The Bigness Complex
Walter Adams and James Brock
The Institute for Social Inventions approves of the Fourth World Review's slogan 'for small nations, small communities and the human scale.' Walter Adams and James Brock, two American professors of economics, argue the 'small is beautiful' line in their book 'The Bigness Complex - Industry, Labour and the Government in the American Economy' (published by Pantheon Books, New York, 426 pages, $22-95). Their agenda for action is admirable, so far as it goes, although the Fourth World movement would take it further, with the breakdown of the United States into its constituent parts and with the dismantling of large firms, even those with under '$1 billion in assets.'
Power and the control of power pose the greatest challenge to a free society. Through monopolisation, mergers and sheer bigness, power tends to subvert the competitive market. It does so in a variety of ways: obtaining, or striving to retain, government cartelisation of inherently competitive fields, pleading for government protection from foreign competition and forcing government bail-outs of collapsing corporate giants to avert the threat of massive shut-downs, lay-offs and plant closings.
The current American 'isms' - neo-liberalism on the left and neo-Darwinism on the right - are not the answer. The neo-liberals would trust a coalition of Big Business, Big Labour and Big Government. The neo-Darwinists would put their faith in the select few anointed by an untrammelled laissez-faire marketplace. Yet neither 'ism' offers a persuasive answer to Lord Acton's warning that power tends to corrupt and absolute power corrupts absolutely. Neither provides a reliable social control mechanism.
An agenda for action
- The current merger mania is clearly out of control. Billion-dollar mega-corporations are roaming the Darwinian jungle, making helter-skelter acquisitions or merging with one another. Our own preference would be to bar all corporate mergers involving corporations with assets of more than $1 billion.
'Billion-dollar mega-corporations are roaming the Darwinian jungle, making helter-skelter acquisitions. Our own preference would be to bar all corporate mergers involving corporations with assets of more than $1 billion'
- The lodestar of public policy should be comprehensive deregulation - the dissolution of a government-industry-labour power complex. In trucking and airlines, for example, regulation was not an instrument for protecting consumers from exploitation, but a means of protecting vested interests from competition. But economic deregulation must be carefully distinguished from social deregulation. There are some regulatory tasks - the assurance of pure foods and drugs, clean air and water, automobile safety and protection from toxic or otherwise hazardous waste - which must, for better or worse, be entrusted to government.
- Public bail-outs of collapsing business complexes seem to have become the order of the day, rendering the Bigness Complex even more powerful and even less accountable to society. Bankruptcy is a competitive market society's ingenious resolution of the problem of preserving physical assets and keeping them intact, while at the same time realigning the financing of those assets, the management of them, and the uses to which they are put.
Unfortunately for the nation, the hold of the Bigness Complex remains as powerful as ever among some prominent economic policy-makers - witness the astonishing suggestion that 'the thing that prevents the American automobile industry from competing effectively with Japan is that General Motors is too small.' These public perorations now emanating from Washington are most depressing, because they attest to the durability of mythological belief and the addiction to ideological dogma, even at the highest levels of government. A cynic once said that establishments reward the lies that sustain them and punish the truths that embarrass them. More unfortunate, perhaps, they also believe the myths that undermine them.
James Brock is Professor of Economics at Miami University (Ohio). Walter Adams is Distinguished Professor of Economics at Michigan State University (Department of Economics, Marshall Hall, East Lansing, Michigan 48824, USA, tel 517 355 4465).
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