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The Weight of Government India, China, and the Disciplinary Society

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The Sweating of Business

by Christopher Chantrill
November 27, 2008 at 4:32 pm

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BACK IN the 19th century, we are told, Americans worked in sweatshops for long hours at low pay. There were no benefits, no weekends, no vacations. Every worker suffered under the most rigid industrial discipline and knew he could be fired on a whim.

So America’s thinkers and activists came up with a solution. Instead of the workers working in sweated conditions, the employers should sweat instead. Today business suffers under the most rigid government discipline, and every CEO knows that he could be hauled up for humiliation on the whim of a congressional committee and fined on the whim of a federal regulator.

The point of the old sweatshops was to milk the workers of their just wages, we are told. Employers would pay them only a bare minimum subsistence wage and pocket the rest in profit.

The point of the sweating of business is to milk commerce of much of its economic added value. Businesses and highly productive individuals are only supposed to earn a modest profit. High incomes and profits are questionable, and should be taxed away to “share the wealth.”

Last week we saw where this sweating of business leads. It leads to the looted hulk of General Motors and the other Big Three automakers stranded on Pennsylvania Avenue. Fifty years ago these industrial giants created the wealth to let every American “see the USA in a Chevrolet.” Now, harried and hamstrung by crippling wages and benefits, minutely supervised by excruciating government mandates, they are groveling at the gates of the corporate workhouse, begging for alms from truculent federal lawmakers. But they still have their executive jets.

Prior to the 19th century big business had been closely associated with the political class. The British East India Company was owned by the great and the good and used its connections to extract numerous privileges from the British government over its life from 1600 to 1873.

But the Industrial Revolution propelled jumped-up nobodies to the head of huge business enterprises that appeared out of nowhere. The nobodies were men like oilman John D. Rockefeller, son of a medicine man; steelmaker Andrew Carnegie, son of a hand-loom weaver; and railroader Jay Gould, son of an upstate New York farmer. Politicians and journalists were terrified. What would these upstarts do with their huge economic power? The answer was soon obvious: Nothing. Rockefeller retired at 50 and invented modern philanthropy. Carnegie funded libraries and wrote articles in intellectual quarterlies. Jay Gould died at 56 of tuberculosis, and never showed an interest in anything except business, growing flowers, and minor philanthropy. What a disappointment.

The terrifying robber barons weren’t interested in political power. But political power was interested in them. The political sector was interested in getting a cut of all the new-found wealth, and it was interested in bossing the wealth creators around. A century later, in the middle of an economic crisis we get this from Columbia University Professor Jeffrey Sachs, Democratic economist, at a roundtable at the New York City Public Library. He is responding to a question about the “death of capitalism.”

Capitalism comes in many flavors and with a tremendous amount of success in some of them, and capitalism is not ending. A market economy makes a lot of sense and it has great strengths, but this kind of fundamentalist market economy is ending in this country and will go back, I believe—back and forward, will go back to the idea of a mixed economy again, of mutual responsibility—I think we’ll go forward to a new kind of economy, also, that is more networked and more public/private partnerships, new innovative ways to do things, build things, connect people, network people, so I don’t think that we’re going back to top-down, old-style big government programs in the old way because in the age of social networking we have better and new ways to do that but the idea that it’s just you’re on your own and all the rest we’ve talked about, not to belabor the point, that’s finished.

Notice how Sachs appears to think that capitalism is like one of those beverage dispensing guns that bartenders use. You pick your flavor and press the button; stuff gushes out Notice how he implies that the highly regulated and taxed economy of recent years represented a “fundamentalist market economy.” Notice how he implies that the “mixed economy” and “public/private partnerships” represent a kind of power sharing between the political sector and the economic sector rather than the complete domination of business by the politicians and the activists. Notice that apparently President-elect Obama’s agenda of increased government control of health care and education, and a forced march to a carbon-free economy is not a return to “old-style big government programs.”

People like Jeffrey Sachs do not experience the economic sector as a fragile human artifact. They do not appreciate the hard-won human inventions such as double-entry bookkeeping, limited liability corporations, financial markets, and jumped-up nobodies that have utterly transformed the material life of the human race. They just see the economy as a political appliance—with success in some areas—for the use of political bartenders.

Do not expend an end to the sweating of American business any time soon.

Christopher Chantrill blogs at www.roadtothemiddleclass.com.

Buy his Road to the Middle Class.

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presented by Christopher Chantrill

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