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An interactive, annotated look at the corporate 'call to arms' on its 50th anniversary
An interactive, annotated look at the corporate 'call to arms' on its 50th anniversary
Lewis Powell Jr.// July 30, 2021//
The Powell Memo has been described as “a call to arms for corporations” and “a corporate blueprint to dominate democracy.” On the 50th anniversary of the controversial memorandum penned by Virginia lawyer (and future U.S. Supreme Court Justice) Lewis Powell Jr. for the U.S. Chamber of Commerce, Virginia Business reprints the memo in its entirety, accompanied with annotations organized by Virginia Business freelance writer Mason Adams.
Click on the yellow highlighted portions below for insights into the memorandum.
And to read more about the history and legacy of the Powell Memo, see our August cover story.
DATE: August 23, 1971
TO: Mr. [wpdiscuz-feedback id=”j4qwbsr3v6″ question=”From the New York Times, Sept. 29, 1972, in a story headlined “Powell proposed business defense”: “A spokesman for Justice Powell said today that he had drafted the paper at the re quest of Eugene B. Sydnor Jr., a Richmond businessman who is an official of the chamber, to suggest steps “the chamber might explore in educating the public on the merits of the free enterprise system.”” opened=”0″]Eugene B. Sydnor, Jr.[/wpdiscuz-feedback], Chairman, Education Committee, U.S. Chamber of Commerce
FROM: [wpdiscuz-feedback id=”6giekzn37a” question=”Jefferson’s citizen-lawyer. He was president of the American Bar Association, chair of Colonial Williamsburg, chair of the Richmond School Board during the challenge of desegregation, on the National Crime Commission. Interestingly enough, I would say he was smart but not off the charts. It was more his sense of responsibility and diligence.” ” opened=”0″]Lewis F. Powell, Jr.[/wpdiscuz-feedback]
This memorandum is submitted at your request as a basis for the discussion on August 24 with Mr. Booth (executive vice president) and others at the U.S. Chamber of Commerce. The purpose is to identify the problem, and suggest possible avenues of action for further consideration.
[wpdiscuz-feedback id=”wa5hyakais” question=”foot2″ opened=”0″]Dimensions of the attack[/wpdiscuz-feedback]
[wpdiscuz-feedback id=”w2i1ahoc9i” question=”Please leave a feedback on this” opened=”0″]No thoughtful person can question that the American economic system is under broad attack. [/wpdiscuz-feedback]This varies in scope, intensity, in the techniques employed, and in the level of visibility.
There always have been some who opposed the American system, and preferred socialism or some form of statism (communism or fascism). Also, there always have been critics of the system, whose criticism has been wholesome and constructive so long as the objective was to improve rather than to subvert or destroy.
But what now concerns us is quite new in the history of America. [wpdiscuz-feedback id=”61fd63qdvp” question=”A.E. Dick Howard, the University of Virginia’s Warner-Booker distinguished professor of international law: “When he wrote the memorandum, he was writing as an advocate for a public policy position in an area with which he was thoroughly familiar — business. He was one of the preeminent business lawyers in Virginia, with a national reputation. He was counsel to major corporations and the like. He was totally comfortable in that area. Therefore, he would have felt he was well-positioned to make an advocates’ case.”” opened=”0″]We are not dealing with sporadic or isolated attacks from a relatively few extremists or even from the minority socialist cadre. Rather, the assault on the enterprise system is broadly based and consistently pursued.[/wpdiscuz-feedback] It is gaining momentum and converts.
Sources of the Attack
The sources are varied and diffused. They include, not unexpectedly, the Communists, New Leftists and other revolutionaries who would destroy the entire system, both political and economic. These extremists of the left are far more numerous, better financed, and increasingly are more welcomed and encouraged by other elements of society, than ever before in our history. But they remain a small minority, and are not yet the principal cause for concern.
The most disquieting voices joining the chorus of criticism come from perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians. In most of these groups the movement against the system is participated in only by minorities. Yet, these often are the most articulate, the most vocal, the most prolific in their writing and speaking.
Moreover, much of the media — for varying motives and in varying degrees — either voluntarily accords unique publicity to these “attackers,” or at least allows them to exploit the media for their purposes. This is especially true of television, which now plays such a predominant role in shaping the thinking, attitudes and emotions of our people.
One of the bewildering paradoxes of our time is the extent to which the enterprise system tolerates, if not participates in, its own destruction.
The campuses from which much of the criticism emanates are supported by (i) tax funds generated largely from American business, and (ii) contributions from capital funds controlled or generated by American business. The boards of trustees of our universities overwhelmingly are composed of men and women who are leaders in the system.
Most of the media, including the national TV systems, are owned and theoretically controlled by corporations which depend upon profits, and the enterprise system to survive.
Tone of the Attack
This memorandum is not the place to document in detail the tone, character, or intensity of the attack. The following quotations will suffice to give one a general idea:
William Kunstler, warmly welcomed on campuses and listed in a recent student poll as the “American lawyer most admired,” incites audiences as follows: [wpdiscuz-feedback id=”1x0jpxu51e” question=”Please leave a feedback on this” opened=”0″]“You must learn to fight in the streets, to revolt, to shoot guns. We will learn to do all of the things that property owners fear.”[/wpdiscuz-feedback]
[wpdiscuz-feedback id=”7iig6blbgm” question=”Mark Schmitt, former editor of The American Prospect : “He was kind of a conservative corporate lawyer and someone shocked by the hippies. He was like a lot of older established men of that era, who were comfortable with the liberal consensus of the post-war era, but saw something a lot freakier coming along, whether in the antiwar movement or the free speech movement. That stuff just unsettled him” opened=”0″]The New Leftists who heed Kunstler’s advice increasingly are beginning to act — not just against military recruiting offices and manufacturers of munitions, but against a variety of businesses: “Since February, 1970, branches (of Bank of America) have been attacked 39 times, 22 times with explosive devices and 17 times with fire bombs or by arsonists.” [/wpdiscuz-feedback]
Although New Leftist spokesmen are succeeding in radicalizing thousands of the young, the greater cause for concern is the hostility of respectable liberals and social reformers.
[wpdiscuz-feedback id=”hmcgx5op5p” question=”Mark Schmitt: “He was kind of a conservative corporate lawyer and someone shocked by the hippies. He was like a lot of older established men of that era, who were comfortable with the liberal consensus of the post-war era, but saw something a lot freakier coming along, whether in anti-war movement or the free speech movement. That stuff just unsettled him.”” opened=”0″]It is the sum total of their views and influence which could indeed fatally weaken or destroy the system.[/wpdiscuz-feedback]
A chilling description of what is being taught on many of our campuses was written by Stewart Alsop: [wpdiscuz-feedback id=”t4n9gl642c” question=”foot3″ opened=”0″]“Yale, like every other major college, is graduating scores of bright young men who are practitioners of ‘the politics of despair.’ These young men despise the American political and economic system . . . (their) minds seem to be wholly closed. They live, not by rational discussion, but by mindless slogans.”[/wpdiscuz-feedback]
A recent poll of students on 12 representative campuses reported that: [wpdiscuz-feedback id=”p7jvtave0m” question=”foot1″ opened=”0″]“Almost half the students favored socialization of basic U.S. industries.”[/wpdiscuz-feedback]
A visiting professor from England at Rockford College gave a series of lectures entitled “The Ideological War Against Western Society,” in which he documents the extent to which members of the intellectual community are waging ideological warfare against the enterprise system and the values of western society. In a foreword to these lectures, famed Dr. Milton Friedman of Chicago warned: [wpdiscuz-feedback id=”c42k6lndol” question=”Please leave a feedback on this” opened=”0″]“It (is) crystal clear that the foundations of our free society are under wide-ranging and powerful attack — not by Communist or any other conspiracy but by misguided individuals parroting one another and unwittingly serving ends they would never intentionally promote.”[/wpdiscuz-feedback]
Perhaps the single most effective antagonist of American business is Ralph Nader, who — thanks largely to the media — has become a legend in his own time and an idol of millions of Americans. A recent article in Fortune speaks of Nader as follows: [wpdiscuz-feedback id=”r9qgexafux” question=”Please leave a feedback on this” opened=”0″]“The passion that rules in him — and he is a passionate man — is aimed at smashing utterly the target of his hatred, which is corporate power. He thinks, and says quite bluntly, that a great many corporate executives belong in prison — for defrauding the consumer with shoddy merchandise, poisoning the food supply with chemical additives, and willfully manufacturing unsafe products that will maim or kill the buyer. He emphasizes that he is not talking just about ‘fly-by-night hucksters’ but the top management of blue chip business.”[/wpdiscuz-feedback]
A frontal assault was made on our government, our system of justice, and the free enterprise system by Yale Professor Charles Reich in his widely publicized book: “The Greening of America,” published last winter.
[wpdiscuz-feedback id=”oxi3zmpd6v” question=”Mark Schmitt: “It (the memorandum) wasn’t really focused on destroying New Deal liberalism. It was really about the more radical left emerging, or the kind of things Ralph Nader was doing. That was its focus, not dismantling the state.”” opened=”0″]The foregoing references illustrate the broad, shotgun attack on the system itself. There are countless examples of rifle shots which undermine confidence and confuse the public. [/wpdiscuz-feedback]Favorite current targets are proposals for tax incentives through changes in depreciation rates and investment credits. These are usually described in the media as “tax breaks,” “loop holes” or “tax benefits” for the benefit of business. * As viewed by a columnist in the Post, such tax measures would benefit [wpdiscuz-feedback id=”ry7elkjqoo” question=”Please leave a feedback on this” opened=”0″]“only the rich, the owners of big companies.”[/wpdiscuz-feedback]
It is dismaying that many politicians make the same argument that tax measures of this kind benefit only “business,” without benefit to “the poor.” The fact that this is either political demagoguery or economic illiteracy is of slight comfort. This setting of the “rich” against the “poor,” of business against the people, is the cheapest and most dangerous kind of politics.
The Apathy and Default of Business
What has been the response of business to this massive assault upon its fundamental economics, upon its philosophy, upon its right to continue to manage its own affairs, and indeed upon its integrity?
The painfully sad truth is that business, including the boards of directors’ and the top executives of corporations great and small and business organizations at all levels, often have responded — if at all — by appeasement, ineptitude and ignoring the problem. There are, of course, many exceptions to this sweeping generalization. But the net effect of such response as has been made is scarcely visible.
In all fairness, it must be recognized that businessmen have not been trained or equipped to conduct guerrilla warfare with those who propagandize against the system, seeking insidiously and constantly to sabotage it. The traditional role of business executives has been to manage, to produce, to sell, to create jobs, to make profits, to improve the standard of living, to be community leaders, to serve on charitable and educational boards, and generally to be good citizens. They have performed these tasks very well indeed.
But they have shown little stomach for hard-nose contest with their critics, and little skill in effective intellectual and philosophical debate.
A column recently carried by the Wall Street Journal was entitled: [wpdiscuz-feedback id=”z0cigtqfp2″ question=”Please leave a feedback on this” opened=”0″]“Memo to GM: Why Not Fight Back?” [/wpdiscuz-feedback]Although addressed to GM by name, the article was a warning to all American business. Columnist St. John said: “General Motors, like American business in general, is ‘plainly in trouble’ because intellectual bromides have been substituted for a sound intellectual exposition of its point of view.”
Mr. St. John then commented on the tendency of business leaders to compromise with and appease critics. He cited the concessions which Nader wins from management, and spoke of “the fallacious view many businessmen take toward their critics.”
He drew a parallel to the mistaken tactics of many college administrators: “College administrators learned too late that such appeasement serves to destroy free speech, academic freedom and genuine scholarship. One campus radical demand was conceded by university heads only to be followed by a fresh crop which soon escalated to what amounted to a demand for outright surrender.”
One need not agree entirely with Mr. St. John’s analysis. But most observers of the American scene will agree that the essence of his message is sound. American business “plainly in trouble”; the response to the wide range of critics has been ineffective, and has included appeasement; the time has come — indeed, it is long overdue — for the wisdom, ingenuity and resources of American business to be marshalled against those who would destroy it.
Responsibility of Business Executives
What specifically should be done? The first essential — a prerequisite to any effective action — is for businessmen to confront this problem as a primary responsibility of corporate management.
[wpdiscuz-feedback id=”updrval7il” question=”Bob Holsworth, political analyst: “Basically what he’s saying is, understand the dimensions of this conflict. He’s saying, ‘This is huge. It’s going to be long-term, and you have to find a way to counter the growing influence of the left on the culture and political institutions. The way to do that is to find a way to build our own institutions — to recognize we can’t sit by and just complain about this, but to build alternative institutions that can defend the basic free enterprise system in this country.”” opened=”0″]The overriding first need is for businessmen to recognize that the ultimate issue may be survival — survival of what we call the free enterprise system, and all that this means for the strength and prosperity of America and the freedom of our people.[/wpdiscuz-feedback]
The day is long past when the chief executive officer of a major corporation discharges his responsibility by maintaining a satisfactory growth of profits, with due regard to the corporation’s public and social responsibilities. If our system is to survive, top management must be equally concerned with protecting and preserving the system itself. This involves far more than an increased emphasis on “public relations” or “governmental affairs” — two areas in which corporations long have invested substantial sums.
A significant first step by individual corporations could well be the designation of an executive vice president (ranking with other executive VP’s) whose responsibility is to counter-on the broadest front-the attack on the enterprise system. The public relations department could be one of the foundations assigned to this executive, but his responsibilities should encompass some of the types of activities referred to subsequently in this memorandum. His budget and staff should be adequate to the task.
Possible Role of the Chamber of Commerce
But independent and uncoordinated activity by individual corporations, as important as this is, will not be sufficient. 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.
Moreover, there is the quite understandable reluctance on the part of any one corporation to get too far out in front and to make itself too visible a target.
[wpdiscuz-feedback id=”adse0e2f19″ question=”1″ opened=”0″]The role of the National Chamber of Commerce is therefore vital. Other national organizations (especially those of various industrial and commercial groups) should join in the effort, but no other organizations appear to be as well situated as the Chamber. It enjoys a strategic position, with a fine reputation and a broad base of support. Also — and this is of immeasurable merit — there are hundreds of local Chambers of Commerce which can play a vital supportive role.
It hardly need be said that before embarking upon any program, the Chamber should study and analyze possible courses of action and activities, weighing risks against probable effectiveness and feasibility of each. Considerations of cost, the assurance of financial and other support from members, adequacy of staffing and similar problems will all require the most thoughtful consideration.[/wpdiscuz-feedback]
The Campus
The assault on the enterprise system was not mounted in a few months. It has gradually evolved over the past two decades, barely perceptible in its origins and benefiting (sic) from a gradualism that provoked little awareness much less any real reaction.
Although origins, sources and causes are complex and interrelated, and obviously difficult to identify without careful qualification, there is reason to believe that the campus is the single most dynamic source. The social science faculties usually include members who are unsympathetic to the enterprise system. They may range from a Herbert Marcuse, Marxist faculty member at the University of California at San Diego, and convinced socialists, to the ambivalent liberal critic who finds more to condemn than to commend. Such faculty members need not be in a majority. They are often personally attractive and magnetic; they are stimulating teachers, and their controversy attracts student following; they are prolific writers and lecturers; they author many of the textbooks, and they exert enormous influence — far out of proportion to their numbers — on their colleagues and in the academic world.
Social science faculties (the political scientist, economist, sociologist and many of the historians) tend to be liberally oriented, even when leftists are not present. This is not a criticism per se, as the need for liberal thought is essential to a balanced viewpoint. The difficulty is that “balance” is conspicuous by its absence on many campuses, with relatively few members being of conservatives or moderate persuasion and even the relatively few often being less articulate and aggressive than their crusading colleagues.
This situation extending back many years and with the imbalance gradually worsening, has had an enormous impact on millions of young American students. In an article in Barron’s Weekly, seeking an answer to why so many young people are disaffected even to the point of being revolutionaries, it was said: [wpdiscuz-feedback id=”9wl28a1km9″ question=”Please leave a feedback on this” opened=”0″]“Because they were taught that way.”[/wpdiscuz-feedback]
Or, as noted by columnist Stewart Alsop, writing about his alma mater: “Yale, like every other major college, is graduating scores’ of bright young men … who despise the American political and economic system.”
As these “bright young men,” from campuses across the country, seek opportunities to change a system which they have been taught to distrust — if not, indeed “despise” — they seek employment in the centers of the real power and influence in our country, namely: [wpdiscuz-feedback id=”fa1sifxabq” question=”This talking point from the Powell Memorandum continues today as disdain for the ‘elite,’ who are people in the same intellectuals who were often written off as ‘intellectuals’ in 1971.” opened=”0″] i) with the news media, especially television; ii) in government, as “staffers” and consultants at various levels; iii) in elective politics; iv) as lecturers and writers, and v) on the faculties at various levels of education.[/wpdiscuz-feedback]
This talking point from the Powell Memorandum continues today as disdain for the “elite,” who are people in the same intellectuals who were often written off as “intellectuals” in 1971.
Many do enter the enterprise system — in business and the professions — and for the most part they quickly discover the fallacies of what they have been taught. But those who eschew the mainstream of the system often remain in key positions of influence where they mold public opinion and often shape governmental action. In many instances, these “intellectuals” end up in regulatory agencies or governmental departments with large authority over the business system they do not believe in.
[wpdiscuz-feedback id=”nw9x0iefsj” question=”Bob Holsworth: “What it identified that was interesting to me when I was rereading it, is it was one of the first statements of the culture war. It spends a very significant amount of time attacking university professors and the education system. It basically argues the university had been taken over by the left. In particular, the social science departments are programing students to be anti-business, anti-American. That is even seeping down into K-12 education.”” opened=”0″]If the foregoing analysis is approximately sound, a priority task of business — and organizations such as the Chamber — is to address the campus origin of this hostility.
Few things are more sanctified in American life than academic freedom. It would be fatal to attack this as a principle. But if academic freedom is to retain the qualities of “openness,” “fairness” and “balance” — which are essential to its intellectual significance — there is a great opportunity for constructive action. [/wpdiscuz-feedback]The thrust of such action must be to restore the qualities just mentioned to the academic communities.
What Can Be Done About the Campus
The ultimate responsibility for intellectual integrity on the campus must remain on the administrations and faculties of our colleges and universities. But organizations such as the Chamber can assist and activate constructive change in many ways, including the following:
What Can Be Done About the Public?
[wpdiscuz-feedback id=”gb08m224xl” question=”Mark Schmitt: “Its genius is a recognition that you have to build institutions. Corporate America didn’t think of itself as building institutions to engage in political fights, legal fights. He (Powell) spotted all the areas where kind of arguments about the direction of the country were going to happen: They’d happen in courtrooms where liberals were filing cases against corporations. They’d happen in journalism, in higher education. He understood all the spots where business had to be engaged in that fight.”” opened=”0″]Reaching the campus and the secondary schools is vital for the long-term. Reaching the public generally may be more important for the shorter term. The first essential is to establish the staffs of eminent scholars, writers and speakers, who will do the thinking, the analysis, the writing and the speaking. It will also be essential to have staff personnel who are thoroughly familiar with the media, and how most effectively to communicate with the public. Among the more obvious means are the following:[/wpdiscuz-feedback]
The Neglected Political Arena
In the final analysis, the payoff — short-of revolution — is what government does. Business has been the favorite whipping-boy of many politicians for many years. But the measure of how far this has gone is perhaps best found in the anti-business views now being expressed by several leading candidates for President of the United States.
It is still Marxist doctrine that the “capitalist” countries are controlled by big business. This doctrine, consistently a part of leftist propaganda all over the world, has a wide public following among Americans.
Yet, as every business executive knows, few elements of American society today have as little influence in government as the American businessman, the corporation, or even the millions of corporate stockholders. If one doubts this, let him undertake the role of “lobbyist” for the business point of view before Congressional committees. The same situation obtains in the legislative halls of most states and major cities. One does not exaggerate to say that, in terms of political influence with respect to the course of legislation and government action, the American business executive is truly the “forgotten man.”
Current examples of the impotency of business, and of the near-contempt with which businessmen’s views are held, are the stampedes by politicians to support almost any legislation related to “consumerism” or to the “environment.”
Politicians reflect what they believe to be majority views of their constituents. It is thus evident that most politicians are making the judgment that the public has little sympathy for the businessman or his viewpoint.
The educational programs suggested above would be designed to enlighten public thinking — not so much about the businessman and his individual role as about the system which he administers, and which provides the goods, services and jobs on which our country depends.
But one should not postpone more direct political action, while awaiting the gradual change in public opinion to be effected through education and information. Business must learn the lesson, long ago learned by labor and other self-interest groups. This is the lesson that political power is necessary; that such power must be assidously (sic) cultivated; and that when necessary, it must be used aggressively and with determination — without embarrassment and without the reluctance which has been so characteristic of American business.
As unwelcome as it may be to the Chamber, it should consider assuming a broader and more vigorous role in the political arena.
Neglected Opportunity in the Courts
[wpdiscuz-feedback id=”odggowisv” question=”Kim Phillips-Fein, author of “Invisible Hands: The Businessmen’s Crusade Against the New Deal,” in a New York Times op-ed published Sept. 27, 2020 and titled “Is Amy Coney Barrett Joining a Supreme Court Built for the Wealthy?”: “Powell suggested that the Chamber should do more to intervene in politics — and most notable was his attitude toward the courts.”” opened=”0″]American business and the enterprise system have been affected as much by the courts as by the executive and legislative branches of government. Under our constitutional system, especially with an activist-minded Supreme Court, the judiciary may be the most important instrument for social, economic and political change.[/wpdiscuz-feedback]
[wpdiscuz-feedback id=”3owkl4oazp” question=”Dick Howard: “Early in the 20th century, liberal groups like the ACLU and NAACP began to create public interest law firms. The ACLU was founded in 1920, and the NAACP created an arm called the Legal Defense Fund. It was the one that brought desegregation cases including finally the litigation that led to Brown vs Board of Education in 1954. Liberals were first out of the gate. They were being very successful.”” opened=”0″]Other organizations and groups, recognizing this, have been far more astute in exploiting judicial action than American business. Perhaps the most active exploiters of the judicial system have been groups ranging in political orientation from “liberal” to the far left.[/wpdiscuz-feedback]
The American Civil Liberties Union is one example. It initiates or intervenes in scores of cases each year, and it files briefs amicus curiae in the Supreme Court in a number of cases during each term of that court. [wpdiscuz-feedback id=”6vsvv2fnzj” question=”Dick Howard: “Lewis Powell argued conservatives should pick up on the example of liberals and start creating their own public interest law firms. What followed from that happened in two stages. First, when Ronald Reagan was governor of California, he and his administration began to cast about for opportunities and funded something called the Pacific Legal Foundation. Other groups like that sprang up, funded by and operated in the interest of business, typically big business. They tended not to go to court; their MO was filing amicus briefs in cases brought by other people. “Then, religious groups started getting into it. In that earlier period about the time of the Powell Memorandum in the ‘70s, conservative public interest law firms were being reactive. Someone would have a lawsuit and the public interest law firm would file an amicus brief. Other conservatives began to say, ‘We should broaden our sights and preach gospel of free enterprise.’ “The conservative movement was beginning to pick up speed. Around that time the conservative public interest law firms began to fashion longer term strategies. I’d say there’s been an explosion in the number of public interest law firms, and the a change in magnitude of their use of the courts.”” opened=”0″]Labor unions, civil rights groups and now the public interest law firms are extremely active in the judicial arena. Their success, often at business’ expense, has not been inconsequential.
This is a vast area of opportunity for the Chamber, if it is willing to undertake the role of spokesman for American business and if, in turn, business is willing to provide the funds.
As with respect to scholars and speakers, the Chamber would need a highly competent staff of lawyers. In special situations it should be authorized to engage, to appear as counsel amicus in the Supreme Court, lawyers of national standing and reputation. The greatest care should be exercised in selecting the cases in which to participate, or the suits to institute. But the opportunity merits the necessary effort.[/wpdiscuz-feedback]
Neglected Stockholder Power
The average member of the public thinks of “business” as an impersonal corporate entity, owned by the very rich and managed by over-paid executives. There is an almost total failure to appreciate that “business” actually embraces — in one way or another — most Americans. Those for whom business provides jobs, constitute a fairly obvious class. But the 20 million stockholders — most of whom are of modest means — are the real owners, the real entrepreneurs, the real capitalists under our system. They provide the capital which fuels the economic system which has produced the highest standard of living in all history. Yet, stockholders have been as ineffectual as business executives in promoting a genuine understanding of our system or in exercising political influence.
[wpdiscuz-feedback id=”jdgt633yx3″ question=”Allen Goolsby: “In those days, the influence of Washington on corporate boards and the influence of large institutional shareholders, like BlackRock and Vanguard and Fidelity — none of that was there. The boards and typically the chief executive officer of the entity had a relatively free hand. That all started changing in the ‘70s. It used to be if you wanted to do some major event like buy a company, you had to go through board of directors, and if board of directors didn’t like the offer or proposal, it never got to the shareholders. “In the ‘70s, we saw the emergence of the cash tender offer — where a party offers all cash to all shareholders for their shares, and there’s nothing the board could do to stop it. That was a huge shift in power that occurred overnight between management and board of directors to shareholders. Today, you’ve got five or 10 institutional shareholders that hold a controlling interest in most corporations. Over 50 years, that’s been a huge change.”” opened=”0″]The question which merits the most thorough examination is how can the weight and influence of stockholders — 20 million voters — be mobilized to support (i) an educational program and (ii) a political action program.
Individual corporations are now required to make numerous reports to shareholders. Many corporations also have expensive “news” magazines which go to employees and stockholders. These opportunities to communicate can be used far more effectively as educational media.
The corporation itself must exercise restraint in undertaking political action and must, of course, comply with applicable laws. But is it not feasible — through an affiliate of the Chamber or otherwise — to establish a national organization of American stockholders and give it enough muscle to be influential?[/wpdiscuz-feedback]
A More Aggressive Attitude
Business interests — especially big business and their national trade organizations — have tried to maintain low profiles, especially with respect to political action.
As suggested in the Wall Street Journal article, it has been fairly characteristic of the average business executive to be tolerant — at least in public — of those who attack his corporation and the system. Very few businessmen or business organizations respond in kind. There has been a disposition to appease; to regard the opposition as willing to compromise, or as likely to fade away in due time.
Business has shunted confrontation politics. Business, quite understandably, has been repelled by the multiplicity of non-negotiable “demands” made constantly by self-interest groups of all kinds.
While neither responsible business interests, nor the United States Chamber of Commerce, would engage in the irresponsible tactics of some pressure groups, it is essential that spokesmen for the enterprise system — at all levels and at every opportunity — be far more aggressive than in the past.
[wpdiscuz-feedback id=”d8aia3sefg” question=”Bob Holsworth: “He manages to lump in socialists, environmentalists and Ralph Nader as all being anti-business, threatening the business system. And not all of that has come to fruition. Nader was pushing safety regulation which most businesses are pretty comfortable with. He argues by linking the New Left philosophers like Marcuse to environmentalists like Ralph Nader: ‘They’re all the same.’ He mentions there are liberals and there are progressive socialists, but he’s fearful. He’s worried the system of business is under attack and it needs to be assertive in explaining its philosophy, in defending what it does in America, and in ensuring these attacks don’t go too far and undermine the system of freedom and prosperity in this country.”” opened=”0″]
There should be no hesitation to attack the Naders, the Marcuses and others who openly seek destruction of the system. There should not be the slightest hesitation to press vigorously in all political arenas for support of the enterprise system. Nor should there be reluctance to penalize politically those who oppose it.[/wpdiscuz-feedback]
Lessons can be learned from organized labor in this respect. The head of the AFL-CIO may not appeal to businessmen as the most endearing or public-minded of citizens. Yet, over many years the heads of national labor organizations have done what they were paid to do very effectively. They may not have been beloved, but they have been respected — where it counts the most — by politicians, on the campus, and among the media.
It is time for American business — which has demonstrated the greatest capacity in all history to produce and to influence consumer decisions — to apply their great talents vigorously to the preservation of the system itself.
The Cost
The type of program described above (which includes a broadly based combination of education and political action), if undertaken long term and adequately staffed, would require far more generous financial support from American corporations than the Chamber has ever received in the past. High level management participation in Chamber affairs also would be required.
The staff of the Chamber would have to be significantly increased, with the highest quality established and maintained. Salaries would have to be at levels fully comparable to those paid key business executives and the most prestigious faculty members. Professionals of the great skill in advertising and in working with the media, speakers, lawyers and other specialists would have to be recruited.
It is possible that the organization of the Chamber itself would benefit from restructuring. For example, as suggested by union experience, the office of President of the Chamber might well be a full-time career position. To assure maximum effectiveness and continuity, the chief executive officer of the Chamber should not be changed each year. The functions now largely performed by the President could be transferred to a Chairman of the Board, annually elected by the membership. The Board, of course, would continue to exercise policy control.
Quality Control is Essential
Essential ingredients of the entire program must be responsibility and “quality control.” The publications, the articles, the speeches, the media programs, the advertising, the briefs filed in courts, and the appearances before legislative committees — all must meet the most exacting standards of accuracy and professional excellence. They must merit respect for their level of public responsibility and scholarship, whether one agrees with the viewpoints expressed or not.
Relationship to Freedom
The threat to the enterprise system is not merely a matter of economics. It also is a threat to individual freedom.
It is this great truth — now so submerged by the rhetoric of the New Left and of many liberals — that must be re-affirmed if this program is to be meaningful.
[wpdiscuz-feedback id=”r4r0h0jmen” question=”Allen Goolsby: “That’s part of the Powell paper you’d have to go back to the ‘60s to appreciate. Prior to the early ‘70s, there was not much regulation at all coming out of Washington. Environmental law, the Clean Water Act, utility acts, consumer legislation — there wasn’t much there in the ‘60s.”” opened=”0″] <br>There seems to be little awareness that the only alternatives to free enterprise are varying degrees of bureaucratic regulation of individual freedom — ranging from that under moderate socialism to the iron heel of the leftist or rightist dictatorship.[/wpdiscuz-feedback]
We in America already have moved very far indeed toward some aspects of state socialism, as the needs and complexities of a vast urban society require types of regulation and control that were quite unnecessary in earlier times. In some areas, such regulation and control already have seriously impaired the freedom of both business and labor, and indeed of the public generally. But most of the essential freedoms remain: private ownership, private profit, labor unions, collective bargaining, consumer choice, and a market economy in which competition largely determines price, quality and variety of the goods and services provided the consumer.
In addition to the ideological attack on the system itself (discussed in this memorandum), its essentials also are threatened by inequitable taxation, and — more recently — [wpdiscuz-feedback id=”50i7nxbaey” question=”Please leave a feedback on this” opened=”0″]by an inflation which has seemed uncontrollable[/wpdiscuz-feedback]. But whatever the causes of diminishing economic freedom may be, the truth is that freedom as a concept is indivisible. As the experience of the socialist and totalitarian states demonstrates, the contraction and denial of economic freedom is followed inevitably by governmental restrictions on other cherished rights. It is this message, above all others, that must be carried home to the American people.
Conclusion
[wpdiscuz-feedback id=”w1yx5byk3s” question=”Please leave a feedback on this” opened=”0″]It hardly need be said that the views expressed above are tentative and suggestive. The first step should be a thorough study. But this would be an exercise in futility unless the Board of Directors of the Chamber accepts the fundamental premise of this paper, namely, that business and the enterprise system are in deep trouble, and the hour is late. [/wpdiscuz-feedback]
L.F.P., Jr.
