The Powell Memo foreshadowed the modern corporate agenda

Five months before being confirmed to the Supreme Court, Lewis Powell Jr. wrote a memorandum that anticipated the next 50 years of political and legal strategy to expand and protect corporate power

Strength lies in organization, 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.

In August, 1971, the Chairman of the Education Committee of the United States Chamber of Commerce commissioned his friend, a corporate lawyer named Lewis Powell Jr, to write a confidential memorandum to the Chamber. The memo was to address what had become a concern among a growing number of US businessmen and corporations following the implementation of the New Deal. Businesses had chafed for decades at the increased taxes and regulation that accompanied FDR’s signature legislation. The post-war economic boom saw a bourgeoning middle class embracing American values and consumerism, aided by a concerted propaganda campaign by business interests to equate economic freedom with political and personal freedom.

The 60s brought with them an unprecedented level of unrest and revolutionary fervor. The Civil Rights movement and the Vietnam War shined an unfavorable light on the inequality and imperialism of US capitalism. People began to question the entire system, taking inspiration from the socialist and communist movements around the world.

For business leaders who viewed the New Deal as already encroaching socialism, this revolutionary activity and the increasing calls for government regulation threatened to topple the entire US capitalist system. After Ralph Nader’s book Unsafe at Any Speed exposed General Motors for cutting corners on safety standards in favor of profits, the public attention became more focused on corporate responsibility. The result was a concerted organizing effort of American consumers and lobbying government for consumer protections against corporate exploitation and lax safety standards.

For Powell, a corporate lawyer who argued many cases in favor of tobacco companies and was on the board of Phillip Morris, any limitations on the activity of private enterprise was a socialist threat. Something had to be done, and had to be done quickly. His memo strikes an alarmed tone, and it is clear from the title, Attack on American Free Enterprise System, that he views the revolutionary movements of the 50s and 60s as an existential threat which has failed to be appreciated or responded to appropriately by business.

The problem

But what now concerns us is quite new in the history of America. We are not dealing with episodic or isolated attacks from a relatively few extremists or even from the minority socialist cadre. Rather, the assault on the enterprise system is broadly based and consistently pursued. It is gaining momentum and converts.

Powell opens by asserting that “No thoughtful person can question that the American economic system is under broad attack.” While there have always been those who have criticized or attacked the free enterprise system and preferred or advocated for socialism, Powell argues that the situation at present is unprecedented in its focus and momentum.

He worries that aside from the typical

Communists, New Leftists and other revolutionaries who would destroy the entire system… The most disquieting voices joining the chorus of criticism, come from perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians.

Powell argues that these dissenting voices are exploiting the media for the purpose of attacking the capitalist system, and that the media is either complicit or not on their guard enough to avoid being exploited. He questions how this can be the case given that many of the media outlets are owned by the corporations whom they are participating in attacking, bemoaning

One of the bewildering paradoxes of our time is the extent to which the enterprise system tolerates, if not participates in, its own destruction.

He gives several examples of statements from intellectuals and others illustrating the tone and content of the attack on business. An ideological battle is being fought, poisoning the minds of students and inciting them to action against not only the war effort, but corporations specifically. More problematically for Powell

Although New Leftist spokesmen are succeeding in radicalizing thousands of the young, the greater cause for concern is the hostility of respectable liberals and social reformers. It is the sum total of their views and influence which could indeed fatally weaken or destroy the system.

Powell saves most of his ire for Ralph Nader, who he deems the “single most effective antagonist of American business.” Thanks to the media, Nader has become “a legend in his own time and an idol of millions of Americans.” Nader and others have been instrumental in turning the public against business, questioning tax breaks and loopholes for business

It is dismaying that many politicians make the same argument that tax measures of this kind benefit only "business", without benefit to "the poor". The fact that this is either political demagoguery or economic illiteracy, is of slight comfort. This setting of the "rich" against the "poor", of business against the people, is the cheapest and most dangerous kind of politics.

For Powell, the response of business has been wholly inadequate

What has been the response of business to this massive assault upon its fundamental economics, upon its philosophy, upon its right to continue to manage its own affairs, and indeed upon its integrity?

The painfully sad truth is that business, including the boards of directors and the top executives of corporations great and small and business organizations at all levels, often have responded if at all by appeasement, ineptitude and ignoring the problem.

He does not entirely fault business for their response. After all, business executives are not “trained or equipped to conduct guerrilla warfare with those who propagandize against the system.” They have been too busy running their companies, creating jobs, serving on the boards of community groups and foundations, improving society, and generally being good citizens to engage in the type of public and intellectual debates with their critics. He argues that the response has far too often been one of appeasement and retreat.

the time has come - indeed, it is long overdue for the wisdom, ingenuity and resources of American business to be marshaled against those who would destroy it.

Powell argues that if the system is to survive, business leaders must make a concerted effort to not only pursue profits but to engage in programs and initiatives within their corporate agendas and management strategies with the specific goal of preserving the free enterprise system. He argues that the US Chamber of Commerce could play a key role in this business infrastructure, given its favorable reputation and branches all across the US.

The campus

Few things are more sanctified in American life than academic freedom. It would be fatal to attack this as a principle. But if academic freedom is to retain the qualities of "openness", "fairness" and "balance" - which are essential to its intellectual significance - there is a great opportunity for constructive action.

Powell argues that the movement against the free enterprise system evolved gradually over the course of a couple of decades, and while there are many separate facets of the resistance, “there is reason to believe that the campus is the single most dynamic source.” He argues that social science departments are full of faculty that are “unsympathetic to the enterprise system.” These faculty are dynamic and popular teachers and they recruit students, write textbooks, and “exert enormous influence - far out of proportion to their numbers - on their colleagues and in the academic world.”

All of this results in a severe imbalance in the viewpoints and positions being purveyed on university campuses. This in turn results in universities turning out scores of revolutionaries who

often remain in key positions of influence where they mold public opinion and often shape governmental action. In many instances, these "intellectuals" end up in regulatory agencies or governmental departments with large authority over the business system they do not believe in.

In other words, universities are radicalizing students, who then go on to exert public and political influence against corporate rights and privileges.

What can be done about the universities? Powell offers a number of potential strategies to be established and implemented by the Chamber of Commerce:

• a staff of qualified scholars to advocate for the free enterprise system

• a staff of speakers and a speakers bureau which may include the scholars but would include other public intellectuals to advocate for business

• a panel of independent scholars should evaluate textbooks with the goal to restore balance by giving equal treatment to positive advocacy for business and free enterprise

• insist on equal time given to pro-business and free enterprise advocates on the university speaking circuit

• urge university administrators to pursue balance in the views of those hired in their departments, with pressure being applied by approaching alumni groups and associations

• build rapport with graduate business schools and request specific courses promoting free enterprise viewpoints with the purpose of educating and preparing future business leaders and advocates

• implement similar initiatives at the high school level

The public

Reaching the campus and the secondary schools is vital for the long-term. Reaching the public generally may be more important for the shorter term… If American business devoted only 10% of its total annual advertising budget to this overall purpose, it would be a statesman-like expenditure.

Powell argues that a concerted effort needs to be devoted to advertising and public advocacy across all media channels. A broad campaign is suggested to include activity in:

• Television-content should be monitored and “kept under constant surveillance.” This surveillance includes educational and news programs. Scripts should be monitored and complaints registered with the FCC for unfair and inaccurate programs. Equal time should be demanded.

• Other media-every opportunity should be taken to leverage any available media to promote the pro-business agenda

• The Scholarly Journals-Chamber of Commerce affiliated scholars must publish and lecture widely, including editorials and public speaking engagements

• Books, paperbacks, and pamphlets-a concerted effort must be made to produce material for distribution at drugstores, airports, and other places where people consume such media

• Paid advertisements-businesses must allocate budgets for advertising, not only for specific products, but to explicit advocacy of the free enterprise system

The political arena

Business must learn the lesson, long ago learned by Labor and other self-interest groups. This is the lesson that political power is necessary; that such power must be assiduously cultivated; and that when necessary, it must be used aggressively and with determination - without embarrassment and without the reluctance which has been so characteristic of American business.

Powell explicitly acknowledges that the ultimate goal is to influence government, as this is likely to have the biggest impact on business prospects and the perpetuation of the free enterprise system: “In final analysis, the payoff - short of revolution - is what government does.”

He laments the anti-business slant of many politicians and the influence of the “Marxist” doctrine that in capitalist countries government is run by big business, claiming instead that it is next to impossible for businessmen to effectively influence politics

Yet, as every business executive knows, few elements of American society today have as little influence in government as the American businessman, the corporation, or even the millions of corporate stockholders. If one doubts this, let him undertake the role of "lobbyist" for the business point of view before Congressional Committees. The same situation obtains in the legislative halls of most states and major cities. One does not exaggerate to say that, in terms of political influence with respect to the course of legislation and government action, the American business executive is truly the "forgotten man".

As evidence of this, he points to examples of politicians supporting “almost any legislation related to "consumerism" [consumer protections] or to the "environment". For Powell, then, given that politicians support the views of their constituents, which he feels are decidedly anti-business, the educational initiatives advocated earlier in the memo would serve the explicit purpose of educating the public so as to provide more appropriate input and attitudes towards business which can be conveyed to their political representatives. While this approach may take some time to bear fruit, he encourages the Chamber to engage in more direct and targeted political activity in the short term.

The courts

Under our constitutional system, especially with an activist-minded Supreme Court, the judiciary may be the most important instrument for social, economic and political change. Other organizations and groups, recognizing this, have been far more astute in exploiting judicial action than American business.

Powell recognizes that the judicial system, along with the executive and legislative branch, exerts a significant impact on business. He gives the example of the ACLU and other groups which have taken advantage of the courts with favorable outcomes, and argues that business should be more active in pursuing this strategy. Business should be bringing cases to court, supporting cases favorable to its interests, filing briefs in support of relevant cases, and funding legal actions. He urges the Chamber to consider taking a more active role in the legal arena, promising that business would likely provide access to their considerable resources in pursuit of such efforts

This is a vast area of opportunity for the Chamber, if it is willing to undertake the role of spokesman for American business and if, in turn, business is willing to provide the funds.

Finally, he argues that the Chamber should retain and support a “highly competent staff of lawyers” to advise and engage in legal action.

Powell addresses a few more things having to do with envisioning and structuring the infrastructure and capability needed to engage in such a broad and far-reaching program. He suggests that if corporations are reticent to become explicitly involved, they might be able to harness the power of their shareholders to advocate for them, forming appropriate targeted organizations for that purpose. However, he notes that big business and corporations need to step up and aggressively pursue an explicit public and political agenda

There should be no hesitation to attack the Naders, the Marcuses and others who openly seek destruction of the system. There should be not the slightest hesitation to press vigorously in all political arenas for support of the enterprise system. Nor should there be reluctance to penalize politically those who oppose it.

All of this, of course is not only in the service of an economic system. As was the case with so many others in his day, Powell argues that preserving the free enterprise system is crucial to maintaining individual and political freedom. His closing arguments could have been lifted wholesale from Milton Friedman or Friedrich Hayek

As the experience of the socialist and totalitarian states demonstrates, the contraction and denial of economic freedom is followed inevitably by governmental restrictions on other cherished rights. It is this message, above all others, that must be carried home to the American people.

The modern corporate juggernaut

Surveying the modern US landscape, it seems that the strategies suggested by Powell have all been implemented to the letter. While the actual influence of the memo has been debated, it’s hard to argue looking back at how accurately Powell predicted the strategy corporations have pursued in the last 50 years. While his memo has been considered to be more of a distillation of the thoughts and attitudes of a majority of the business community at the time rather than an explicit blueprint, the precision with which he articulated a multi-pronged attack that would be pursued over the coming decades is startling.

The goals for the university have not been wholly realized, but business exerts heavy influence on education via business schools around the country. The most famous example of free enterprise advocacy at the university level is the Chicago School of Economics, where many libertarian economists, including Milton Friedman developed their theories and workshopped their neoliberal policy ideas. There has also been a concerted effort by conservative interests to develop educational resources and curricula. Here the line between media and education is blurred, with sites like PragerU routinely spreading pro-corporate, free market capitalist messages packaged in slick-looking high-quality videos featuring public intellectuals and scholars. Many of the right wing attacks on the higher educational institutions follow the playbook established by Powell’s memo.

Powell’s goal to establish business advocacy groups and centers of scholars and intellectuals who would do research and give talks has been realized many times over. The Business Roundtable was established in 1972 and became a highly influential lobbying group, claiming membership of 113 of the top Fortune 200 companies within five years. The Heritage Foundation, a think tank whose stated goal is to “formulate and promote public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense” was founded two years after Powell’s memo, in 1973. It has been a major player in conservative politics ever since. Dozens of other think tanks in the US and other countries (including the New Zealand Initiative here in Aotearoa) have been founded since with the purpose of advancing pro-corporate agendas cloaked in independent research and policy advocacy.

Popular media and news has been wholly captured by corporate interests, with both Fox News and MSNBC, nominally the right and left wing perspectives, parroting corporate talking points night after night. Dedicated corporate publications such as the Wall Street Journal, the Economist, Fortune, Forbes, and others have a heavy pro-corporate slant. Even nominally liberal outlets like the Atlantic, the Nation, the New York Times, and the Washington Post, carry much more corporate friendly content than not. Aside from these major outlets, there are hundreds of other corporate friendly websites, podcasts, and radio programs.

Because of the heavy corporate slant of most mainstream media, the public attitudes and political activities of elected representatives are almost uniformly pro-corporate. Both Democrats and Republicans carry the banner for corporations, receiving millions of dollars in corporate donations and legislating in favor of corporations regardless of what the public want. Any token moves towards reigning in corporations are dwarfed by the scale of government contracts, tax breaks, and deregulation that is the routine.

Arguably the most consequential victory has been won in the courts. The Chamber of Commerce established a dedicated litigation society in 1977 that has become the most successful body to appear before the Supreme Court, with a record of 69% wins in cases brought since John Roberts was made Chief Justice, making the Roberts Court the most pro-business court since the 1930s, successfully rolling back much of the New Deal. A steady crop of young, conservative, pro-corporate lawyers has been cultivated by The Federalist Society, founded in 1982. The society is a libertarian and conservative judicial organization that has recruited and placed hundreds of judges in federal courts. Six of the nine current Supreme Court justices forming the conservative supermajority are members of the society. Nearly 90% of judicial appointments made by Donald Trump were members of or affiliated with the society. These judges often promote “originalist” or “textualist” interpretations of the Constitution which inevitably neuter the ability of law to adapt to modern society and needs.

The modern conservative takeover of the courts has been astounding, with numerous dark money groups funneling millions of dollars into recruiting, training, and placing conservative judges and litigating cases. This project has been masterminded in recent decades by Leonard Leo, co-chair of The Federalist Society and beneficiary of billionaire largesse, with a recent donation of $1.6 billion to fund his agenda which has thus far successfully placed three Supreme Court justices and overturned Roe v. Wade.

Corporations, while suffering some legal setbacks over the years, have enjoyed an embarrassment of riches at the hands of the courts. A brief summary of a handful of the most impactful Supreme Court rulings includes:

• Santa Clara County v. Southern Pacific Railroad Company (1886): the court ruled that corporations have some of the same rights as individuals. Specifically, the 14th Amendments Equal Rights Clause applies to corporations.

• Buckley v. Valeo (1976)-Powell joined the majority: the court ruled that while the law could limit the amount an individual (or corporation) could spend directly on an individual political campaign, it could not limit the amount spent “relative to a clearly identified candidate”. In other words, any amount of money propping up a candidate is fine.

• First National Bank of Boston v. Bellotti (1978)-Powell wrote the majority opinion: the court ruled that there could be no law prohibiting corporations from donating with the purpose of influencing the vote on a particular issue

• Citizens United v. FEC (2010): the court ruled that corporate contributions to political candidates constitute free speech and as such cannot be limited in any way. Corporations are free to spend unlimited amounts of money to influence elections.

Aside from these catastrophic decisions, numerous other court cases have sided in favor of corporations over the public good, particularly when it comes to regulations on corporate pollution or environmental exploitation.

The modern US political landscape is dominated by corporations. Any fear that Powell and others had in the early 70s of a failure of the capitalist system has failed to be realized. All three branches of government have been wholly captured by corporate interests. They have run the playbook presented by Powell’s memo to the letter, establishing and maintaining a stranglehold over American society and politics. Although speaking for a larger class of business interests, Powell was one of the first to articulate the problem and establish targeted approaches to deal with it. His approach, executed with the aid of billions of corporate dollars and lobbying, has been brutally effective in harnessing the power of government in favor of corporate rights and profits at the expense of the public good and democratic governance. Right wing thinkers and politicians around the world have a ready-made blueprint to reshape their social and political institutions, and many are chomping at the bit to implement the corporate agenda.