Ida Tarbell's Warning: The Foul Ethos of Corporate Culture

By Saliem Fakir · 28 Oct 2008

A+ A= A-
    Print this page      0 comments

Ida Tarbell is long forgotten and very few know of her. Tarbell left us with a seminal work -- a piece of investigative journalism that led to the publication of the first expose of the doings of the Standard Oil Company.

She carved a new style of investigative journalism in which personal ethics played a big role. Tarbell was also a feminist and undertook some insightful appraisals of the working of corporations and the business world.

Tarbell was one of the few brave investigative journalists willing to risk her own life to uncover corruption within the corporate sector. Her series of investigations into the workings of the Standard Oil Company were serialized in a magazine called McClure’s Magazine (1902-1904) and collated and compiled as a book titled: The History of the Standard Oil Company.

Following this she wrote a another book titled: New Ideals in Business, as a elaboration of her views of acceptable conduct of business and what she learnt from speaking to many industrialist and managers during the investigation of the Standard Oil company.

She wrote a long-time ago, but what she wrote a century ago, resonates with the turmoil that the financial world finds itself in today. This turmoil has nothing to do with the technicalities of the market, but rather the corporate culture and foul ethos that exudes as a result of it.

When Tarbell did an expose on Standard Oil she took on one of the most ruthless and powerful corporate barons, John D Rockefeller, himself. Rockefeller presided over one of the most powerful companies in the US that controlled, at one point, 85 percent of the oil business from oil wells, pipelines, refineries and even determining the discounts the railroad industry should offer.

What drove Rockefeller was not just the stuff of greed, but also the application of business ingenuity and corporate thuggery for the acquisition of power. The pursuit of economic success had no moral limitations – if anything, dominance of the markets justified any means to achieve the end. Rockefeller wanted to test the limits of power in which money was the fuel that drove this engine. He wanted to go as far as it would take him.

Tarbell noted, worryingly that: “One of the most depressing features of the ethical side of the matter is that instead of such methods arousing contempt they are more or less openly admired. And this is logical. Canonise ‘business success’ and men who make a success like that of the Standard Oil Trust become national heroes!”

It is a culture still prevalent today in which the most unscrupulous of CEOs is merely seen to be doing the job of business – dirty business is what is needed to be a successful businessman and corporation, and it is not thought unusual to accept it as a norm. With such an ethos wrapped around business practices and culture, it is no wonder that unscrupulous CEOs think they can get away with anything, and many a times do.

Rockefeller’s desire was to create a gigantic national and worldwide business empire. Ironically he thought monopolies brought order to the market. He disliked the messy business of competition and thought that the idea of a free market was too chaotic. While the theorists preached efficiency through competition, Rockefeller’s practice was to subvert and throw scorn at the very idea by pursuing monopolies at every part of the value chain that defined the oil business.

Rockefeller seemed to meet his match. Tarbell’s revenge was sweet as her father’s own business suffered at the hands one of Rockefeller’s companies, the South Improvement Companies, that were involved in a scheme to control transport routes between the large oil companies and the railroads and in this way controlling the outlet of oil to the markets, killing the small guy in the process.

Following her investigations, the anti-Trust Laws were brought to bear on the Standard Oil Company’s monopoly and it was finally broken-up in 1911.

Tarbell’s detailed uncovering of the way in which the monopoly was brought about throws cold water on the ideological pronouncements of economist such as Milton Friedman that the markets must be left to operate freely and that markets can achieve greater democracy, equilibrium and freedom than government’s can do. This by now is old hat and fraudulent economics.

Tarbell was scathing of the general conduct of business and the inhumanity that arose from the pursuit of business for the sake of power and rule over others. At the heart of her warning is that corporations do not pursue just economic interests but rather their economic power influences political power and the entire subordination of social life to the interests of economics.

The pursuit of success also draws scorn from the men of corporations as they see all public goods as their own rather than serving the public. Or at least, they instigate the furnishing of public goods to be produced under the label of public service only to corner it for themselves.

Tarbell shows up all of these antics of Rockefeller who was in support of public laws and infrastructure only in so far as they served his monopoly. He was found to  shaft laws and programmes that harmed his business.

Tarbell was not the only one who drew us to these insightful observations but economist such as Thorstein Veblen and later John Kenneth Gailbraith wrote of this as well. Gailbrath, in particular, noted that the large corporation exists both for the economy of scale and monopolisation of the markets.

In this process the corporation’s sphere of influence often extends beyond its remit – the economy – and into other spheres. It is simply because the economy does not exist autonomously but is enmeshed within both political and social structures. Business does not operate with mythology. It fully recognises that costs and price are not things only of production but require business to exercise power in the market and beyond both to control price and use price as a way of extracting surplus.

It exists both for the production of goods from which profits are made, but also to engage the politics of reining in unwieldy forces that impact on its bottom-line. Rockefeller operated with this logic and saw the chaos of competition as an anathema for good business. His solution was a totalitarian approach to the market by controlling the competition and frequently taking out those companies that did not oblige to his dictat. His engagements with the political establishment too were designed solely to subordinate political will to the interests of his business.

Tarbell noted: “Very often people who admit the facts, who are willing to see that Mr Rockefeller has employed force and fraud to secure his ends, justify him by declaring, “It’s business.” That is, “it’s business” has to come to be a legitimate excuse for hard dealing, sly tricks, special privileges. It is a common enough thing to hear men arguing that the ordinary laws of morality do not apply in business.”

The right of the corporation to exist as a legal persona with limited liability provisions is an outcome of political and social sanction. It exists by the right of law. However, what is a right seems to exist with no limitations on excess or obligations to fulfil public responsibilities.

The ever large greedy fingers of the corporation will know no end if there were not public regulation. The obsession with profit by all means possible, in the void of a proper public ethos, soon gives the market and corporations the free hand to subordinate all else of life to its wishes.

As Tarbell poignantly noted about the psychology of businessmen and American corporate culture: “The ethical cost of all of this is the deep concern. We are a commercial people. We cannot boast of our arts, our crafts, our cultivation; our boast is in the wealth we produce. As a consequence business success is sanctified, and practically, any methods, which achieve it, are justified by a larger and larger class’.

One aspect of social subordination is the issue of humanity and fairness in the work place. There is no more glaring obfuscation of inhumanity and unfairness than the wage gap between CEOs and the lowest rung worker within a corporation. This is prevalent worldwide and not uncommon a practice in South Africa as well.

The wide wage gap between managers and workers merely represents a shift in power – where managers have both power over the shareholders and workers. A shift in power that has left one set of interests to gain dominance and currency both within the political and social spheres without reprimand nor proper checks and balances.

This trend of unjustifiable salaries, bonuses and share-options has come to be regarded as a general moral hazard. The German Chancellor, Angela Merkel, under considerable pressure from both workers and shareholders has promised to investigate the German situation and even consider passing a law to place caps on the amount of shares and bonuses managers can own.

Gordon Brown, too, recently, confirmed that the issue of bonuses has to be looked into because they have perverse effects – fund managers and CEOs are prone to look after their own interests than that of shareholders and the public.

As the recent financial crisis has shown, the mystical way in which free markets and corporate heads have been treated, marks both public absence and absolving of responsibility to act in the interests of both the markets and the public. It is the greatest of irony that where the free marketeers and corporate barons have shouted at the government to stay away they are now pleading for the public to rescue them.

But their excesses have come at a tremendous cost to public taxpayers and the general functioning of economies where the crisis has hit the hardest. Yet, it would seem that Tarbell’s warning might not be heeded: corporations like to believe they are a godsend.

The truth is that they can be far from noble if left to their own devices.  These men and women, driven by the obsession for profit and power will have neither the time nor conscience to always think of the consequences of their actions. If they think they can get away with the business of dirty business, they will do so.

Under the cover of the mystical powers of the free market we have come to believe all sorts of things thrown at us, just like we once believed that there are Gods for Thunder, Rain, and Happiness, so the Gods of corporations and the markets will have us believe that they have access to secret wisdom and power over the strange forces that churn and turn in the belly of the market.

Trust not a word they say and be sure to be vigilant as Tarbell was vigilant over the corporate heroes of her time.

Fakir is an independent writer based in Cape Town.

Should you wish to republish this SACSIS article, please attribute the author and cite The South African Civil Society Information Service as its source.

All of SACSIS' originally produced articles, videos, podcasts and transcripts are licensed under a Creative Commons license. For more information about our Copyright Policy, please click here.

To receive an email notification when a new SACSIS article is published, please click here.

For regular and timely updates of new SACSIS articles, you can also follow us on Twitter @SACSIS_News and/or become a SACSIS fan on Facebook.

You can find this page online at

A+ A= A-
    Print this page      0 comments

Leave A Comment

Posts by unregistered readers are moderated. Posts by registered readers are published immediately. Why wait? Register now or log in!