In my field of business ethics I regularly read or hear condemnations of the great power of business corporations in the modern world.
Witness Warren Buffett. Buffett is the third richest man in the world and head of the powerhouse Berkshire Hathaway corporation. I am not a fan of his political or economic views, but Buffett’s recent newsworthiness is instructive.
Recently, Buffett was asked by Wendy Edelberg to come to Washington to share his thoughts on a variety of financial matters. Buffett twice declined the invitation. Edelberg decided she would not take No for answer, and now Buffett has been subpoenaed.
Who is Wendy Edelberg? She is Executive Director of the Financial Crisis Inquiry Commission, a government body charged with investigating the financial crisis. As a government official in that position, she has the power to send a message to Buffett that begins with the words “YOU ARE HEREBY COMMANDED to appear and give testimony.” And if Buffett does not, the police will soon appear at his door.
Suppose the “invitation” had gone the other way: Imagine that Warren Buffett had asked Wendy Edelberg to come to Omaha to share her views about stuff. Suppose Edelberg had replied that she was too busy or otherwise did not want to. What could Buffett have done about that? Absolutely nothing. Buffett, despite his great wealth, has no power to compel anyone to do anything.
But a mid-level government bureaucrat can force the world’s third richest man to come to her.
Edelberg’s and the FCIC’s lawyer wrote to Buffett: “We would prefer not to use compulsory process to secure your cooperation.” Not surprisingly, they were able to overcome their reluctance.
So for those who mutter darkly about the power of corporations: please keep in mind where the coercive power really lies.
Economic power is a genuine power, but its power is limited by the voluntary choices of the parties involved in the transaction. I could offer you a million dollars to shave your eyebrows and declare your love for Immanuel Kant on YouTube. You could accept or not.
Political power is different. It is the power to compel others, and it does not require the consent of all of the parties.
Of course it’s a common phenomenon in mixed economies for some wealthy individuals or corporations to use their economic power to influence the political process, and sometimes that is a bad thing. But even here remember what makes that possible: either corrupt politicians who accept bribes or politicians, corrupt or mistaken, who politicize the economy in the first place.
We need to move in the direction of separating politics and economics, for exactly the same reasons we separated politics and religion.