THE BACKLASH BUILDING AGAINST BUSINESS
Is Corporate America in denial? When such nationalist conservatives as Presidential candidate Pat Buchanan and such militant labor leaders as new AFL-CIO President John J. Sweeney agree that corporations are the root cause of stagnant wages and downward mobility, something very serious is afoot in the land. So far, most Americans have tended to blame Big Government for their economic woes. But now their anger may be shifting in some measure toward Big Business. The role of the corporation in society is being challenged. Only the foolish would ignore the signs.
Who benefits from the new high-tech, global economy? That is the question both right and left are asking. Their answer is virtually identical: Despite big gains in productivity and profits, most employees are not sharing in the rewards, while shareholders and option-laden corporate officials most definitely are. The rising economic tide that once lifted everyone in America is now playing favorites, and people don't like the new rules. Cutting taxes can help, but it's not a real solution to families facing declining real income.
Buchanan's solution would be to go protectionist and halt immigration, stopping companies from freely trading and blocking the inflow of goods and people. That would curb competition and push up wages. Sweeney would up the minimum wage and also curb immigration and free trade. Not a pretty picture, if you're an executive intent on building a vibrant global enterprise.
New conservative and liberal philosophies also challenge the corporation's role in America. Reviving civil society is the motivating idea driving conservatives these days. Rebuilding the institutions of civil society--voluntary associations, churches, schools, and, of course, families--to replace inept government bureaucracies is their guiding light. But there is no way for that to happen without family income rising or parents getting more time off from work to raise their children and attend Boy Scout or PTA meetings. There is no way for civil society to be rebuilt unless businesses return to their traditional support of charities that look after their workers' well-being. Backing local hospitals and baseball teams are expenses delegitimized recently by shareholder pressure.
Voices from a reviving left are also calling for changes in the ways corporations operate. The motivating idea in liberal circles is to build a stakeholder society, which calls for a wider collection of corporate groups to join shareholders and chief executives in reaping the rewards of higher productivity and profits. In Britain, the opposition Labor Party leader Tony Blair is making this his clarion call to defeat the Conservatives. Just as civil society unites conservative factions--libertarians, religious conservatives, growth conservatives, and nationalists--under one principle, so, too, does stakeholder society unite many liberal factions.
Whether building a civil or a stakeholder society, both right and left use the America of the second half of the 19th and the early 20th century as their reference point. For good reason. It was an era of huge technological change, economic growth, and downward mobility. It was a time much like our own. Conservatives see it as a golden age of community, when the YMCA, libraries, and the Red Cross were created, often with the patronage of industrialists. Liberals recall it as the Progressive Era, when Populists were elected to bust corporate trusts, establish fair labor laws, and set new rules of the game to protect working people in the marketplace.
What's clear is that both conservatives and liberals want corporations to do more for society than boost their stock prices. In the recent World Economic Forum of top business and political figures in Davos, Switzerland, the central theme was the growing backlash against the cold exigencies of global competition. CEOs would be wise to ponder these tectonic changes. One thing is certain: U.S. corporations may have to strike a new balance between the need to cut costs to be globally competitive and the need to be more responsible corporate citizens.