Manufacturing Discontent

The Trap of Individualism in Corporate Society

Michael Perelman

• Publisher: Pluto Press
• Year: 2005
• ISBN:
  9781783718481
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Political History & Theory
• Index: Politics & International Relations

Corporate power has a huge impact on the rights and privileges of individuals -– as workers, consumers, and citizens. This book explores how the myth of individualism reinforces corporate power by making people perceive themselves as having choices, when in fact most peoples' options are very limited. Perelman describes the manufacture of unhappiness - the continual generation of dissatisfaction with products people are encouraged to purchase and quickly discard - and the complex techniques corporations employ to avoid responsibility and accountability to their workers, consumers and the environment. He outlines ways in which individuals can surpass individualism and instead work together to check the growing power of corporations. While other books have surveyed the corporate landscape, or decried modern consumerism, Perelman, a professor of economics, places these ideas within a proper economic and historical context. He explores the limits of corporate accountability and responsibility, and investigates the relation between a wide range of phenomena such as food, fear and terrorism. Highly readable, Manufacturing Discontent will appeal to anyone with an interest in the way society works - and what really determines the rights of individuals in a corporate society.

1

The Individual Subsumed in the Corporate Economy

THE MYTH OF INDIVIDUALISM

Although the United States is a massively corporate culture, individualism remains such a core value in the United States that it has become a force in itself. Many Americans still pride themselves on their rugged individualism. Indeed, the myth of individualism is pervasive. Popular culture derides conformity. The public flocks to Hollywood movies that tell stories of improbable individuals who surmount impossible odds. Politicians cloak their policies in the rhetoric of individualism—perhaps none more vehemently than Margaret Thatcher, the former British Prime Minister, who inspired much conservative activism in the United States. Thatcher declared: “There is no such thing as society: there are individual men and women, and there are families” (Thatcher 1987). You might think that Thatcher’s words would ring hollow, but a surprising number of people still buy into the dream of rugged individualism—what Adam Smith once called “the system of natural liberty” (Smith 1776, IV.ix.51: 687).

Thatcher and her ilk would have us believe that individuals in a market society enjoy an unprecedented degree of freedom because private individuals are in control of their own destinies—which for them is the freedom to get rich. Many people accept this view, leading to wildly unrealistic expectations. For example, in January 2003, while the economy languished and the job market sagged, a Gallup poll found that 31 per cent of Americans expected to get rich at some time in their lives. Rich, in this interview meant an annual income of about $120,000 or financial assets of about $1 million. For people between the ages of 18 and 29, a surprising 51 per cent expected to be rich (Moore 2003). Reality is, of course, completely different. Unless the economy changes radically, the majority of these people will be sadly disappointed.

In terms of consumption, people are also free to choose what commodities to buy within the constraints of their budgets. Many writers have gone so far as to characterize this freedom—which they call consumer sovereignty—as the central principle of market society (for a sampling see Dawson 2003: 8–9).

Supposedly, the whole market system must adapt itself to the individual choices that consumers make. Since “free choices” of individual consumers both define and regulate the market, the mythical consumer is “king.” For example, Bob McTeer, president of the Dallas branch of the Federal Reserve Board, published a Free Enterprise Primer on the internet. According to this primer:

In a free market system, the government doesn’t organize, direct and control economic activity. If the government doesn’t, who does? Who decides what is to be produced, and how, and in what quantities and quality, and who gets the fruits of production? The answer is that you and I decide these important questions by the way we spend our money. The market system features consumer sovereignty, meaning that the consumer is king. We decide what will be produced by casting dollar votes for the things we want and by not spending on the things we don’t want. [http://www.dallasfed.org/htm/dallas/primer.html]

In this spirit, Henry Luce, founder of the Time-Life empire, explained, in words that call out for pity for the powerlessness of the corporations that appear to rule the economy, that corporate enterprise is merely “a built-in hostage to … the consumer’s freedom of choice” (Luce 1950: 62).

According to the imaginary perspective of consumer sovereignty, any firm that is unsuccessful in adequately serving the consumer is doomed to fail. This rhetoric cleverly inverts the powerlessness of the majority of society. In reality, in a corporate society people as consumers exist to serve the needs of the corporations. But through the distorted lens of consumer sovereignty, corporate megaliths appear to be nothing more than the passive servants of the all-powerful consumer, despite the insignificant influence of the typical individual within corporate society.

THE REAL MEANING OF INDIVIDUALISM

Within the myth of individualism, corporations diligently serve their kingly consumers, while these privileged consumers have the responsibility to earn the wages needed to participate in the market. Market society demands that individuals make their lives conform to the needs of the market, reducing the role of the individual in corporate society to two narrow dimensions: working diligently and consuming appropriately. Slacking off in either regard is unacceptable. Oh yes, the individual is also supposed to bring up a new compliant generation of well-behaved, hard-working, consuming individuals.

A quite different sort of individualism reigns supreme in the contemporary United States: corporate individualism. The giant corporations wield enormous power, enjoying all the rights of individuals with few of the responsibilities that ordinary individuals are expected to bear. In the world of corporate individualism, corporations are all but assured of success, while ordinary individuals are left to fend for themselves.

The people who own and run these corporations employ compliant legislators and regulators who then faithfully serve the corporate needs, often expecting a lucrative post in the corporate world after a sojourn in public service. So, in contrast to the powerless condition of ordinary private individuals, the giant corporations can deploy their enormous powers to redesign the economic and political landscape to meet their immediate interests.

As a result of this cozy relationship, these corporations enjoy subsidies, sweetheart contracts, tax breaks, limited liability for harms that they might impose on others, and every other imaginable sort of advantage. Despite the centrality of the corporation in modern American society, the economic and legal framework requires little of corporations in return for the benefits that they enjoy.

In short, while corporate leaders sanctimoniously proclaim the virtues of individual self-sufficiency, they have absolutely no intention of exercising this virtue in their own affairs. While the ethic of individualism demands considerable personal responsibility for working people, the economic and legal framework either absolves the corporate sector of its misdeeds or punishes it in an extraordinarily lenient fashion. Major corporations all too often effectively enjoy complete immunity from legal prosecution.

Even though the imagined rugged individualism of the American character includes a willingness to take risks, here too the standards for corporations are different. Despite the glowing corporate rhetoric about how society as a whole benefits from entrepreneurial risk-taking, the government covers much of the risk that the corporate sector faces.

Ordinary people, public institutions, the legal system, international policy, and virtually every other aspect of society must adapt to the needs of the giant corporations. Of course, this adaptation is not complete. Some choices still remain—choices more significant than “Coke or Pepsi.” Even so, the most important choices in society lie far outside the realm of individual decision-making.

Corporations, however, rarely admit that they are exercising raw power when they make their demands. Rather than openly speaking in the name of the divine right of capital, corporations typically wrap their call for acquiescence in a mantle of public interest.

One of the most common ruses is to present their case in terms of jobs. Schools’ primary purpose is to prepare students for jobs. The tax system must be modified to encourage the creation of jobs. Land use planning standards, designed to maintain or improve the quality of life, must give way to compromises in order to create jobs.

Unfortunately, the major corporations create relatively few domestic jobs. Indeed, they are far more energetic in transferring jobs to faraway places where crushing poverty forces people to accept subhuman wages. Besides directly cutting their wage bill, this strategy of relocating work abroad intensifies the competition among workers for the remaining jobs. In a final comic twist, job scarcity makes the corporate demands for concessions seem even more civic-minded.

This same corporate power produces a host of destructive outcomes. Corporate power intensifies inequality, at the same time that it reduces the quality of education, the media, and public participation, and threatens human health as well as the health of the environment. The rest of the book will address these problems and call for something better.

BACK TO ADAM SMITH

Although the idea of consumer sovereignty did not originate with Adam Smith, we economists have a long tradition of tracing ideas back to that venerable figure. Writing at the dawn of the formal study of economics, Adam Smith laid out a powerful vision of the economy as an entirely voluntary process. At times, he went considerably further. For example, once while lecturing his students, Smith remarked:

an ordinary day-labourer, whom we false account to live in a most simple manner, has more of the conveniencies and luxuries of life than an Indian prince at the head of 1000 naked savages. His coarse blue woolen coat has been the labour of perhaps 100 artificers, the shearer, the picker, the sorter, the comber, the spinner, etc. as well as the weaver and fuller whose loom and mill alone have more of art in them than all the things employed about the court of a savage prince; besides the ship which brought the dies and other materials together from distant regions, and all the workmen, wrights, carpenters, coopers, smiths, etc. which have been employed to fit her out to sea and the hands which have navigated her. The iron tool with which he works, how many hands has it gone thro.—The miner, the quarrier, the breaker, the smelter, the forger, the maker of the charcoal to smelt it, the smith, etc. have had a hand in the forming it. How many have been required to furnish out the coarse linen shirt [which] he wears; the tanned and dressed-leather shoes; his bed which he rest(s) in; the grate at which he dresses his victuals; the coals he burns, which have been brought by a long land sea carriage; and other workmen who have been necessary to prepare his bread, his beer, and other food; besides the glass of which his windows are composed, production (of) which required vast labour to bring it to its present perfection, which at the same time excludes the wind and rain and admits the light, a commodity without which this country would scarcely be habitable, at least by the present effeminate and puny set of mortals. So that to supply this poor labourer about 1000 have given their joint assistance. He enjoys far greater convenience than an Indian prince. [Smith 1978: 338–9]

So, here we have a fanciful image of a poor, overburdened farmworker suddenly transformed into a sovereign consumer commanding a princely retinue of workers. Smith was writing at a time when social relations in Great Britain were turbulent to say the least (Thompson 1963). Were Smith’s words meant to offer the poor some consolation, suggesting that they should be grateful for their affluence and put aside the revolutionary activities that troubled Smith’s society? More likely, Smith was aiming at easing the consciences of the rich and privileged.

Smith’s vision of consumer sovereignty mostly fell from view for a century and a half. By the end of the nineteenth century, workers were beginning to mount a powerful challenge to the existing order. Socialist parties were the fastest growing political organizations throughout the world. Economic and political leaders feared imminent revolution, just as they did at the time of Adam Smith.

In that environment, leading intellectuals began to counsel workers that they should not interpret their lives in terms of their unsatisfying existence as workers, but rather in terms of their experiences as consumers. The most famous call came from Walter Lippmann in his influential Drift and Mastery (1914):

Many radical socialists pretend to regard the consumer’s interest as a rather mythical one …. But we are finding, I think, the real power emerging today is just the mass of people who are crying out against the “high cost of living.” That is a consumer’s cry. Far from being an impotent one, it is, I believe, destined to be stronger than the interests of either labor or capital. [Lippmann 1914: 54]

So, workers may suffer indignities at the workplace, but as consumers they are sovereign—at least according to this comforting rhetoric.

MARKETS UBER ALLES

Consumer sovereignty is a pleasant fiction designed to reassure the powerless. While business people might find such rhetoric useful for public relations, they speak a different language when they address each other. For example, Walter Wriston, former Chief Executive Officer of Citibank, described a future that was sure to delight his business readers in a book, tellingly entitled, The Twilight of Sovereignty. There, after asserting that information is the driving force in modern society, Wriston elaborated on his perspective of the world from the commanding heights of high finance:

Today information about the diplomatic, fiscal, and monetary policies of all nations is instantly transmitted to electronic screens in hundreds of trading rooms in dozens of counties. As the screens light up with the latest statement of the president or the chairman of the Federal Reserve, traders make a judgment about the effect of the new policies on currency values and buy or sell accordingly. The entire globe is now tied together in a single electronic market moving at the speed of light. There is no place to hide.

This enormous flow of data has created a new world monetary standard, an Information Standard, which has replaced the gold standard and the Bretton Woods agreements. The electronic global market has produced what amounts to a giant vote-counting machine that conducts a running tally on what the world thinks of a government’s diplomatic, fiscal, and monetary policies. That opinion is immediately reflected in the value the market places on a country’s currency. [Wriston 1992: 8–9]

In this new world order:

capital will go where it is wanted and stay where it is well treated …. It will flee from manipulation or onerous regulation of its value or use, and no government can restrain it for long. [Wriston 1992: 61–2]

The consequences of capital rapidly fleeing a country can be catastrophic, as the Asian economies discovered a few years later in 1997. William McDonough, president of the powerful New York branch of the Federal Reserve Bank, was not exaggerating when he observed: “domestic policy mistakes elicit quick and harsh punishment on an economy from international sources” (McDonough 1995: 15).

So, Wriston was absolutely correct in announcing that the global marketplace “has produced what amounts to a giant vote-counting machine.” This particular vote-counting based on dollars has the power to annul the will of the people. Yes, people may be free to vote as citizens however they may choose, but if their choice displeases those who sit in the trading rooms they will suffer dire consequences.

For example, two years after Wriston’s book appeared, Bob Woodward, of Watergate fame, published his account of the Clinton administration. Woodward recounted a scene from the newly elected president’s team meeting in Little Rock, Arkansas intended to shape the economic agenda for the incoming administration. Clinton had campaigned on the promise of a massive program to renew the country’s deteriorating infrastructure of bridges, sewage treatment plants, water systems and the like, while creating a large number of jobs in the process. Now that the election was over, his advisors explained that the bond market would not approve if he were to follow through on his promise. Then Woodward paints the scene that followed:

At the president-elect’s end of the table, Clinton’s face turned red with anger and disbelief. “You mean to tell me that the success of the program and my reelection hinges on the Federal Reserve and a bunch of fucking bond traders?” he responded in a half-whisper.

Nods from his end of the table. Not a dissent.

Clinton, it seemed to [Alan] Blinder, [whom Clinton later appointed as Vice Chairman of the Federal Reserve Board] perceived at this moment how much his fate was passing into the hands of the unelected Alan Greenspan [Chairman of the Federal Reserve Board] and the bond market.

[George] Stephanopoulos [Clinton’s Communications Director in the 1992 campaign, realized that the administration’s] first audience would have to be the Fed and the bond market. [Woodward 1994: 84]

Indeed, once Clinton took office, his Secretary of the Treasury, Robert Rubin, would give him daily briefings about the mood of the bond market.

Over and above the market forces that Wriston described, corporations have devised new legal systems to protect their interests against the will of the people. For example, prodded by corporate interests, the United States has led the way in creating trade agreements that allow business interests to challenge laws that supposedly restrain trade. For example, according to the North American Free Trade Agreement, food exporters from Mexico and Canada can sue federal, state, or local governments in the United States for such trade-unfriendly behavior as passing legislation banning pesticide residues on food. In theory, governments do not have to repeal the legislation. They merely have to pay the exporters for the profits that such legislation supposedl...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Acknowledgments
• Introduction
• 1. The Individual Subsumed in the Corporate Economy
• 2. People as Consumers
• 3. What Corporate Society Does to Workers
• 4. Corporate Accountability
• 5. Accountability vs. Responsibility
• 6. The Role of Risk
• 7. Food, Fear, and Terrorism
• 8. Individuals as Citizens
• Concluding Remark
• References
• Index