Finger on the Scale

By Patrick J. Deneen for FRONT PORCH REPUBLIC

It’s often asked by more practical-minded readers “so what’s the point”? What is to be done? After all the theory, what practical recommendations can FPR offer by way of encouraging “limits, place, liberty”?

An article in this past Sunday’s “Outlook” section of the Washington Post offered a glimpse into one issue that would go a long way toward the restoration of localities and certain attendant virtues in American life today. Barry Lynn of the New America Foundation and author of Cornered: The New Monopoly Capitalism and the Economics of Destruction, authored a lead article in Sunday’s Washington Post noting the precipitous decline in small-scale business ownership in America over the past thirty years. In a lament that could easily be found elsewhere on FPR, he wrote,

Where the independent pharmacist counted pills, we see a CVS employee. Where family livestock farms dotted the landscape, we see immense operations run by Smithfield and Tyson. Where the buttonmakers of New York and Los Angeles sold their wares, we see the imported products of Li & Fung. Where our community bank stood, we see Bank of America. Where the local grocer marketed local fruit, we see Wal-Mart. Where the local general-merchandise store stacked jeans, we see, well, Wal-Mart again.

Lynn notes several pieces of data that focus the mind: America is second-to-last among the world’s 77 richest nations (only leading Luxembourg) in small-business ownership, and over the past 50 years, self-employment in non-farm businesses has fallen by 50 percent.

Writes Lynn,

Ask an economist why so many small businesses have given way to giant chains, and you’ll hear a lecture on the dynamics of capitalism and free markets, and how the creative destruction of small, independent businesses is a natural and benign process. Yet specific political moves and decisions in Washington over the past several decades have made it much easier for the people who control large-scale corporations to displace small proprietors.

Lynn goes on to discuss some specific political policies that will doubtless make some on the Right cringe, including lax enforcement of Anti-trust measures; he also offers a dubious evaluation of the role of “populists” in the FDR and Truman administration in their embrace of centralization of economic power (I’d need to hear more about his definition of the word “populist”). I’d counter that, according to Amity Schlaes in her fine book The Forgotten Man, it was New Deal policy that systematically favored big business over small scale ownership; FDR and his brain trust realized that it was much easier to regulate big private entities, and big private entities came to realize that burdensome regulation actually gave them competitive advantage, since large scale operations could use efficiencies of scale and simple bigness to comply with red tape, while enjoying healthy access in the process of the writing of regulation.

But, one aspect of Lynn’s analysis rings particularly true: in the 1980s, “instead of protecting competitive markets, Reagan officials said they would use anti-monopoly laws to promote ‘consumer welfare,’ which they defined largely as lower prices. It no longer mattered how much power was consolidated, as long as the consolidation appeared to result in the delivery of less-expensive goods.”

We have seen the aftermath of these policies: the destruction of small businesses throughout America, and a corresponding economic crisis in which disconnection, irresponsibility, and the decline of accountability fostered bad behavior throughout the American economic system. As William O. Douglas wrote (cited by Lynn), “When independents are swallowed up by the trusts and entrepreneurs become employees of absentee owners,” [the result] “is a serious loss in citizenship. Local leadership is diluted. He who was a leader in the village becomes dependent on outsiders for his action and policy.”

For FPR sympathizers with a policy interest, this is one area needing sustained attention and examination and specific policy recommendations. It is an issue over which both Left and at least some on the Right can agree, even if specific policy recommendations are likely to be debated. However, perhaps it would not be too difficult to begin looking at systematic ways in which current policy supports concentrated economic power, and to begin its dismantling. It may also be that Government needs to be more active in enforcing anti-trust measures. The Republican orthodoxy will scream that such activity is an intrusion of “Gummint,” but it’s clear that Gummint has already intruded in this area, and is doing tremendous damage to the fabric of the nation (the Republican orthodoxy’s ecstasy in the wake of the recent Supreme Court decision that ensures unlimited corporate participation in our electoral process does not inspire confidence about their motives). Perhaps some log-rolling is in order: in exchange for a serious consideration about the disproportionate impact of regulation on differently scaled businesses, a sustained look at anti-trust enforcement could be considered. Or, more creatively still, legislators should read Allan Carlson’s Third Ways, and specifically his chapter on Chesterbelloc, for some innovative ideas on how to protect individually-owned businesses from the depredations of concentrated private power. We will differ even here on how much of a role the Gummint should have in tipping the scales, but it’s quite clear that the scales have already been considerably tipped, and that American towns, citizenship, and virtue have all suffered as a result – and that finally cheap prices are too high a price to pay.

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