“If business is so bad, why does it remain so integral to the basic functioning of America?” — Tyler Cowen, George Mason University economist
Tyler Cowen, Professor of Economics at George Mason University and a New York Times columnist, has a new book out, called “Big Business: A Love Letter to an American Anti-Hero.”
I was fascinated with some of the new material he brought to the debate over big business, such as the fact that big business is more transparent and honest in its dealings than individuals, even though businesses are not trusted by the public. How ironic!
His book is very important in influencing the country to recognize business as the best source of strength. I often cite this quote from Massachusetts Institute of Technology (MIT) Professor Shlomo Maital, who wrote in “Executive Economics”:
“The health and wealth of a large number of individual businesses — small, medium and large — determine the economic health and wealth of a nation. When they succeed, managers create wealth, income and jobs for large numbers of people. When they fail, working people and their families suffer. It is businesses that create wealth, not countries or governments. It is businesses that decide how well or how poorly off we are.”
Tyler’s defense of Corporate America also reminded me of the importance of the writings of management guru Peter Drucker and John Mackey, the CEO of Whole Foods Market.
For example, the first chapter in Tyler’s book talks about how we depend more and more on corporations. Peter Drucker had predicted the same thing years ago when he made the case that “big business” is the only “free, non-revolutionary way” to social justice — the new social order.
Here is part of an article I wrote years ago on the subject. The article is called “The Other Austrian: Peter Drucker.” (To read the full article, go to http://mskousen.com/1999/10/the-other-austrian/).
Peter Drucker on the New Social Order
It was his life in America which turned his interest to business management. During the late 1930s, Drucker began searching for a new social and industrial order. He became disenchanted with “unbridled” capitalism as the Great Depression wore on and on. But socialism, fascism and communism seemed even worse alternatives to society’s ills.
Drucker finally found his answer in the only “free, non-revolutionary way” — the large corporation. He was enthusiastic about his discovery that big business could provide a superior alternative to socialism and big government.
According to Drucker, the large corporations should be the conduit through which economic stability and social justice could be established. Only big business could afford to assume social responsibilities such as job security, training and educational opportunities, as well as other social benefits. Such an alternative was absolutely critical in an age when free enterprise was on the defensive around the world.
Breakthrough Study of General Motors
After the war, Drucker got a consulting contract with General Motors, which gave him an opportunity to develop his thesis more fully. His exhaustive study of GM culminated in the 1946 publication of “Concept of the Corporation.” Here, Drucker came to the unshakable conviction that the large corporation should be the “representative social institution” of the postwar period and that major American companies such as GM should take the lead in building the free industrial society.
Top officials at General Motors resented the book and scoffed at the idea that a large corporation should assume social responsibilities. But Drucker’s reputation as a management expert grew despite GM’s cold shoulder.
By 1950, Drucker was professor of management at New York University, and in 1973 he was appointed Clarke Professor of Social Science at the Claremont Graduate School in California.
Drucker maintained that a company is more than an economic entity. “Even more important than economics are the psychological, human and power relationships which are determined on the job rather than outside it. These are the relationships between worker, work group, task, immediate boss and management.” A company’s administrators have a moral purpose and social responsibility beyond making short-term profits.
Drucker envisioned the large corporation as THE social institution, far superior to government in providing a retirement income, health care, education, childcare and other fringe benefits. He argued that corporate welfarism should replace government welfarism.
Drucker acknowledged that such social activity could undermine economic performance, but he rejected Milton Friedman’s admonition that the only legitimate responsibility for a business is to increase its profits. A lethargic government has created a “vacuum of responsibility and performance” which big business must fill.
The Big Debate: What is the Purpose of Business?
Tyler referenced Milton Friedman’s famous article on the purpose of business (to make money), which he rightly criticized. But for some reason Tyler failed to cite John Mackey’s brilliant response to Friedman in this debate and in his new book, “Conscious Capitalism.” Mackey wrote the most important book of the 21st century when it comes to a new business paradigm.
The Debate Continues at This Year’s FreedomFest
I’m pleased to announce that this debate will continue when John Mackey takes on Kevin O’Leary of “Shark Tank” fame in “Conscious Capitalism vs. Pure Greed.” The sparks will fly!
Use this Discount Coupon to Get $50 Off Your Ticket to FreedomFest
I urge you to sign up today to attend “the greatest libertarian show on earth” here.
If you use the special code EAGLE50, you get $50 off the registration fee. Call toll-free 1-855-850-3733, ext. 202 or register online.
See you in Vegas in three months!
Good investing, AEIOU,
American Association of Individual Investors (AAII), April 13, Skirball Center, Los Angeles: Starting at 9 a.m., I’ll be speaking on “Why Bull Markets Are Lasting Longer” and “Ye Shall Prosper In the Land: Three Financial Lessons from the Bible,” in honor of the Passover and Easter the following weekend. Here I will offer a unique presentation on the Biblical principles of prosperity, including (1) The significance of the Abrahamic Covenant now: “Why the Jews Don’t Feel Guilty about Money and Sex, and Christians Do.” (2) Max Weber’s “The Protestant Ethic and the Spirit of Capitalism” and how John Wesley’s “Sermon on Wealth” in 1743 made the West rich; (3) American Exceptionalism (as the Promised Land); and (4) How to apply Ben Franklin’s Trinity of Virtues (Industry, Thrift, Prudence) to investing today. My subscribers are invited. Price is only $5 at the door for first-time Skirball attendees and is the same for students who show a school ID. To secure this rate, please email Fred Wallace at firstname.lastname@example.org (the regular public “walk-up” rate is $18).
Las Vegas MoneyShow, May 13-15, Bally’s Resort: I’ll be moderating a main stage panel on “Where to Invest Next,” followed by two works on “My Most Successful Money-Making Strategy” and “When Will the Mother of All Bull Markets End?” Other speakers include Keith Fitz-Gerald, John Buckingham, Louis Navellier, Wayne Allyn Root, Brien Lundin, and CNBC’s Jon Najarian (Fast Money). Tickets are free, but you must click here to register. Use code 047455.
You Nailed It!
By Mark Skousen
Editor, Forecasts & Strategies
Candace Owens Takes on Democrats in New Congress
Earlier this week, conservative spokeswoman Candace Owens appeared before a congressional committee and was accused by Democrats of being sympathetic to Neo-Nazism.
She gave a fiery response. Watch this three-minute exchange on YouTube.
I also should add that I’m no fan of the “nationalism” that Candace Owens and Donald Trump trumpet, but she deserves a fair treatment.
Ben Franklin said it best, “Our cause is the cause of all mankind. God grant that not only the love of liberty but a thorough knowledge of the rights of man may pervade all nations of the earth, so that a philosopher may set his foot anywhere on its surface and say, this is my country!”
I’m thrilled to announce that Candace Owens will be making her first appearance at this year’s FreedomFest, July 17-20, at the Paris Resort, Las Vegas. You won’t want to miss it. Find out why John Fund said, “FreedomFest doesn’t just ride the wave, it invents the wave.” Join us by going here.