$ = Power: C. Wright Mills and William Randolph Hearst

Over break, I visited Hearst Castle, one of many homes of the famed publisher and politician William Randolph Hearst. On the tour, I learned several interesting facts about his life: at the time Hearst built the estate, he controlled 98 business in various industries such as forestry, mining, and ranching, not including his publishing interests.

The estate was built during the start of the Great Depression, though Hearst himself was still receiving a high income of somewhere around 100 million dollars (I think- and that's 1930s dollars too.) Later on, as Hearst's fortune went under, he slowly sold his land holdings (at one point he owned something like 40 miles or so of California coastline!) and his businesses. I don't know the details of how the Hearst Corporation turned its finances around but I know that his family is still deeply involved in corporate ownership and management (W.R.'s grandson, George R. Hearst Jr., is co-Chairman of the board of the privately owned corporation.)

The example of W.R Hearst fits well with many of the sociological traits that C. Wright Mills in The Power Elite underscores: Hearst was wealthy, college-educated, the son of a landholding millionaire mining engineer and businessman. I liked how Mills tried to debunk the idea of a power elite (back then) of immigrants or upwardly mobile lower middle class people by using statistical figures of mostly white, upper-middle class and highly educated shoe-ins for corporate executive positions. His critique of the "entrepreneur" and "bureaucrat" are especially biting, and he argues that most people incorrectly identify the entrepreneur as an individual who has "all the risks of life about him, soberly founding an enterprise" while in fact "[i]n 1950, a far more accurate picture of entrepreneurial activity of the corporate elite is the setting up of a financial deal which merges one set of files with another. The chief executives of today to do less building up of new organizations than carrying out of established ones." (133) Certainly W.R. Hearst wasn't a poor man starting from nothing when he began his publishing enterprises. He had social capital, connections, and financial means, and inherited the first paper he started from his father (who was also a Senator). I wonder how true Mills' idea of entrepreneurship as a somewhat marginal (as in, not making an enormous amount of money) way to start a business holds today in a world of startups, and in a world where we tack "social" onto the term and use it to promote small businesses in developing countries through microfinance and microcredit.

Finally, another major point I got from C. Wright Mills is that survival tactic (and money-bringing one) of the power elite, especially the business power elite, is to consolidate and diversify. Mills points that out in his description of the kind of lateral, industry-influencing decision making that corporate executives must partake in:

"on the higher levels, those in command of great corporations must be able to broaden their views in order to become industrial spokesmen rather than merely heads of one or the other of the great firms in the industry. In short, they must by able to move from one company's policy and interests to those of the industry. There is one more step which some of them take: They move from the industrial point of interest and outlook to the interests and outlook of the class of all big corporate property as a whole." (120-121)


Clearly Hearst Corp. exemplifies this idea: it has broadcasting, radio, newspaper, magazine, and interactive companies; space satellites; a ranch; real estate holdings; and philanthropies- you name it- all over the world.

Schumpeter - Capitalism, Socialism & Democracy

Since this was a rather difficult reading, I will clarify major points of Schumpeter's argument for my benefit:

-Capitalism is characterized by fifty year business cycles

-Compared to classical economists, Schumpeter believes that the economic engine of capitalism is not pure competition, which operates on the principle that companies compete against each other to produce the most goods and services at the cheapest cost while making the most profit. In such an environment, the net effect of this type of competition is lowered prices, increased output and the edging out of those who cannot compete. Monopolies and advertising campaigns are cited by Schumpeter as examples of a kind of hybrid competition, where companies and industries create artificial & intentionally high (or low) pricing structures.

-The economic engine of capitalism according to Schumpeter is creative destruction, where
"the opening of new markets, foreign or domestic, and the organization development from the craft shop and factory...illustrate the same process of industrial mutation if I may use that biological term- that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one." (83)

-Creative destruction is the process of innovation and creation of new business models that emerge from technological development (I assume through capital investment) and widespread societal adoption. In other words, new paradigms in production, distribution, and consumption that can be reproduced on a mass scale correspond directly to the profitability and increased output of capitalist institutions, industries and corporations, as well as wealth for individuals (and the middle class) . Although this ongoing process of capitalist development has its winners and losers, it is ultimately of enormous social benefit since it opens new markets (via new products and services) in the process of closing, or destroying, existing ones.

I am interested in the question of credit, technological innovation, and the economic engine of capitalism. Somewhere in this dynamic of boom and bust is the ethical question of how many people (in America and elsewhere) fail to save and spend too much on crap they don't need that is pumped out at exponential rates. What defines innovation for Schumpeter- I have the feeling that he means anything in the business world and in the global flow of economy that mysteriously leads to improved social conditions for people(? not sure about this though) Does his notion of innovation apply to efficient processes like the ways in which global networks of capital investment, credit flows, trade legislation and labor practices are currently managed? The rapid transfer of capital, money, goods and services characterizing our current situation has shaped production, distribution and consumption of the material and non-material (information) world in a way that perpetuates increased output rates and decreasing costs of labor and goods, but also in a manner that can't be sustained indefinitely.

The destruction end of this picture is bleak, especially when we consider environmental costs. I think that at this point we are all aware of the fact that there is so much more to consider regarding innovation for innovation's sake. I am explicitly critiquing the ideology behind "nanotechnology" or Moore's law, ideas that are characterized by the desire to build things that are faster and smaller without taking into consideration the fact that whatever is being produced might be more disposable. Technological innovations related to the speeding up production processes- or chains of distribution- can lead to little to no comprehension and reflection of decisions that consumers might make.