Stephen Hicks, Ph.D.

Warren Buffett and the power of corporations

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.

Authoritarianism, not liberal democracy [Section 10 of Nietzsche and the Nazis]

[This is Section 10 of Nietzsche and the Nazis.]

10. Authoritarianism, not liberal democracy

So far we have three major themes in the Nazi Program: collectivism, socialism, and nationalism. The next question is: How do the Nazis believe this is to be achieved?

As early as 1920 the Nazis are clear that they are no friends of democracy, liberalism, or republicanism. They favor strong authoritarianism and centralized power.

Point 23 calls for censorship and government control of all newspapers.

Point 24 suggests limitations on religions that do not fit the Nazis’ goals.

Point 25 calls for centralization and unconditional power: “we demand the creation of a strong central power in Germany. A central political parliament should possess unconditional authority over the entire Reich, and its organization in general.”

These points in combination with the economically socialist points earlier are to give the government total control over all aspects of society.

Throughout the 1920s the Nazis are unapologetic about wanting to eliminate liberalism, democracy, and republicanism. Goebbels for example put it bluntly and publicly: “Never do the people rule themselves. This madness has been invented by liberalism. Behind its concept of the sovereignty of the people hide the most corrupt rogues, who do not want to be recognized.”[19]

In Mein Kampf, Hitler agreed entirely: “There must be no majority decisions.” Instead, “the decisions will be made by one man.”[20] So, Goebbels continued, “We shall create a power-group with which we can conquer this state. And then ruthlessly and brutally, using the State’s prerogatives, we shall enforce our will and our programme.” Again from Goebbels:

“History has seen repeatedly how a young, determined minority has overthrown the rule of a corrupt and rotten majority, and then used for a time the State and its means of power in order to bring about by dictatorship … and force the conditions necessary to complete the conquest and to impose new ideas.”[21]

The Nazis were very clear from the outset what they were in favor of, what they opposed, and how they planned to exercise power once they achieved it: socialism, nationalism, racial identity and purification—and a strong, centralized power to make it happen.

References

[19] Goebbels 1929, in Mosse ed., 1966, p. 105.

[20] Hitler 1925, p. 449.

[21] Goebbels 1927, quoted in Irving 1999, p. 117.

[Bibliography.]

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Explaining Nazism philosophically [Section 5 of Nietzsche and the Nazis]

[This is Section 5 of Nietzsche and the Nazis.]

5. Explaining Nazism philosophically

I want to suggest a better explanation: The primary cause of Nazism lies in philosophy. Not economics, not psychology, and not even politics.

National Socialism was first a philosophy of life believed and advocated by highly intelligent men and women. Professors, public intellectuals, Nobel Prize-winners—all powerful minds working at the cutting edges of their disciplines. It was they who shaped the intellectual culture of Germany in the 1920s and who convinced millions of Germans that National Socialism was the best hope for Germany’s future.

That is not to say that there were no other contributing factors. The legacy of World War I, persistent economic troubles, modern communication technologies, and the personal psychologies of the Nazi leadership did play a role. But the most significant factor was the power of a set of abstract, philosophical ideas. National Socialism was a philosophy-intensive movement.

I will up the ante further.

I also want to suggest that the Nazi intellectuals and their followers thought of themselves as idealists and as crusaders for a noble cause. This may be even harder to accept. The National Socialists in the 1920s were passionate men and women who thought that the world was in a crisis and that a moral revolution was called for. They believed their ideas to be true, beautiful, noble, and the only hope for the world.[5] Yes, Nazi ideology contained major elements of harshness, even brutality—but what if an important truth about the world is that it is harsh and brutal?

It may be hard to believe that the Nazis thought of themselves as noble idealists, especially with our after-the-fact knowledge of the horrible destructiveness of Nazism. It may be especially hard for those of us raised in Western liberal democracies to believe it—since from the cradle we’ve been raised to believe that freedom, equality, and peace are almost self-evidently good.

But what if they are not self-evidently good? Let me play the Devil’s advocate.

How long have human beings existed? Most anthropologists say homo sapiens has existed for well over 100,000 years, perhaps as long as 200,000 years. For how much of that time have freedom, equality, and peace been the norm? Democratic experiments were tried in ancient Greece for a few centuries. A little later, republican experiments were tried in ancient Rome—again for a few centuries. But Greece and Rome both failed: the Greeks were conquered by the Romans, and the Romans descended into authoritarian decadence before themselves being conquered. And there have been a few smaller and relatively brief republican city states—Renaissance Venice, Florence, and in the Baltic. That is a few short-lived experiments in over 100,000 years—not very impressive.

So now we imagine ourselves in Europe in the earliest decades of the twentieth century: democratic republicanism has been resurrected and is being tried again, for example in the United States of America. How successful have the modern experiments been? Come the 1920s, the United States is only about 150 years old. That means that it has survived for less time than the Greek democracies or the Roman republic. The U.S. lasted only 90 years before it plunged into a brutal Civil War, the reverberations of which are still being felt early in the twentieth century. In the 1920s the U.S. is itself experiencing economic uncertainty and is shortly to plunge into its Great Depression. Even in the United States, many intellectuals are suggesting that capitalism and liberalism are finished and that some form of centralized authority led by a strong man is the future. So in the 1920s, just how strong is the case for liberty, democracy, republicanism, and capitalism?[6]

What if a culture’s brightest thinkers believe that democracy is a historical blip? What if they come to believe that the lesson of history is that what people need is structure and strong leadership? What if they believe that history shows that some cultures are obviously superior—superior in their arts, their science and technology, and their religion? What if they believe that history teaches that we live in a harsh world of conflict and that in such a world strength and assertiveness against one’s enemies are essential to survive? Or even more strongly than that—that peace makes people soft and that it is conflict and war that brings out the best in people, making them tough, vigorous, and willing to fight for their ideals and if necessary die for them?[7]

I am suggesting that a set of ideals was primarily responsible for the rise of Nazism.[8] I think those ideals are extraordinarily false and terribly destructive—but that is not how millions of intelligent, educated, even in many cases well-meaning Germans saw them.

But why do I call them a set of ideals? Why not just say the Nazis had some ideas—of course they had some ideas with which to bewitch the masses—but basically they just wanted power and were effective at using those ideas to get power?

Well, of course the Nazis wanted power. What politician doesn’t want power? But if you are only out for power, think about how you go about getting it in a democracy. The best way is to identify the established political parties, join one of the powerful ones, and work your way up the ranks to the top.

Here is an analogy: In the United States, the two major parties are the Democratic and Republican parties. So if you are young and ambitious and you want a realistic chance at becoming a Senator or even President in your lifetime, you join one of those two parties. What you do not do is join a fringe party. What you do not do is start your own party—say, the Midwestern Farmer’s Union Party, out in the middle of nowhere. The only reason you would start the Midwestern Farmer’s Union Party is that you are a true believer in the ideals of Midwestern Farming and think you cannot achieve your ideals by joining the established parties.

But that describes the Nazis exactly. They did not join the Social Democrats or any of the established political parties. They set up their own fringe party, initially based in the south of Germany and away from the center of power in Berlin. They were true believers in a cause. They did not want power if it meant compromising their ideals by joining with an established party. They wanted power—but power to achieve what they took to be high ideals.

So what was this obscure political party formed in Munich in 1920, and what did it stand for?

References

[5] As did many foreign observers, e.g., the Anglican clergymen who expressed “boundless admiration for the moral and ethical side of the National Social programme, its clear-cut stand for religion and Christianity, and its ethical principles, such as its fight against cruelty to animals, vivisections, sexual offenses, etc.” (quoted in Manchester 1989, p. 82).

[6] “Few of the supporters of Weimar understood that for many Germans the fundamental political issue in 1930 was the pluralistic system of politics itself, not substantive issues within the system” (Orlow 1969, p. 186).

[7] E.g., Immanuel Kant: “a prolonged peace favours the predominance of a mere commercial spirit, and with it a debasing self-interest, cowardice, and effeminacy, and tends to degrade the character of the nation” (1951 [1790], p. 28). See Appendix 4 for quotations on German militarism.

[8] Contra, e.g., Helmut Kuhn (1963, p. 310), who asserts that the Nazis perverted German philosophy.

[Bibliography.]

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