In August, I wrote a blog about a 1956 book, The American Business Creed, and how strong and positive that creed was, as well as the key role it played in making America the strongest economy in the world. A reader asked if I would speculate on why what was generally accepted in the 1950s is now largely either ignored or demonized.

So in this post, I will focus on the changes in business values stemming largely from changes in business itself. In a follow-on post, I will address broader social forces that launched a broad-scale attack on these values.

Let me reiterate the book’s seven key U.S. business values:

1. Individualism with moral responsibility and freedom
2. Materialism and productivity
3. Practical realism
4. The continuing goal of progress
5. The need for optimism and the spirit of adventure
6. Democracy and universalism
7. Service and social responsibility

One can make a strong case that these values, held by American businesses and supported by most of U.S. society—including all but the most left-wing elites—were a key factor in enabling U.S. global economic leadership.

Most large businesses still strongly support values one through five. However, the final two values have changed and weakened. Indeed, the values that have eroded the most, but by no means completely, relate to democracy and universalism and to service and social responsibility.

Value Six: Democracy and Universalism

The business creed insists on prioritizing the “welfare of all Americans” over the “welfare of humanity.” Today, however, globalization has shifted that balance.

In the 1950s, while many companies sold in foreign markets, true multinationals had not yet emerged. That is why GM CEO Charles Erwin Wilson, known as "Engine Charlie,” could tell the Senate that the interests of GM and the interests of the United States were aligned. At the time, this was seen as a perfectly reasonable statement. And when that was the case, a strong business meant a strong economy.

But with the rise of global economic integration—enabled by technological changes like jet air travel, container ships, and improved communications—globalization became inevitable. Hence, for the growing number of multinationals, the welfare of humanity started to get more attention than the welfare of all Americans. As Geoffrey G. Jones of Harvard Business School wrote, “The view that global firms were becoming divorced from the nation state began to be widely expressed as the pace of globalization accelerated from the 1980s.”

Interestingly, companies were supported by changes in American politics, both on the left and the right. The GOP, supported by leading free-market think tanks, became the party of free trade and globalization in the 1970s. But the left embraced globalization as well. Ever since the Bolshevik Revolution, the U.S. left has had mixed loyalties, often putting the interests of the global oppressed ahead of American interests.

This became more pronounced in the last two decades, as more of the left adopted a globalist outlook in which loyalty shifted from “America first” to “the global proletariat first.” We see that with leading progressive economists like Joseph Stiglitz, who pushes for weak IP protection in the United States so that developing countries can pay less for U.S. intellectual property. While they might still hate corporations and despise capitalism, they (like multinationals) put global interests ahead of American ones.

Value Seven: Service and Social Responsibility

The creed says that business managers must support service to society. That commitment, once central, has steadily eroded in the aftermath of the shareholder-value movement.

Corporate leaders in the 1950s firmly believed in service to the nation, embracing the notion that beyond earning profit they had a duty to advance society. To be sure, virtually all large U.S. corporations now have corporate social responsibility (CSR) programs. But these are largely add-ons rather than core components of the firm. And the more fundamental duty of business leaders is not supporting local charities or environmental programs, but ensuring the overall American capitalist system—and by extension the U.S. economy—is strong. On that measure, businesses embrace that role far less than they did 75 years ago.

As U.C. Berkeley political scientist David Vogel wrote in his 1978 seminal article “Why Businessmen Distrust Their State: The Political Consciousness of American Corporate Executives”:

The bourgeoisie occupies two roles simultaneously, that of businessman and that of capitalist. In the former role he relates to other firms and industries as competitors, while in the latter he is concerned about the relationship of the business system to the rest of society. One relationship emphasizes his individuality and independence: the other stresses the dependence of his economic position upon the maintenance of the socioeconomic system of capitalism. Tension between these roles is built into the nature of a market society. The interests of business as a whole are quite distinct from the sum of the objectives of each firm or industry and are often incompatible with the goals of any particular enterprise.

As Vogel points out, because of the nature of capitalist development in the United States, where the state did not have to play a strong role in overthrowing feudal interests, U.S. business leaders never adopted a very strong role as “capitalists.” But even so, their understanding of that role declined significantly after the late 1970s. Before then, many business leaders saw themselves not only as businesspeople but also as corporate statesmen. CEOs like Reg Jones of General Electric, Irving Shapiro of DuPont, Thomas Watson of IBM, David Packard of HP, George Romney of American Motors, and even John Young of HP in the 1980s spent considerable time advancing the interests of the nation, not just their own firms. Unless you are a diehard anti-corporate advocate, there is little doubt that this advocacy strengthened America.

But that began to diminish in the late 1970s and 1980s, prompted by the shareholder-value movement and libertarian notions of popular economic figures like Milton Friedman, who proclaimed that the only purpose of business is to maximize profits. At one level, this is of course true: Companies have to make profits or they cannot stay in business. But if support for the capitalist system weakens, and if policies to support it are weakened, then the ability to earn individual profits is also lessened.

As Wall Street shifted from providing long-term capital for productive investment to a short-term extraction game—led by raiders like Mike Milken, Carl Icahn, Nelson Peltz, T. Boone Pickens, and others—CEOs could no longer afford anything but a focus on short-term profits. The capitalist system would have to take care of itself. At the same time, corporate norms shifted, and what was once a system that enabled and largely required statesmanship was now one that penalized it. The rise of intense global competition only reinforced this short-termism and narrow self-interest. As Doug Henwood wrote, “the transaction replaced the relationship—not just on Wall Street but in American business generally.” And relationships, it turns out, are critical to the effective functioning and strength of the U.S. economy.

Finally, the decline of the traditional American WASP ruling class—which, for all its flaws, had the singular advantage of promoting leaders who were civic-minded and not only self-interested—played a key role. Say what you will about this class, it at least had an ethos of service to the nation. We saw this in the motto of private boarding school Groton, the leading training ground for the American leadership class before the 1950s: Cui servire est regnare, which is conventionally translated as “To serve is to rule.” In other words, service was expected, even if not always altruistic. Today, the WASPs are a timid minority that recognizes itself at its private country clubs, but not much more.

Restoring the Creed

It is beyond the scope of this post to discuss whether it is possible to restore business values to their pre-1970s state. But perhaps the most important step in that direction would be to recognize that the current system is not working as it should. The business creed of the 1950s helped make America the strongest economy in the world. Today, to maintain global economic leadership and prevail in the ongoing techno-economic war with China, the United States should revisit the two eroded values discussed. That means curbing the role of “casino finance” in the system and elevating the role of business leaders to that of statesmen.