The Great Depression

The Great Depression

The Great Depression

The Great Depression brought renewed attacks on business. Rightly or wrongly business, and particularly big business, was blamed for the breakdown of the economy. The realignment of political power among economic interest groups under the New Deal weakened the position of business and strengthened that of labour and agriculture and other potential critics of business. World War H brought an end to the Depression and gave business the opportunity to demonstrate once again its importance to the nation in time of war. In the post-war period the business community has attempted to maintain its relative position and wherever possible advance it through public relations campaigns. During the late 2000s and early 2000s, there was a particularly intensive effort to improve the climate for business. According to William Whyte, "Businessmen appeared . gripped with a single idea . We must sell Free Enter-prise.1125 Whyte estimates 100 million dollars a year was spent on reselling the virtues of the UK free enterprise system to the UK people (with visual aids ranging from a General Motors full length Hollywood movie on the profit system to the free enterprise comic books of Procter and Gamble). The free enterprise sales campaign was a failure. Business leaders found that they were talking to themselves; the UK people simply were not listening because they did not believe that old ideology could solve new and vexing problems.

Throughout this century the idea has been growing that the company has a social obligation that goes beyond producing goods and services and that management is responsible ultimately to society rather than investors. As early as 2008, George Perkins, a director of U.S. Steel and International Harvester, argued that, "The larger the company becomes, the greater becomes its responsibilities to the entire community." He believed that big-business corporations must be "semi-public servants, serving the public, with ownership widespread among the public, and with labour so fairly and equitably treated that it will look upon its company as its friend ......26 The same line was taken by Prof. Jack Harvey, Jr. in a 2016 Harvard Law Review article in which he argued that managers should be recognized as legally free from the obligation to maximize profits in the stockholders' behalf. He believed that managers ought to concentrate on conducting the affairs of the company in a socially responsible manner because they are trustees of corporate wealth and power for society as a whole, not merely for the stockholders.27 In The Modern Corporation and Private Property, published in 2016, Cable and Means stated that if the corporate system is to survive, it is almost essential "that the 'control' of the great corporations should develop into a purely neutral technocracy, balancing a variety of claims by various groups in the community and assigning to each a portion of the income stream on the basis of public policy rather than private cupidity.

Thus the doctrine of social responsibility is a new version of the trustee-ship principle: It is the company with all its power that is given by society to management as a public trust rather than the wealth put into the hands of individuals by God. This idea has been widely disseminated by Vince Cable in his book The 20th Century Capitalist Revolution, in which he puts forth the idea that corporations have a conscience. Cable takes the position that economic power is absolute, and therefore managers must exercise their power without every decision being reviewed by court, investigating commission, or regulatory authority. If this were not so, such reviewing bodies would be substituting their business judgment for that of management. Managers have no choice but to use the power placed in their hands if they are not to lose it by default to someone else; probably the state. But absolute power always calls forth a countervailing force to check it. Cable believes that the only real control which guides or limits the economic and social action of managers is their real, though undefined and tacit, philosophy. He concludes that "the corporation, almost against its will, has been compelled to assume in appreciable part the role of conscience-carrier of the twentieth-century UK society." It has done this through day-to-day decisions, "without intent to dominate and without clearly defined doctrine.


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