American Anti-Capitalist Exceptionalism

This story in the Houston Chronicle, “Law Makes It Easier to Blow Whistle on Corporate Crime,”  written by Philip Hilder, the lawyer for Enron “whistleblower” Sherron Watkins, explains (though not in so many words) how the new “whistleblower” provisions of Dodd-Frank will turn corporate employees into spies and bounty hunters.

One effect, he notes, is that employees will no longer report employee misbehavior to higher-ups but will immediately try to criminalize misbehavior in order to secure some big bucks. “The law's impact could be significant as companies may lose the opportunity to self-correct before a government investigation is launched. It is foreseeable that such an investigation could trigger shareholder or derivative lawsuits against the company. It is equally foreseeable that employees in Watkins' situation will now bypass company protocol and proceed to grab for the golden ring.”

Watching an anti-capitalist culture destroy capitalism can be a fascinating, if depressing, experience. A century ago, there were two “sophisticated” arguments against capitalism. (A) Capitalist companies, because they drain off money in the form of profits, are less productive than socialized companies. (B) Capitalist companies, because they seek to optimize profits, create inhumane lives for their workers--which socialized companies would not do. But as Stephen Hicks wrote in his book Explaining Postmodernism , both of these arguments had been effectively refuted by the 1950s, by which time people could compare life in capitalist countries with life under “real existing socialism.”

Yet alongside those two socio-economic critiques, there has always been a more popular and journalistic attack on capitalism: “Capitalists are essentially criminals. They do not care about other people’s rights, and they make money by cheating everybody around them: customers, competitors, and colleagues alike.” This view gave rise to the term “robber baron,” used to describe the greatest of capitalists. (The term seems to have been  coined in 1882 by Carl Schurz , who had been a revolutionary in the 1848 uprising in Germany and fled to America after its failure.) But the same conception of businessmen can be applied at all levels.

The logical step, for those who hold this view, is to start passing laws and regulations that forbid practices they take to be unjust or unseemly. But because business is such a dynamic and innovative activity, these legal attempts to domesticate it will inevitably produce more violations, more exposés, and a sense that business must be curbed still further--which produces more regulations, more violations, more exposés, etc. And to these violations will be attached ever greater penalties, inasmuch as earlier penalties failed to bring businessmen to heel. Meanwhile, the costs of obeying a multitude of regulations will give a great economic advantage to large corporations and thus undermine the competitive dynamism that makes capitalism so advantageous. And of course businessmen will try to shape the regulations by which they are bound—thus adding the accusation of political corruption to the other charges against business.

Yet one problem remains for those who seek to criminalize business: The economy is so vast and the number of regulators and prosecutors is so comparatively small. Now a remedy has been found in the bounty-hunter provisions of Dodd-Frank.

The result is that even in the destruction of capitalism America will likely proceed by a unique path. It began, back in the days of the muckrakers, by portraying free-wheeling capitalism as a violation of rights and fair play, thus invoking the American sense of justice rather than the European sense of envy. It continued, from the Sherman Act of 1890 to the Dodd-Frank Act of 2010, by vindicating rights and fair play through laws and courts, rather than through popular uprisings and street marches. Lastly, through the new whistleblower provisions, it seeks to mobilize a nation of spies through monetary incentives, not through secret police forces. If The Lives of Others (a film about the East German secret police) is ever adapted to post-capitalist America, it will not feature a Ministry of Culture and citizens will not be consumed by fear. It will feature the SEC and citizens will be cosumed by greed—a fitting end for the war on “greedy capitalists.”

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