Reading literature for pleasure and enlightenment entails a luxury of time and energy that was difficult to find in pre-pandemic times. Since March, however, I find myself scanning the New York Times Book Review for distraction from the pandemic and found there three seemingly unrelated books that caught my eye. But the power of literature is as much about what we extract from it through our own individual lens that creates synergistic insights as it is about the intent of the author.
My interest in Revolver: Sam Colt and the Six-Shooter that Changed America by Jim Rasenberger was to learn about the history of Hartford from the life of a native New Englander. Sam Colt was born in Hartford, built three factories while becoming the largest employer in the city, and played a critical role in the development of New England’s transformation of manufacturing from artisanal craft to industrial-scale production. Since colonial times, the production of everyday items made from metal was handcrafted by skilled workers. The unique combination of plentiful waterpower from New England’s rivers and the poor quality of soil for agriculture led to the development of towns throughout New England with factories and workforces skilled in the production of a particular product: silverware, brass, clocks, textiles.
Sam Colt’s positive contribution to society lay in the industrial movement that combined reliable waterpower with more advanced methods for milling and shaping metal to produce interchangeable components. But Colt’s primary legacy was as an arms merchant; the first significant use of his revolver was by the U.S Army during the Seminole Wars, waged to enforce the relocation to what would later become Oklahoma of not only the Seminole tribe but also the Cherokee, Chickasaw, Choctaw, and Creek under the Indian Removal Act of 1830. After that, the Colt revolver became the weapon of choice for the Texas Rangers and U.S Cavalry against the Comanche, Sioux, Apache, and other Plains Indian tribes and during the Mexican-American War.
Upon visiting Texas, Frederick Law Olmsted (another son of Hartford) in 1854 wrote of the Colt revolver in the New York Times, “There are probably in Texas about as many revolvers as male adults, and I doubt if there are one hundred in the state of any other make.” During a trip by Colt to England in 1851, the Times of London wrote of the revolver, “In fact, while acknowledging the virtues of this ingenious instrument, we must express our suspicion that its principal effect has been hitherto to promote murder… They were, no doubt, found serviceable in ‘frontier action,’ but the invention cuts two ways, and we very much question whether Mr. Colt’s discovery has not cost Americans more lives than Mexicans.”
This month, the U.S. Supreme Court ruled that the rights conferred by treaties with those Indian tribes relocated to Oklahoma remain in force: “Because Congress has not said otherwise, we hold the government to its word.” This decision affirming that much of eastern Oklahoma resides in Indian Territory will set off legal and economic repercussions that impact much of Oklahoma and neighboring states. The power of remote events in history to reverberate down to us today and impact our daily lives argues that the decisions we make today be carried out with deliberate consideration of how solutions for problems of today may very well cause far greater ones in the future.
The Anarchy: The East India Company, Corporate Violence, and the Pillage of an Empire by William Dalrymple tells the complex history of the end of the Mughal empire and the role played in the ensuing social disruption by the first international corporate raider.
The East India Company was devoted not to manufacturing but to finance and trade. The Company was founded in 1599 during the reign of Queen Elizabeth I as the evolution of British international commerce moved from piracy, stealing from the Spanish who had stolen in turn from South America’s natives, to establishing their own colonial empire. While South America was claimed by Spain and Portugal and the lucrative spice trade by the Dutch, India was still a contestable market. Under Parliament, the East India Company was given a monopoly and established its own military force which at the Battle of Plassey in 1757 defeated the Mughal nawab and seized control of the province of Bengal.
The resulting transfer of a nation’s wealth from India to England resulted in profound poverty for the native population, brought to a crisis by the Great Bengal Famine of 1769-1773 when an estimated one-third of the population died.
The collapse of the economy threatened the Company with financial ruin. Too big to fail, Parliament passed the Tea Act of 1773, which eliminated the tax the East India Company paid for importing tea into England and gave the company a monopoly on importing tea to the American colonies. A tax on importing tea to America in effect transferred the import tax from the Company to the American colonies. The Boston Tea Party followed and the rest, as they say, is history.
Dalrymple’s message in presenting this massively researched work is the harm a for-profit company can wreck on society when governments fail in their responsibility to govern in the best interests of society. The story of the collective failures of governments—international, national, and provincial—to recognize and coordinate response to threats—internal and external, natural and man-made—resonates with haunting tone today.
Transaction Man: The Rise of the Deal and the Decline of the American Dream is a book I would recommend, especially to those who have an interest in economic policy. It is deeply thoughtful and well written by Nicholas Lemann, former dean of the Columbia University Graduate School of Journalism. Lemann begins with the New Deal and carries us through the Great Recession.
As the U.S. entered the 20th century, corporations founded by the tycoons of the Gilded Age had eclipsed the size and influence of early industrial companies such as Sam Colt’s, evolving into the great Trust companies that had been partially dismantled through government intervention. The question President Franklin Delano Roosevelt faced was whether to further limit the scope of major corporations to regional markets as counseled by Louis Brandeis (the future Supreme Court Justice and youngest graduate of Harvard Law at 20), or to allow them to remain as large entities under the supervision of a benevolent federal bureaucracy as espoused by economist Adolf Berle (the second-youngest Harvard Law graduate at 21). FDR choose Berle’s approach and the New Deal laid the groundwork for a vision of corporations providing social benefits such as lifetime job security, pensions, and health care coverage.
This social compact between government, industry, and unions worked well as companies such as General Motors, IBM, and AT&T came to dominate the economy with the expectation that they would perform societal functions of providing for welfare of their workers and funding basic science research. An unforeseen price for this was that workers were expected to accept and conform to the company’s policies and values, which led to the moniker of the Organization Man. One wonders how much this contributed to the development of ingrained institutional bias on matters such as race, gender, and culture. On a more positive side, the organizational structure of major corporations placed an emphasis on superior operational management skills to produce predictable and stable economic performance.
In the 1980s, however, as U.S. corporations lost their global dominance, a new generation of economists at the University of Chicago shifted thinking away from an emphasis on management to finance and microeconomic theory enabled by advancements in computer science for the statistical analysis of markets. Milton Friedman, William Sharpe, Myron Scholes, Fischer Black, Robert Merton, and others accumulated a breathtaking 12 Nobel Prizes for the quantitative application of data science in economics. An early example of what we now call artificial intelligence, this data analytic approach combined with loosening of financial market regulation led to derivatives, junk bonds, and other complex financial tools. Whole companies were viewed as entities to be taken over, sold, or broken up by private equity markets using leveraged buyouts. This art of the deal was led by a new breed that Lemann calls the Transaction Man (with his apologies for keeping the male gender for the sake of consistency).
The expectation that companies were responsible for the welfare of their employees was no longer relevant when the companies themselves were viewed as Lego blocks to be played with at will. Perhaps in retrospect it is not surprising that such a one-sided view of the world that largely left behind the bulk of society in sharing in economic gain would exacerbate long-standing social inequities, and that with the collapse of financial markets, the Great Recession would leave society adrift in the absence of a new defining economic and political construct.
Lemann closes by considering whether the Transaction Man will be replaced by the Network Man. In a society distinguished by mobility and six degrees of separation, one’s social network becomes the connective tissue as individuals transact with each other through venues such as LinkedIn, Match, or Venmo and transform work models to that of the gig economy. Yet the dominance of just four companies in the digital world—Alphabet, Amazon, Apple, and Microsoft—suggests that perhaps, instead, we have come back full circle to the days of John D. Rockefeller.
Governments, which represent the people they govern, and corporations, which employ individuals and provide products and services of value to people, are dependent on the engagement of the people who in total comprise society. When, during the COVID-19 crisis, governments require wearing of masks and social distancing, it is dependent on society to agree to abide by those decisions for the greater good, in recognition that the Network Person does not exist solely within the narrow confines of a self-selected network. Macroeconomics, as opposed to transactional microeconomics, considers the overall impact and value of financial decisions on society. The Transaction Person’s far more limited focus on immediate gain has led to a scale of harm to individuals, the cost of which to repair, to the extent it can be repaired, is borne by society; to the extent it cannot be repaired, it tears at the fabric of society until, in the words of W. B. Yeats, “the centre cannot hold.” And the Organization Person who conforms to the status quo and who is not encouraged to question ingrained institutionalized bias does not support a dynamic society that takes us to a better place.
Individuals are most effective when they work through institutions that effectively articulate a vision for the future of society and possess an operational structure to enact the organization’s mission in pursuit of that vision. An example of an institution that is thoughtfully evaluating its relationship to society is the New Britain Museum of American Art, a cultural institution founded in 1903 as the first museum dedicated to American art, defined parochially at that time as U.S. art (disclosure: I serve on their Board). Under the leadership of director Min Jung Kim, the museum has explored its institutional bias and expanded its vision to include art from Central and South America and representation of the oeuvre of women and minority artists.
Our health care institutions, as instruments of society, should lead as well. During the pandemic, public trust in health care has risen, the burden of deep-seated and chronic social inequity is clear, and the failure to attend to the discipline of science over wishful thinking has been catastrophic. It is time for leadership to emerge.
History has a long memory. While we are consumed in the moment, we should have the humility to understand that we are only a link to the future; that we pause and consider that our actions today inure to the benefit or harm of those who will follow, less the statues we erect today be torn down tomorrow.