Economy & Business

‘The End of Loyalty’ and the Surge in Populist Sentiment

(Photo: Stewart Cohen/Dreamstime)
In his new book, Rick Wartzman charts ‘the rise and fall of good jobs in America.’

In the literature that helps explain the shocking results of the presidential election of 2016, Rick Wartzman’s new book, The End of Loyalty: The Rise and Fall of Good Jobs in America, merits a place alongside J. D. Vance’s well-known memoir of white working class alienation and despair, Hillbilly Elegy: A Memoir of a Family and Culture in Crisis and the less well-known sociological study of American mores just before the election, The Vanishing Center of American Democracy, by James Davison Hunter and Carl Desportes Bowman, both of the Institute for the Advanced Study of Culture. The last two focus on the mores of citizens, but they reveal a growing skepticism in our major institutions: government, churches, the media, etc. We are, as Hunter is fond of saying, in the midst of a “legitimation crisis” for our institutions.

Wartzman provides a kind of genealogy of how the legitimation crisis came to afflict American corporations. A good portion of the populist turn of the white working class has to do with career insecurity and a growing impression that corporations care less about workers than they do about shareholders.

A business writer for the Wall Street Journal and the Los Angeles Times, Wartzman here pens a highly readable history — replete with fascinating characters from finance, the unions, and government — of the relationship between a key set of American corporations (General Motors, General Electric, Kodak, and Coca-Cola) and their workers. The story, which runs from the Great Depression to our own time, envisions a golden age, in the 1940s and 1950s, when corporations, as one GM executive puts it, acted on an obligation to “lend a helping hand to workers” and to “shield them against the vicissitudes of life.”

Waltzman provides ample detail of the ways in which corporate leaders sought to increase jobs, wages, and benefits for American workers. Indeed, in 1943, 19 corporate executives met in New York to prepare for the transition to a peacetime economy. In wartime the economy had blossomed with jobs and productivity. The concern of the Committee for Economic Development was to prevent the economy from regressing to the levels of unemployment, weak productivity, and social anomie that characterized the 1930s. The growth during the war continued, and thus began what Wartzman calls the golden age of American business.

One of the ironies of Wartzman’s narrative is that his golden age is precisely the era that gave rise to memorable critiques: John Kenneth Galbraith’s The Affluent Society (1958) Michael Harrington’s The Other America (1962). Wartzman does not deny that too many remained in poverty or that there were unacceptable levels of exclusion of women and minorities. These defects, however, do not alter the “fundamental truths” that “American business flourished during the fifties” and that an “extraordinarily wide swath of the populace enjoyed the fruits of its prosperity.”

On Wartzman’s view, troubles come later. The income gap between executives and average workers, which had been quite pronounced before the Great Depression, narrowed significantly during the 1940s. Although the converging trend stalled in the early 1950s, it did not begin expanding again until the 1970s, an era that also witnessed grand battles between unions and corporations. The union victory in the famous GE strike during the Nixon administration won salary increases for workers but contributed to an inflationary spiral. During this period of high prices and high unemployment, corporate profits declined.

An increasingly global economy placed further strains on American corporations. Japan and Germany, whose economies had been ground down by the end of the war, began surging. Automobile imports gave American consumers the opportunity to buy cars of better quality for less money. Some of the Japanese edge rested on a much lower compensation for its workers: 60 percent less than for American workers in 1974.

Wartzman is making a point that Tocqueville made about American political-economic life: that the excesses latent in our economic practices need to be tempered by countervailing social practices.

Given the concerns over inflation, stagnant wages, and growing global competition, American executives found themselves “besieged” and in need of becoming more “efficient and cost conscious.” In this part of his narrative, Wartzman focuses on two executives: GE’s Jack Welch, whose downsizing practices won him the nickname “neutron Jack,” and Coca Cola’s Roberto Goizueta, of Cuban descent, who claimed that he thought about “shareholder value from the time he gets up in the morning until he goes to bed at night.” Although these executives embody the breakdown of what he calls the social contract between corporations and workers, Wartzman offers a somewhat sympathetic depiction of them.

In fact, the way Wartsman presents the various and increasing pressures on American businesses makes the stages of his history nearly inescapable. The sense of inevitability haunts the book particularly in its conclusion. In response to the question “Can the American corporate social contract ever be reconstructed?” Wartzman admits that it’s not possible in anything like its instantiation in the 1940s and ’50s. (Wartzman does not, it is worth noting, comment on a recent development, namely, the tendency of corporations to think of themselves as moral agents insofar as they advance the latest trends in progressive politics.) Admitting that there is no escape from technological progress and the employment stress that automation brings, he puts forth a standard laundry list of recommendations: a higher minimum wage, making it easier to unionize, and paid family leave. But, he concedes, these will not reshape corporate behavior. As he notes, the “social contract won’t be strong unless business leaders want it to be so.”

There’s the rub. For it is not the case that individual executives simply decided in the past to be generous and that today they simply decide to be selfish. Wartzman admits that motives were complex even in the golden age. Companies in the ’40s and ’50s “took it upon themselves” to look out for workers “not just out of profit motive.” One motivation was to get out ahead of the unions and treat workers in a way that would make unions superfluous. But the deeper issue here is that whatever altruistic motives executives had in the golden age did not emerge in a vacuum.

One of the immediate implications of Wartzman’s history is that capitalism, even in its American variant, comes in many forms; economic systems are embedded within, and partly shaped by, the peculiar social conditions of time and place, by what Alexis de Tocqueville called mores. Without citing him, Wartzman is making a point that Tocqueville made long ago about the ethos of the American political-economic life: that the excesses latent in our economic practices, the restless desire for acquisition and material comfort, need to be tempered and altered by countervailing social practices.

Perhaps the most instructive feature of Wartzman’s book is the way in which his critique of corporate behavior and his evaluation of the culture run contrary to standard left–right divisions. On the one hand, his objection to the elevation of profit at the expense of workers seems leftist. On the other hand, his analysis of the cultural roots of good and bad corporate behavior emerge from the right. The generation of executives who saw their corporations as serving the good of workers and the nation was steeped in an ethic of commitment and community that arose out of the shared struggle and sacrifice of the Depression and World War II. That ethos all but vanished in the “‘do your own thing’ spirit of 60s and 70s counterculture,” a culture that in some cases mutated into “a ‘culture of narcissism,’ to use the title of Christopher Lasch’s 1979 bestseller.”

The golden age of corporate loyalty was a time of deep and widely shared American patriotism.

The mixing and inverting of standard political divisions mirrors in interesting ways the strange political phenomenon of the past year in American life. In the wake of the surprising presidential election of Donald Trump, American culture has largely degenerated into a series of shouting matches. By comparison, little attention has been devoted to understanding the origins of the surge in populist sentiment, unless, that is, one takes seriously the view that it is simply reducible to tumescent racism and xenophobia. For those who want, at least for a brief time, to step back from our increasingly irate culture war, and to seek understanding, the works of Vance, Hunter and Bowman, and now Wartzman are good places to start.  

READ MORE:

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The Francification of America: America’s French-style Realignment Towards Populism

 — Thomas S. Hibbs is dean of the Honors College at Baylor University and director of the Baylor in Washington program.

Thomas S. Hibbs — Thomas S. Hibbs is the dean of the honors college and distinguished professor of philosophy at Baylor University.

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