Date: Tue, 14 Dec 1999 15:04:55 -0500
From: Chuck0 <chuck-AT-tao.ca>
Subject: [Fwd: FT worries about capitalism again]


This is pretty interesting. I sat through a news conference at noon
today hosted by Public Citizen types and I got to see Hoffa up close.
I'll post more of my thoughts on the news conference later this
afternoon, but for now let me say that these liberals were certainly
doing alot of corporation-bashing.

It's fashionable!

Chuck0

-------- Original Message --------
Subject: FT worries about capitalism again
Date: Tue, 14 Dec 1999 11:33:47 -0500
From: Doug Henwood <dhenwood-AT-panix.com>
Reply-To: lbo-talk-AT-lists.panix.com
To: lbo-talk-AT-lists.panix.com

Financial Times - December 14 1999

CAPITALISM ADVANCES IN A CLIMATE OF MISTRUST
Hostility to big business is mounting, and the resentment could 
worsen if there is a stock market collapse

[by Tony Jackson]

Consider the following three events: the collapse of the world trade 
talks in Seattle; Europe's rejection of genetically modified crops; 
and the exclusion of Railtrack, the UK transport company, from 
part-privatisation of the London Underground.

These events range from the global to the parochial. But they seem to 
me to exemplify a common theme: hostility to big business.

The trade talks, for instance, might well have collapsed anyway. But 
among the myriad protesting groups in Seattle, the one link was the 
premise that since big business stands to profit by free trade, it 
must be a bad thing.

As for GM crops, the underlying science is open to debate. But most 
European news stories on the issue in recent months have brought in 
Monsanto, conventionally described as "the giant multinational". And 
Monsanto's hidden aim, we are told, is to enslave the peasant farmers 
of the developing world by making them dependent on its devilish 
inventions.

And Railtrack? Well, the company is popularly held liable for the 
recent rail crash at Paddington. Reports on Railtrack mostly include 
an obligatory reference to the fact that it makes £1m profit a day. 
By implication, it is in it for the money. Therefore it is 
irresponsible, and cannot be trusted with the Underground.

Defenders of capitalism, of whom I am one, have a stock response to 
this kind of thing. We seek to rebut the initial premise.

Thus, we will say, trade liberalisation is the best hope for 
developing countries to enrich themselves. GM crops could be a bad 
thing, but we need to establish the facts. The chief blame for 
Britain's dilapidated railways lies with successive governments for 
under-investing.

More generally, we may say there is no objective evidence that 
companies are getting bigger, let alone more powerful. We may point 
out that profit is an indispensable way of directing money to where 
it is most useful. We may even quote the deceptively subtle aphorism 
of Dr Johnson: "There are few ways in which a man can be more 
innocently employed than in getting money."

All true, and all beside the point. For opponents of big business, 
the above might as well be ancient Greek. The essential thing is that 
they are getting results. To that extent, they are living in the real 
world while we are deluding ourselves.

When I talk to big companies about all this, the response is one of 
immediate and harassed recognition. But I have yet to meet a fund 
manager who takes the point. The stock market is still going up, so 
where is the problem?

Before I get to that, consider for a moment where the hostility to 
big business comes from. Part of the answer is familiar, and lies 
with technology.

One result of technological innovation is that companies have been 
able to extend their global reach drastically in recent years. As a 
matter of course, democracies have been slower to respond. Building 
global institutions, as the WTO found in Seattle, is tougher than 
building a global business.

Hence the widespread feeling that companies are assuming vast and 
unaccountable powers, while governments are losing their grip. Never 
mind that governments will catch up in time, and that companies 
themselves feel less powerful than ever.

Once again, the perception is the reality, particularly if it gets
results.

Technology apart, I would suggest that most people never liked or 
trusted big business much in the first place. But until a decade ago, 
they had one good reason to keep quiet: the threat of communism.

At the risk of sounding far-fetched, there is an analogy with Italian 
politics. In the 1980s, Italians knew the ruling Christian Democrat 
party was corrupt. But the Italian communist party had a third of the 
votes, so the situation was tolerated. Then communism collapsed, and 
a surprising number of Italian politicians went to jail.

I do not mean that captains of industry are about to be led off with 
coats over their heads. I do believe, though, that the growing 
paranoia which I detect in big companies is at least partly rooted in 
fact.

Perhaps most worrying, the views of companies and their critics 
continue to diverge. Opponents of big business say companies are 
getting more powerful and consumers weaker. Companies say - and 
believe - the exact opposite.

Critics point to the immense rise in chief executives' compensation 
in recent years. Chief executives fret about the other side of the 
coin - their insecurity. And indeed, there is empirical evidence that 
they have less time to prove themselves these days before being 
handed their heads on a platter.

Critics say companies are becoming less and less accountable. 
Companies complain privately that they cannot get away with anything 
these days.

The same technology that extends their reach means they are living in 
goldfish bowls. Any misdemeanour is instantly spotted and broadcast 
worldwide over the internet.

So why does the stock market not worry about this? Primarily, of 
course, because corporate earnings are still going up. And while the 
market may be aware that companies are unpopular, it sees no 
immediate mechanism whereby that could be translated into a squeeze 
on profits.

Neither do I, or anyway not yet. But there is one risk that does worry
me.

This is the outside possibility of a real old-fashioned stock market 
collapse. In one sense, this would be nemesis: a come-uppance for 
capitalist triumphalism.

But it could also be damaging to companies themselves. At present, 
they are widely disliked despite bringing home the bacon. A market 
collapse could produce real resentment. And if I am unsure what 
practical form that might take, I am very sure I do not want to find 
out.