Demonizing Wall Street

Progressive rhetoric increasingly equates the business model of Wall Street with fraud, particularly as national elections draw near. The demonization of Wall Street is a common activity of the progressive left, a tactic designed to convince followers that the time has come to tame the id of big business. Indeed, it is difficult to recall a more dramatic crescendo of anti-corporate invectives from progressives in recent history. In Wall Street and Progressivism, we argue that this kind of wholesale dismissal and condemnation of the private sector produces real casualties. We first observe that this rhetoric is, quite remarkably, disconnected from serious reforms to ensure corporate accountability. Proposed legislation is very long on rhetoric though equally short on theoretical and empirical support. This is true in spite of a history of progressivism that embraced legislative reforms that are grounded in science and evidence.

More important, creating a mirage of a progressive political effort not only fails, but displaces genuine efforts to pass reforms. Demonization is not just unhelpful, but likely harmful as it encourages us to think of all capitalistic endeavors as intrinsically or unchangeably evil. With reference to the progressive movement of the 20^th century, we argue that this kind of sentiment is in fact anti-progressive—where the complete elimination of sectors like Wall Street is both undesirable and pragmatically impossible, demonization displaces real progressive reforms, those that countenance the possibility that corporate actors can, indeed, become better or even good.

The most common justification of the fiery progressive rhetoric is that it is politically advantageous—that these speeches and exaltations are meant to usher the progressive reforms that have been blocked by an obstructionist and captured pro-corporate wing of Congress. While we recognize that political challenges around corporate regulation are one of the main barriers to progressive reform, it is difficult to find reasonable proposals for progressive reforms. This criticism holds with the recycling of old and quite questionable progressive proposals in The Accountable Capitalism Act; the dismantling of the private equity market in the Stop Wall Street Looting Act of 2019; the muddled conceptions of corporate fault adopted in the Corporate Executive Accountability Act of 2019; and legislation that does little to end the “too big problem” called the Ending Too Big to Jail Act.

It is not an overstatement that the legislative pipeline of progressives offer a mirage of effort to ensure corporate accountability. Serious legislative and regulatory proposals for reforms are simply missing. Gratuitous political rhetoric far too often substitutes for serious law reforms or legislation with a chance of passage in Congress. And, we argue, the costs of demonization are paid at a time when our embrace of the potential good that comes from a well-governed, responsible, and sustainable private sector is more than necessary for the success of meaningful collective action strategies and, quite practically, to fund the aspirational progressive agenda.

By extending the indignation that is justifiably leveled against serious and chronic corporate wrongdoers toward all business, could it be that no one can imagine that corporations could be good? Is it so unlikely that corporations with vigilant oversight and reasonable regulation could be held, at times, accountable? The enmity of the hard left encourages some who are politically-inclined to look past the policy outcomes of proposed legislation, while ignoring any analytic rigor, no less constraints of empiricism. While many other countries are seeking and exploring evidence-based policy making, we hear the musings of presidential candidates who want to shred the private sector or, from those on the right, deify corporations by asking the naïve to abide by some sense of American exceptionalism. With little substance to these reflections or proposed legislation, we can only interpret these effects as aiming, consciously or not, at some kind of catharsis rather than real, progressive change.

It is sad that the brand of progressivism associated with some far left-leaning politics today betrays its ideological heritage. This is a heritage that never conceived of markets as ugly forms of corporatism.  Progressive dogma supports law reforms—no matter how significant—that are driven by evidence. Progressive predecessors, to their credit, embraced at least in general terms the central role of science and proportional social controls as foundational principles in combatting wrongdoing and regulatory largess and capture. This heritage finds its roots in a century-long appreciation by social scientists that we needed newer, more imaginative frameworks—economic, sociological, and legal—to control the expanding powers and growing reach of corporations. Progressivism’s long embrace of the “transformative scientific state” as both a tool and object of reform reflects a recognition of both the power and limitations of the state: its power to effect change in society, alongside its tendency to be slow to adopt modern tools of regulation and intervention.

It would be a fair response to our Essay that progressives’ sense of indignation over all things corporate may actually hold some promise for achieving unfinished substantive law reforms. Progressives are justly fueled by the kind of indignation over corporate wrongdoers that is so very absent and needed today. The challenge is to channel this indignation and take seriously the idea of passing progressive corporate crime legislation that is fair, measured, and evidence-based. It is but a small step for progressives to distinguish the worst of corporate wrongdoers from all corporations—to levy indignation towards specific wrongdoers.

The complete paper is available for download here.