Crony-Capitalists: History's Still Hangin' 'Round

Andrew Carnegie was once the richest man in the world. Three Presidents were said to have served under Andrew Mellon during his 10 years as U.S. Treasury Secretary (Harding, Coolidge and Hoover). Who cares? I do, because two brilliant historians have shown me a better way to understand today's crony-capitalists.

Professors David Cannadine (Andrew Mellon) and David Nasaw (Andrew Carnegie) present thorough explorations of their subjects who share a great deal more than a first name. They are both classic crony-capitalists from whom I've learned a great deal about what we must do moving forward.

How did corporations come to dominate both the economic and the political arenas? Pliant politicians doing favors for friends and funders, leading to high tariffs (one example), leading to great wealth, leading to more favors, more pliancy ... to crony-capitalism and to political and economic excess. To me, it's the classic story of the sorcerer's apprentice, with some politicians, our elected representatives, starring as the hapless apprentices.

America's Founding Fathers severely limited corporations when they wrote the U.S. Constitution. Their hard colonial experience had taught them that corporations need to be constrained, to be our servants, not our masters. They defined the very foundation of this nation's legitimacy as the American people -- not anyone's God, not a king or an elite, and certainly not corporations.

While I'm as tempted as the next person to succumb to my rage about today's crony-capitalism, history has helped me to see our situation in context. We've been here before. Professor Nasaw points out that the "golden era of free-market capitalism" is largely a myth; then, as now, the markets were regularly fixed, sometimes by those compliant politicians and occasionally by brute force. The sovereign people's well-being was undermined then as now by very private interests who got very, very rich. Now as then, no "fix" is permanent, only the need for constant vigilance is. That's the price of being free from tyranny by whatever name.

So, I lift a toast to two serious historians who've given us access into Mellon's and Carnegie's lives and times. The similarities with today's corporate moguls are brutally relevant. (Robert A.G. Monks also makes this exquisitely clear in his masterful book _Corpocracy_. It's personal for him.)

And I thank both professors for reminding me that Mellon, Carnegie and their allies viewed themselves as great patriots. Hard as I find it to give up my own stereotype of cartoonish robber barons, that temptation pales before the need to address an essential question as Professor Cannadine poses it: How do we strike a balance between capitalism's energy and the government regulation necessary to reign in its propensity to excess? First, we ask that question. Then we start requiring accountability.

You'll can listen to our Shows - including the ones with Professors David Cannadine (Mellon) and David Nasaw (Carnegie), Ron Chernow (Rockefeller) and Robert A.G. Monks - at our website http://www.PaulaGordon.com.

Comments

[Henry]

You'd be able to envision the whole shootin match once you watch the accounting entries that create "new wealth" at the IPO (birthing) of a new corporation.
Equity financing is free money capitalized on to a stream of tenative cash flows and funded by a 401K spigot of liquidity established by for and of the corporate interest. Of course, marketed as a keen way to fund retirement. But that mess of inequality waits us all.
(for example...think of oil companies as sole proprietorships. Wealth maybe, but only in the real abstract, not the monetized abstract)

[tompoe]

Please allow your rage against today's crony-capitalism, and while you're raging, spend a few minutes with Prof Yunus' social business model ideas. The answer is in play, now. Your rage is about to be channeled into a new world. Welcome aboard. Remember, the man didn't win the Nobel Peace Prize, because he jumped off a bridge. :)

[ATLiberal]

I am in the middle of reading "Shock Doctrine" by Naomi Klein, which is a fantastic book that addresses this subject as well. Learning a lot and realizind that we the people need to be vigilant about reigning in the wild excesses of Milton Friedman total free market concepts. I'm not a Marxist or a Communist, or even a socialist, really. More a Keynseyan, I suppose.

The track record of pure free market capitalism with no government regulation or intervention during financial crises' is one of misery and poverty for the majority with incredibly excessive wealth concentrated in a very tiny minority. We are seeing that trend here in the US right now.