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Capitalism: Can't live with it, can't live without it
From John D to Mark Z
Roger Waters of Pink Floyd recently stated that he had been contacted by Facebook about using one of the band’s songs in an advertising campaign. “It arrived this morning, with an offer for a huge, huge amount of money,” Waters said. His answer was succinct: “Fuck you. No fuckin’ way.'” Waters added, “I only mention that because this is an insidious movement of them to take over absolutely everything. I will not be a party to this bullshit, Zuckerberg.”
Mark Zuckerberg is our present moment’s version of big-business bogey, when Jeff Bezos of Amazon is otherwise occupied (as by being rocketed into outer space). The role has a long history, running back to John D. Rockefeller, Andrew Carnegie and J. P. Morgan in the nineteenth century. And it reflects the love-hate relationship Americans - and Brits like Waters - have with capitalism.
The hate is obvious in the tone of Waters’ remarks, which echo similar remarks about the business titans of the past. Rockefeller was condemned at length by Ida Tarbell in her History of the Standard Oil Company, which chronicled Rockefeller’s takeover of the petroleum refining industry of America in the last decades of the nineteenth century. Carnegie was lashed for turning company goons loose against workers at the Carnegie steel plant at Homestead, Pennsylvania, in 1892. Morgan was raked over the coals by Congress for squeezing the U.S. Treasury during a run on the nation’s gold supply in 1895.
Americans’ love for capitalism has been quieter and often grudging, but no less enduring. Ida Tarbell’s loathing for Rockefeller reflected the ruin he inflicted on her father, an early rival in the oil business. Yet even as Rockefeller crushed Frank Tarbell and the others who stood in his way, he delivered the miracle of light - from kerosene - to millions of Americans, at steadily falling prices.
Before the Homestead debacle, Carnegie won respect for treating his workers well - as he wished his father might have been treated by the employers who laid him off and cast the Carnegie family into poverty and then exile from Scotland to America. The Homestead violence cost Carnegie much of that popularity, but he soon began to win it back through philanthropy that, among other accomplishments, put public libraries in thousands of communities that had never had them before - libraries that created opportunities for millions of poor kids such as Carnegie had been
J. P. Morgan was the capitalist Americans were most conflicted about. By the end of the nineteenth century Morgan dominated American banking, an industry that was at once vital to the lives of most Americans and yet utterly mysterious in its workings. Americans knew they needed banks, but they resented bankers, who often became the wealthiest individuals in their communities while doing nothing that looked like work to the farmers, mechanics and merchants who were their customers.
Two financial panics bracketing the start of the twentieth century made Morgan the man Americans most loved to despise. An 1893 panic triggered the run on gold that moved Morgan to step in to rescue the U.S. government from default. None besides Morgan could have managed the feat, for none had his connections in the investment world. The rescue, moreover, prevented a larger collapse that would have made the existing crisis far worse in its effects on the lives of ordinary Americans.
Yet Morgan received no thanks. When he refused to divulge to congressional investigators the profits he made on the secondary sale of the rescue bonds, claiming that this part of the transaction was his private affair, he was assailed as a bloodsucker, like all the other bankers.
A second rescue took place in 1907. The panic this time was only incipient. Morgan summoned New York’s big bankers to his home and demanded that they put up the cash needed to support the markets until the crisis passed. The bankers knew Morgan could crush them, and would if they defied him, and they fell into line. Again the apocalypse was averted.
This time the congressional response was slower but more profound. Progressives concluded that no private individual should have as much power over the lifeblood of American commerce as Morgan did, and after several years of hearings and debate, Congress in 1913 passed the Federal Reserve Act, which essentially took control over the money supply out of the hands of Morgan and his ilk and gave it to the new Federal Reserve.
The reform not only killed Morgan's power, but killed Morgan himself. Or so his friends concluded when Morgan, following rude treatment by congressional inquisitors, suddenly died.
The progressives and their heirs reined in the corporate titans and their heirs. Rockefeller's Standard Oil was broken into a dozen pieces. The rights of steel workers and other industrial laborers were guaranteed by New Deal legislation. The Fed became the arbiter of American banking.
Yet new titans, in new industries, eventually emerged, with Zuckerberg, Bezos and other techies being the most visible of the current crop. Americans have always liked what the titans could deliver, even if they didn’t like them. And the dislike prompted action against the titans only when their faults seem to outweigh the benefits they were currently providing.
New rules likely will be written to force Facebook and Amazon to play nicer. But there is almost no chance that American capitalism will be fundamentally revised.
Roger Waters knows why. The huge pile of money Zuckerberg offered would have been much harder for Waters to decline had capitalism not already provided him a pile of his own.