Archive for May, 2011

Who drives regulation?

May 2, 2011

In a framework where issues must be black and white with no shades of gray, it may make sense from a progressive perspective that any form of regulation on business enacted by government is a “win” on behalf of workers and consumers. However, in the current age when we often hear politicians discuss deregulation, it is important to understand how reality is much more complex than this.

For example, the Sherman Antitrust Act of 1890 made it illegal to form a “combination or conspiracy” to restrain trade in interstate or foreign commerce. However, the U.S. Supreme Court interpreted the act in such a way as to make it largely harmless with decisions like U.S. v. E.C. Knight Co. in 1895, which held that a monopoly in sugar refining was a monopoly in manufacturing, not commerce, and, thus, could not be regulated through the Sherman Act. During the “progressive era,” meanwhile, Teddy Roosevelt gained a reputation as the “trust-buster” and signed into law such legislation as the Meat Inspection Act, the Hepburn Act to regulate railroads and pipelines, and the Pure Food and Drug Act.1

So, were such cases of regulation “wins” for workers and consumers? Well, certainly many citizens benefited to some extent from these changes. Were these new regulations “losses” for corporations? Well, certainly some corporate elites opposed such regulation. However, in some ways, the reforms of this era were an attempt at achieving stability after the financial panic of 1907, while perhaps being sped up by the growing strength of the Socialist party, the IWW, and other trade unions. As opposed to fighting against regulation, it was a “qualitative shift in outlook” toward “enticements and compromises” among many corporate elites2 that facilitated Roosevelt’s partnership with business leaders to guide relatively modest reform. As Roosevelt explained about his reform strategy to his concerned brother-in-law on Wall Street, “I intend to be most conservative, but in the interests of the corporations themselves and above all in the interests of the country” (p. 351).1 In other words, many reforms of this era can be viewed as proactive measures crafted by corporate and political elites working together in an attempt to achieve stability and ward off the potential for more radical reforms that might be forced upon them if workers organizations continued to gain momentum.

The self-regulation of markets by corporate elites is noted by David Harvey, who explains that “unbridled competition among the capitalists has the potential to destroy the work force, the very source of surplus value itself. From time to time, the capitalists must in their own interest constitute themselves as a class and put limits upon the extent of their own competition” (p. 30).3 He notes that Marx interpreted the early English factory acts as an attempt “made by a state that is ruled by capitalists and landlord” to “curb the passion for a limitless draining of labour power” which had “torn up by the roots the living force of the nation.”4 Harvey suggests, “there is, then, a distinction – often rather hazy – between regulation of this sort and regulation obtained through victories of the working class and its allies in the struggle to obtain a reasonable working day” (p. 30).3 Such complexities are important to consider as we think about regulation in the 21st century and ask questions such as: when republicans and democrats “battle” over reform, does one party represent the interests of corporations and the other the interests of workers, or do the two parties represent slightly different strategies for continuing the conditions for maximum corporate accumulation?

Sports Connection: The NCAA is, perhaps, a useful case study in self-regulation. The NCAA formed, in effect, when Teddy Roosevelt threatened to intervene in college sports if changes were not made (he had summoned college athletics leaders to two White House conferences to encourage reform). In order to ward off external regulations that might be placed upon college athletics from the outside, 62 colleges and universities formed the Intercollegiate Athletic Association of the United States (precursor to the NCAA) in 1906.

References:

1. Zinn, H. (2003). A people’s history of the United States: 1942-present. New York: HarperCollins.
2. Wiebe, R. H. (1966). The search for order, 1877-1920. New York: Hill & Wang.
3. Harvey, D. (2006). The limits to capital (new and fully updated edition). New York: Verso.
4. Marx, K. (1887). Capital: vol. 1.

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