Corporation the Role of Corporations

Corporation

The Role of Corporations in Modern America from the Great Depression to the Present

As early as 1920, President Calvin Coolidge was able to declare that the "chief business of America is business"(Bryant 1999). Beginning in the 1920s, after World War I, corporations were able to offer vast array of consumer goods to ordinary, middle-class Americans, spanning from automobiles to washing machines, radios, and refrigerators (Bryant 1998). Despite the stock market crash of 1929, the story of American business has continued to be one of increasing size and growth. Ever since the Great Depression and World War II large American corporations have continued to extend their outreach into every facet of modern commercial society. Although the federal government has attempted to regulate corporate practices, it has, at times also facilitated this expansion.

It is true that American corporations always tended to be large, even during the early wave of 19th century industrialism, as manifested in the large rail road, steel and oil industries. But the production demand of the Second World War followed by the downturn in European economic fortunes and coupled with America's relatively untouched infrastructure created a supremely dominant American world power in the 1950s. Ever since then, "the overwhelming reality about business in the United States is that it is heavily concentrated in organizations that are extraordinarily large. If 500 employees is taken as the cutoff point between small and large, then big companies account for about three-fifths of the nation's output and the proportion has been increasing slowly over the postwar period"(Samuelson 1983). While the concentration of specific industries did not immediately increase during the postwar era the corporations dominant in almost all industries did grow significantly larger as a whole.

Furthermore, the output of singular corporate entities began to grow more diversified. "As late as 1949, according to one study, roughly seventy percent of the nation's largest industrial firms were engaged in a single or dominant business. Twenty years later, that had declined to roughly a third"(Samuelson 1983). Perhaps the most obvious example of such diversification can be found in the persona of R.J.R. Nabisco. An individual vehemently opposed to smoking in the 1990s, who would not want to invest in a company that sells tobacco, might find him or herself unwittingly supporting the hateful industry when buying Nabisco products. R.J.R. Nabisco was formed when both the snack food company Nabisco and the tobacco company R.J.R. Reynolds merged, although it has since disbanded, showing how mergers can create unlikely production 'bedfellows.'

In contrast, before the Great Depression, the Ford Motor company, one of the most dominant companies in the nation, produced only Fords, and quite proudly, in any color, so long as the customer wanted the car in black. The need for increasingly large outlays of capital, increased size to enable costs of production to be met by large volumes of sales, and expanded consumer demand all created the rise of the mega-merger and the mega-corporation that produced a wide array of products under its logo.

It should be noted that the Great Depression and World War II did not simply bolster the economic power and strength of corporations, however. One of the goals of Franklin Delano Roosevelt was to check some of the power of corporations and to limit the abuses that had caused the stock market crash. "An important part of the second phase of the New Deal brought about an anti-monopoly philosophy," including an investigation of corporate price-fixing, the deliberate creation of scarcity on the part of some organizations, agreements between corporations not to compete, and in the abuse of patent laws"(Bryant 1998). However, the desire to limit the growth of industry power was superseded by the need to mobilize the nation for war. While before, during the 1920s, the numbers of manufacturing jobs had begun to abate, during World War II, manufacturing once again became a growth sector (Bryant 1999). What did emerge during World War II, was a desire upon the part of the federal government to control the production and shape of modern industries, and an acknowledge for some regulation of corporate efforts to serve the common good: "The federal government emerged from the war as a potent economic actor, able to regulate economic activity and to partially control the economy through spending and consumption. American industry was revitalized by the war, and many sectors were by 1945 either sharply oriented to defense production (for example, aerospace and electronics) or completely dependent on it (atomic energy)"(Tassava 2008).

The government took a new role in directing industry research in the case of atomic energy. This still exists today, as is manifest at pharmaceutical companies that fund private research but receive government research grants to embark upon initiatives deemed necessary for the public good, such as creating retroviral drugs to treat AIDS. Also, regarding the modern defense industry, private defense companies receive government contracts in another manifestation of the complementary relationship between government and big business that has existed since the Second World War mobilization.