by Randolph T. Holhut
American Reporter Correspondent
November 23, 2008
IT'S TIME FOR A NEW CAPITALISM
DUMMERSTON, Vt. -- As we've seen over the past few months, Americans are not happy with the way things are. They want change.
If you wonder why so many people are so angry about the trillions of dollars handed out by the Federal Reserve and the Treasury Department to the institutions that created the worst economic mess in decades, consider these numbers.
In the 1950s, most Americans had a great deal of confidence in corporate America. A 1954 Roper poll found 80 percent of American adults believed that Big Business was a good thing for America and 76 percent believed that business required little or no change.
During those years of labor peace and worker prosperity, American businesses understood themselves to be part of the social fabric. The business sector was lauded for job creation, its effectiveness as a mass producer, its development and improvement of products, its support of education and its willingness to carry its fair share of the national tax burden.
Five decades later, that trust has vanished. A 2006 Lichtman/Zogby poll found only 5 percent of Americans said corporations did right by their customers and only 7 percent had a high degree of trust in corporate leaders.
What happened? According to Shoshana Zuboff, a professor of business administration at Harvard Business School, the erosion of trust can be traced to the transition of the corporation from a socially embedded institution to one devoted solely to maximizing shareholder profits.
Zuboff, the co-author of a new book, "The Support Economy: Why Corporations Are Failing Individuals and the Next Episode of Capitalism," wrote a recent column for Business Week magazine that tied the lack of trust in corporate America to the election of Barack Obama.
"Obama was elected not only because Americans feel betrayed and abandoned by their government but because those feelings finally converged with their sense of betrayal at the hands of Corporate America," she wrote. "Their experiences as consumers and as citizens joined to create a wave against the status quo - as occurred in the American Revolution. Be wary of those who counsel business as usual. This post-election period is a turning point for the business community. It demands an attitude of sober reappraisal and a disposition toward fundamental reinvention. If you don't do it, someone else will."
Companies became - in Zuboff's words - "a transaction machine designed to maximize profit, untethered from its community, society and country," and put the needs of stockholders ahead of the needs of workers and customers. The result has been decades of outsourcing, plant closings, hostile takeovers, union busting, benefit cuts and an increasingly unequal distribution of wealth. And this model was replicated in every corner of the public and private landscape as everything from health care to banking to media became "more ruthless, remote, gigantic and impersonal."
Without trust, everything comes crashing down. Zuboff said this collapse of trust offers an opportunity for a new era of American business. "When faced with a true choice, consumers will give their allegiance and cash to advocates who offer trustworthy relationships intended to support their complex needs rather than to distant adversaries who offer only impersonal transactions."
In putting together the book, Zuboff said she found most American business managers to be utterly indifferent to the needs of consumers and the demise of trust. As long as the money kept flowing in and consumers had no real choices, there was no pressure to change.
The collapse of the financial markets changed that equation. People realized they had been played for fools and wanted to do something about it. Obama's election was a reflection of that frustration and desire for change.
"Can we invent a business model in which advocacy, support, authenticity, trust, relationship and profit are linked?" asked Zuboff. "Can I write that sentence without invoking fear, disbelief, cynicism or peals of laughter? The ugly practices that killed trust seem intractable to most people, whether they are the ones trapped inside the money machine or on the receiving end of its operations. But after this election, the answer to these questions has irreversibly changed. The answer today would have to be not only 'yes we can' but also 'yes we must.'"
Randolph T. Holhut has been a journalist in New England for nearly 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at email@example.com.