Relationship of Government to Business

Relations of Government to Business

The increasing complexity and interdependence of social life precipitate more sharply than ever the problem of the interrelations between industrial and political forms of organization and control, and this has been accentuated by the rise of large scale industrial units resembling in form while rivaling in magnitude some of the governmental units to which they are technically subordinate.

Unemployment, industrial instability, tariffs, currency and banking, international loans, markets and shipping, agricultural distress, the protection of labor, have raised many vital questions respecting the relationship of government and business, and it is easy to foresee that many others will be raised in the future. Demands are now being made for more effective control over banking, investment trusts, holding companies, stock speculation, electric power industries, railroads, chain stores, and many other activities. The new forms of corporate structure raise many problems of legal control for the protection of the minority interests, and of the community itself. The service functions of government are also likely to expand because of the demands of the special economic groups. The poverty of the marginal and submarginal farmers, the insecurity of the wage earners in industry, the perplexity of the consumers, the plight of the railroads, are likely to call for, indeed have already demanded the close cooperation of the government. Unemployment and industrial instability are of special urgency in their demands for governmental assistance, first of all in times of emergency, but also in preventing the recurrence of disastrous crises or in minimizing their rude shocks and ghastly losses.

Under such circumstances the problem of the interrelationship between government and industry is of grave importance. Shall business men become actual rulers; or shall rulers become industrialists; or shall labor and science rule the older rulers? Practically, the line between so-called “pure” economics and “pure” politics has been blurred in recent years by the events of the late war, and later by the stress of the economic depression. In each of these crises the ancient landmarks between business and government have been disregarded and new social boundaries have been accepted by acclamation. The actual question is that of developing quasi-governmental agencies and quasi-industrial agencies on the borders of the older economic and governmental enterprises, and of the freer intermingling of organization and personnel, along with the recognition of their interdependence in many relations.

Observers of social change may look here for the appearance of new types of politico-economic organization, new constellations of government, industry and technology, forms now only dimly discerned; the quasi-governmental corporation, the government owned corporation, the mixed corporation, the semi- and demi-autonomous industrial groupings in varying relations to the state. We may look for important developments alike in the concentration and in the devolution of social control, experiments perhaps in the direction of the self-government of various industries under central guidance, experiments in cooperation and accommodation between industry and government, especially as the larger units of industrial organization, cooperative and otherwise, become more like governments in personnel and budgets, and as governments become agencies of general welfare as well as of coercion.

The hybrid nature of some of these creations may be the despair of those theorists, both radical and conservative, who see thee world only in terms of an unquestioning acceptance of one or the other of two exclusive dogmas, but these innovations will be welcomed by those who are less concerned about phobias than with the prompt and practical adjustment of actual affairs to the brutal realities of changing social and economic conditions. The American outcome, since all the possible molds of thought and invention have not yet been exhausted, may be a type sui generis,
adapted to the special needs, opportunities, limitations and genius of the American people.

Those who reason in terms of isms or of the theoretical rightness or wrongness of state activity may be profoundly perplexed by the range of governmental expansion or contraction, but the student of social trends observes nothing alarming in the widely varying forms of social adjustment undertaken by government, whether maternal, paternal, or fraternal from one period to another.

Source: Recent Social Trends in the United States, an examination of the social state of the United States at the end of the 1920s undertaken at the direction of President Herbert Hoover.