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Dear U.S. Chamber of Commerce: Why Attempt to Resuscitate a Brain Dead Climate Bill?

“Politically oriented capitalism, whatever particular form it takes, involves the granting by the state of privileged opportunities for profit. Such openings are available only to those with connections or to those who can pay for influence.” 

-          Scott, James. Comparative Political Corruption. Englewood Cliffs, NJ: Prentice-Hall, 1972, p. 52.

Joe Romm at Climate Progress (Center for American Progress) is holding out hope against hope that a climate bill–just about any climate bill–will be passable in 2010. He regurgitates a Boston Globe piece under the headline, Graham, Kerry, Lieberman meet with Rahm Emanuel — and then Chamber of Commerce, whose VP of Gov’t Affairs said, “generally we were in synch”!

This brings up the question: why is the Chamber of Commerce negotiating with the enemies of true (consumer-driven) economic recovery?

This incident reminded me of a section from my book Capitalism at Work (chapter 6, pp. 172–74) that deals with the Chamber of Commerce in a historical sense. (There is a Ken Lay surprise–read on.)

A collection of speeches given in 1966/67 by the president of the U.S. Chamber of Commerce was published by McGraw-Hill as The Business of Business: Private Enterprise and Public Affairs. M. A. “Mike” Wright, chairman of Humble Oil & Refining Company (now ExxonMobil), urged his fellow executives to be more proactive in public and government affairs to improve the business environment and better society. “Virtually every business decision today is affected by public laws, regulations, and policies,” he stated, yet industry leaders were often “indifferent” or “negative” rather than “creative” and “positive” toward lawmaking.

A new emphasis on statesmanship and the common weal was necessary for the business community to meet the unprecedented challenges posed by “urbanization, industrialization, and internationalism.” The new executive of the new capitalism had to understand and participate in “government-business relations, public affairs, investment analysis, international trade, union relations, public relations, social welfare, diversification, [and] cultural development.” The CEO’s “daily education” needed to be as much about “legislative trends and developments in Washington as on the latest production or marketing techniques.”

The speeches, and now published essays, offered little historical context. The issues of the day—inflation, price controls, welfare transfers, tax policy, pollution, public education, antitrust suits, labor relations—were just taken as the starting point. Business was portrayed as an innocent bystander rather than, historically speaking, the shaper of much government activism. The real message from the book was that political capitalism was getting more difficult to manage for its progenitors as new interests organized and pluralism increased.

The book’s fare was not unlike what journalist John T. Flynn criticized in the 1920s as sloganeering, including “that which burns upon the banners of the United States Chamber of Commerce: More Business in Government and Less Government in Business.” Flynn scoffed because the new laws were coming far less from the imaginations of legislators than from “the legislative program committees of trade associations or from the special counsel of trade groups … backed often by resolutions from trade conventions and chambers of commerce.”

Yet the Chamber, complained Flynn, was selling a picture of business “as a huge giant, gagged and shackled like a moving-picture galley slave to his oar.” Flynn forwarded his own ideal for the Chamber: Less business interference in government and more statesmanship in business.

That was the 1920s; this was the 1960s. The policy-making environment was more competitive and pluralistic, even if The Business of Business provided no inkling about how then-current politics evolved from a century of mostly business-driven politics. Joining the traditional government-business-labor triad were new players that could frustrate the legislative agenda of any business, particularly that of big oil. Business-versus-business tiffs alone could leave any company or trade association defeated, as Humble Oil knew first-hand from its political skirmishes with independent oil firms on policies regulating domestic production and imports.

And on the natural-gas side, Humble Oil and other producers were losing a fight to deregulate wellhead prices as legislators, regulators, and presidents sided with pro-intervention gas-distribution companies and municipalities instead. The depletion allowance and other cherished wellhead tax breaks for oil and gas producers were under fire. Environmental issues were complicating the political equation for the first time. Political capitalism was a win-some/lose-some game more than ever before for big companies, as it could also be for small firms.

The game had changed for business in general. “Corporate plans for advertising campaigns, for mergers and acquisitions, for changes in employment practices, for new stock issues, for changes in the manner of computing and reporting earnings, for pricing to different groups of customers—all can raise questions that the management must put to its legal staff,” said Alfred Chandler Jr., the noted historian of business behavior. Chandler declared the day over when business leaders devoted all their time to internal matters. As a result of the affluence they helped to create, “non-economic challenges are now becoming more critical than the economic ones.” Special interests were proliferating, some or many with an anti-business and anti-capitalist agenda.

The sweep of contemporary economic issues in The Business of Business was beyond the reach of a life-long engineer and busy company head. Mike Wright had a speechwriter and ghost-writer, an up-and-coming corporate economist by day and Ph.D. economics candidate at the University of Houston by night. Kenneth Lee Lay, age 25, was smart and well-educated. He had a large capacity for work and got to the essence of things quickly. He possessed sound organizational instincts and strong people skills. He wrote clearly. Dr. Lay, as he would soon be titled, had a big future.

Back to the present. The public, inflamed at Big Government, must keep a close eye on rent-seeking by business, whether small or large, national or multinational. If there is to be a revolution against Big-Government Republicans and Big-Government Democrats, a new era of business ethics needs to be articulated–and enforced by public pressure.

A good place to start is with the concept of Principled Entrepreneurship™, which has been defined as follows:

Principled Entrepreneurship™ is defined as “maximizing long-term profitability for the business by creating real value in society while always acting lawfully and with integrity.” Such value creation can only be measured in a free market where consumers have choices, and where profits (and losses) are meaningful measures of business performance.

Principled entrepreneurship eschews political profiteering, which redistributes and destroys wealth rather than creates it. Thus political capitalism is discouraged in favor of free-market capitalism by the company practicing principled entrepreneurship.

In practice, principled entrepreneurs spend their time anticipating and meeting consumer demand rather than seeking non-market political favors such as a special tax provision, a cash subsidy, or a restriction placed on a competitor.

Can the amorphous concept of “social corporate responsibility” be redefined along the lines of Principled Entrepreneurship™? The U.S. Chamber of Commerce is invited to revisit fundamental questions of business and society with such a revision in mind.

5 comments

1 Danni { 01.26.10 at 12:32 pm }

Because efficiency is good for business, good for the family budget, and good for the environment. http://www.facebook.com/home.php?#/uschamber?ref=ts

2 Robert Bradley Jr. { 01.26.10 at 5:57 pm }

Consumer-driven energy efficiency is one thing–government-incited or government-mandated conservationism is quite another.

Why not let the market decide?

3 Andrew { 01.26.10 at 6:38 pm }

Danni-The problem with your argument is that the climate bills are not efficiency bills, they are emissions reductions bills. Efficiency as so small an impact on emissions (YES even in aggregate) that it is laughable to suggest that they are “good for the environment” in any measurable sense (or bad for that matter). More over, since when has it ever been necessary for businesses to be told to do something which benefits them, much less families and individuals?

4 Charles { 01.26.10 at 6:53 pm }

Good stuff Rob to highlight the unsettling new trend in business today, which is to adopt the rent-seeking role to the cost of tax-payers. All this does is entrench government distortion of markets by allowing large corporations to support government generated market positions by some of these businesses.

I suspect that in the future voters and the public in general is going to have to be a lot better informed about these connivances, as I think they will become more complex and sophisticated in the future and therefore much harder to spot.

Easier to nip in the bud now before it ever gets a life of its own.

5 Mark Van Schuyver { 01.26.10 at 11:56 pm }

Nice post. Thanks Robert. As you know we are big fans of your work.

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