Collision Course: Endless Growth on a Finite Planet (29 page)

The emergence of these unfamiliar corporations was not at first welcomed by many Americans. According to the economic historian Naomi Lamoreaux, the United States—hitherto made up of small-scale, small-town communities—was “transformed overnight from a nation of freely competing, individually owned enterprises into a nation dominated by a small number of giant corporations.”
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There was great alarm over the wave of mergers around 1900: in one of these, for example, the International Harvester trust consolidated 85 percent of the manufacture of US farm machinery into a single organization. Even if, as Chandler holds, the key competitive advantage lay in vertical integration, the numerous horizontal mergers made the integrated corporations far bigger than they would otherwise have been and helped fuel the fear of the concentration of economic power in very few hands.

The Struggle for Acceptance and Legitimacy

These centralized organizations, integrated both horizontally and vertically—as predicted by Marx
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—have persisted for more than a century as the dominant form of enterprise in the world economy, gaining international primacy in the second half of the twentieth century; their immense material superiority gave them the deep pockets to finance their multifaceted counterattack against environmental concerns and the critique of growth in the 1970s. The means by which the emerging corporations of the early twentieth century won over a reluctant population were varied, but all owed their success to the new profession of public relations, touched on in chapter 5. Blunt force retreated as an everyday option for US business and the professionalization of persuasion began; it would extend the principles of product advertising into every arena of life, thought, and politics.

At the beginning of the twentieth century—the era of the “robber barons” in the United States—conflict between capital and worker continued as it had throughout the nineteenth century, and intensified. Businessmen bitterly opposed any form of regulation and regarded labor unions as a part of the pernicious tendency to regulate conditions and wages. In 1895 the National Association of Manufacturers (NAM) was founded to lobby for business-friendly legislation and, under the leadership of David Parry, in 1903 it launched “a crusade against unionism.”
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George Baer, railroad president and spokesman for the mine operators, remarked during the 1902 anthracite coal strike that “the rights and interests of the laboring men will be protected … not by the labor agitators, but by the Christian men to whom god in his infinite wisdom has given the control of the property interests of the country.”
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Views such as these, accompanied as they were by corporate militias, swindles, and lockouts, underpinned panic about democracy. Gustave Le Bon, one of the earliest theorists of the danger of imminent democratic change, commented, “Today the claims of the masses are becoming more and more sharply defined and amount to nothing less than a determination to destroy utterly society as it now exists.… The divine right of the masses is about to replace the divine right of kings.”
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Complicating the legitimacy problem for business, the middle classes—including the farming community—were unhappy with the concentration of economic power and the dissolution of the world they knew. As Stuart Ewen observes, it was no longer just the working class that opposed a world where

a small number of powerful and disdainfully arrogant men were dictating the social circumstances and life rhythms of countless people throughout the United States.… Middle class people began to look toward the state and toward the device of regulation as necessary instruments for controlling the rapacity of those who held unrestrained private wealth.
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In the infancy of public relations, before World War I, the Enlightenment-based idea of disseminating factual information to a rational audience for sensible assessment persisted, but the concept of a “fact” had already begun to shift. Ivy Lee, one of the very first men to set up as a PR practitioner, started his practice by offering “facts” (known today as “factoids”) to the public. In his PR activities for the Rockefellers after the Ludlow massacre of 1914, when a miners’ camp was set alight, burning men, women, and children to death, Lee published a “witness report” from the wife of a railroad official who was not, in fact, present at all. When at the subsequent US Commission on Industrial Relations investigation Lee was asked what personal effort he had made to ascertain whether the facts given to him by the owners were correct, his frank reply was, “None whatever.”
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Thus, although Lee still embraced an ostensibly factual rhetoric, notions of evidence intrinsic to the concept of scientific knowledge were evaporating. Facts could be manufactured to suit the purpose. Lee also pioneered the presentation of publicity as news. In one early job in 1906, to help an insurance company improve its profile after a fraud conviction, he arranged for the company president to write letters to seven hundred newspapers across the country; Lee got most of them published, many in prominent slots masquerading as “news.”
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The Manufacture of Consent

The government propaganda effort after the United States entered World War I in 1917 demonstrated to the corporate world just how persuasive the new techniques could be. President Wilson hired George Creel, a journalist and erstwhile trenchant critic of big business, to run his Committee on Public Information (CPI), designed to promote US involvement in a war that many Americans did not support. Creel, who later wrote about his work under the title
How We Advertised America
,
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marshalled the advertising industry to lead the effort and demonstrated that advertising could be just as effective in the propagation of ideas and beliefs as it was at selling consumer goods. He noted in one article that “somebody once said that people do not live by bread alone; they live by catch phrases.”
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The “public information” Creel organized was favorable to big business. Creel’s CPI recruited the Four Minute Men, community leaders who spoke briefly in thousands of local movie theaters—about 150,000 times a week. They preached the need to “make the world safe for democracy,” branding as German sympathizers any citizens who thought the war was a “capitalists’ war” or was being pushed by the captains of industry for its money-making potential, or who otherwise felt the United States had no interest in it. Loyal Americans were instructed to report antiwar sentiment, and by 1918, a Censorship Board was actively suppressing dissent.
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Creel also used the full range of social institutions to spread the patriotic message—from churches and schools to Rotary Clubs and Chambers of Commerce, from cinemas to the print media.

It was in the wake of this immensely successful PR campaign that Walter Lippmann, a journalist and another early theorist of public opinion, coined the phrase “manufacture of consent,” later revived by Noam Chomsky. “Increasingly,” Lippmann wrote, people “are baffled because the facts are not available; and they are wondering whether government by consent can survive in a time when the manufacture of consent is an unregulated private enterprise.” Lippmann, fearing that democracy was not actually possible under such circumstances, appeared to fault private ownership of the means of communication: “So long as there is interposed between the ordinary citizen and the facts a news organization determined by entirely private and unexamined standards, no matter how lofty … no one will be able to say that the substance of democratic government is secure.”
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The prominent business analyst Roger Babson remarked in 1921 that “the war taught us the power of propaganda. Now when we have anything to sell the American people, we know how to sell it.”
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Edward Bernays, too, noted that the “astounding success of propaganda during the war opened the eyes of the intelligent few in all departments of life to the possibilities of regimenting the public mind.” In the world Bernays aimed to foster, “propaganda is the executive arm of the invisible government.”
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As well as demonstrating how effective PR could be, the CPI showed that existing organizations of all kinds could be recruited to spread any message.

During the 1920s, US corporations were not only concerned about their image and legitimacy in the public eye, they were gravely fearful of overproduction and anxious that growth would be jeopardized if ongoing consumer desire was not systematically stimulated (discussed in chapter 5). Yet, even while consumer desire was being carefully constructed by advertising, one of the emerging PR gambits was the idea that the corporation existed primarily to serve the people’s wishes.
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Simultaneously, the cabal of wealthy individuals who had created the huge new companies was beginning to attract the first wave of middle-class investment, an initial small step toward the idea of the citizen shareholder class;
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this trend helped solidify middle-class identification with the interests of big business. Corporations also recognized that joining regional and community organizations gave them “unusual opportunities for establishing contacts with the leaders in general public activities and those who are molding public sentiment.” Two subsidiaries of AT&T alone paid dues of nearly $5 million for noncommercial memberships of every conceivable kind between 1925 and 1934.
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Republican presidents were returned throughout the 1920s on platforms similar to those of the late twentieth-century neoliberal era: tax cuts, the promise of universal prosperity through laissez-faire economics, the minimization of union power, and deregulation—“less government in business and more business in government,” as President Harding put it during the 1920 campaign.
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The decade also saw more consolidation, with the disappearance of some five thousand public utilities and more than eight thousand separate mining and manufacturing businesses.
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Newspapers were among the consolidating enterprises,
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and Roy Howard, who headed Scripps-Howard, one of the two largest print concerns (the other was Hearst), approved heartily of the “system of setting in action identical thought processes in all communities of the nation.”
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At the same time, commercial radio was granted the lion’s share of the bandwidth; according to Ewen, “the public sphere itself was becoming the private property of corporate gatekeepers.”
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The concentration of both economic and ideological power proceeded unchecked. As was the case during the era of the mortgage bubble, so abruptly burst in 2008, the financial sector dominated the economy and debt fueled the fiesta of consumption. Most of the biggest US corporations at the start of 1929 were holding companies engaged in financial and speculative activities—only four out of the ninety-seven largest corporations were strictly operating companies doing real business in the productive economy.
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Bruce Barton, one of the foremost executives in the new PR industry and holder of the accounts of DuPont, US Steel, General Motors, and General Electric, told a convention of electric light chiefs in 1926, after two decades of the infant PR industry’s efforts, that corporations were still “only tolerated” and that the people did not “fully understand” or “fully trust” them and did not yet “love them.”
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The 1920s had nevertheless seen the reputation of corporations improve greatly: in
Propaganda
, Bernays suggested that the big corporations were by then regarded as “friendly giants” rather than the “ogres” they had been thought to be, a change he attributed to “the deliberate use of propaganda.”
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The Wall Street Crash of 1929 brought this success to an abrupt halt, delivering a serious reversal to the more positive image achieved by big business in the decade following the war. As the hard times dragged on, a new campaign would soon be launched to persuade Americans that, despite the trauma of the Great Depression, business would still serve them better than any government ever could.

Depression and War

For the Love of the Corporation

Along with the major corporations (which already had their own PR staff), NAM played a central role in the fight against the New Deal. The US Congress had investigated NAM’s influence on legislation as early as 1913. It found some evidence of direct inducements to legislators but reserved its “severest censure” for what it called “coercion through propaganda,” a disguised campaign to influence public opinion, conducted through newspapers, speakers, and the dissemination of literature to schools, colleges, and civic organizations across the country.
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Robert Lund, who became NAM’s president in September 1933, urged the corporate world to unite against Roosevelt under the NAM banner, and launched a campaign to dislodge him in the 1936 election; this was not successful, which “gravely shocked business men all over the country.”
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As PR man Bruce Barton told NAM’s 1935 convention, “industry and politics … are competitors for the confidence and favor of the same patron … the public.” If businessmen talked to ordinary people, he said, they would be astonished to find “how little we are liked, how much our incomes are resented and our motives misunderstood.” They must, he told them, persuade people that “we are more reliable than the politicians [and] … will work for them more cheaply and with more satisfaction.” Barton echoed the exhortations of General Motors president Alfred Sloan Jr., who at the same meeting forecasted a great battle between “political management” and “private enterprise,” a battle for the “very foundation of the American system.” NAM’s president declared that they would campaign to “sell the American way of life to the American people.”
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This they did. NAM’s public relations budget rose from $36,000 in 1934 to almost $800,000 in 1937.
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The campaign yoked the New Deal notion of the greater good to the role and purpose of corporations and argued that private enterprise was the citizen’s guarantee against a “collectivistic” future where people were mere cogs in the machinery of the state. In contrast to this specter, NAM offered the “freedom of opportunity for the individual to strive, to accumulate, and to enjoy the fruits of his accomplishments.”
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In essence, a wealthy elite set out to ensure that people would be convinced, as
Fortune
magazine put it, that “business is not just a phenomenon on the surface of American life … it
is
American life.”
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