• Email
  • Single Page
  • Print

The Refined and the Crude

The Control of Oil

by John M. Blair
Pantheon, 441 pp., $15.00

I

Until about thirty years ago the primary object of economic criticism in the United States was the labor union; it resisted innovation, raised costs, subjected the community to the inconvenience of strikes, and was in highly unauthorized possession of an essentially public power. There are still echoes of these attitudes in the contemporary assertions that police, firemen, sanitation workers, and those who live on pensions are getting rich at the public expense. But, overwhelmingly, the modern focus of critical discussion is on the great corporation. There is a continuing cold war between the large corporation and its critics, and the terms of this conflict, which are very little examined by either the participants or others, are worth some thought.

Only people of exceptionally simple view, or with a highly developed capacity either for ignoring circumstance or adjusting belief to their personal pecuniary interest, suppose that the corporate and the general public purpose always coincide. There must be areas of common advantage; were it otherwise, we would hardly survive, for a handful of giant corporations—as a working figure, 2,000 is roughly right—supply around half of all privately produced goods and services. But to imagine that the men who run Exxon, GM, ITT, or Lockheed have only the aims of the average citizen in mind requires either extensive conditioning by standard text-book teaching in economics or a notable capacity for illusion. That so many rise to the requisite self-deception does not make the divergence in interest any less real. It is this divergence that sustains the conflict between the corporation and its critics.

All critics of the corporation—all who speak for the “public interest” or believe that they do—agree that the corporate advantage is enormous. It has great numbers of people on its payroll and at its call. It has access to vast sums of money. It has something yet more important, which is the ability to specify the respectable view. No editor or columnist ever gets accused of irresponsibility or radicalism by taking a position that accords with the needs or wishes of the high members of the corporate technostructure. Any professional economist who does so with some appearance of scholarly competence will, if noticed, enjoy a brief burst of business applause and be eligible for a modest though not trivial subsidy as a consultant, convention oracle, witness in an antitrust case, or, at the highest level, a member of a board of directors. (Oddly, in doing these things he invariably prepares himself for professional oblivion, for it quickly becomes known that his thoughts are in the service of his pay. But that is another story.)

Finally there is the dependence of press and commercial vision on corporate advertising and of politicians and public officials on business subsidy. The Nixon administration, with its paradoxical commitment to reform, made corporate purchase of politicians and political parties so flagrant that what had been an accepted abuse is now limited to what can be had for love or up to $1,000. But no one can believe that the political power of the great corporation has, by this reform, been dissipated or perhaps much reduced. It would be hard to imagine a public and political position seemingly more unassailable than that of the large corporate enterprise. Those who challenge that power have, in consequence, an unwavering belief in their own bravery and sometimes a rewarding sense of martyrdom. The opposition they face is, indeed, formidable and with a great capacity to survive even telling criticism. Yet the contest is not quite as unequal as the critics of the corporation so pleasurably assume.

Evidence on this point begins with the oral literature of the American corporate executive. It is replete with self-pity. There is possibly no group of people anywhere in the world who, having food, shelter, and medical care, complain more persistently, plaintively, and even pathologically of the unfairness with which they are treated or of the depths of the misunderstanding to which they are subject. And none at all, if business executives be taken at their word, has such a highly developed sense of economic peril.

Executives, older ones I judge more than younger, rarely meet except to warn each other of the malignancy by which they are surrounded. This sense of extreme vulnerability lies behind the persistent efforts to educate the American people in the nature and fundamentals of the economic system, an educated person being one who takes a benign view of the modern corporation. The hilarious current collaboration between the United States Department of Commerce and the Advertising Council to explain the approved concept of free enterprise is, by a wide margin, Governor Carter’s most bizarre inheritance from the Ford-Simon-Greenspan Gestalt.

The book by John Blair, to which in due course I will come, is concerned with the corporations that discover, recover, transport, refine, and market oil and its products. They are, it holds (and I agree), the most powerful of all business corporations, and the largest and most potent of these (and in assets the largest industrial corporation in the world) is Exxon, née Jersey Standard. Coming frequently into this account is M.A. Wright in his capacity as chairman of Exxon, USA. Two or three years ago, in a widely circulated pamphlet which he wrote or anyhow signed, Mr. Wright was apocalyptic, despairing: “Let there be no mistake: an attack is being mounted on the private enterprise system in the US. The life of that system is at stake.”

He went on to the reasons: People were being lured into “consumerism”; businessmen were too busy producing goods to see what was happening to them; the people, damn them, did not understand “the role of profit or the free market.” (Make note of that reference to the free market.) Turning to the political position of the oil industry, he observed that only two senators, James Buckley of New York and Paul Fannin of Arizona, out of the hundred (pessimism surely got out of hand here) could be relied upon to see economic truth as did the oil companies. Such was the state of mind—the sense of power and security—in the executive suite of the world’s most powerful corporation, and before, it should be added, age and the voters had combined in the best tradition of service to the Republic to delete both Fannin and Buckley.

Some of the complaint of the corporate executive arises not from a sense of vulnerability but from amazement and anger over what may be called unappreciated preeminence. The corporate president or chairman has reached the top of a huge organization—before all the world, he is a proven success. He enjoys the respect and on occasion the obeisance of a large army of subordinates. And he finds his view of the economic society in which he excels not only not accepted but challenged and on occasion scorned. And such criticism, always, comes from people of lesser achievement, experience, and income as well as of indifferent tailoring and maybe even deficient personal hygiene. Thus, and one must truly sympathize, some of the hurt tone in, as it is called, executive “communication.”

But more of this tone has a genuine basis of alarm, and it arises from the profound strategic weakness of the corporation’s defense of itself. That involves a compulsion—and I use the word advisedly—always to take a stand on the patently absurd. It is this corporate instinct for absurdity that makes the contest between the corporation and its critics far more nearly equal than the latter, at least, ever imagine.

The defense of the great corporation is rarely if ever that it uses its power to good purpose. It is always that it has no power. Economically it is subordinate to the market—as Mr. Wright automatically averred when speaking of the most improbable case. Being subordinate to the market, the corporation has no control over prices, or its production, or its product mix, or the prices it pays, or its profits. Product design is what the customer wants. No real discretion exists in the distribution of earnings or over investment decisions. In politics it has the citizens’ right of petition, and, on occasion, it must take its case to the public. But that is because legislators and the people at large do not understand the constraints imposed by the market—how the market system imposes a righteous discipline with which government must not as a matter of high principle ever interfere.

For an American corporation executive to concede the exercise of power for corporate purposes is virtually unthinkable. He never in public and not often in private agrees that his firm, in explicit or tacit association with others, has control over prices; or that it can, if it wills, bring substantial power to bear on suppliers; or that it sets a target level of profit which, more often than not, it is able to meet; or that it owns legislators less obtrusively compliant than Buckley and Fannin; or that it is even better served by a symbiotic association with people in the Pentagon or the regulatory agencies; or that it has a foreign policy and that this, in the manner of Lockheed or the oil companies, has no necessary alignment with that of the State Department.

And here is the fatal weakness. For it is known to everyone, including those who instruct the young to the contrary from the economic textbooks, that power is possessed by the large corporations, that its exercise is commonplace. And there is confirming evidence in the newspapers and on the networks every day; if influence on the press and television could suppress this information, there wouldn’t be too much left. The consequence is that the greatest corporation executive can be skewered even by an amateur, and since he is sometimes (though by no means always) pompous, dogmatic, or disposed to stand on his corporate dignity, this can be a pleasure. With no thought he always takes a position that allows of his impeachment by a myriad of his own past actions, or by those for which he has been responsible. And the public, having read or heard or experienced the actions—having seen prices increased by the steel companies over public objection, or having noticed an effort on television to persuade them to buy one product or another, or having heard of the contributions to CREEP, or having read of the inspired destabilization operations against friendly governments by Lockheed—is almost certain to believe that the critic is right. The corporation, he concludes, not surprisingly, must have had power to do what it did.

Were it the corporate defense that power over prices or the persuasion of consumers or even political influence is inescapably a counterpart of great size and that it is exercised with consummate wisdom for the public good, the critics of the corporation might have trouble. So long as the great men of the corporation argue that they have no power—that all authority lies with the market, the consumer, and the ballot box—they will be sitting ducks. Corporations will survive; their survival value, perhaps fortunately, is very high. But their critics will have the best of the play. And so lumbering, obtuse, or doctrinaire is the corporate perception of its economic role that this, one can be sure, will continue to be so.

  • Email
  • Single Page
  • Print