Quantcast

Getting Down to Big Business: A Conservative American Romance (Part 2) | The Nation

  •  
Rick Perlstein

Rick Perlstein

Where the past isn’t even past.

Getting Down to Big Business: A Conservative American Romance (Part 2)




Wall Street

Yesterday, for the first of three posts on the romance between business and the political right, I wrote about what some historians call “the golden age of capitalism,” which, as far as our governmental arrangements are concerned, was also a golden age of liberalism. In the years after World War II, coincident with America’s decades-long economic boom, even the nation’s top corporate executives seemed to buy into the Keynesian consensus that the best way to assure their own firms’ prosperity was to put money in the pockets of ordinary Americans.

Then, suddenly, they didn’t—my subject for today.

Here’s an irony of the history of conservatism’s relationship with business and business’s relationship with conservatism: “Wall Street” used to be the right-wing industrialists of the forties and fifties’ greatest term of derision. (Wall Street was the place that humiliated them by forcing them, hat in hand, to beg for capital.) Phyllis Schlafly wrote of the “Wall Street kingmakers” who controlled the Republican Party like dictators, forcing on it “liberal” nominees (like the financier Wendell Willkie), the kind of people who read the liberal Republican flagship organ the New York Herald-Tribune. Wall Street liked Lyndon Johnson. It tolerated unions. And, as long as the postwar boom was still booming, it accepted business’s relatively subordinate role in federal policy making. Which of course drove the 1950s and ’60s versions of Tea Partiers—I’ve called them “Manionites.”

Then, lo, the boom bust.

The 1970s was a time of falling rates of profit due largely to fallout from the Vietnam War, from the Arab oil embargo, and lots of successful labor militancy. A reaction was not long in following. And the leaders of the new business reaction now came from Wall Street and the blue-chip companies that had only a decade earlier formed the core of the postwar golden-age corporate-liberal bargain. The romance between business and conservatism entered a new phase: white-hot and smoldering.

Its leaders were people like William Simon, who made a pile of money lending money to New York as senior partner in charge of government and municipal bonds at Solomon Brothers. Then, when New York needed a federal bailout to pay back those loans when banks like Solomon Brothers greedily called them in (they could make more money now loaning to the same resource-rich Third World and Middle East nations who crushed the boom by using oil as a weapon), he did everything he could, as Gerald Ford’s secretary of the Treasury, to block it, making liberalism out to be the only reason for the nation’s every problem. As he wrote in a book modestly titled A Time for Truth, published by Reader’s Digest Press, “The philosophy that had ruled our nation for over forty years had emerged in large measure from that very city which was America’s intellectual headquarters, and inevitably, it was carried to its fullest expression in that city. In the collapse of New York those who choose to understand it could see a terrifying dress rehearsal of the state that lies ahead for this country if it continues to be guided by the same philosophy of government…. Nothing has destroyed New York’s finances but the liberal political formula…. Liberal politics, endlessly glorifying its own ‘humanism,’ has in fact been annihilating the very conditions for human survival.”

And they were people like Bryce Harlow, who became a confidant of both Presidents Eisenhower and Nixon while on leave from Procter & Gamble’s pioneeringly aggressive Washington lobbying shop, which he himself established in 1961. Now back in harness at P&G, he drafted himself as field general for just the kind of organizing called for in the now-famous Lewis Powell memo. Powell, another establishment mandarin who a decade earlier might have been counted on to buy into corporate liberalism, instead became a leading activist against it in his role as a top lawyer for the tobacco industry. Tobacco companies were still smarting from Congress’ passage of the Public Health Smoking Act in 1970, banning cigarette advertising on TV and mandating health warnings on cigarette packs—the kind of regulation big business had previously learned to take in stride. In 1971, Powell, as chair of the “education” committee of the National Chamber of Commerce, argued “the American economic system is under broad attack,” that business had to learn the lesson “that political power is necessary; that such power must be assiduously cultivated; and that when necessary it must be used aggressively and with determination… Strength lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.”

And so Harlow went into battle as one of the new movement’s generals. Alarmed at the election of an apparently overwhelmingly liberal Congress following Watergate in 1974, he recalled: “We had to prevent business from being rolled up and put in the trash can by that Congress.” Even though that Congress was not all that economically liberal, actually, just Democratic. In actual fact the number of Senate votes the AFL-CIO said they could count on in that Congress decreased from thirty-eight to thirty; “The Freshman Democrat today is likely to be an upper-income type,” a labor lobbyist said. “I think a lot of them are more concerned with inflation than unemployment.”

Another of the establishment-cum-insurgents was a dude named Charls Walker, a former Treasury undersecretary. In 1975 he took over a foundering organization for estate tax recipients and turned it into a turbocharged lobbying shop dedicated to the proposition that the American economy was foundering for a lack of “capital formation”—that business literally did not have enough money, largely because the government extracted too much from it in taxes, which it then distributed downwardly to Americans who were not capitalists. This was precisely the opposite of Keynesiansm—and a proposition that proved attractive enough to several formerly Keynesian Fortune 500 corporations that they each contributed $200,000 to make Walker’s “American Council for Capital Formation” a juggernaut.

Groups that had always done this kind of work became more explicitly political during this period. The National Association of Manufacturers had been aggressively fighting liberalism for decades, but from New York; in 1972 the group (and their political arm, the Business and Industry Political Action Committee, or BIPAC) moved house to Washington, DC—because, a spokesman said, “the thing that effects business most today is government.” The budget of the United States Chamber of Commerce doubled in size between 1974 and 1980.

Here’s why figures like Harlow and Walker were so important. Corporate lobbyists had plied the halls of Congress since forever. But they did so exclusively as representatives of their companies’ own interests, seeking advantage over other companies. Now, they lobbied for capitalists as a class. Capitalists, in other words, were forming unions, with a solidarity unmatched in the labor movement they opposed. They foreswore competition in the name of defending competition.

Please support our journalism. Get a digital subscription for just $9.50!

Consider the formation of a group like the Business Roundtable, formed in 1972: its membership is literally the CEOs of America’s biggest corporations, meeting around a round table. Wikipedia: “The Business Roundtable played a key role in defeating an anti-trust bill in 1975 and a Ralph Nader plan for a Consumer Protection Agency in 1977. And it helped dilute the Humphrey-Hawkins Full Employment Act. But the Roundtables most significant victory was in blocking labor law reform that sought to strengthen labor law to make it more difficult for companies to intimidate workers who wanted to form unions. The AFL-CIO produced a bill in 1977 that passed the House. But the Roundtable voted to oppose the bill, and through its aggressive lobbying, it prevented the bill’s Senate supporters from rounding up the 60 votes in the Senate necessary to withstand a filibuster.”

Wikipedia is precisely correct. For more detail you can read great books like Fluctuating Fortunes: The Political Power of Business in America, by David Vogel; Winner-Take-All Politics: How Washington Made the Rich Richer—and Turned Its Back on the Middle Class, by Jacob Hacker and Paul Pierson; The Paradox of American Democracy: Elites, Special Interests, and the Betrayal of Public Trust, by John Judis; or The New Politics of Inequality, by Thomas Byrne Edsall, which is my favorite.

Next time: what all this history means for the Tea Party here and now.

Part 1 of Rick Perlstein’s series traces the origins of the cozy relationship between conservatives and big business.

Before commenting, please read our Community Guidelines.