Abstract
On the terrain of discourse, how do the problems of capitalism get addressed? A simple view treats businesses and corporate intellectuals as obstinate defenders of free markets and the profit motive pitted against radicals and reformists that aim to regulate firms from without. Christian Olaf Christiansen’s book Progressive Business provides an intellectual history of a third strand of ideas in America, which he terms “market reformism.” These ideas concern the ways business itself should “morally self-regulate” as a means to address the social problems that result when firms pursue profits alone.
The book argues that market reformist discourse and programs share three basic characteristics. First is the view that business alone should be responsible for ethically governing itself. Reform should be voluntary and a matter of self-regulation. Second is an ambivalence toward pursuing profits alone or at least to the detriment of the firm’s moral responsibility to a variety of stakeholders. And finally, market reformism is premised on the notion that capitalism can and should be a system that generates social harmony rather than persistent and endemic conflicts and competing class interests. But in taking a long historical view, roughly periodizing the book between 1870 and the present, Christiansen also shows how significantly market reformist ideas have changed over time.
Progressive Business does two things particularly well. First, by drawing from secondary histories and original texts, the book explores how key market reformists articulated their views, not simply on their own terms but in conversation with others about the role of business in society, its social responsibilities, and capitalism more broadly. Second, it chronicles how market reformist strands of thinking developed over time. In doing so, Christiansen shows that the notion of progressive business was especially important to the discourse about capitalism during three critical periods: the late nineteenth century (1870 to 1900), when it took a paternalistic form; the New Deal era (1930 to 1970), when thinkers turned toward managerialism; and the period of globalization and neoliberalism (1970 to present), when market reformism was framed in entrepreneurial terms.
In the period 1870 to 1900, the United States transitioned toward an economic system that more greatly relied on wage labor, large businesses, and nationally integrated markets. The book argues that a paternalistic market reformism emerged as a solution for businesses to the social ills this wrought, one that differed markedly from laissez-faire liberalism with its roots in social Darwinism. While early ideas of “socially responsible” business had European roots in thinkers like Robert Owen, in America, figures such as Washington Gladden—a church pastor and figure in the Social Gospel movement—were its early proponents. Market reformism of the period argued that business had a moral responsibility to workers that extended beyond a mere market wage.
Gladden was an early advocate for various kinds of industrial partnerships, like profit-sharing schemes, but ultimately argued for a system of cooperation and free enterprise based on Christian ethics. This became the intellectual basis for what came to be known as “welfare capitalism.” But as with the other periods, these ideas were contested. Some, like economist Richard T. Ely, heavily criticized experiments in actually existing market reformism, like the company town Pullman, as a form of corporate coercion, while others, such as William Graham Sumner, made their critiques from the laissez-faire right.
In the next period that Christiansen takes on, the 1930s to the 1960s, pro-capitalist intellectuals articulated a managerial form of market reformism, laying out new visions for an enlightened capitalism. For instance, former executive and organizational theorist Chester I. Barnard argued for industrial cooperation. At the center of his market reformism was a theory of organizations that viewed people as not simply motivated by self-gain and profit, but rather finding greater meaning in the purpose of the firm itself.
Somewhat similarly, organizational theorist Elton Mayo argued that the happiness of workers is related to their sense of belonging to a group. His studies helped to launch the “human relations” school of management, which applied psychological knowledge to understand how the workplace could be organized to generate greater productivity and to make it a more pleasant place to be, something Mayo argued was severely lacking in the scientific management theories of Frederick Winslow Taylor a few decades earlier. Much less dependent on a Christian framework of ethics, this management theory aimed to reshape the contentious employee-employer relationship into something more harmonious through changes at the workplace.
Finally, management thinker Peter F. Drucker began to explore the many societal stakes in the firm and the fact that while firms should actively pursue profits, they also serve a larger social role. Taking these strands of ideas together, against the idea of the “economic man,” in the mid-twentieth century market reformists argued that firms could be “soulful” institutions in society, with responsibilities to employers, consumers, and other community stakeholders.
In our most recent period, the 1970s to present, Christiansen argues that the business perspective in America cannot simply be reduced to neoliberalism. While many pro-capitalist thinkers latched on to the neoliberal ideas of prominent figures such as Friedrich Hayek and Milton Friedman, gesturing toward the power and importance of unregulated markets, somewhat counterintuitively Christiansen argues that new market reformist ideas germinated during this period as well. Management scholar Sumantra Ghoshal argued that the neoliberal version of business—in Friedman’s phrase, the business of business is business—had become a self-fulfilling prophesy, turning out business people from management schools that had simply left moral considerations out of their training. Ghoshal argued to reintroduce “humanism” into management and business schools.
During the same period, ideas about corporate social responsibility diffused across management schools. But overall, according to Christiansen, market reformism has become more entrepreneurial since the turn to the 1970s. This is best exemplified in the figure of Stephen R. Covey, author of the best-selling The Seven Habits of Highly Effective People. For Covey, individuals themselves—”self-made men”—were the agents of change, a marked break from a version of neoliberalism that required the whip of the market to drive business decisions.
The book unfolds as three episodes of a Polanyian double movement. Themes related to social protection in the face of market failure drive the story forward in each of the periods that Progressive Business considers. A key claim that underlies the book is that market reformist ideas were generated in a “context of conflicts”—not just intellectual but also economic and political. And indeed, Christiansen argues that market reformism helps to explain how business has regained its social legitimacy during periods in which social criticism of capitalism was particularly acute or at least ratcheting up.
But this claim is more speculative than proven. There is actually very little in Progressive Business about the economic and political context in which these debates raged and even less about the impact that these thinkers had on actual business practices. In fact, business itself is strangely hard to find. The story of the Pullman company town stands out as one of the few examples of an actual business putting market reformist ideas into practice. And it is hard to make the case that the Pullman Company was motivated by ethics and the Social Gospel rather than by the desire to control their workers and suppress democracy, as so much of the historiography on the town has argued. Even Richard T. Ely’s study at the time, which Christiansen cites extensively, points to this less-benevolent conclusion.
If Pullman was an example of earnest market reformism, it certainly didn’t seem to help capitalists regain social legitimacy at the workplace. Over 4,000 workers in the company town went on strike in 1894 and were supported by the American Railway Union’s President, Eugene Debs, who called for a boycott of their train cars. It is possible that welfare capitalism may have helped regain a broader social legitimacy for capitalism, but to demonstrate this would require further study and evidence of a different sort.
One also wonders if market reformist discourse is actually a distinct third strand. Alternatively, is it part and parcel of classical liberalism? The notion at the heart of market reformism that business should transform itself in the face of social problems seems to fundamentally underlay the laissez-faire, neoliberal view as well. And when reading the book, we can see the overlap between the two slowly emerge. As the ideas progress from paternalistic to managerial to entrepreneurial market reformism, their content comes to look more and more like classical liberalism.
All of this to say that Christiansen has written a fascinating intellectual history of the discourse and interpretive struggles of market reformism that should spur further research. My questions are the sort that sociological research in particular seems designed to take on. Is market reformism reactive to labor demands and social threats or is it responsive to social problems? Is its intention to preserve business or to preserve the social good? Under what conditions does market reformism take different forms? What is the relationship between the theory of market reformism, mostly from the writings of intellectuals, and actual business and managerial practice? How do market reformist ideas diffuse into practice, and why do they sometimes stagnate at the level of intellectual debate? Under what conditions are market reformist ideas effective at generating legitimacy for capitalism? Progressive Business brings up these questions for us to ponder along with many others. By focusing in depth on the key works of market reformism, the book will be of interest to anyone seeking to explore the moral and political debates over capitalism.