The Chamber’s War on Healthy Capitalism

April 15th, 2011

The United States Chamber of Commerce is one of the largest lobbying groups in this country.  It has enormous clout on Capitol Hill, both because of the size of its membership and the depth of its pockets—the Chamber spends more money on political ads and campaigns than any other organization in the country, save the Democratic and Republican parties.  To the public it describes itself as “the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions [while over] 96% of U.S. Chamber members are small businesses with 100 employees or fewer.”  The reality of its operations, however, is a bit less egalitarian.  Case in point: in 2008 about 50% of the Chamber’s $140 million in contributions came from just 45 donors.

And what does the Chamber do with this power?  A lot.  But in recent years, those actions have become increasingly less, shall we say, morally appetizing.  In 2009 the Chamber was one of the loudest voices opposing legislation aimed at reducing green house gas emissions.  The Chamber has historically played a key-role in fighting consumer-protecting legislation, labor-law reform, and financial regulation.  In the last year, the Chamber has also been particularly outspoken against health care reform.

It has been able to do accomplish so much, so the theory goes, because it is “ideologically cohesive.”  But over the last three years, that has been unraveling.  The impetus for this extrication, until recently, was climate change.  In October of 2009, Apple announced it was immediately resigning its membership to the Chamber because the company “supports regulating greenhouse gas emissions, and it is frustrating to find the Chamber at odds with us in this effort.”  And that came after Nike left its position on the Chamber’s board and Pacific Gas & Electric, PNM Resources, and Exelo forfeited their memberships for the same reason.

In their statements, these companies argued their stances on climate change were fundamentally at odds with the Chamber’s.  Implicitly, took issue with the Chamber’s morality on the issue, as these companies believe strongly in the importance of protecting the planet.  Moreover, they seemed to understand that climate change “isn’t just bad for the planet; it’s bad for business.”

The heart of these issues seems strikingly similar to those put forward by a fresh wave of criticism of the Chamber.  This week, socially-conscious shareholders at some of largest U.S. corporations—including IBM and Pepsi—are loudly contesting their firms’ involvement in lobbying efforts by the Chamber to undermine the Foreign Corrupt Practices Act (FCPA).  For several months now, the Chamber has been lobbying to weaken the FCPA and has even retained former U.S. Attorney General Michael Mukasey to help them.  According to a compelling article by Raymond Baker, the Chamber’s requests include (among many others) giving “subsidiaries of multinational companies a loose rein” with the FCPA so that the actions of a foreign subsidiary should not expose the parent company to liability and limiting successor liability in cases of mergers and acquisitions.

But shareholders see a schism between their companies’ policies and morals and the Chamber’s.  For example, as Timothy Smith, a leading voice in the fight, argues, for 25 years IBM has had “a very strong policy on bribery and people would be fired if they tried.  Their position is strongly stated by top executives in the board.  Now, at the same time, the Chamber is trying to lobby to reduce the impact.”

The Chamber of Commerce would love to have you—and your senator—believe that it represents American business: big, small, and everything in between.  The truth is the Chamber represents a narrowing minority, but one with a great deal of cash.  This discussion is not just about ethics, although I have argued in the past for the moral responsibility of companies and corporations.  Rather, this is about a comprehensive understanding of the broader implications of these social dilemmas.

In the same way that climate change will ultimately create an unstable environment for business, bribery fundamentally undermines the stability of global markets.  The FCPA aims to guide American business to take actions which will promote the rule of law and create a playing field where businesses worldwide compete based on their products and ingenuity, not on the depth of their agent’s pockets.  To undermine this document is morally wrong, but also fundamentally at odds with a long-term, healthy view of the world’s market places.  Unless the Chamber revises its narrow vision, it faces the risk of becoming irrelevant in this age where a growing majority understands the merits of a healthier brand of capitalism.


Written by Ann Hollingshead

Follow @FinTrCo