Who owns America? What conservatives of the '30s teach left and right today about crony capitalism.

Nader, Ralph

There was a time in the Depression of the 1930s when conservative thought sprang from the dire concrete reality of that terrible era, not from abstractions.

They did not use the word "conservative" very often, preferring to call themselves "decentralists" or "agrarians." Eclectic in background, they were columnists, poets, historians, literary figures, economists, theologians, and civic advocates. In 1936, Herbert Agar, a prominent author, foreign correspondent, and columnist for the Louisville Courier-Journal and Alan Tate, poet and social commentator, brought a selection of their writings together in a now nearly forgotten book: Who Owns America? A New Declaration of Independence.

In his 1999 foreword to the reissued edition, historian Edward S. Shapiro called Who Owns America? "one of the most significant conservative books published in the United States during the 1930s" for its "message of demographic, political, and economic decentralization and the widespread ownership of property" in opposition "to the growth of corporate farming, the decay of the small town, and the expansion of centralized political and economic authority."

It is not easy today to convey the intense belief of many activists and intellectuals in the '30s concerning the necessity and inevitability of radical change. Among the best known are the different advocacies that swirled around Franklin Roosevelt's liberal New Deal years. Norman Thomas, the Socialist Party's frequent presidential candidate, was pushing FDR toward government health insurance, unemployment compensation, Social Security, and labor union rights.

Then there were the "spread the wealth" movements of popular figures like Sen. Huey Long and radio personalities like Father Coughlin and, in contrast, the Wall Streeters' own challenge: the attempt to save capitalism from President Roosevelt, whom they called a "traitor to his class."

In this mix, there was espoused a political economy for grassroots America that neither Wall Street nor the socialists nor the New Dealers would find acceptable. It came largely out of the agrarian South, casting a baleful eye on both Wall Street and Washington, D.C. To these decentralists, the concentrated power of bigness would produce its plutocratic injustices whether regulated through the centralization of political authority in Washington or left to its own cyclical failures. They were quite aware of both the corporate state fast maturing in Italy and Nazi Germany and the Marxists in the Soviet Union constructing another form of concentrated power with an ideology favoring centralized bigness in the state economy. They warned that either approach would produce unrestrained plutocracy and oligarchy.

Nor did they believe that a federal government with sufficient political authority to modestly tame the plutocracy and what they called "monopoly capitalism" could work because its struggle would end either in surrender or with the replacing of one set of autocrats with another. As Shapiro wrote in the foreword, "while the plutocrats wanted to shift control over property to themselves, the Marxists wanted to shift this control to government bureaucrats. Liberty would be sacrificed in either case. Only the restoration of the widespread ownership of property, Tate said, could 'create a decent society in terms of American history.'"

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Although the decentralists were dismissed by their critics as being impractical, as fighting against the inevitable wave of ever-larger industrial and financial companies empowered by modern technology, their views have a remarkable contemporary resonance given today's globalized gigantism, absentee control, and intricate corporate statism, which are undermining both economies and workers.

They started with the effects of concentrated corporate power and its decades-long dispossession of farmers and small business. They rejected abstract theories by focusing instead on such intensifying trends as the separation of ownership from control; the real economy of production in contrast to the manipulative paper economy of finance; and the growth of "wage slavery," farm tenancy, and corporate farming.

Year after year, Agar and his colleagues rejected pyramids of power, saying that the country could have "a majority of small proprietors, with no all-powerful plutocracy at the top and no large proletarian class at the bottom." The decentralists were among the earliest critics of the notion that large industry was inherently more efficient, noting that economies of scale frequently could be met by smaller factories, ones with fewer external costs that would offer fewer abuses to a democratic polity.

They revolted against "high finance" at a time of multitiered holding companies, especially in the electrical and other utility industries. David Cushman Coyle, a prolific economist, put it this way in "The Fallacy of Mass Production": "In a capitalist system, mass production is usually a mere camouflage for high-finance manipulation of business, to the detriment of the commonwealth and the impoverishment of the nation."

This is why these thinkers insisted on the proximity of direct ownership, in contrast to remote stock ownership, and, as a result, favored individual proprietorship and producer and consumer cooperatives. In cases in which large-scale efficiencies require large-scale operations, they should be run as "public services."

In their arguments they often referred to American history, including Jeffersonian traditions of smallness and farmers' bitter experience with the large railroads and banks of the late 19th century, which spawned a populist revolt from east Texas far and wide--to the north, east, and west. They took repeated note that the farmers' powers--political and economic--once awakened had their roots in the ownership of their land.

One of their favorite observations of Adam Smith distinguished between individual capitalism and corporate capitalism. Smith wrote, "People of the same trade seldom meet together, even for merriment or diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices." Wars, the '30s conservative group believed, only result in the government's creation or support of ever-larger "postwar combines."

The Catholic priest and author John C. Rawe put it this way: Corporate mergers and all devices of economic and legal control, usurious interest with wholesale foreclosure, unsound manipulation of the nation's volume of money by banker, broker, and politician--all these have made of us a nation of dispossessed people.... And it is absolutely irrelevant to learn from government and corporation statistics that the total wealth of the nation is much greater today than ever before.

Rawe and other agrarians were not easily fooled. They knew that only a shift of power from the plutocrats to the farmers and others would produce the desired social justice. "No State or Federal regulation," wrote Rawe, "is ever adequately enforced to protect private individual owners in any field of commercial production. The immense power of the incorporated monopoly always has its ways of circumventing legislative programs."

Sound familiar?

The decentralists had a concrete awareness of the ways and means of corporate power that was way ahead of many of today's conservative thinkers, who believe that the marketplace will suffice to check this ever-boiling force of business power. Many contemporary conservatives exhibit such a focus on government and keeping it at arm's length that they have neglected to rigorously propose an alternative locus of power, one that would take up many functions of government and restrict what they call "crony capitalism."

Part of the reason for this contrast between thinkers of the Depression years and the ones we have now is that the earlier conservative writers were close to the dirt-level poverty, land dispossession, foreclosures, and overturning by Big Business of a historic way of rural life which empirically grounded their diagnoses and reforms. There were no screens to look at daily in their abstract workplaces and households to distract them from grim reality.

They refused to grant legitimacy to corporate claims of having the same constitutional rights given to people. They knew how little accountability their state charters asked of business entities. Vanderbilt University professor Lyle H. Lanier, in his essay "Big Business in the Property State," launched a critique by citing Chief Justice John Marshall's famous words that each corporation is an "artificial being, invisible, intangible, and existing only in the contemplation of the law." Lanier wondered how "in this land of rugged individualism two hundred corporations control more than fifty percent of the nation's industrial assets."

He continued: Conceived in that constitutional Garden of Eden whose walls are the Fifth and the Fourteenth Amendments, and nurtured by the friendly decisions of a judiciary saturated with ex-lawyers of corporations, these economic giants have become the instruments of an economic fascism which threatens the essential democratic institutions of America. ... Ironically enough, the most vociferous defenders of free competitive enterprise are the big industrialists and their lawyers, whose illicit appeal to the sentiments properly attaching to the institution of private ownership of real property has served to camouflage the development of an alien economic system.

"In these matters," he continued, "America is confronted with a condition, not a theory. It is obvious that the peculiar disassociation of ownership from control of property, which characterizes the corporation, and the reduction of a progressively increasing number of real property owners to the status of wage-earners, create conditions not contemplated by the founders of the American Republic."

Today, the financial, industrial, and commercial stock corporations care far less about ownership than about control. Ironically, the greatest wealth in this country is still owned by the people but controlled by the corporations under the approving aegis of the federal and state governments. These assets are owned under individual claims, in the case of pensions and stocks, and as a commons in the case of the public lands, the public airwaves, and the varieties of government research, development, and other public assets. All are peoples' assets controlled and taken by corporate power for profit.

To the agrarians and decentralists of 80 years ago, the distinction was democratically unsustainable. As Alan Tate wrote: Ownership and control are property. Ownership without control is slavery because control without ownership is tyranny.... Corporate property has reached gigantic dimensions under protections of certain legal fictions: when the law made the abstract corporation a person, gifted with the privilege of real persons but with few of the responsibilities, it established a fiction that has gradually undermined the traditional safeguards, the truly functional property rights, embodied in the older common law.

These writers' clarity on matters of the traditional queries by political thinkers--the who, what, when, and how of power--made them quick to debunk distracting ploys, like the growth of the GDP, as justifying the status quo of corporatism. They went right to the distribution question, as did, by the way, Henry Ford in 1914, when he doubled the daily wages of his workers to $5 so that there were more buyers for his cars.

Lyle Lanier liked to quote the famous and very well-paid president of General Motors, Alfred P. Sloan, who, in Sloan's words, advocated a "broader distribution of income in order that a condition of abundance rather than of scarcity might prevail." Too bad that Walmart executives did not adopt policies to follow that basic curve of American economic progress: namely, that higher wages lead to more basic consumption and economic expansion. Walmart has been the leader in reversing this with a low-wage policy it has mercilessly inflicted on its workers and its domestic suppliers, which it has forced to meet the "China price" or to relocate production to China.

Lanier was unrelenting but still in the mainstream of agrarian conservative framing. He favored a tax on corporations that advantaged any company "which maintained as low a ratio as possible between volume of business on the one hand and net earnings and salaries on the other."

Because he viewed government regulation of wages to be impractical, he favored the "only feasible resource": collective bargaining by labor. His rationale would be fresh and clear-eyed today: In the typical big corporations the management represents the collective interests of great numbers of 'owners,' and possesses enormous power by virtue of that fact. The collective interests of the workers in the plant should be represented by an organized leadership, which would aim to secure for each individual an equitable return from the productive activity of the concern.

He recognized that both corporations and labor unions may "frequently be guilty of racketeering practices" (note the evenhandedness rarely found in today's self-described conservatives) but "vertical industrial unions will be economically desirable and socially necessary in big mass-production enterprises." Lanier shared the wide belief that the "labor problem" could be diminished by decentralization and widespread small ownership.

Not until the 1990s did the decentralists' core focus on corporate power and personhood begin to be discussed even in liberal/progressive circles. Yet back in the 1930s, Lanier had put the central issue concisely: "The farce of treating these giant corporations as individuals with the rights and privileges of individual American citizens should be discontinued. Constitutional amendment is the only recourse."

What the decentralists were pushing for was the supremacy of individual property rights that "secure life, liberty and the pursuit of happiness," over the property rights of incorporated entities possessing a "legal-social structure of privilege and concentration completely alien" to the agrarians' notions of a democratic society.

In this regard, they drew their public's attention to the early corporate chartering laws, administered by state legislatures in the early 1800s with "the greatest caution and limitation," reflecting the charterers' view of the supremacy of property "in the hands of private individuals."

Rapid industrialism and the increase in the power of financial institutions led to the changing of these laws and the revising of some state constitutions to authorize more automatic chartering by state agencies, leading the agrarians to lament the lost opportunity, for they had been pressing for the creation of chartered cooperatives that would do the same work of amassing capital and other services without the distorting greed and concentrated power of corporations.

However they enumerated the "collectivist" power of the giant corporations and their governmental servants, the agrarian decentralists were not in awe of such power. In 1933, under emergency conditions of their own making, the "great lords of banking, who are said to hold us in the palms of their hands, were as gentle as the hearth-side of altered cats," wrote Herbert Agar, adding that "they asked the government please to save them, please to protect them from the alleged anger of the public."

If the American people, Agar believed, "ever decide they want something, they will not be headed off by anyone so readily frightened as our robber rabbits.... The important question from our point of view is not whether we can overcome the opposition of Big Business, but whether we can convince the plain man in America that our program is what he wants."

The real danger, the decentralists believed, in the awakening of the people was the demagogues--they would name Sen. Huey Long or Dr. Francis Townsend--preying on the lower middle classes by promising them the moon and offering simple solutions. If the demagogue comes to power, knowing he has no easy solution he will turn, in Agar's indictment, to the Lords and Masters ... and make a deal. The demagogue stays in office and keeps the people quiet. The Lords and Masters stay in power and run the economic system just the way they always wanted to run it. The corporate state is monopoly-capitalism made safe. One of the first steps is to destroy all labor unions. Then the plain man is fobbed off with subsistence wages, patriotism, and a uniform. If he is still restive, it is not hard to fling him some racial minority on whom to work off his spleen. The Jews do very nicely. In America the Negroes might also serve.

It is remarkable how deeply and concretely these earlier defenders of prudence and tradition kept abreast of the new perils of the corporate supremacists. The Depression years of the '30s made many thinkers and doers get down to fundamentals, whether they were in the social sciences, humanities, or the arts or organizing actions in communities. They thought more boldly, spoke out more candidly, confronted the realities of power, and, even when they were dealing with abstract principles, sought to ground their thoughts in the real world where people live and work.

But then, they did not have to go to their offices every day to work in rarified, screen-filled environments, being well paid by grants from economic interests, vested ideologues, or foundations. The decentralists and agrarians had relatives and friends in serious states of impoverishment and insecurity, and if they did not, they saw these avoidable, wretched conditions all around them. It was hard to live a lie. Unemployment was as high as 25 percent to 45 percent, depending on the area.

They had their limitations when it came to directly discussing race. African-Americans were not given much attention, other than to be included in their denunciations of all sharecropping. Women were also not given specific attention in their rendition of "life, liberty and the pursuit of happiness." They wrote about "the people" generally.

But one chapter in Who Owns America?, titled "The Emancipated Woman," by Vassar College professor Mary Shattuck Fisher, minced no words: To call the modern American woman free is as false as to call modern America a democracy, and for the same reasons. She is not living in a world whose values are based on a sense of the worth of human beings, or one characterized by equality before the law and equality of opportunity. That is why she is not free, however 'emancipated.' It is also the reason why America is not a democracy.

Professor Fisher was not at all wowed by the increasing number of women in the workplace, seeing them as entering the same rat race that men are gripped by, though they were coming in at a lower wage rate and also had to shoulder the "double burden of maternity and employment."

Troy J. Cauley, an economist and author of the acclaimed book Agrarianism: A Program for Farmers (1935), questioned the program advanced by the philosophy called "technocracy," which foresaw a future in which there would be a redistribution of property from the few to the many, or even abundance with less work for all, powered by increasing automation. None of those schemes, he asserted, offered any "method for redistributing property among the people."

He went even deeper: "If there is to be a stable and permanent foundation for a redistribution of income, the foundation must be a general diffusion of property ownership, that is, a general diffusion of the control of the sources of income."

Though like most reformers, who shun the path of dictating the exact steps to be taken to effect a change, he and his colleagues offered no specific steps to get to the goal of distributing property, he insisted on the need for a society that enhances spiritual and "other non-material wants." He knew where it must all start. "For in the last analysis, community life and family life have much the same essential bases."

The decentralists were not alone in not knowing how to get to their secure and free society--an unanswered question that still haunts today's advocates of just change. Nevertheless, these writers and scholars, coming off the destitutions of the most prolonged economic collapse and massive unemployment in American history, known as the Great Depression, have much to teach us during these times known, so far, as the Great Recession.

Their writings shame the thinness of the conservative/liberal appraisals of the contemporary contours of power and control. They were much freer of taboos. They liberated themselves from the latent self-censorship that in our era has precluded fresh thought about even modest power-shifting possibilities and civic motivations. They also had a clear-eyed focus on the grip of the giant corporations over our political economy, whose antagonism to our sense of individual and community freedom and fair access to justice (courts and agencies) is so palpable today.

Most outstanding was their persistent questioning as to why the artificial entity that is the "joint-stock company" should have ever achieved equality with human beings under our Constitution, a document that starts with "We the people" and never mentions the words "corporation" or "company" or proclaims "We the corporation."

Ralph Nader is a consumer advocate. This essay is adapted from Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State by Ralph Nader. Available from Nation Books, a member of The Perseus Books Group.