Henry Ford Sued (aka The Day the World Changed)

The January 2007 issue of Z Magazine has another great interview with Noam Chomsky.  The piece, by Dennis Ott, is titled "On Capitalism, Europe, and the World Bank," and it runs four pages for just two questions.  What I found interesting about it was where it went after Ott quoted Hans-Martin Buhlmann at a shareholder's meeting of Allianz AG, for which Buhlmann is a "major shareholder." Buhlmann stated, "The inferiors must not be bled so much that they can no longer consume.  They must survive as consumers."

Chomsky takes this opportunity to go into some of the history of our current state of capitalism and corporate rule, and he gives credence to Buhlmann's idea about what our current state of capitalism is like.  "It's been dealt with over and over again in one or another way during the history of capitalism," Chomsky states before using the example of Henry Ford (pictured above).

"Henry Ford famously tried to pay his workers a higher wage than the going wage on the grounds that if he didn't pay his workers enough and other people didn't pay their workers enough, there would be nobody around to buy his model-T Fords," Chomsky states.  Interesting concept, and a fairly well-known fact.  What is not as well known is what happened next.

According to Chomsky, the issue of Henry Ford's wages was actually taken to court in the US around 1916 "and led to a fundamental principle of Anglo-American corporate law."  The case was called Dodge v. Ford.  "Some of the stockholders of the Ford motor company, the Dodge brothers, brought Henry Ford to court, claiming that by paying the workers a higher wage and by making cars better than they had to be made, he was depriving them, as stockholders, of their profits because dividends would be lower."

The Dodge brothers won.

Continues Chomsky, "The courts decided that the management of a corporation has the legal responsibility to maximize the yield of profit to its stockholders; that's its job."  He also points out that the reason the Dodge brothers wanted to win is because they wanted to start their own card company, which they did.

The interview continues with Chomsky talking about corporations carrying out benevolent acts.  "There's an important decision by a U.S. court that urges corporations to carry out benevolent activities.  It says -- and I'm quoting it now -- or else 'an aroused public' may figure out what corporations are up to and take away their privileges because, after all, they're just granted by the government, there's nothing in the Constitution, there's no legal basis for them, it's a violation of classical liberal and 'free market' principles."

Corporations "should be concerned only with the maximization of gain for their stockholders instead of what's sometimes called 'stakeholders' (the community, the work force, everything else)."  This, he says, is the corporation's only mandate.

Chomsky's answer to Ott's first question then turns to the Bush administration and its attempted attacks on Social Security.  "[Social Security] is of no use at all to the wealthy.  But a very large part of the population, maybe 60 percent or something like that, actually survive on it.  So it's a system that contributes nothing to profit.  It has other bad features, like it's based on the principle that you should care about somebody else.  And that's hopelessly immoral by the moral principles of power and privilege, so you've got to knock that idea out of people's heads and get ride of the Social Security system.  A lot of what's called -- ridiculously -- 'conservatism' is just pathological fanaticism based on maximization of power and wealth in accord with principles that do now have a legal basis."

Greed is not only good, but mandatory and legal. 

We spend our lives caught up in this system of capitalism and greed, of corporate tyrannies and attacks on any kind of government aid.  We have seen where this system eventually leads to, and we have really done nothing about it.  The same bankers are still sitting in the same seats, investors are still toying with toxic assets, and the people who are supposed to be regulating all of this are some of the same people who let the current meltdown happen in the first place.

Let's not even talk about the recent ruling from the courts that let corporations have even more access to the political system (not that they didn't have it in the first place, it's just less regulated now).

Is there a lesson to be learned?  Yes, but I don't know if we've quite grasped it yet.

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