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Inequality.Org: Remembering the Moment Our CEOs Dug In


Forty years ago, U.S. corporate honchos saw their power ebbing away. So they did what corporate honchos always do. They asked for a memo.

-by Sam Pizzigati

August 30, 2011- A landmark historical anniversary passed by almost totally unnoticed last week. No front-page retrospective in a major daily newspaper. No ceremony in the White House Rose Garden. Not even a new postage stamp.

A postage stamp, to be sure, might have been a bit of a stretch. You can’t, after all, put a memo on a postage stamp. Not even a memo that helped change, 40 years ago this month, the course of modern U.S. history.

The writer of this memorable memo, Richmond attorney Lewis Powell, would later go on to national prominence as a U.S. Supreme Court justice. But Lewis Powell, back in August 1971, had no national general public presence.

Powell did have widespread respect within elite corporate circles. A former American Bar Association president, he served on top corporate boards — and had friends in pivotal places, like Eugene Sydnor, a mover and shaker at the U.S. Chamber of Commerce.

Powell and Sydnor, notes corporate watchdog Charlie Cray, shared a sense of impending doom. The American “free enterprise system,” they feared, faced an existential crisis. The enemies of that system would surely triumph — unless business mobilized, as never before, to meet the threat.

The Chamber’s Sydnor asked Powell for a memo that outlined what the Chamber could do to jumpstart a crusade to save free enterprise. Powell’s confidential August 23, 1971 response did just that.

Powell’s memo, reread today, can come across as wildly overheated and even, at times, laugh-out-loud paranoid.

Business confronts, Powell contends in the memo, critics “seeking insidiously” to “sabotage” free enterprise. “Extremists on the left,” he declares, have become “far more numerous, better financed, and increasingly are more welcomed and encouraged by other elements of society, than ever before in our history.”

With “extremists” and “social reformers” working ever more closely in concert, Powell’s memo laments, “individual freedom” itself may stand at risk.

In truth, “free enterprise” in America had faced significantly more threatening — and better organized — challenges before World War I and then again during the Great Depression. In 1971, those Powell labeled “extremists” had no significant political parties, as they had in earlier eras. And the social reformers of 1971, unlike their predecessors, rarely questioned any “free enterprise” basics.

But corporate leaders, Powell correctly understood, did face a hostile political environment in 1971. Progressives were making headway against tax breaks that benefit “only the rich, the owners of big companies,” as one Washington Post columnist put it. “Populist” tracts in mainstream magazines like New York were arguing that “the root need in our country is ‘to redistribute wealth.’”

“This setting of the ‘rich’ against the ‘poor,’ of business against the people,” Powell’s memo seethes, “is the cheapest and most dangerous kind of politics.”

Corporate America, Powell goes on to exhort, must respond with more than “appeasement, ineptitude, and ignoring the problem.” Business leaders must show more “stomach for hard-nose contest with their critics.” CEOs need to consider counterattacking “a primary responsibility of corporate management.”

Yet individual corporate leaders, Powell would acknowledge, can only do so much. An individual corporation, he understood, might be reluctant “to get too far out in front and to make itself too visible a target.” The answer?

“Strength lies in organization,” Powell’s would explain, “in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.”

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