Week 7 notes
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This document summarizes the origins and history of criticism toward business from ancient Greece through modern times. It discusses how philosophers like Plato criticized profit-seeking and how the Catholic Church condemned usury. It then outlines critics like the Populists, Progressives, and Socialists who blamed social problems on large industry in America in the late 19th century. The document also discusses how confidence in big business declined in the 1960s due to social movements.
Week 7 notes
- 1. Chapter 4 Critics of Business McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
- 2. Mary “Mother” Jones o Suffered through the death of her family from yellow fever, and the death of her business from the Great Chicago Fire o Rose to prominence as an organizer for the United Mine Workers o In 1905 helped launch the International Workers of the World o Eventually became disillusioned with unions, but continued to speak out 4-2
- 3. Origins of Critical Attitudes Toward Business o Two underlying sources of criticism of business: o The belief that people in business place profit before more worthy values such as honesty, truth, justice, love, piety, aesthetics, tranquility, and respect for nature o The strain placed on societies by economic development 4-3
- 4. The Greeks and Romans o The civilizations of ancient Greece and Rome were agrarian societies where most people worked the land for subsistence o Agrarian society: A society with a largely agricultural economy o The extraordinary civilizations of ancient Greece and Rome were based on subsistence agriculture 4-4
- 5. The Greeks and Romans o Philosophers reasoned that profit seeking was an inferior motive and that commercial activity led to excess, corruption, and misery o Plato believed that insatiable appetites existed in every person, but could be controlled by acquiring inner virtues 4-5
- 6. The Greeks and Romans o Aristotle believed there was a benign form of acquisition that consisted of getting the things needed for subsistence o Epictetus and Marcus Aurelius taught that the truly rich person possessed inner peace rather than capital or property 4-6
- 7. The Medieval World o The prevailing theology of the Roman Catholic Church was intolerant of profit seeking o According to Church cannon, merchants should charge a just price for their wares, opposed to our modern idea of market price o Just price: A price giving a moderate profit; one inspired by fairness, not greed o Market price: A price determined by the interaction of supply and demand 4-7
- 8. The Medieval World o Catholicism condemned usury o Usury: The lending of money for interest o By the twelfth and thirteenth centuries, the money supply and economic activity had greatly expanded and interest-bearing loans were common 4-8
- 9. The Modern World o Protestant ethic: The belief that hard work and adherence to a set of virtues such as thrift, saving, and sobriety would bring wealth and God’s approval o Capitalism o Free markets harnessed greed for the public good and protected consumers from abuse 4-9
- 10. The Modern World o Visible wealth creation in expanding economies forcefully countered the notion that only a more or less fixed amount of wealth existed in a society o The industrial revolution created new tensions that reinforced critical attitudes about business 4-10
- 11. The American Critique of Business: The Colonial Era o The colonists who landed at Jamestown, Virginia, in 1606 were sponsored by investors in the London Company, who hoped to make a fortune by discovering gold in the New World o The Pilgrims who came in 1620 were financed by the Plymouth Company, whose backers sought to make a profit 4-11
- 12. The American Critique of Business: The Colonial Era o International trade in coastal regions expanded; inland farmers created a broad agrarian base for the economy o Benjamin Franklin made business activity synonymous with traditional virtues and released it from moral suspicion 4-12
- 13. The American Critique of Business: The Young Nation o Alexander Hamilton believed that industrial growth would increase national power and designed a grand scheme to promote manufacturing and finance o Thomas Jefferson believed than an agrarian economy of landowning farmers was the ideal social order 4-13
- 14. The American Critique of Business 1800-1865 o The first half of the century saw steady industrial growth o Many rejected capitalism and tried to create alternative worlds o New Harmony o The Oneida Community o The agrarian and socialist communes failed in practice because they were based on romantic thinking, not on sustaining social forces 4-14
- 15. Populists o Populist movement: A political reform movement that arose among farmers in the late 1800s o Populists blamed social problems on industry and sought radical reforms such as government ownership of railroads o The populists: o Advocated government ownership of railroad, telegraph, and telephone companies and banks o Demanded direct election of U.S. senators 4-15
- 16. Populists o Sought to abandon the gold standard and expand the money supply o Succeeded in electing many state and local officials, but ultimately failed to forge an effective political coalition o Refined the logic and lexicon for attacking business 4-16
- 17. Progressives o Progressive movement: A turn-of-the twentieth century political movement that associated moderate social reform with progress o Progressivism was less radical than populism and had wider appeal o It was a mainstream political doctrine o Sought to cure social ills by using government to control perceived abuses of big business 4-17
- 18. Progressives o Progressives: o Broke up trusts and monopolies o Outlawed campaign contributions by corporations o Restricted child labor o Passed a corporate income tax o Regulated food and drug companies and public utilities 4-18
- 19. Socialists o Socialism: The doctrine of a classless society in which property is collectively owned and income from labor is equally divided among members o It rejects the values of capitalism 4-19
- 20. Socialists o The originator of the modern socialist doctrine is Francois-Noël Babeuf (1764-97) o Advocated seizing the possessions of the wealthy and giving them to the masses o 1848 – Karl Marx and Friedrich Engels published The Communist Manifesto o Argued that the basis for socialism was an inevitable process of class struggle underlying and explaining the history of human society 4-20
- 21. Socialists o Marx and Engels envisioned an equalitarian society that abolished private ownership of capital and instituted wealth sharing among all members o Discovered historical theory that class warfare was the underlying dynamic that changed society 4-21
- 22. Socialists o United States of 1850-1900: o Child labor was widespread o Factories injured and wore down workers o Wealth and power were concentrated in great banks, trusts, and railway systems o Inequality between rich and poor seemed obscene 4-22
- 23. Socialists o The masses suffered through financial panics and unemployment o Industrial growth created a new social working class 4-23
- 24. Socialists o Unionization - Early unions tied to single companies or locations o 1869 - Knights of Labor was set up o 1886 - American Federation of Labor formed o 1877 - Beginning of violent union strikes o 1905 - Industrial Workers of the World (IWW) was formed o 1912 - Peak of socialism in the United States 4-24
- 25. The Great Depression and World War II o There was a period of high confidence in big business during the 1920s, ending with the stock market crash of 1929 o The war years washed away the populist/socialist/depression era image of the corporation as a bloated plutocracy 4-25
- 26. The Collapse of Confidence o Strong public support for business collapsed in the mid-1960s o Four strong social movements attacked big business: o Civil rights o Consumer rights o Environmental rights o Vietnam war opposition 4-26
- 27. Figure 4.2 - Percentage of American Public Expressing “A Great Deal of Confidence” in Leaders of Major Companies: 1966–2010 4-27
- 28. The Collapse of Confidence o Theoretical “confidence gap” created in the 1960s o The steep fall of public trust after 1966 opened the door for reformers to increase government regulation dramatically 4-28
- 29. The New Progressives o Old Progressive: Members of a broad political and social reform movement in the early years of the twentieth century o New Progressive: Members of contemporary left- leaning groups who advocate more radical corporate reform than did old time Progressives 4-29
- 30. The New Progressives o New Progressives seek to avoid being branded as liberals and try to take advantage of favorable connotations in the word progressive 4-30
- 31. Global Critics o Corporate power grows in the world economy o Nongovernmental organization: A term for voluntary, nonprofit organizations that are not affiliated with governments o NGOs animate civil society, which is a zone of ideas, discourse, and action that transcends national societies and focuses on global issues 4-31
- 32. Global Critics o Civil society: A zone of ideas, discourse, and action, dominated by progressive values, that transcends national societies and focuses on global issues o In the 1990s a global justice movement evolved within civil society o Global justice movement: A coalition of groups united by opposition to economic globalization dominated by corporate capitalism 4-32
- 33. Global Critics Neoliberalism A word denoting both the ideology of using markets to organize society and a set of specific policies to free markets from state intrusion Liberalism The philosophy of an open society in which the state does not interfere with rights of individuals Economic The philosophy that social progress comes when individuals freely pursue liberalism their self-interests in unregulated markets Keynesianism An economic philosophy of active state intervention to stabilize the economy and stimulate employment Chicago School The name given to a group of economists and to the free market doctrine they taught Group of Eight Formerly an annual meeting where eight leaders of large industrial democracies met to discuss economic issues, since replaced by an expanded group of the wealthiest nations called the Group of 20, or G20 4-33
- 34. Global Activism o Activists attack corporations using a range of devices: o Consumer boycotts o Shareholder attacks o Harassment, ridicule, and shaming o Corporate campaign 4-34
- 35. Concluding Observations o Each era brings new personalities, new targets, and some new issues, but the fundamental substance endures o Industrial capitalism is a historical force for continuous, turbulent social change o Capitalism, for the most part, brings changes that represent progress, a condition of improvement for humanity 4-35
- 36. Figure 4.3 - Timelines of Ideological Conflict in the United States 4-36