impose new rules upon them or to dissolve their charters.

All the presidents of that transitional period took it for granted that populist socialists had many valid points and that centralization was inevitable, desirable, and modern — it was just a question of how much say government would have in that centralization process. Few voices on any side of the debate were raised in defense of laissez-faire and strict property rights adherence:

–Small business owners pointed to the common law tradition of forbidding “combinations,” collusion in “restraint” of trade, and wanted those laws used in their favor and against emerging large corporations (instead, the law inadvertently encouraged big corporations to become bigger, by being more lenient toward mergers than toward agreements, such as price-setting schemes, between multiple small firms).

–Big corporations, then as now, were less enamored of the market than of predictability, especially when engaged in long-term, transcontinental planning, and were more than happy to partner with government against upstart competitors (but they would soon see the uncertainty of the marketplace replaced by the uncertainty of regulatory changes, necessitating the immediate and rapid rise of lobbyists and trade associations).

–Labor unions, despite their rhetorical railing against big corporations, greatly preferred the idea of negotiating with a few mammoth firms to the often-violent patchwork of disputes they were accustomed to across the country at that time (but at first they would be the primary victims of the Sherman Antitrust Act, the law treating union organization as combination in restraint of trade, much like inter-firm price-setting).

–The general public, awash in farmer-populist and socialist sentiment at that time (not so unlike the more radical socialist thinking bubbling in Europe then), passively accepted a growing role for Washington, DC in controlling the economy and ameliorating newly-discovered labor and working conditions problems (but this thinking, still with us, has done more to impede than to foster prosperity, leaving us all leading less “modern” lives than we otherwise might).

The “one big union” of which the villainous Wobblies dreamed was just one manifestation of that era’s love of centralization; people also longed for one big firm, one big and stable economy, and one big government, with the last of these, at least, eventually made real.

In short, this book describes the deeper systemic tragedy, a tragedy a century and more in the making, that is our modern corporate/government economy — or, as Sklar would say, our “corporate liberal” system. In retrospect, the legal and regulatory sclerosis, and the likely recurring financial crises, we face today seem built into a system rooted more in a vain quest for control and stability than in the freedom to innovate. Or as my anarchist law professor friend Butler Shaffer likes to say, we could get rid of most regulations simply by eliminating the ones that were promoted by self-serving businesses.

These are problems deep enough that no mere budget cut or financial oversight bill is going to eliminate them, only a switch to a laissez-faire model unlike any that existed even before the Progressive era.

Indeed, lest we exaggerated the loyalty of pre-twentieth-century thinkers to laissez-faire, it’s worth noting astoundingly ambivalent statements such as this one of Taft’s, quoted by Sklar, which indicate how wildly divergent the potential legal outcomes of the uncertain Progressive era were: “We must get back to competition. If it is impossible, then let us go to socialism, for there is no way between.”

Wilson was confident that a return to old-fashioned competition was not an option. Sklar quotes him saying: “We used to say that the ideal of government was for every man to be left alone and not interfered with, except when he interfered with somebody else; and that the best government was the government that did as little as possible. That was the ideal that obtained in Jefferson’s time…we are coming now to realize that life is so complicated that we are not dealing with the old conditions.” Wilson said, “Whenever bodies of men employ bodies of men, it ceases to be a private relationship.”

John Hay proclaimed the triumph of the new, state-run, corporate — and imperialist — order in his eulogy to Congress, as Secretary of State, for President McKinley, who had been (futilely) assassinated by an anarchist: “The past gives no clue to the future. The fathers, where are they? And the prophets, do they live forever? We are ourselves the fathers! We are the prophets!” Welcome to the modern world.

•And tomorrow, the day after Labor Day, hear some of the pros and cons of the world corporations have wrought by attending our Tuesday 8pm Debate at Lolita Bar on the question “Are Bosses Usually Jerks?”

•And speaking of bosses (but not jerks), for an overview of the excesses of the big government we’ve slowly acquired in the century since the Progressive era, an overview that successfully avoids getting bogged down in partisan defense of left or right and instead focuses on across-the-spectrum violations of the older, constitutional, limited-government order, you might well want to read the books of the man I work for, Judge Andrew Napolitano (host of Freedom Watch), starting perhaps with his first, Constitutional Chaos: What Happens When the Government Breaks Its Own Laws (a copy of which was given to me by Steve Whelan, husband of my previous boss, as it happens).

The book is a reminder — the sort of stepping-outside-one’s-favorite-models mental exercise we all need — that talking about government in ideal terms, as though it actually achieves left-wing or right-wing goals, is irresponsible. Government spends most of its time wasting money, flouting its own rules, and not so infrequently railroading innocents, in ways that make it a poor locus for ideals and visionary schemes of any stripe. (I say end it.) On New Jersey’s Superior Court, Judge Napolitano got to see firsthand how often police lie in court, prosecutors use items seized as evidence as if they were their own personal possessions, and searches and raids occur with little pretext. Like economic reality, this is stuff political philosophers wish they didn’t have to take into account. But we all must.

•Still, without imagining them to be perfect, we must sometimes forge political alliances to get things done. Therefore, for all the right/left-spectrum model’s admitted flaws, my Book Selection entry next month will be: Proud to Be Right, edited by Jonah Goldberg and containing my essay “Conservatism for Punks,” along with contributions by some other familiar figures. More in a few weeks.