Today's newsletter is an interview with Matt Stoller, author of Goliath: The 100-Year War Between Monopoly Power and Democracy. I wanted to talk to Matt because his book provides a historical perspective on a topic I frequently cover in Popular Information — the influence of large corporations on our political system.
Matt's views are provocative, but the book, ultimately, is hopeful. Americans have taken on massive concentrations of corporate power before and won.
In Goliath, you cover a lot of history to demonstrate that the political challenges of today aren't entirely unique. Which era do you think is the closest analog to today, and why?
Two answers. First, the late 1910s/1920s, because we became far more xenophobic and plutocratic. “The dregs of Europe” and elsewhere, said one politician at that time, had “Orientalized, Europeanized, Africanized, and mongrelized” America. Speeches like this were common.
There was a brutal financial crisis in 1919-1920, which caused an agrarian depression, and led to the rise of the second Ku Klux Klan. By the early 1920s, the Klan had four million members, including the mayor of Portland, Oregon, and the mayor of Portland, Maine. Texas, Alabama, and Indiana sent Klansmen to the Senate. It’s the time when white mobs burned down "Black Wall Street" in Tulsa, Oklahoma. Democracy failed to deliver, so people resorted to ethno-tribalism, with symptoms of despair unaddressed by a callous government.
It was also an era of monopolies, with the fantastically wealthy Treasury Secretary Andrew Mellon passing tax cuts for the rich that inspired Ronald Reagan. Mellon also used his office to get his companies lucrative concessions from both government contracts and by extorting or manipulating foreign governments. Ring any bells?
Like Facebook today, big business worked with the Republicans to maintain power and dominance. The Federal Trade Commission, created a decade earlier to promote fair commerce, was run by a man who proudly announced it would no longer serve as a “publicity bureau to spread socialist propaganda.” It was a vicious anti-labor decade; Mellon’s younger brother was asked by a Senator if he could run a coal mine without machine guns. He said no.
Even though Republicans were in charge, the Democrats were pathetic. They nominated J.P. Morgan’s lawyer as a Presidential nominee in 1924, fought mostly over "social issues" like prohibition and the KKK, and supported debt forgiveness deals with European states that privileged Mussolini’s government over those of democracies.
Autocracies rose globally as they are now, with dictatorships emerging in Portugal, Spain, Italy, Greece, Turkey, Russia, Poland, Czechoslovakia, and Belgium. Hitler had his beer hall putsch. Some scary stuff, like what we’re seeing today led by China and in some ways Russia.
I might also say the 1970s. The 1970s were the last moment of major rethinking of political philosophy. It’s when we moved from the New Deal to deregulation and concentrating wealth and power. It’s when New York City went bankrupt, our electric utilities were collapsing, and the train system – like Boeing today – was having serious problems. The inflationary episodes were basically a rolling financial crisis. There was a massive political debate starting at the beginning of the decade, between the last of the populists (people like Phil Hart, Wright Patman, Hubert Humphrey), the Chicago School libertarians and big business, and the consumer rights oriented New Left types like Gary Hart. By the end of the decade, neoliberalism had won.
Our debate is still happening, and I think the populists will end up winning this time.
If you could reincarnate one politician from the past to take on corporate power today, who would it be?
Franklin Delano Roosevelt. He was unafraid and just so good at seizing the moment. “The public has burned its fingers in the flame of wild speculation and has learned to fear the fire,” he said a few years after the stock market crash of 1929. “While it still fears the fire is the time for us to act.” He put his political opponents who had committed crimes on trial. For example, his attorney general sought to indict Mellon for tax fraud, and when the indictment failed, his Treasury Secretary Henry Morgenthau went after Mellon for nonpayment of taxes (and won).
I also really like Wright Patman, a Texas Congressman who filed articles of impeachment against Mellon in 1932. “They only believe in law and order,” he once said, “if they write the law and give the order.” Patman was also so good at messing with his enemies. Federal Reserve officials once tried to avoid government obligations by asserting the Fed wasn’t part of the Federal government. Patman notified the city of Washington D.C. that the Fed didn’t deserve its tax-free status, and had the city start foreclosing on Fed buildings. The Fed quickly changed its mind about whether it was part of government.
What are some of the tactics in the past that were successfully used to take on concentrated power that could work again?
One, pay attention to business! How we do business is how we do justice. By paying attention to business, we begin to break the power of the oligarchs, as you are starting to do to Facebook. Boeing, Disney, WeWork, etc. – these are all part of politics.
Two, govern from Congress. Congressional leaders and protesters had a sort of dance. In 1932, there was a giant Occupy Wall Street-style protest called the “Bonus Army” of World War One veterans, what they sought was to remove Mellon from office and have the government print money and distribute it to the tens of millions of vets who had been underpaid for their war service. They linked protest to a bill and a floor fight in Congress. Eventually, Hoover had the protesters tear-gassed, which caused his popularity to plummet. The Bonus Army won. The analogy today would be student debt. We need a giant protest linked with bills to free generations from indentured servitude.
Three, investigate! Investigate corporations, government, and bankers, like Congressman David Cicilline, is investigating Facebook and Google. Congress also investigated the judiciary in 1937 as it became obvious that the judges were implacable foes of the New Deal.
Four, link policy and elections. Democrats didn’t used to talk about "electability," "moderates," or artificially divide the world into government, elections and grassroots movements. To them, the government was the grassroots instrument to take over and use to fight corporate power and deliver justice. They ran elections on doing that, and then in office, they did it. They also took the Democratic platform seriously as a litmus test and saw policy as the point of elections. They got that elections were based not just on campaigns but on whether they had governed well.
It's one thing to control, say, production of steel. But today's massive conglomerates exercise significant control over information. How does it change things that the largest companies today are in the information business?
The technical questions are a bit different, but the basic principles are the same. Smash their power, break up these companies, regulate their business practices, and force them to obey the law. It might be regulating data instead of practices in the steel or auto industry, but it’s similar.
Remember, there was tight information control in the 1930s. Nearly all newspapers were owned by Republicans, and most endorsed Herbert Hoover.
One of the things I go over in my book is how the Democrats from the 1970s onward stopped fighting against finance and big tech. Their leaders made alliances with junk bond king Michael Milken, and both Bill Clinton and Barack Obama sought to concentrate wealth and power because they believed in elite technocracy. Facebook and Google are largely creatures of progressive negligence. So in one sense, all we have to do is start fighting again and recognize that these corporations are political problems and not problems we can address as consumers.
This year's Democratic primary has a few candidates talking about corporate power. But what's an aspect of the problem that you think isn't getting enough attention?
I think it’s dangerous how close Democrats still are to Facebook, which is an authoritarian institution. What you report on in Popular Information is the fusing of the concentrated communications and surveillance power of Facebook with the right-wing political machinery of Trump and the conservative law and economics framework. Combining monopolists with an illiberal political movement is the essence of every authoritarian state. I wish Democrats would openly discuss that Mark Zuckerberg is an autocrat and a threat to all of us and that his power needs to be broken.
The most important thing to know is that we have been here before, and we can restore our democracy. I see hopeful signs everywhere, and I think we're well on our way. “Before [Rockefeller] started his enterprises,” wrote Walter Lippmann in 1937, “it was not possible to make so much money; before he died, it had become the settled policy of this country that no man be permitted to make so much money." That sounds a lot like Bernie or Warren.
Thanks for reading!