Power Play: The US Case - Essay Example

Power Play: The U.S. Case If "power" is the ability to compel another to do something that s/he would otherwise not do (Dahl, 1957, p. 202-203; Lukes, 1974, p. 30; Weber, 1978, p. 53), CEOs in the United States of America (U.S.) have greater power than government leaders. This is clearer if power includes the ability to pass unnoticed, act in the background, and pull strings without attracting attention (Held, 1993, p. 209). Since its beginnings as a nation, the role of business has been obvious in the development of the U.S. as a liberal, pluralist, democratic, and capitalist society where CEOs exercise power in, through, and by the government. Origins of America: Evolution of Power Since its late 15th century discovery, the U.S. was home to small Spanish and French colonies. Not until the late 16th and early 17th centuries - when England's monarchs and businessmen with mercantilist intentions sent adventurers - did colonisation begin with the first settlement at Jamestown in 1607 (Loewen, 2005, p. 48-49). From 1620 onwards, the U.S. welcomed a mixed group persecuted by England's absolutist monarchy or escaping from Europe's economic crisis. The settlers shared a common goal: religious, economic, and political freedom. When England tried to maintain the U.S. as a colony, the settlers refused, fought back, declared independence, and won the revolution (Loewen, 2005, p. 51-53). The settlers in their Declaration of Independence and American Constitution of 1787 established a "Commercial Republic", avoiding two common errors regarding political authority: that the people have all the power and that the ruler has absolute power. It was the first attempt at a genuine democracy coming from the grassroots. They took a practical approach on man's nature, avoiding theoretical arguments on whether he is good or bad. They just noted that whilst man could be good or bad, the more power he has, the more he can be corrupted (Loewen, 2005, p. 54-56). Thus, they created a nation with a government of checks and balances to minimise corruption, which could not be eradicated completely. Government is needed to manage society, so they wrote a Constitution where absolute power does not reside in one person but in three bodies: legislative, executive, and judiciary (Ryan et al., 2003, p. 47-48). By dividing these three powers - to legislate, administer, and enforce laws - the government rulers are divided and set against each other based on the principle that the people can remain free to pursue progress and prosperity if their rulers are divided. This complex structure of government serves to limit the power of its leaders and was designed to serve not one but many and conflicting purposes (Ranney, 2001, p. 233-236). This was the foundation of the pluralistic, liberal, and democratic nation the U.S. is today, where political, religious, and economic freedoms are guaranteed under the rule of law (Ryan et al., 2003, p. 31-33 and p. 40-41). Since independence, the U.S. developed a political system that is a progressive and natural development of liberalism and the exercise of power by people averse to absolutism, an economic system that is almost perfectly capitalistic and based on the power of free markets, and a meritocratic social system that recognises human dignity and the power of individual effort. This is why the U.S. is characterised by continuous "conflict" amongst the different interest groups or centres of power that created it: business, government, and the people who continually attempt to balance that power. This conflict has been constructive and peaceful, although with a brief violent interlude during the Civil War from 1861 to 1865 (Zinn, 2003, p. 111). Powerful Hand of Business The first English settlement in the U.S. was established in 1607 as the Virginia Company of London, followed by the Massachusetts Bay Company in 1629. Since then, the corporation has been the chosen vehicle for local and state governments to achieve public ends - building roads, bridges, and canals through private investment. The private business corporation appeared in the 19th century, and by the 20th century, corporations were the king of the U.S. economy (Beatty, 2001, p. 17). Corporations are legal persons established for the purpose of earning profits for its investors. Although initially an instrument to promote the mercantilism of 17th century England, the 19th century industrial revolution transformed the U.S. Corporation into a perfect instrument for progress, prosperity, and freedom, leading to what would eventually become one of the most powerful blocs - Corporate America - in U.S. society. Innes (1995, p. 213-217) traces the roots of representative government in the U.S. to the corporation. The Virginia Company's procedural democracy, with members voting their shares, chose their officers, decided on company policy, and passed legislation for the colonies. Until independence in 1776, most colonies in the U.S. were set up as corporations in England by Royal Charter to attract investors and adventurers willing to sail across the Atlantic. Even the Puritans, persecuted Calvinists who sailed on the Mayflower in 1620, drafted whilst still aboard the ship a legal contract similar to a corporation charter that enshrined the principles of hard work, community spirit, and resourcefulness (Innes, 1995, p. 218-224; Bailyn, 1955, p. 94-96). The U.S. has been, and continues to be, a land of wealth and opportunity. In contrast to socialism and its cry for "equality" that inspired the French, the liberalism that took root and developed in the U.S. had as its main idea "freedom" - from persecution, economic slavery, and absolutism (Bailyn, 1955, p. 97). Thus, the government of early U.S. society was egalitarian, based on the principle of one man, one vote. Calvinist principles gave the development of society an economic slant: pioneers believed they were predestined to dominate the creation, ownership, and use of wealth. The 17th century U.S. saw a dramatic increase in the number of tradesmen, engines of economic growth with religious convictions that balanced industry, wealth, temperance and discipline (Bailyn, 1955, p. 98-100; Beatty, 2001, p. 31-32). This idealistic environment lasted until the arrival in the 1650s of Breedon and Wharton, imperialistic ideologues whose purely commercial interests detached from Puritanism (which they saw as an annoying archaism) changed the face of economic power in the U.S. They were interested only in business as a source of private wealth, public prosperity, and natural expansion; the rich land merely a treasure chest waiting to be exploited for economic gain (Bailyn, 1955, p. 105-111). Since then, the U.S. was dominated by a class of driven businessmen with one pre-dominant concern: creation, ownership, and use of wealth. Until and even after the 1776 revolution, the government established and controlled by businessmen had as its main goal to preserve freedom by promoting the progress and prosperity of all. Together, government and business rule the people: the first by representative democracy, the second by the promise of progress and prosperity (Kennedy, 1999, p. 284 and p. 292). Early critics such as Jefferson realised that close ties between government and capitalism brought seeds of destruction, captured by Schumpeter's theory of creative destruction, but they saw that this cycle of wealth and complacency and their corresponding ties to government power leads the system to renew itself. U.S. history is full of examples of families, politicians, and barons - Vanderbilt, Huntington, Harriman, and Scott - whose fortunes rose and fell and rose again in a constant pattern of renewal (Chandler, 1977, p. 36). Equally numerous are examples where business dictated to government, and the government - legislative, judiciary, and executive - docilely complied with the will of private business (Horowitz, 1977, p. 111 and p. 130). In the aftermath of the Savings and Loan Collapse (1980s), financial markets crashes (1987, 1998, and 2000), and the Gulf wars (1990 and 2003), many saw the invisible hand of business pulling government strings through the cycle of creative destruction. Business as the Real Power We only need numbers to see why CEOs are more powerful than government. The Fortune 500 companies had revenues of $9 trillion, whilst the government budget topped $2 trillion. Total U.S. GDP is $12.31 trillion, so business controls 75% of the nation's wealth (Schwartz, 2006, p. 51-52; OMB, 2006, p. 1). The legitimacy of government power rests on the votes of over 100 million citizens, and its leaders have power over the domestic population to whom they are accountable. CEOs are elected by a small cabal of corporate directors and shareholders to whom they are accountable, but they have global power over what 6 billion people eat, wear, or watch. Government officials have term limits. CEOs do not. Therefore, CEOs are more absolutist in their powers than elected government leaders. U.S. business has evolved into an elite, oligopolistic social class that continues to influence how government makes and carries out decisions. Nowhere is this power shown as clearly as in a recent Senate investigation of Rex Tillerson, CEO of Exxon-Mobil, the world's biggest company (Schwartz, 2006, p. 53-55). When asked why the company was not investing in ethanol, Tillerson told the Senators that it was none of the company's business. When attacked for their record profits at a time of high oil prices, Tillerson answered that the company's stockholders, including some Senators conducting the investigation, were the real beneficiaries. An expected classic showdown - politicians browbeating CEOs for earning record profits whilst ordinary Americans were being squeezed at the pump - became a subtle reminder by business to government as to who was really in charge. From imposing embargoes on non-"democratic" nations such as Myanmar and North Korea, to promoting imperialist ambitions under the populist guise of supporting the war on terror and spreading democracy, the group that really wields power through government action is U.S. Big Business: CEOs and stockholders, still faithful after two centuries to their roots of building and preserving a nation with a complex power structure where everyone is free to get rich with the help of a government that rules with its permission. Bibliography Bailyn, T. (1955). The New England merchants in the seventeenth century. Cambridge, MA: Harvard University Press. Beatty, J. (Ed.) (2001). Colossus: How the corporation changed America. New York: Broadway Books. Chandler, A.D. 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(2001) Governing: An introduction to political science (8th ed.). Upper Saddle, NJ: Prentice-Hall. Ryan, N, Parker, R & Brown, K. (2003). Government, business and society, 2nd ed. French's Forest, NSW: Prentice Hall. Schwartz, N. D. (2006, 8 May) "The Fortune 500: The biggest company in America...is also a big target". Fortune, 153, 7, 51-105. Weber, M. (1978). Economy and Society: An outline of interpretive sociology, trans. Ephraim Fischoff et al. Berkeley, CA: University of California Press. Zinn, H. (2003). A people's history of the United States: 1492-present. New York: Harper Perennial. Read More