Rob Bradley Jr.'s Capitalism at Work offers a fascinating combination of business history, economic theory, business ethics, and moral philosophy. Maybe those topics don't sound fascinating, but by weaving his analysis in with American business history, past and present, readers gain insight into how the US economy really works.
Bradley argues that major corporate flameouts, from Samuel Insull at Chicago Edison to Ken Lay at Enron, involved more than just character flaws, incompetence, malfeasance, and arrogance. Each involved a corrupting network to government favors, subsidies, and protective regulations.
Especially today when another cohort of corrupted businesses, from Fannie Mae and Freddie Mac, to the Wall Street firms and big three automakers that have either been taken over, bailed out, or bankrupted, Bradley's episodes from business history help us put today's crises in historical perspective.
Bradley is an expert on the history of regulation in the energy industry, the author of Oil, Gas and Government: The U.S. Experience, and has lectured and written widely on energy economics and politics. He argues that much of the U.S. economic system is better understood as "political capitalism" rather than market capitalism. Government spending and regulation, at both the state and federal level, are such a key part of many industries, that any entrepreneur or firm thriving in these industries gains success as much by political capital and leverage as by physical capital or financial leverage.
Bradley observes that "the scope and scale of Enron's politically dependent profit centers was unprecedented." He further claims: "The story of Enron is one of the most important benchmarks in the history of mixed-economy capitalism." But most books, articles and movies about Enron have so far "only superficially probed into fundamental incentives and motivations..."
To explain and contrast market capitalism with political capitalism, Bradley draws upon the writings of Adam Smith, Samuel Smiles, and Ayn Rand. Few of us are familiar with Samuel Smiles, but his work on personal improvement is fascinating: "In the mid-1840s, Smiles saw a higher calling in empowering each person to improve his or her character. Government policy was important, but the individual was the mainspring of social progress and good government... Smiles's writings inspired thousands to take charge of their own lives, revisit their attitudes, refine their best efforts, and improve in the workplace."
After reviewing these three writers on what he calls "Heroic Capitalism" Bradley explores its shadow "Political Capitalism" in Part II "Business Opportunity, Political Opportunism." I remember meeting in Seattle a businessman who strongly advocated recycling. He spoke with passion and enthusiasm, but I noticed also that his firm had the contract to supply all the plastic recycling bins that would be mandated for city and county residents. It would be hard not to be excited about recycling when holding such a business opportunity. Bradley's overview of the views and theories of industrial organization show the shift from early personal improvement and entrepreneurship to later theories that offered a diminished role for laissez-faire.
Part III of Capitalism at Work drills into debates over Energy and Sustainability, and again, the historical perspective is fascinating. We find that recent debates over "Peak Oil" are similar to debates over a century earlier over "peak coal"--that is, fears that coal reserves would rapidly run out, throwing industrial economies into chaos. Perhaps because the energy industry has for so long been regulated, and because energy is so central to a modern economy, academics have written many books on energy issues--most calling for governments to strengthen regulations and empower academics to shape energy production and policy.
The energy and environmental regulation industry has evolved over the decades, from early Earth Day activities for school children, to today's demands for banishing coal plants and limiting or sequestering carbon dioxide. Readers of Capitalism at Work are given a walk town memory lane with sections on early players like Resources for the Future, E. F. Schumacher, Paul Ehrlich, ZPG, and events like Earth Day, and the publication of The Limits to Growth by the Club of Rome.
Next up is a chapter titled "The Dark Decade" on the disaster of US energy policies from Richard Nixon to Jimmy Carter. We read the views and fears of scholars, writers, and interest groups who shaped US energy policy over these years, and further distorted both the energy industry and the US economy.
It is hard to think of a better way to prepare ourselves for the coming years of political capitalism and further government intervention in energy and environmental policy, than by reading Bradley's "Capitalism at Work: Business, Government and Energy." Highly recommended.
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