Enron and the Decline of Capitalism
Patrick J. Buchanan
February 12, 2002
The 1950s gave us the "Fifth Amendment Communists" – men who hid behind the Constitution to cover up their treason. Now, we have the Fifth Amendment capitalists, the Enron men who invoke the constitution to cover up their betrayal of faithful employees.
"Women and children first!" and "The captain goes down with his ship!" That was the manly code of honor we were taught as children. But, at Enron, the women and children were locked in steerage, so they would not interfere as captain and crew hauled the ship's safe, with all the passengers' valuables, into the lifeboats and shoved off. These fellows give new meaning to the old Marxist phrase "capitalist pigs."
At first, Enron seemed but the latest manifestation of the second of the capital sins in action: covetousness. But Enron may prove a far more serious matter. It may have helped to dynamite the very foundations of capitalism itself: faith, trust and belief in the system.
For the stock and bond markets depend on the faith and trust of investors – that what they are being told by companies about profits and what the market analysts tell us is the truth, so far as they know it. We now learn that Enron was an empire of lies. The corporate executives lied to employees, the accountants lied to executives, and both lied to the Enron investors. As for the Wall Street analysts, these wizards seem to have been clueless that it was all a shell game.
But why are we surprised? After all, we live in an age when college professors hand out A's to undeserving students, when Scholastic Aptitude Tests are rewritten so poor students will get better grades, when politicians write resumes to include combat they never saw. Why are we surprised, then, that Arthur Andersen cooked the books the way the boys at Enron wanted them served up?
Enron is a corruption of a free-enterprise system, where honest businessmen try to meet consumer needs. It represents a new "casino capitalism," where men make hundreds of millions – not by creating new products, but by gaming the system.
How did Enron become the seventh largest corporation in the United States, a rival to GM and GE? Not by doing the honest but boring business of delivering energy to consumers, but by "diversifying," borrowing and buying businesses Ken Lay knew nothing about, and investing in such productive ventures as "derivatives."
Growing up in the '40s and '50s, schoolchildren were taught about the "Robber Barons," those 19th century titans of steel, oil, banking and rail: Carnegie, Vanderbilt, Rockefeller, E. H. Harriman, James J. Hill and J. Pierpont Morgan. But for all their ruthlessness, all their greed, these men left America the greatest industrial, technological and financial power the world had ever seen. They built a nation.
What did the faux capitalists of Enron produce but piles of shredded paper for packing crates? Patriotism may be the last refuge of the scoundrel, but the "malefactors of great wealth" at least saw themselves as master builders of America.
Something has happened to capitalism. Old companies that used to be proud to be called American are cutting their ties to the country of their birth to declare themselves "global corporations." Executives loyal to hometowns, who refuse to dump their American workers and move their factories abroad, are considered relics on their way to extinction.
A few years ago, Ralph Nader wrote to 100 of America's greatest corporations to suggest that they open their annual board meetings with the Pledge of Allegiance. Replies came back full of indignation and anger that such a request amounted to calling for "loyalty oaths" and "McCarthyism." Only one company said that reciting the pledge sounded like a fine idea.
The "mystic chords of memory" of which Lincoln spoke no longer bind. Some of our richest capitalists treat their American workers no better than depreciated and wornout equipment. American think tanks burble about the "creative destruction" of Global Capitalism, indifferent to the fact that when factories move out of towns, communities die, faith dies, hope dies and people turn to government to restore the security that has been lost.
Like socialism, capitalism may contain the seeds of its own destruction, and the gravediggers of capitalism may turn out to be the capitalists themselves. Ivan Boesky; "Chainsaw Al" Dunlap, who made his reputation firing workers in the thousands; Ken Lay – who has done more damage to the faith, trust, and belief in our system of free markets and competition than such as these?
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