Anti-Corporate Populism: A Brief Rebuttal

John Torinus notes an understudying aspect of Senator Barack Obama’s recent Philadelphia speech on race:

The adversary in Obama’s view of the world is not a person of another color, but “a corporate culture rife with inside dealing; questionable accounting practices and short-term greed; a Washington dominated by lobbyists and special interests; economic policies that favor the few over the many.”

In another passage, he reiterates his anti-business philosophy when he says “the real problem is not that someone who doesn’t look like you might take your job; it’s that the corporation you work for will ship it overseas for nothing more than a profit.”

Because Obama is running as a populist and has always ranked as one of the most liberal senators, it is tempting to dismiss his anti-corporate statements as campaign rhetoric and a play to his base of support.

But this speech will go down as the hallmark of his historic run for the presidency. He and his speechwriters prayed over every word in the seven-page document. He isn’t just saying this stuff. This is what he really believes.

In fact, anti-corporate populism is cropping up all over the place:

Acting on a populist, anti-corporate impulse, the director of the movie “Be Kind Rewind” has invited amateurs to make their own movies using a miniature version of a Hollywood back lot constructed in a gallery’s industrial, garage-size space. Visitors not making films can wander among the sets and watch short, intermittently amusing but woefully unskillful films that aspiring filmmakers have made thus far.

A recent law review article by former Delaware Chancellor William Allen contains a concise response to these critics:

The modern business corporation is the instrumentality within which the greatest part of our economic activity occurs, in which jobs and wealth are created and through which, to a great extent, our national competitiveness is maintained. It is largely within the corporate form that all of the great scientific discoveries from the time of the second industrial revolution forward have been shaped into useful products or services and brought to markets to improve human lives. From railroads to automobiles and airplanes, from aspirin to immunosuppressants, from electricity, telephony, and computers, to the internet, WiFi and almost everything else that makes our lives safer, healthier, easier and more pleasant—all are produced and distributed by people organized within the publicly financed corporate form.

I am reminded of John Micklethwait and Adrian Wooldridge’s wonderful book, The Company: A Short History of a Revolutionary Idea, which persuasively argues not only that the corporation is one of the West’s great competitive advantages, but also that the number of private-sector corporations a country boasts is a relatively good guide to the degree of political freedom it provides its citizens. Indeed, they make the strong claim that the corporate form is “the basis of the prosperity of the West and the best hope for the future of the rest of the world.” (at p. xv) After 20 years of studying the corporation, I’ve come to agree.

Posted on Monday, March 31 2008 | Permalink

The portion of Allen’s “response” that you quote is a non-response.

The challenge is not to the existence of corporations, but to “inside dealing; questionable accounting practices and short-term greed.”

Are these essential to corporate practice?  Surely not.  And changing the subject to mischaracterize the criticism, suggests that one has no answers to the actual criticism.

Posted by  on  03/31  at  03:14 PM

I disagree. The anti-corporate populism extends not just to a criticism of corporate dealings but to the very form itself. “Economic populists like to develop a kind of golden age theory of history, in which everything was on the right track until the corporate form was put together, aided by a bad interpretation of the 14th Amendment in which corporations were granted personal status and so became free to act irresponsibly.” I disagree with much of what that writer says, but this point is undoubtedly correct. Hence, a defense of the form strikes me as appropriate.

Posted by Professor Bainbridge  on  03/31  at  05:25 PM

Yeah, but your attack here is on OBAMA’s “populism.” And it seems to me that if the quote from his speech is what you are basing your attack on, then Anderson’s point is apropos. If you’ve decided to brand him with the broad brush of “economic populist” in the vein of the quote you provide in your answer, you’ll have to do better stringing together Obama quotes to show that.

Unless I’m missing something, which is always possible.

Posted by  on  03/31  at  05:57 PM

I agree with Anderson and Hui. Chancellor Allen’s statement is completely unresponsive to Obama’s quote above. Are you really saying that Obama wants to abolish the corporate form?

It’s quite possible that Obama’s statements are inaccurate, that self dealing is not a problem, or that attempts to regulate it do more harm than good. But that’s a long way from saying that he is calling for abolition of the corporate form.

More generally, is there anyone seriously calling for abolition of the corporate form?

Posted by  on  03/31  at  09:43 PM

But one can believe in the corporate form as it existed in England without believing it should be treated as a person under the U.S. Constitution’s 14th Amendment. Very few people want to abolish the corporate form itself.
Incidentally, when you quote Allen’s praise for the *number* of corporations, I strongly suspect that the populists would agree that millions of tiny corporations would be wonderful—it’s the move toward a smaller number of massive corporations that they tend to be concerned about. Note their fondness for the corner hardware store, which may well be organized as a corporation (hammers = liability), and its colleagues in the books, music, clothing, grocery etc. businesses, but dislike of Wal-Mart for pricing these small corporations out of business.

I am afraid that you have mistaken what populists mean because they use the term “corporate” so imprecisely. Their problem usually isn’t with the corporate form itself, but with a constellation of characteristics they associate with “corporate”: large, bureaucratic, indifferent to employees. On the off-chance you ever encounter any public interest law students, ask them what the word “corporate” means to them, and they’ll probably mention certain law firms—which of course are almost all organized as partnerships, with the exception of some PCs.

You can argue accurately that the populists don’t like maximum efficiency (preferring other values such as community, accountability, yada yada), particularly when it is found by moving jobs overseas. But I wouldn’t bother with this “Obama wants to abolish the corporate form” claim. You might be able to make a valid attack on the populists for something of which more of them do seem to be distrustful, which is the publicly traded corporation. The more disembodied ownership becomes from any involvement in the corporation itself, the greater the push for profits uber alles. If companies were all organized as corporations but employees held the majority of shares, populists would be less stressed about it.

Posted by PG  on  04/01  at  12:23 PM

"John Torinus is chairman of Serigraph Inc. of West Bend.”

I’m shocked Mr. Torinus would feel this way…

Posted by  on  04/01  at  05:14 PM
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