Can Business Of Any Size Be Good?

In their new book, Big is Beautiful: Debunking the Myth of Small Business, Robert D. Atkinson and Michael Lind argue that the U.S. has over-romanticized mom-and-pop-shops and garage entrepreneurs. They say that we have wrongly allowed small business to capture our hearts, minds, and regulatory favoritism, while it’s big corporations that have driven innovation, raised GDP, and made America the global superpower that it is today. (If you doubt that capture has occurred, see John Oliver’s stitch-up of dozens of politicians singing in chorus, “Small businesses are the backbone of our economy.”)

Lind and Atkinson follow the growth of big business and its detractors through U.S. history: from the country’s agrarian roots through industrialization, the waves of corporate mergers and the emergence and evolution of the antitrust movement, up until the Trump administration’s rhetorical embrace of small business and protectionist bashing of U.S. firms that move jobs and operations offshore.

All along the way, Lind and Atkinson point out the flaws in the anti-big movements over the years using productivity and growth data. They show that the various forms of our megalophobia have been based on elitist self-interest, naïve nostalgia, and a couple of flimsy ‘-isms’, like producer republicanism (the notion that democracy is healthier if dominated by self-employed small producers) and market fundamentalism (the belief that monolopies and oligopolies distort the market and hurt consumers).

Their case is compelling—if productivity is your only God. Productivity monotheism might be fine for economists and the policy makers who love them, but a single-minded focus on how much companies produce per employee can have devastating effects on individuals, communities, societies, and our planet.

Lind and Atkinson emphasize that, compared to small firms, big companies pay higher wages, provide more generous benefits, and offer greater job security. Noting a positive correlation between average firm size and national per capita income, they make a giant deductive leap to conclude that people would rather be wage earners than start up their own enterprises, the latter being a last resort only for when big companies aren’t hiring. “Higher incomes not only increase market size, they make it more likely a person will want to be a wage worker rather than a subsistence entrepreneur… A high level of self-employment in a country means there are not enough good full-time jobs, so many people are forced to obtain low incomes by working for themselves.”

But if working for big business is so great, why do we have to try so hard to make it not horrible? Why do we need books called How to Be Happy at Work (three at last count), exercises in “job crafting” that help us mentally reframe work to find enough purpose to keep showing up, and start-ups like “Remote Year” aimed at injecting life into the drudgery of the typical corporate career? Why do so many of us knowingly laugh at The Office and the 1999 Monster.com Super Bowl ad of kids declaring corporate aspirations: “When I grow up, I wanna file – all day.” “I want to claw my way up to middle management.” “I want to be paid less for doing the same job.”

The answer is this: Work has become everything, which sets us up for inevitable disappointment. Corporations do not exist to imbue their employees with a sense of purpose; they are created to sell a product or service. In doing so, some people find real fulfillment, but, for others, work inevitably falls short of their high expectations. As Joanne B. Ciulla writes in The Working Life: The Promise and Betrayal of Modern Work: “We have gone beyond the work ethic, which endowed work with moral value, and now dangerously depend on our jobs to be the primary source of our identity, the mainspring of individual self-esteem and happiness. Furthermore, work sometimes substitutes for the fulfillment we used to derive from family, friends, religion, and community.”

Even where the work itself might not seem fulfilling, affiliation with colleagues and the accomplishment of earning a paycheck are powerful glue, even when a work situation crosses the line from tolerable to abusive. In 2016 David G. Allen, Vesa Peltokorpi, and Alex L. Rubenstein wrote in the Journal of Applied Psychology about how employees who feel a high degree of “embeddedness” (strong social ties to coworkers, perceived compatibility between one’s skills and values and the organization’s needs, perceived costs of leaving) will suffer insomnia, emotional exhaustion, and a hostile work environment rather than leave their jobs. (They studied a diverse range of workers and controlled for education levels, since people with more education tend to leave jobs more frequently.)

Organizational behavior experts have identified the essential elements of a positive, meaningful work experience, with autonomy, control, and impact near the top of the list. These elements are difficult to achieve in corporate bureaucracies, which is why large companies try to create smallness in their bigness. Team-based work has become the norm versus individual contributions. W. L. Gore & Associates (maker of Gore-Tex) doesn’t let facilities exceed 200 employees to preserve a community feel. Jeff Bezos has a mantra of keeping teams small enough to feed with two pizzas.

But never mind all of these efforts to make corporate life livable. Personal satisfaction is not on Lind’s and Atkinson’s radar. They dismiss “Ashley’s and Justin’s” desire to launch a pizza parlor and other start-up efforts “merely so that the owner can fulfill personal lifestyle goals,” and present, with something approaching disbelief, studies showing that “the lion’s share of people who start businesses do so not because they want to be a rich entrepreneur, something that takes enormous dedication and hard work to achieve; rather, most don’t want to work for a boss… Another study found that 50 percent of small business owners did not start their business principally to make money.”

To Lind and Atkinson, such non-economic motivators are anathema. “So if you are advising your children where to work — in a big corporation or a small company — advise them to go big if they want to maximize lifetime earnings.” This sort of advice, with its single-minded focus on income, is how we end up with only 32 percent of U.S. workers being “engaged” in their jobs. As Andy Beckett recently wrote in the Guardian, “You can sense this every time a graduate with a faraway look makes you a latte.”

According to Lind and Atkinson, the only aim of someone starting a new business should be to scale and/or get bought out by a big company. Then they can lean back into the comfort of an ergonomically-appropriate chair, a 401k match, and the relinquishment of responsibility that comes with being a cog in the vast, anonymized, obedient and slightly exhausted wage-earning proletariat.

All the better for maintaining the status quo and keeping the 1% in power, some argue. In his 2013 essay “Bullshit Jobs,” David Graeber reminds us of John Maynard Keynes’s 1930 prediction that by century’s end, technology would facilitate a 15-hour workweek. So why are we working more now than ever? Graeber writes, “The ruling class has figured out that a happy and productive population with free time on their hands is a mortal danger,” pointing to the social upheaval of the 1960s. Benjamin Hunnicutt, a leading proponent of the “post-work” movement, suggests: “I do think there is a fear of freedom – a fear among the powerful that people might find something better to do than create profits for capitalism.”

God forbid. Nor is this just the Man keeping down the Masses: Many of us stay on the professional hamster wheel even when we could live on less income, not knowing how we would define or even occupy ourselves outside of work.

Having recently left corporate life, I can attest that it is much harder to be fully present with your spouse, your kids, your friends, and your surroundings, to (re)discover your voice, and to find your true place in the world, than it is to execute the mandates of your board, your boss, and your customers. What does each moment call for? What legacy do I want to leave for my children, beyond a pile of branded stuff? That is deep and exhausting work—just give me the PowerPoint template. It’s much easier to strive for an empty inbox than equilibrium.

Indeed, why bother if that kind of effort doesn’t pay off in the form that Lind and Atkinson say is all we should care about: higher GDP? The salary, the benefits, the growing pile of stuff should continue to suffice. For those who are satisfied working in big business, by all means stay—particularly if you’re playing some part in improving your company’s impacts on the world. Just be sure to occasionally follow the advice in the perennial bestseller Your Money or Your Life and calculate your real earnings: not just your gross income, but deducting the time and expenses that work necessitates in childcare, commuting, business attire and gear, unwinding from work, and underwriting a few of those bullshit jobs (dogwalker, food deliverer, dry cleaner). You might find that the golden ring six-figure job isn’t so rewarding after all.

For people saddled with debt or caregiving obligations or living near or in poverty, of course any job can be a lifesaver, and leaving is not an option. But circumstances never excuse exploitation of workers, or abuses of power, or robbing people of their souls and family lives. Hopefully the #MeToo spotlight on workplace abuse will continue to spread and lead to more equitable and empowering situations for people of all classes.

In the meantime, we stay in our cubicles and assembly lines en masse. Soul-destroying, perhaps, but good for the whole according to Lind and Atkinson—an ironically communist sentiment for an homage to capitalism. But is it good for the whole, really?

One of Lind’s and Atkinson’s central arguments is that big companies’ efficiency leads to lower prices for consumers, which increases consumption—which is all good in their eyes, even though our current rate of consumption is destructive to our health and that of the planet. Lind and Atkinson even point to the American Tobacco Company’s ability to lower the price of cigarettes in the merger wave at the end of the 19th century as demonstrative of scale’s benefit to consumers. (Just as Philip Morris International has declared that they’re heading towards a “smoke-free future.”)

But don’t fret about potential harm, say Lind and Atkinson. Big companies have more resources to comply with laws and regulations, and they invest more in sustainability and philanthropy than small firms. Big firms do indeed make such investments—often to clean up their own messes. Most of the corporate social responsibility and sustainability work that I have been involved with over the last two decades involves companies mitigating actual and potential damage done by—wait for it—themselves. Countering the negative effects of their own products on our health (Philip Morris, PepsiCo) and society (Facebook); reducing their pollution and greenhouse gas emissions; improving working conditions for the suppliers making their products; alleviating social upheaval brought about by their infrastructure projects; lessening the drain on materials, on water, on the natural environment caused by their operations.

Of course some companies have made strides to improve: H&M is shifting to long-term relationships with suppliers and paying them a living wage, and Amazon (whose efforts I was part of) is streamlining packaging originally created to attract attention on brick-and-mortar shelves, reducing the need for both packaging material and fuel to ship unnecessarily big boxes. But mitigation measures do not necessarily translate into a net positive impact on the planet; they are making bad things less bad, but rarely eliminating the problem entirely.

Lind and Atkinson rightly point out that small business commits its share of corruption and non-compliance, whether out of ignorance, intent, or a permissive regulatory environment that exempts small businesses from many laws and regulations. Amen to their assertion that “if a business is so fragile and unsuccessful that it can’t comply with sensible laws, pay its fair share of taxes, and survive without special treatment from government, then maybe it should die.” But that statement should not only apply to small business: There are plenty of big companies lobbying against sensible laws, not paying their “fair share” of taxes (if through technically legal maneuvers), and lining up for tax incentives with dubious benefits for the jurisdictions doling them out.

Ensuring that all companies comply with the law and do no harm must come first. If Maslow had a hierarchy of corporate social responsibility, compliance would be at the base of the pyramid. The next tier up would be companies taking responsibility for their impacts and externalities with the sorts of mitigation measures described above. (Philanthropy shouldn’t register on the pyramid since it’s too often disconnected from a company’s business, subject to the whim of a single executive.)

At the peak of the corporate Maslow pyramid would be that net positive model. There is a movement to shift from “sustainable” to “regenerative,” since sustaining the pace at which we are driving off the climate cliff still ends in destruction. Related movements are looking at “place-based investment” and “solidarity economies,” seeking an ecosystem of organizations and infrastructure that make for a sustainable and equitable – not just “productive” – community and society.

Lind and Atkinson give a nod to ecosystem thinking in likening big companies to “capstone species” that, like big trees providing shade and nutrients, help smaller species flourish. Big companies are customers of smaller suppliers, and their spending and that of their employees can support other businesses. But a regenerative vision, unlike Lind’s and Atkinson’s, requires a diversity of small businesses to thrive as they are: Enterprises that honor and reflect local cultures, without ambition to disintegrate into global corporate monoculture.

See the decades-old debate over New York City’s gentrification. In this magazine, Nathan J. Robinson recently wrote about the irresolvable tension between the Efficient City (entrepreneurs, Applebee’s, high rents) and the Romantic City (artists, CBGB, grunge): “If efficiency is your goal, then you’re going to have chain restaurants. They’re just more efficient. If you must perpetually grow and grow, then you’re going to have to demolish a lot of things that people dearly love.” Jane Jacobs, help us.

Lind and Atkinson believe that government policies should be size-neutral, that we should stop discriminating against big business and let it continue to work its magic and make the world a better (more productive) place. They give a nod to the “serious challenges” that big business can present to democracies but advocate for, for example, a more lenient view of mergers, suggesting that market power and short-term price increases may not be bad if—you guessed it—productivity and GDP benefit.

But the invisible hand is blind to externalities. In the absence of a new economic paradigm, the idolatry of GDP will continue to exacerbate today’s problems of climate change, economic inequality, and corporate cultures harmfully devoid of humanity. At the same time, Lind and Atkinson seem unaware of the initiatives and actions underway today that are nudging big business towards becoming the positive contributors that the authors believe them to be. For example, Lind and Atkinson say that the chief executives of big business have a key role to play in winning us over, say. “It is time for big corporations to stop being apologetic,” they declare, and “reluctant to toot its own horn.” I don’t know of the modest multinationals of which they speak. But I can think of responses to their challenge to “name a current CEO who is seen as a leader for good policy for the American economy”: the tech CEOs advocating for pro-immigration policies in the face of the Trump administration’s moves to the contrary; Citibank, Dick’s Sporting Goods, REI and others enacting sensible policies on gun sales while legislators prove inept at doing the same; the many companies embracing and reacting to climate science while the administration remains in denial.

Granted, all of those companies have challenges, and the occasional positive stance does not negate them. But unless positive statements are directly undermined by business actions to the contrary, I can applaud a company’s position on one issue while criticizing it on another. Lind and Atkinson write that “It is probably too much to expect Wall Street to call for reform”—presumably before Blackrock CEO Larry Fink made his 2018 annual letter to CEOs a clarion call “to demonstrate the leadership and clarity that will drive not only their own investment returns, but also the prosperity and security of their fellow citizens.” (Not that Blackrock has achieved its own clarity, for example keeping gun manufacturers in some funds but dropping them and gun retailers [including Dick’s] from others. But its platform as an investor is a powerful one.)

Big companies are doing much of what Lind and Atkinson propose. They write that companies should “think twice” before making decisions that will harm their reputations such as outsourcing. Believe me, they do. I’ve been part of those discussions, and as thoughtful as they often are, the final decision is typically to go for the lowest cost and invest in mitigating risks as needed, rather than source in a country where costs are higher, spending more up front to avoid risks that may or may not materialize. Despite some positive steps, big companies are still losing in the court of public opinion. In Lind’s and Atkinson’s view this is hypocrisy, as big business has improved our living standards by growing our economies and developing new products and services.

So why do I keep thinking about the modern-day fable about the management consultant on vacation in an undeveloped beach town, who spots a fisherman napping in his dinghy in the middle of the day while schools of fish leap out of the water nearby. The consultant urges the fisherman to maximize his yield, upgrade his equipment and hire staff, assuring him that by working harder he could triple his income. “But why would I do that?” asks the fisherman. “You could retire early,” says the consultant. “You know, put your feet up, relax, nap in the middle of the day…”

Multinational corporations have the resources and the scale to make significant change—for the better, if they so choose, and some do. But positive systemic change won’t happen by accident, or by default. While business could move itself in the right direction, regulators also need to develop smart, forward-thinking policies and laws that allow flexibility and evolution but create accountability. “Comply or explain” measures such as the California Transparency in Supply Chains Act, the U.K. Modern Slavery Act, and the conflict minerals provision in the Dodd-Frank bill are interesting models. They require companies to disclose whether they have programs to avoid human rights abuses in their supply chains, but do not prescribe what those programs should look like, nor impose penalties for having weak programs or even none at all. While this would seem to lack teeth, it is a pragmatic admission that governments have neither the skill nor the capacity to assess compliance. Civil society initiatives like Know the Chain have stepped in to do the analysis of company responses for others to then act on, for example providing investors with information they can use to enjoin companies in their portfolio.

While national policymakers do their part, they also need to cooperate across borders to prevent regime shopping and the race to the bottom to attract business with low wages and even lower oversight. International agreements like the United Nations Guiding Principles on Business and Human Rights (which I was part of developing) are a helpful step in agreeing on global standards. Finally, individuals need to show more willingness to put their money where their stated ideals are. That means (for those of us who have the choice) shopping from, working for, and investing in businesses that are creating the world we want to see, no matter what their size.

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