Opposition to globalization. Efforts to weaken intellectual property (IP) protections. Pushing for municipal broadband. Support for organic food. Calls for the National Institutes of Health (NIH) to develop drugs. What do these seemingly unconnected positions have in common? Simple: They all are suffused with a deep animus toward corporations and an equally fierce determination—among progressive activists and politicians—to transform the U.S. economic structure into one in which government-provided goods and services are readily available; small, locally-owned firms abound; and corporations are heavily regulated and broken up by the Justice Department whenever they get too big.
It is so-called “Big Tech” companies that face the most scrutiny these days from the media, advocacy groups, lawmakers, and regulators. But for most progressives, this anticorporatism extends well beyond the tech sector. It has become a general operating principle, the go-to policy formula for righting wrongs and achieving other societal goals—a conviction so firmly held that it is no longer just the means to an end; it is, for many, the end in and of itself.
This has not always been so. For more than a century, starting in the 1910s and continuing through to the 1990s, most progressives accepted that large corporations were a permanent and even valuable part of American economic life, to be balanced with other forces, such as unions, and sometimes to be regulated. Today, however, a growing share of progressives view large corporations as inherently problematic, if not malicious. To be sure, America faces serious challenges, such as excessive income inequality and a tattered safety net. But if we reject the calls of today’s anticorporate progressives and instead follow the examples of the original Bull Moose Progressives and most New Dealers, we can solve these problems in ways that do not diminish the value corporate capitalism produces for both the U.S. economy and American society itself.
Anticorporatism Now Extends From the Fringe to the Center of the Political Fabric
Over the last two decades, in parallel with the anticorporate Left’s growth from a relatively small fringe to a formidable political force, the criteria that progressives have used to determine whether policymakers are sufficiently liberal has shifted dramatically. Rather than evaluating policymakers on whether they support policies that generate progressive outcomes—getting broadband to rural areas, fostering drug development, addressing global warming, helping workers get training—they now judge policymakers almost exclusively on whether they advocate for positions that would restrict, restrain, or replace the corporate sector.
Very few on the anticorporate left will acknowledge that anticorporatism is their true goal, yet their disdain for those who shop at Walmart, get coffee at Starbucks, or patronize other large corporations, is palpable. They realize that while many voters may rightly support more regulation and more progressive taxation, most oppose shrinking the corporate sector, especially since half of private sector workers are employed by large companies. As a result, the anticorporate Left camouflages its real endgame by calling for policies that enjoy near-universal support: lower prices, more privacy, more fairness, more broadband, safer food, fighting climate change, cheaper drugs. But the policies they embrace as solutions are primarily designed to restrict, restrain, or replace the corporate sector—a silver-bullet solution, they believe, for all of the above, but also an end in and of itself. It happens to be the case that when it comes to advancing those and many other progressive goals, large corporations have a demonstrably better track record than small firms do, but that rarely enters into the debate.
There has been an anticorporate fringe in American politics since large industrial corporations first emerged after the Civil War. Anticorporate sentiment has risen and fallen in relationship to economic conditions and political responsiveness. But today, that fringe extends toward the center of the fabric; as in many policy areas, it now represents mainstream thinking, particularly among Democrats. (There is an emerging anticorporate wing in the Republican party, too, but this report focuses on the anticorporatist Left.) Tying that agenda to the important goal of racial justice has made it even easier for the anticorporate Left to broaden its appeal by promulgating the false claim that small businesses better serve the interests of people of color.
Most progressives, and many liberals, now have a deep and abiding animus toward large corporations, regardless of their behavior or how active their social responsibility efforts are. As such, these progressives seek to reshape the U.S. economy away from a corporate structure, which they see as inherently against the public interest. And in many ways, they are making progress, as evidenced by the fact that “Big” is now largely used as an epitaph (e.g., Big Cable, Big Pharma, Big Tech).
Most progressives, and many liberals, now have a deep and abiding animus toward large corporations, regardless of their behavior or how active their corporate social responsibility efforts are.
However, to achieve its goal of radically restructuring the U.S. economy, the anticorporate Left must first convince voters that in each industry, corporate performance is deficient (prices and profits are too high, innovation is too low, privacy too unprotected, workers earning too little, etc.) and that the technologies corporations develop and use come with an array of unacceptable risks and harms. Most of the claims along those lines are inaccurate or overstated, but they get recycled ad nauseum on social media anyway, in the press, and in congressional hearings, thus laying the groundwork for a set of structural anticorporate policies that, if implemented, would result in lower economic and wage growth, less innovation, reduced U.S. competitiveness, and reduced opportunities for disadvantaged Americans.
If policymakers are to advance effective policies to support competitiveness, economic growth, opportunity, and innovation across a wide array of areas, they need to understand the real nature of the debate: Do we want for-profit corporations competing with each other to drive innovation, progress, and American competitiveness—albeit with a system of government regulation and public spending—or do we want a system with government- and small business-provided goods and services, and wherever that is not possible, strict and costly regulations of large companies?
At its heart, this new version of progressivism is not so much about being antimarket as it is about being anticorporate, meaning, “opposed to or hostile toward corporations or corporate interests.” This is not meant to suggest that there are not additional motivations that underpin anticorporate progressives’ positions. Opposing laws to limit digital piracy would limit large media companies’ revenues, but it also would deliver free content to “the people.” Supporting policies to reduce automobile use is not just about limiting the size of auto companies, it is about realizing progressives’ vision of how they believe everyone should live (in built-up urban areas). Nonetheless, the result of these and a wide array of other policies many progressives now seek would be to shrink the size and effective functioning of the corporate sector.
It is certainly true that corporations are a means to various ends. And if an economy with fewer large corporations could achieve important public interest goals better than can the current economy, then policymakers should support that path. But in a technology-driven, globalized economy, that is simply not the case. A healthy, productive, innovative (and responsible) corporate sector brings with it a host of critical public benefits: increasing per capita gross domestic product (GDP), good jobs, innovation, better goods and services, a cleaner environment, and national competitiveness.
The alternative to an anticorporate agenda is a pragmatic agenda that focuses on where more government is needed to advance welfare and progress—and where corporations are needed to advance similar goals.
Likewise, an anti-anticorporate agenda is not an agenda that necessarily favors large corporations over small business. Contrary to the vision of anticorporate progressives who seek an economy dominated by small and mid-sized firms, optimal policy is size neutral, with government not tilting the balance in either direction but instead letting market forces determine the optimal business size and structure.
Nor is the alternative to an anticorporate agenda, as many progressives assert, an antigovernment agenda. The alternative to an anticorporate agenda is a pragmatic agenda that focuses on where more government is needed to advance welfare and progress—and where corporations are needed to advance similar goals. Indeed, as John Kenneth Galbraith noted, there are many aspects to capitalism that need countervailing. But countervailing does not mean counter to corporations themselves.
Finally, anticorporate progressives should not have a monopoly on progressive thought. There are a host of progressive policies, such as a higher minimum wage, expanded access to health care and retirement security, increased unionization, more clean energy, and more progressive taxes on individuals, that would help achieve important progressive goals without restricting, restraining, or replacing the corporate sector.
If we are to engage in a debate about the role of large corporations in America, then we should do so directly, by examining each industry and asking whether it would be better to have goods and services provided the way they are now or with fewer large corporations. And if the answer is the former, then what are the policies to maximize the public interest and ensure benefits for most Americans?
This report discusses how anticorporatism has evolved, how it plays out in various industries and technology policy areas, and what supporters of the current system need to do to avoid losing the battle, including more-effectively addressing the legitimate concerns of progressives.
In the 1980s and 1990s, debates over advanced industries and technologies were mostly pragmatic and focused on the best ways to advance innovation and growth. Since then, additional players have joined the debate, bringing with them a variety of ideological aims, including protecting privacy, helping small business, promoting equity, and limiting the role of government. And in the last decade, this divergence has grown wider, with many liberals engaging in industry and technology policy debates to push for a fundamentally different kind of industry structure that significantly reduces the role of large corporations. Many progressives no longer see corporate-led business models as desirable, instead advocating for government production, small-business production and, as a last resort, heavily regulated corporations.
Progressives did not weave this extreme position out of whole cloth. Forty years of policy that let the interests of large corporations diverge from the national interest added to their frustration and anger. A system of “managerial capitalism” that before the 1980s balanced shareholder interests (particularly short-term interests) with stakeholder interests has evolved into a system of “shareholder capitalism” that pressures corporations to maximize short-term profits.
Former Defense Secretary Charles E. “Engine Charlie” Wilson famously said in a 1953 congressional hearing that “what’s good for the country is good for General Motors, and vice versa.” The growth of globalization since then has rendered that statement anachronistic.
The decline in organized labor in the private sector has significantly reduced countervailing pressure on corporations. Reducing taxes on the wealthy has let many wrongly conflate corporate income with the excess wealth of the “point-one percenters.”
Forty years of living in “the era of big government is over” underscores that government has failed to respond to the hosts of challenges generated by a technology-fueled, global economy, making it easier to attack corporations as the problem. For example, if the government funded the U.S. Economic Development Administration at the same share of GDP today as it did in 1979, then it would be receiving $51 billion a year, not $300 million. Business leaders and elected officials used to understand that support for capitalism and big business depended not only on business serving U.S. interests but on government playing an active role to fill in the gaps, serve as a backstop, and invest in key foundations.
Finally, several decades of corporate scandals, including Enron’s accounting scandal, Tyco’s executive stock fraud, Goldman Sachs’s manipulation of derivative markets, Volkswagen’s “Dieselgate,” and Wells Fargo’s pressuring of employees to manipulate customers into adding accounts, have added fuel to the anticorporate fire. All of these trends and factors have led progressives to give up on the possibility of regulating and reforming corporations to maximize the public interest. Instead of reform, they now pursue revolution.
It’s not just “democratic socialists” such as Sen. Bernie Sanders (I-VT)—who said, “ to build an international movement of our own against capitalist elites”—and Rep. Alexandria Ocasio-Cortez (D-NY) who embraces an anticorporate agenda. That view has permeated liberal thinking.
As author Evan Osborne wrote in The Rise of the Anti-Corporate Movement, “Increasingly, the obstacles to everything that progressives believe in—decent health care and retirement for all through the welfare states, world peace, a clean environment—are being interpreted exclusively through the anti-corporate prism.”
It wasn’t always this way. As the second wave of industrialization transformed America in the 1890s, populists were opposed to the change and fought against large, privately owned corporations. The Populist Party campaign platform from this period reflected this view, calling for nationalizing what we would today call “network industries”: rail, telephone, and telegraph. As historian of the era Robert Wiebe noted, “Through nationalization the populists expected to take certain basic segments of the economy from the “interests” and hand them to the “people.” (See figure 1).
Figure 1: Populist Party poster calling for nationalization of railroads and telegraphs
However, while populism was an expression of frustration, anger, and opposition to change, it was the progressive movement that came to grips with the economic reality. In reality, many of the original progressives were not anticorporate. Far from it. They often embraced industrialization and the rise of large corporations because they rightly understood that big business was the source of progress.
Herbert Croly, author of the progressive tract The Promise of American Life, and someone who is regularly spurned by conservatives today, wrote with respect to large corporations, “The new organization of American industry has created an economic mechanism which is capable of being wonderfully and indefinitely serviceable to the American people.”
In his 1905 annual message to Congress, President Theodore Roosevelt declared,
I am in no sense hostile to corporations. This is an age of combination, and any effort to prevent combination will not be useless, but in the end vicious, because of the contempt for law which the failure to enforce law inevitably produces. We should, moreover, recognize in cordial and ample fashion the immense good effected by corporate agencies in a country such as ours, and the wealth of intellect, energy, and fidelity devoted to their service, and therefore normally to the service of the public, by their officers and directors.
As Sean Wilentz wrote in The American Prospect with respect to President Franklin Roosevelt’s New Dealers, “In everything that mattered—an appreciation of the democratic potentials of industrial capitalism, an acceptance that the old yeoman America was dead and gone—they repudiated populism.”
Progressives embraced industrialization and the rise of large corporations because they rightly understood that big business was the source of progress.
In other words, most progressives did not want to roll back the corporate economy, they wanted to grow it and align it more with broader public interests. As Teddy Roosevelt stated, “The corporation has come to stay, just as the trade union has come to stay. Each can and has done great good. Each should be favored so long as it does good. But each should be sharply checked where it acts against law and justice.”
Figure 2: Cartoon of Teddy Roosevelt and trusts