Challenging Corporate Efficiency
LEKACHMAN, ROBERT
Challenging Corporate Efficiency Our Overloaded Economy By Wallace C. Peterson M.E. Sharpe. 240 pp. $14.50. Reviewed by Robert Lekachman A lonely liberal voice in the intractably conservative...
...There really will be life after Reagan...
...The school's founder was Thorstein Veblen, and his most influential disciples John R. Commons and Selig Perlman flourished during the 1920s and '30s under the patronage of the LaFollettes in the hospitable environment of the University of Wisconsin...
...Institutionalists differ from conventional economists in numerous ways...
...At the same time, corporate marketing and advertising strategies engender public demand for all sorts of dubious toys, trinkets, beauty aids, guides to health, and clothing fads...
...Corporate power is in fact hostile to efficiency...
...What should be done...
...Like a great many others, he wants to junk our baroque tax code and substitute, as the financing source of public employment, a Credit Income Tax...
...I wish he had taken the next step and uttered the subversive words...
...Its central elements are a flat rate tax on income from all sources and a tax credit adjusted to family size...
...They start with salutary skepticism about the wonders of allegedly competitive markets, the very staff of intellectual life in our graduate schools...
...The diagnosis hinges upon a well-argued connection between the worsening wage-price spiral of the last two decades and the linked phenomena of corporate concentration and gross maldistribution of income and wealth...
...The moral is inescapable that public employment is a continuing necessity...
...Aggravating the problem is the Fortune 500's interest in intricate financial maneuvers, excessive executive emoluments and inventive product promotions, rather than the research and development essential to sustained growth...
...In disdaining innovation, they slow the productivity improvements out of which rising living standards emerge...
...To advocate full employment, egalitarian redistribution and public restraint upon our rapacious corporations is implicitly to endorse some variety of democratic planning...
...A decent society offers its citizens useful work...
...Focusing upon corporate power and the judicial system that sanctions its exercise, they are inclined to criticize inequalities of income and wealth on grounds of efficiency as well as equity...
...These in turn generate new wage demands, a second round of price rises, and so on...
...Peterson demonstrates accurately that the private economy has utterly failed to hit the target of high employment rhetorically proclaimed by the 1946 Employment Act and the 1978 Humphrey-Hawkins Full Employment and Balanced Growth Act...
...In themeanwhile, I recommend this highly intelligent guide to a fairer and more efficient American economy...
...In the automobile industry, to choose a glaring example, General Motors the dominant firm??has stubbornly refused to cut prices after three calamitous sales years...
...On the crucial issue of public control of the corporate sector, though, he is disappointingly vague and general...
...Never, it need scarcely be said, have money and political power embraced themselves more affectionately than in the Reagan era...
...Peterson endorses permanent price controls over industries where market power is concentrated a specification met by most of manufacturing and much of the financial sector...
...Further, where two or three large enterprises dominate their industry, they more frequently resist technological progress than promote it as in the case of steel...
...If I have any serious reservation about Peterson's reform agenda, it is that he stops short of its full implications...
...Two of the enduring New Deal innovations, the Social Security Act and the National Labor Relations Act, were based on Wisconsin models shaped by the state's resident Institutionalists...
...Peterson approvingly quotes Michael Harrington's demand for "redefinition of the institutional limits of the public and private sectors...
...Like his predecessors, Peterson thinks of economics as above all a guide to public policy...
...And because income is so unevenly distributed, ordinary wage slaves press for gains that the inefficient corporate sector cannot grant without inflationary price hikes...
...Reviewed by Robert Lekachman A lonely liberal voice in the intractably conservative state of Nebraska, Wallace C. Peterson writes in the honorable tradition of American Institu-tionalism...
...With luck, voices like Peterson's will be heard as soon as a dazed and frightened public wakes up to the existence of genuine alternatives to supply-side snake oil...
...On ethical, political and economic grounds, he eloquently sets out the case for diminished inequality, citing Kenneth Arrow, Stanford's Nobel laureate, to the effect that "a redistribution of income, to the extent that it reduces the freedom of the rich [which it does], equally increases that of the poor...
...The culture it has spawned has generated human yearnings that cannot be fulfilled in part because the financial resources to gratify them are poorly divided among Americans...
...Institutionalist influence upon public policy in the past, if not the present, has been substantial...
...In clear and cogent language, he advances a diagnosis of economic malaise and a set of sensible prescriptions for its alleviation...
...Although as Peterson concedes, the statistical correlation between corporate elephantiasis and escalating inflation is less than compelling, concentration of market power contributes to inflation in ways that elude quantitative measurement...
Vol. 65 • June 1982 • No. 12
