One Market under God: Extreme Capitalism, Market Populism, and the End of Economic Democracy

Getting to Yes

The Architecture of a New Consensus

American industry—the whole capitalist system—lives in the shadow of a volcano. That volcano is public opinion. It is in eruption. Within an incredibly short time it will destroy business or it will save it.

—PR man Carl Byoir, 1938

I am a revolutionary, as you may know.

—John S. Reed, CEO of Citicorp, 1999

Let Us Build Us a Bill Gates

It was the age of the focus group, of the vox populi transformed into flesh, descended to earth and holding forth majestically in poll results, in town hall meetings, in brand loyalty demographics, in e-mail bulletin boards, in website hits, in browser traffic. The people's voice was heard at last, their verdict printed in a full-color chart on page one. The CEO was down from his boardroom and taking questions at the empowerment seminar; the senator was pointing out a family farmer right there in the audience; the first lady was on a "listening tour," the anchorman was keeping an anxious eye on the chat-room. The president himself was "putting people first"; was getting down at a "people's inaugural"; was honoring our values at "town meetings"; was wandering among us in a humble tour bus; was proving his affection for us with heroic feats of consumption—an endless succession of Big Macs, apple pies entire.

For all that, the formalities of democracy seemed to hold little charm for We the People in the 1990s. Election turnouts dwindled through the decade, hitting another humiliating new low every couple of years. Any cynic could tell you the reason why: Politics had once again become a sport of kings, with "soft money" and corporate contributions, spun into the pure gold of TV advertising, purchasing results for the billionaires' favorites as effectively as had the simple payoffs of the age of boodle. For those who could show us the money, to use one of the era's favorite expressions, there were vacancies in the Lincoln Bedroom, coffee klatches with the commander-in-chief, special subsidies of their very own. We voted less and less, and the much-discussed price tags of electoral victory soared like the Nasdaq.

Maybe the amounts our corporate friends were spending to court us should have been a source of national pride; maybe those massive sums constituted a sort of democratic triumph all by themselves. Certainly everything else that money touched in the nineties shined with a kind of populist glow. In the eighties, maybe, money had been an evil thing, a tool of demonic coke-snorting vanity, of hostile takeovers and S and L ripoffs. But something fundamental had changed since then, we were told: Our billionaires were no longer slave-driving martinets or pump-and-dump Wall Street manipulators. They were people's plutocrats, doing without tie and suit, chatting easily with the rank-and-file, building the new superstore just for us, seeing to it that the customer was served, wearing name tags on their work-shirts, pushing the stock prices up benevolently this time, making sure we all got to share in the profit-taking and that even the hindest hindmost got out with his or her percentage intact. These billionaires were autographing workers' hardhats out at the new plant in Coffeyville; they were stepping right up to the podium and reciting Beatles lyrics for the cameras; they were giddy with excitement; they were even allowing all people everywhere to enjoy life with them via their greatest gift of all—the World Wide Web. Maybe what our greatest popular social theorist, George Gilder, had said about them all those years ago was finally true: "It is the entrepreneurs who know the rules of the world and the laws of God."

Or maybe Gilder didn't go far enough. Stay tuned for a while longer and you would see the populist entrepreneurs portrayed as something not far removed from the Almighty Himself. In a 1998 commercial for IBM's Lotus division that danced across TV screens to the tune of REM's Nietzschean anthem, "I Am Superman," great throngs of humanity were shown going nobly about their business while a tiny caption asked, "Who is everywhere?" In the response, IBM identified itself both with the great People and the name of God as revealed to Moses: The words "I Am" scrawled roughly on a piece of cardboard and held aloft from amid the madding crowd. The questions continued, running down the list from omnipresence to omniscience and omnipotence—"Who is aware?," "Who is powerful?"—while the hallowed scenes of entrepreneurial achievement pulsated by: an American business district, a Chinese garment factory, a microchip assembly room, and, finally, the seat of divine judgment itself, the trading floor of the New York Stock Exchange. "I can do anything," sang a winsome computer voice.

If there was something breathtaking about the presumption of this particular bit of corporate autodeification, this conflation of God, IBM, and the People, there was also something remarkably normal about it. Americans had already made best-sellers of books like God Wants You to be Rich and Jesus, CEO. The paintings of Thomas Kincade, the decade's greatest master of kitsch (and a man who actually trademarked a description of himself—"painter of light"), freely mixed heavy-handed religious symbolism with the accoutrements of great wealth, plunking Bible references down alongside glowing mansions and colorful gazebos. "The Market's Will Be Done" was the title Tom Peters, guru of gurus, chose for a chapter of his best-selling 1992 management book, while techno-ecstatic Kevin Kelly, whose 1994 book, Out of Control, was a sustained effort to confuse divinity with technology, referred quite confidently to a list of New Economy pointers he had come up with as "The Nine Laws of God." The heavens seemed even closer as the decade progressed and the surly bonds of the "Old Economy" slipped away. The publisher of Fast Company, a magazine dealing in the apotheosis of the new breed of corporate leaders, described his publication in 1999 as "a religion"; one Morgan Stanley analyst was routinely referred to in print as "the Internet Goddess" (her "embrace" of a company was described by one magazine as "a laying on of hands"); a much-discussed online operation matched "angel" investors with thankful startups in a cyber-space called "Heaven"; ads for the GoTo search engine showed Muslims at prayer and suggested that such a "loyal following" could be yours as well were you to patronize their product; and advertisements for Ericsson cellphones insisted that the product conferred powers of omnipresence: "You Are Everywhere."

So pervasive did the business-as-God routine become that in 1999 the Merrill Lynch brokerage actually ran commercials seeking to correct an apparent heresy in the new faith. Reminding us that however wonderful computers might be they had still been constructed by Business Man in his own image, the brokerage admonished us to get our theology straight: we were to "admire machines" but "worship their inventors."

This was something far beyond simply being "bullish on America." It was as though the good people of Merrill Lynch, IBM, and their fellow worshipers, standing at the millennium's end, could look back over the entire sweep of human struggle and see they themselves at its climax, its very peak. They were supermen, indeed, presiding over an era of historical advance so rapid, of change so profound, that it constituted nothing less than a "New Economy," a magic time in which the ancient laws of exchange, of supply and demand, had been repealed at last. From the rousing op-eds of Wired and Forbes, from CEO conference calls, from the bubbling announcements on CNBC, from the ecstatic babel of motivational seminars, came word of the miraculous advance: Through feats of sheer positive thinking, Business Man had overturned the principles of accounting, had smashed the barriers of price-to-earnings, had redrawn the map of competition, had thrown off the dead hand of the physical world! The country's gross national product, we exulted, weighed less than ever before! We dealt in ideas rather than things! And just as the laws of Newton had given way to those of the microchip, so scarcity itself, the curse of the material world, had been overcome once and for all. Not even the Fed could call the New Economy back to earth. We were, as one pop-economics title put it, Living on Thin Air.

The race was on to describe an achievement we believed to outrank any in human history, to hail the achievements of Business Man in the most grandiose possible terms. "Is this a great time or what?" asked a series of 1996 commercials for telecom giant MCI. "Let us celebrate an American triumph," thundered a Mort Zuckerman editorial early the next year in US News and World Report, a "triumph" based on the solid rock of pro-business political principle: "privatize, deregulate, and do not interfere with the market." And as the logic of the New Economy spread over all things, the imperatives of Business Man inundated every other way of imagining the world. "Everything is now thought of as a business of a sort," wrote management theorist Charles Handy in 1994. "We are all 'in business' these days, be we doctor or priest, professor or charity-worker." This was not just metaphor, either. As the Dow mounted higher and the startups soared, every avenue of inquiry found its appointed role in the new order. A 1999 story in an Internet trade journal instructed startup entrepreneurs on how to coax peak performances from a stable of nominally independent intellectuals, the sort of respected thinkers who could send a company's IPO through the ceiling by enthusing about it energetically enough. In addition to a venture capitalist (always referred to in such places as "VC") and a lawyer, entrepreneurs were advised to retain the services of a "pundit," a "journalist," and an "academic," manipulating each of these value-building experts by seeing to it that they understood the place of your enterprise in their own visions of the New Economy future. All the seers and eggheads of the world would have to puff in unison if your IPO was to net you the millions you desire.

New Economy thinking expanded geographically as well. Just as Americans had once looked to Japan for the secrets of prosperity, now we demanded that other nations follow our lead. America's business thinkers confidently diagnosed the economic ailments of their competitors and announced their findings at one international summit after another: While in America business could proudly announce "I Am," in Europe and Japan it was "held back," as journalist Louis Uchitelle summarized the conventional thinking, "by uniform pay scales, strong unions, generous unemployment insurance, costly benefits, and anti-efficient regulations. . . ." One memorable incident, at a meeting of economic policy-makers from the largest industrialized countries that was held in Denver in June 1997, signaled the new mood. President Clinton and Larry Summers, then deputy secretary of the treasury, seized the occasion to tell the world about the miraculous new American way. They handed out pairs of cowboy boots and proceeded to entertain the foreigners with what the Financial Times called a steady diet of "effusive self-praise" spiced with occasional "harsh words . . . for the rigidities of French and European markets." Don your boots and down with France!

Many statistical measures could be used to compare the triumphs of New Economy America to the floundering old economies of Europe and Japan: American productivity was up (at least it was in the second half of 1999), American growth was up, American stock markets were way, way, way up. Perhaps the most important markers of American uniqueness, though, were the different ways in which this New Economy chose to dole out the benefits of prosperity to different social classes. For the majority of American workers, wages through the nineties either fell or barely kept pace with inflation. But for top corporate executives these really were years in which to stand up and say "I Am." According to Business Week magazine, CEO compensation during the decade went from 85 times more than what average blue-collar employees received in 1990 to some four hundred and seventy-five times what blue collar workers received in 1999. In Japan, meanwhile, that multiple stood at about 11 times and in Britain, the country most enamored of New Economy principles after the US itself, only 24 times. And these were average numbers, remember. Some chief executives did far better: In 1997, Jack Welch, the much-revered CEO of General Electric, was paid some 1,400 times the average wage earned by his blue-collar workers in the US—and 9,571 times the average wage earned by Mexican industrial workers, who made up an increasing percentage of the GE workforce as production was moved to the region just across the border.

What was true for CEOs was also true for the social class to which they belonged. The wealth of America's most privileged ballooned during the age of Clinton. Thanks to the feats of the Dow, the country's richest 1 percent found themselves happily holding an estimated 40.1 percent of the country's wealth in 1997, up from 35.7 percent in 1989 (and from only 20.5 percent in 1979). By the third year of the Man from Hope's first term, the country's next richest 9 percent were the proud owners of 33.3 percent of the nation's wealth. Measured according to the more comprehensive standard of inequality known as the "Gini Index," the US was achieving levels of wealth polarization both unique among industrialized nations and, according to economics writer Doug Henwood, not seen on these shores since the 1920s.

But what made the new draughts of wealth especially sweet was the exclusion of the bulk of the population from the boom times. This was most definitely not a matter of bad luck: While the inevitable trickle-down had its predictable effects (booming service industries, great innovation in luxury products, the return of servants to the homes of the rich), many of the usual mechanisms that allowed workers to participate in boom economies had been shut down. For the boldest American thinkers this was an integral part of the "New Economy," one of the things that made it "new." Stock markets, now enthroned as the judge of all economic value, massively rewarded those companies and those CEOs most ruthlessly committed to laying off great swathes of their workforce. Or take the nation's productivity figures, of which so much was made in the late nineties. Before the nineties, productivity had been a meaningful measure precisely because it signified real economic advances for the entire population. Growing productivity was, in fact, just about the only condition under which neoclassical economics was willing to acknowledge that wage increases were justified. But while productivity numbers in the final years of the decade grew at rates not seen since the 1960s, what put them on the front page and made them the subject of breathless commentary in Wired and on CNBC was that this connection to higher wages no longer seemed to exist. Wages remained stagnant even while productivity increased; the advances were funneled directly into stock prices. This was the reason productivity announcements in the late nineties were greeted with such jubilation: The people who got richer as workers became more productive were stockholders.