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Building the Myth: Capitalism = Democracy

George Salamon
April 24, 2017

by George Salamon

“[T]he liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than the Democratic State itself.” —Franklin D. Roosevelt, address to Congress, 1938

WE REACHED that point years ago. A 2014 study by two political scientists concluded:

“[O]ur analyses suggest that the majority of the American public actually have little influence over the policies our government adopts...if policy making is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened.” --“Testing Theories of American Politics: Elites, Interest Groups and Average Citizens,” Martin Gilens and Benjamin Page

Yet a majority of the American public believes that they live in a democratic society. They accept little or no blame for the diminished influence they wield in the shaping of the nation’s political and public life. A growing number of them may grumble about “too much money in politics,” but they don’t ask how so much of it got in, and they don’t acknowledge the people’s role in welcoming the proposition that business, not political democracy, was the “chief business” (as Coolidge actually said) of America.

Instead, the American people came to believe that our country’s business interests were the same as the interests of a free and democratic society. How did this happen? Why did the myth gain such a powerful hold in the minds of Americans? What would it take to debunk and dislodge it?

TODAY, after the scandals in the military-industrial complex during the 1980s (remember that $600 toilet seat or $1,600 wrench?), after the crimes against average citizens committed by Wall Street brokerages during the financial meltdown a decade ago (remember those worthless mortgages and manipulated electricity rates?), after so many years in which newspaper business sections read like police blotters while corporate executives received billions in bonuses or golden parachutes, jobs were lost, and wages stagnated, after all that, 60 percent of Americans are “positive about capitalism, 85 percent about free enterprise,” according to Gallup in 2016. According to the Public Affairs Council in 2014, “Americans have a generally favorable opinion of major companies . . . but had negative views of the federal government.”

To explain this, we need to look back and find out why and how the American public’s love affair with big business, including its role in politics, got started. Until World War II, many Americans looked upon any alliance of business and government with unease. Many saw politicians as corrupt and inefficient and big business leaders as greedy and cruel. Then came the war. To win the two-front battle against Germany and Japan, to efficiently produce the materiel needed for victory and move it to the troops, businessmen were recruited to run wartime agencies that peacetime political bureaucrats could not. Think of Robert McNamara’s whiz kids and their success with plotting the Air Force’s bombing raids from bases spread out across the Pacific.

This wartime alliance was not dismantled after democracy’s victory, but expanded to face the new Communist enemy. The military-industrial complex was born and grew, and it is growing still, its role in our political system well documented and warned against. Today it is so entrenched in our political and economic system that its role and power are practically unquestioned pillars of American democracy. It was not, however, the military-industrial complex that made business, business culture, and business “values” synonymous with democratic culture and values. Rather, it was affluence and consumerism, made possible by our commercial industry, that did it, turning a wartime alliance of convenience into a marriage that has lasted for more than half a century.

The marriage is nurtured by myths about capitalism’s free enterprise market as the good husband and provider for his political wife, who is obedient and grateful for the good life provided. The good life, aka The American Dream, may be fading, but the myths have not been dislodged. When Donald Trump promised to “Make America Great Again,” he meant make it like America in the 1950s and 1960s. That’s when these myths were created and took hold.

LIFE FOR middle-class and blue-collar Americans from the late 1940s to the mid-1970s was good. Just how good? Unprecedented prosperity was provided by American industry, the only one standing in the rubble that surrounded those in Germany, the Soviet Union, England, France and Japan. Americans, 6 percent of the world’s population, produced one half of its goods, including 75 percent of its automobiles and 60 percent of its telephones. Family median income rose from $3,083 to $5,657, and wages for all 66.5 million working Americans were up by 30 percent. Working-class Americans could afford to buy single-family homes and choose from the abundance of consumer goods available. What Adlai Stevenson predicted in 1952 had come true by 1960: “[T]he US at mid century stands on the threshold of abundance for all.” Not quite all, of course; housing covenants, job restrictions, segregation laws, and legal discrimination sanctioned even by the G.I. Bill assured second-class status for the black minority and other people of color -- but for white men and white families, the American Dream was attainable.

As our consumer republic and affluent society prospered, so did the corporations that made both possible. The 1950s saw a rapid growth in the number, size and power of large corporations, as 3,404 smaller companies were absorbed by around 500 larger ones. By the end of the decade, some 600 corporations, representing one half of 1 percent of all corporations, made 53 percent of all corporate income, and the 200 largest ones controlled over 50 percent of the nation’s total business assets. Our industrial oligarchy was born, with the tacit approval of our Department of Justice and with the help of Congress, which supported corporate profits and growth through generous tax policies and depreciation policies.

The rise of the giant corporation had a greater effect on American life, and on American politics, than the rise of the military-industrial complex. A few hundred corporations, controlling much of the country’s industrial and commercial assets, started to dominate the seats of economic and political power. They used the enormous and rapid growth in two areas of American life to sell themselves as safeguards of American democracy, indeed, as exemplars of democracy, and their executives and businessmen in general as embodiments of democratic citizenship: mass communications and advertising. Advertising of business as the foundation for a free society started alongside the age of mass communications. The 20th century has been described as ”The Magazine Century,” and general-interest magazines such as TIME, Newsweek, Life, Look, Collier’s, and The Saturday Evening Post found a huge audience among middle-class and blue-collar readers with an appetite for information and the time for absorbing it in easy, fun-to-read publications. The saying, “I read it in the paper,” meant that readers trusted what papers told them to be true. In New York City you could share a subway car with the same guy going to work reading the Daily Mirror in the morning and the Journal-American on the way home. There were at least ten dailies published in the city. And it was in those magazines and papers that big business chose to sell itself.

How it did that and why were first described in Marshall McLuhan’s 1951 classic, The Mechanical Bride: Folklore of Industrial Man. In fifty-nine short essays, often called riffs, and accompanied by illustrations from ads, McLuhan revealed that industry, well aware of how its interests, practices and values were becoming intertwined with the interests, practices and values of political public service, presented stories and lectures about how the two were essentially the same and must to go together -- like love and marriage or horse and carriage. Businessmen were the agents for this symbiotic relationship, mutually beneficial and thus good for profit and polity. Advertised examples told the stories of just how this worked in corporate boardrooms and in Everytown’s stores and homes. It came off brilliantly.

McLuhan riffs on ads that tell male readers what it takes to be successful and female ones what to do to be happy. For both, industry products, corporate behavior, and consumer products combine to grant them the freedom of a democratic society to follow the advice and become a winner, or ignore it and end up a loser. The first ad, “The Freedom to Listen,” sponsored by the Radio Corporation of America (RCA), shows a Norman Rockwell-like family around their kitchen table listening to their radio, learning to be supine consumers and passive citizens. As McLuhan comments, “Freedom is an activity of perception and judgment, based on a great range of particular acts and experiences.” Freedom is not turning your RCA radio on or off. As the president of NBC said, when asked about the proposal to separate business control from program control: “This is to forget that ‘he who controls the pocketbook controls the man.’ Business control means complete control, and there is no use arguing to the contrary.”

Corporate advertising wrapped the flag of freedom of choice around the ads for products and services. “Freedom American Style,” an ad for Quaker State Motor Oil, tells readers that “In asking you to try Quaker State -- in order to care for your car, for your country in the best way possible. And, of course, it’s your right to disregard this friendly advice, if you feel so inclined.” But hey, you’d be acting not just against the best interests of your car and country, but, by gum and by golly, against those of America as well.

NOT EVEN the snake oil salesmen of the Frontier days linked purchase of their bottle of elixir to the progress of national expansion and liberty for all. Richard Nixon, as our vice president in 1959, did. During the famous Kitchen Debate with USSR Premier Nikita Krushchev, he said: “This house can be bought for $14,000 . . . any steel worker can buy this house . . . Let the people choose, the kind of house, the kind of soup, the kind of ideas they want.” That was, he trumpeted, the American way. But that freedom applied to goods and services, not to ideas, and therefore not to political freedom. Five years earlier, Congress had passed the Communist Control Act, which said that the Communist party should be outlawed and membership in or support of the party or groups supporting leftwing ideologies should be criminalized. The people could choose their houses or soups, but not their parties or their parties’ candidates.

As long as a comfortable life was still within reach for middle-class and unionized blue-collar white Americans, the advertising industry, a $6.5 billion industry by 1953 (it had revenues of half a billion in 1939), remained successful in selling American freedom and American capitalism as twin fighters for and protectors of democracy. They succeeded through the 1960s as well, converting the counterculture’s demand for liberation from a gray flannel mindset and lifestyle into ads for Burger King, where you were free to “Have it Your Way.” Advertising proved itself a superb agent in achieving the economic and social control corporate sponsors sought. They not only created the desire in consumers to buy when products far exceeded need for them, but instilled in ordinary people an unconscious and uncritical acceptance of big business as the source of their good life and the freedom to be grateful for the opportunity.

Companies continued to thrive, and the corporate-owned media and publishing companies nurtured a cult of the CEO as leader and innovator and champion of free enterprise in the land of the free. The new mantra was “excellence,” and every corporation claimed it had zero tolerance for business practices and attitudes striving to achieve anything less. America’s managerial capitalism continued on its roll in remaining the king of the world’s markets.

By the time Ronald Reagan entered the White House in January of 1981, corporate management had decided to turn ”lean and mean” in the face of revived foreign competition and an oil crisis during the 1970s, and that signaled the beginning of “downsizing,” later renamed “rightsizing,” and a steep decline in America’s manufacturing industry and the rise of the financial sector. It really was the dawn of a new America, and big business had to find a new way to maintain its political and economic power.

It employed the myth of capitalism as a force for democracy once again. And it used the image of the businessman as the can-do American. In bad economic times, the people who brought you the good life could do it again. It was Obama’s “Yes, We Can” with a history of success. And it served business to achieve what would have been unthinkable when the first gilded age gave way to the Great Depression: Business has become government’s partner in running America.

IT IS DEPRESSING that most Americans have not been told what this means. It is absurd to believe that government and business can be equal partners; it is foolish to ignore the fact that business has no roots in democracy; it is ignorant to propose that government and business share most goals and the mission each pursues.

Yet no “Americans United for Separation of Corporation and State” organization has been formed. The myths about business were planted too well in the minds of Americans. Some of them are based on truths: Business should be consulted by government, and business should thrive under policies and rules the people want to govern it. But if it is accurate, as Hannah Arendt perceived, that “official political reality is now being created by the modern capitalist businessman” in America, American political democracy is in serious danger, and millions of Americans will suffer. The modern capitalist businessman will not feel their pain.

These Americans need to be informed that many things they have been told and been sold to believe about American business are delusions and myths, although not all of them. The delusions and myths must be exposed to build a truly democratic political system and a decent social structure.

What these myths are, and getting people to see and understand them as myths, will be a tough job. As lifelong socialist Upton Sinclair realized: “It is difficult to get a man to understand something when his salary depends on his not understanding it.”

It would be a good place to start with people like that woman in an environmentally devastated area of Louisiana, who told a visiting sociologist: “Pollution is the sacrifice we make for capitalism.”

I suspect that she and millions of others are ready to hear about the myths of capitalism and work with progressives to end capitalism’s partnership with government.