The Power Problem
Gray, Horace M.
BOOKS The Power Problem by HORACE M. GRAY Qtarting with Veblen's institutional ^ theory of credit and capitalization, David T. Bazelon (The Paper Economy) defines the faith and practice of...
...neither the facile optimism and complacency of Berle nor the mordant pessimism and alarm-ism of Bazelon are justified...
...While it is true that both people and government tolerate, even create and subsidize, monopoly, this behavior tells us nothing about their real values...
...Rather, it is a symbol of "things hoped for, things not seen" a romantic illusion of capitalism, a product of imagination stimulated by avarice, or, in the formal technology of economics, "capitalized expectations...
...On his own premise, socialism would appear the logical answer, but he rejects this and, following Adolph Berle, settles for a Power Review Commission which would conduct a "running criticism" of corporate power but would have no authority to control or organize it...
...This is what happened in 1933 and has continued since...
...The power problem, as Bazelon demonstrates, is real and dangerous...
...The United States, he thinks, has achieved by empirical methods a more efficient, productive, and socially useful distribution, or balance, of power than any other country...
...How this powerless "Board of Higher Criticism" might stop the destructive process of capitalization, restrain the excesses of monopoly, or avert the impending crisis is not made clear...
...He no longer relies on the "corporate conscience" as an adequate safeguard against abuses of power, nor on some intellectual elite to determine the public consensus...
...both of the latter are now recognized as having some limited usefulness...
...On the contrary, if one believes, as this reviewer does, that society is master of its fate, that institutions and technology are susceptible to rational human control, then the way is open for solution of the power problem...
...The American economy is the most productive and beneficent on earth...
...the present distribution of power, contrary to Berle, is neither satisfactory nor durable...
...The "values of the culture," then, are the end product of the power system—by determined power rather than, as Berle suggests, free, independent variables...
...6.95...
...The Fates, he erroneously assumes, have decreed that Technology must be propitiated by the extreme concentration of economic power in great monopolistic organizations...
...of government itself...
...that industrial society must, therefore, move toward "a higher order of organization," toward further integration into a "permanent administered technological revolution," toward a system "nicely organized into one well meshed, producing-consuming unit...
...The responsibility for maintaining the most socially useful distribution of power rests squarely on the political state, which operates according to a democratically determined public consensus...
...Berle answers: by the processes of cultural relativism, the transcendental margin, and public consensus, operating through informal, democratic empiricism...
...In The American Economic Republic, Berle is more sanguine...
...247 pp...
...The same criticism lies against his use of the transcendental margin—ethical and social ideals...
...We can, in this event, escape both the status quo of Berle and the doom of Bazelon...
...The American Economic Republic, by Adolph A. Berle...
...When applied to America it is merely a Communist myth...
...By what means can these capitalized expectations, which transcend reality, possibly be validated...
...responsibility for the control of private power and for determining the public consensus rests with the democratic political state...
...This balance embraces a wide range of organizations from small, individual enterprises to giant corporations, the size in each instance being determined by the function to be performed...
...this fluid and dynamic situation institutional changes are urgent...
...The organization of economic power, he holds, is determined by the prevailing culture and by the social philosophy dominating it...
...This paper, in modern folklore, is "property...
...467 pp...
...This begs the whole question...
...The same, however, cannot be said for his appeal to the "values of the culture" as the ultimate determinant of concentration...
...4.50...
...It can change the structure of power, redirect resources, increase production, or modify the distribution of wealth and income as may be necessary to achieve desired social goals...
...Bazelon regards this last step as a very real danger unless action is taken soon to avert an impending crisis...
...Those familiar with Berle's previous work will note some significant changes...
...This system, Berle affirms, can produce whatever we desire, according to our values...
...Lacking any realistic theory of how monopoly is achieved and maintained, and appealing to the "values of the culture," Berle's argument, in the last analysis, comes down to mere justification of the status quo...
...Bazelon visualizes an impending crisis of power...
...he now concedes that technology is flexible and adaptive over time, and amenable to human control...
...The right "to emit bills of credit" is a general right, pertinent alike to individuals and giant corporations, and subject only to special restraint, as in the case of counterfeiters, bankers, blue sky operators, and the issuance of what Texans, with their flair for expressive language, call "penitentiary paper...
...the result is "the paper economy," after Proudhon...
...The transcendental margin—by which he means our ethical and social ideals—is a powerful, decisive force operative on the economy...
...Men, as the theory goes, capitalize everything in sight plus all they hope for in the future and then express this faith, or valuation, in symbolic forms— money, credit, debt, shares, and contracts...
...If, however, one succumbs to determinism—as both do in varying degrees, Bazelon more than Berle—and assumes that neither institutions nor technology are amenable to change, then the future is hopeless...
...The paper "property" thus generated bears no relation to reality— that is, to productive, physical capital...
...Harcourt, Brace and World...
...It is not at present a major threat...
...The concentration of economic power is no longer a problem: "Centralization of industrial economic power to a point when it could dominate the political state has been avoided...
...While still wary of concentrated political power, and solicitous to preserve non-statist centers of power, Berle recognizes that the central government must possess sufficient power to keep the system in balance and to direct it toward socially approved goals...
...From the Olympian heights which he loves to preempt, he surveys the American scene and finds it good...
...These are all improvements in the development of his thought...
...It ignores completely the underlying fact that for years Big Business has spent billions of dollars to inculcate these "values" among the people, and to corrupt and control the government...
...First, private business may resort to contrived, or artificial, scarcity via concentration and market control...
...There is nothing fixed or determined about it...
...This is strange doctrine coming from one who for years has criticized corporate power as dangerous, irresponsible, and illegitimate, and has sought to bring it under constitutional public control...
...Most important of all, he subordinates private economic power— its organization, distribution, and uses—to the service of humanistic ends that transcend purely materialistic considerations...
...How has this erstwhile formidable dragon of corporate power been reduced to impotence...
...But this also is futile because every favor of government—guarantee, give-away, protection, privilege, or subsidy—is immediately capitalized, thereby adding to the already mountainous accumulation of paper "property" and jeopardizing the financial integrity The Paper Economy, by David T. Bazelon, Random House...
...He still favors oligopoly, but his previous contempt for competition and anti-trust policy is somewhat abated...
...Dominance (by giant corporations) over the political state in major matters is not a present possibility...
...Hence, the paper economy faces a desperate and unremitting struggle to validate expectations, fulfill commitments, convert illusions into reality, and avoid bankruptcy...
...In general, our values being what they are, we have settled for oligopoly—not monopoly—as the most practicable form of organization in the large basic industries...
...it "structures the circumstances" by which men live...
...The system, then, is institutionally deterministic...
...Third, the illegitimate private power of Big Business and Finance, alarmed for its safety, may seize control of the political state, and unify private and public power under a fascist-military regime...
...While far from perfect, this balance, he finds, is reasonably satisfactory and consistent with the values of our culture...
...Monopoly Capitalism' is strictly a Communist phrase...
...Both are wrong...
...the process of its creation is "capitalization...
...Berle regards the power problem as settled, or stabilized...
...Under this dispensation there is created and set awash a great flood of "stamped paper," beautifully and, as fits the case, mystically inscribed, engraved, and embossed...
...on the contrary, it is subject to frequent shifts as functions and ideals may change...
...BOOKS The Power Problem by HORACE M. GRAY Qtarting with Veblen's institutional ^ theory of credit and capitalization, David T. Bazelon (The Paper Economy) defines the faith and practice of American capitalism...
...Second, government may intervene in the role of the Great Underwriter, or Guarantor, to validate these otherwise hopeless private expectations...
...At this critical juncture, however, Bazelon finds himself hopelessly trapped by another determinism— Technological Necessity...
...no mood of crisis troubles him...
...His original theory of monopoly—technological determinism— while not abandoned, is considerably muted...
...This approach, however, is futile because monopoly power is quickly capitalized, thereby generating a new flood of paper "property" and making the situation worse...
...He describes how government intervenes, on an ad hoc empirical basis, to maintain the balance of power within the system and to direct the economy toward goals consistent with prevailing values...
...Since, however, human capacity for self-delusion invariably outruns the reality of performance, the system is chronically burdened with "overcapitalization...
...Important and vital as these are, they cannot, as he affirms, exercise a decisive influence on the distribution of economic power when they are nullified or vitiated by the false values generated by private monopoly...
Vol. 27 • August 1963 • No. 8
