Even before Lee Iacocca sold the two-millionth copy of his autobiography, it was the most successful business book of its kind. More impressively, when that sales milestone was reached in July 1985, less than a year after its publication, Iacocca joined the ranks of America’s all-time bestsellers, regardless of genre, including Gone With the Wind and The Power of Positive Thinking. From his humble origins as the firstborn son of Italian immigrants, Iacocca distinguished himself as an engineer at Ford Motor Company before becoming CEO of the Chrysler Corporation in 1978, when it was on the brink of bankruptcy. Iacocca turned Chrysler around, paying back a government bailout and leading the former automotive straggler to the top of the car industry within a few short years. Highlighted repeatedly in Iacocca’s practically unavoidable TV commercials for Chrysler in the 1980s and ’90s, it was an American success story. But it was also something else, maybe something more: the creation of a new character on the American scene, the Celebrity CEO.
The chief executive officer was nothing new in the history of corporate capitalism, but the CEO was. According to the Oxford English Dictionary, the now familiar acronym first occurred in print in American English in 1972. Its appearance signaled a larger change in the culture of big business. Through the early postwar decades, when quiet stability was the paramount corporate virtue and men in gray flannel suits ran the show, the chief executive officer had exercised his authority behind the scenes, almost exclusively within the managerial staff and in the boardroom. As an activist Wall Street and a risk-enthusiastic financial services industry began to tear down and rebuild big business in the 1970s and ’80s, the CEO became a public figure, the face of the corporation, and even something like the new generation’s corporate buccaneer, consolidating power around himself (as well as lucrative stock options) and making the success of the company a matter of personal branding. Iacocca was one of this new breed, but there were many others. Almost all of them—Wal-Mart’s Sam Walton, Hewlett-Packard’s David Packard, Walt Disney’s Michael Eisner, Michael Bloomberg, even Dave Thomas of Wendy’s and Tom Monaghan of Domino’s—wrote best-selling books in the new genre of business leadership, mining wit and wisdom from their own personal stories.
In prestige and power, none of them surpassed Jack Welch, CEO of General Electric and businessman supreme in the era of shareholder value. In The Man Who Broke Capitalism, New York Times reporter David Gelles makes an earnest (perhaps overly earnest) attempt to give a frank account of Welch’s life and legacy.
When Welch took the reins of GE in 1981, he began remaking the old industrial giant into a lean, mean, shareholder-value–producing machine. Right off, he fired 100,000 people, graded every manager with efficiency statistics, and made his employees compete annually in order to keep their jobs. Dubbed “Neutron Jack” by labor unions, he emptied out factories and office buildings, all the while producing record profits and spreading the gospel of cutthroat profit seeking. “Each staff person has to ask, How do I add value?” he told Harvard Business Review in 1989. “How do I help make people on the line more effective and more competitive?” He promised to divulge his managerial wisdom in best-selling books such as The New GE: How Jack Welch Revived an American Institution (1993) and the unfortunately titled Jack: Straight From the Gut (2001) and, later, in courses at his Jack Welch Management Institute. In the late twentieth century, he became the face of American capitalism and all that it could accomplish.
But the Welch who emerges from The Man Who Broke Capitalism is far from the genius who pioneered brilliant methods for unlocking profit. We learn on page after page that he was ruthless, that he encouraged his top managers to “never, never stop looking for” employees who didn’t have the right values, and if they found them, to “shoot them,” that his risky financial strategies undermined the company’s pension fund and the retirement prospects of thousands of employees, that he shamelessly employed every tactic to keep quarterly earnings going smoothly upward. He even yelled at his secretary.
Gelles’s well-researched and thoughtful book is not simply an exercise in posthumous muckraking (Welch died in 2020)—it asks important questions about what has become of our economic system. Gelles argues that Welch was instrumental in transforming American capitalism into a system that is increasingly unstable and inhumane to workers precisely because it is obsessively focused on short-term profits. The fact that Welch played a role in profiting from and promoting the short-termism that remade big business over last several decades can hardly be denied, but the bitter fruits of stagnant wages and a shrinking middle class are the product not simply of managerial strategy but of larger structural changes that in the 1970s and ’80s began to make the global economy what it is today: lightly regulated, highly financialized, and completely ruthless in exploiting cheap labor markets wherever they can be found. Is Jack Welch the master villain of this story?
Turning the history of capitalism into a morality tale about good guys and bad guys is tempting. Even though it is a history filled with human beings doing human things, it is still primarily a history of bureaucratic institutions—hardly the stuff of page-turning narratives. As Hannah Arendt memorably put it, a fully developed bureaucracy is “rule by Nobody.” The large, publicly traded business corporation seems designed to obscure living, breathing, accountable human beings. The organizational chart may suggest that the CEO is where the buck stops, but in actual practice any number of executive or upper-level managers might be the actual responsible parties. Besides, the directors appoint management—and to whom are they accountable? Shareholders, it seems. Private equity groups and other activist investors such as T. Boone Pickens, Carl Icahn, and Mitt Romney, through hostile takeovers and other forms of financial pressure, have played an important role in gutting the old industrial corporation. But shareholders are a large, unmanageable mass of people who can end their relationship with the corporation simply by selling their shares. In short, the more you try to lay a hand on the bureaucratic body of the corporation, the more it slips away, disappearing into the fog that neoliberal theorists called a “nexus of contracts.” If, as Aristotle famously defined it, the soul is the form of the body, the fungible and seemingly formless corporation that has become so familiar to us is fundamentally soulless.
The absence of the soul, just like the absence of personality, was a problem for big business almost from the beginning. In his classic book Creating the Corporate Soul: The Rise of Public Relations and Corporate Imagery in American Big Business (1998), historian Roland Marchand showed how early-twentieth-century public relations professionals sought to apply a façade or simulacrum of humanness to the large bureaucratic organization of the corporation—then perceived by Americans as jarringly inhuman when compared to far more familiar small businesses. Such experts pioneered new methods for giving public personas to retail chains, life insurance companies, industrial manufacturers, and other public-facing firms by hiring relatable spokesmen and employing advertising campaigns that used homely art or made the company founder an icon of its brand.
Business leaders were not the only ones who stood to gain from giving the corporation more of a human face. Muckrakers and critics of big business from the Progressive Era onward also sought to attribute personality to the firm, if only to sidestep “rule by Nobody” and set their sights on a specific individual who might be blamed for reckless or criminal behavior. John D. Rockefeller of the Standard Oil monopoly was made one of the first villains of American business by the journalist Ida Tarbell. Historian Matthew Josephson popularized the epithet “robber barons” in reference to such financiers and industrialists as Andrew Carnegie, Jay Gould, and Cornelius Vanderbilt in a 1934 book of that name. Congressional hearings held in 1912 and 1913 by the Pujo Committee made financier J.P. Morgan the face of Wall Street malfeasance. Twenty years later, in an America beset by the Great Depression, the Pecora Commission did the same thing to Morgan’s son, J.P. Jr., and a handful of other bankers. But during the three decades of prosperity that followed World War II, Americans lost their appetite for muckraking, and there were fewer politicians and journalists eager to uncover wickedness in the heart of corporate capitalism. The rise of the Celebrity CEO as financial anxiety began to grow in the 1970s marked a turn in the culture of big business, but this change did not redound solely to the benefit of newly powerful executives. If a new generation of corporate personalities could be praised for remaking capitalism, they could just as easily be blamed.
Which brings us back to David Gelles and his book-length indictment of Jack Welch. Gelles explains how Welch’s financial and managerial strategies were replicated outside GE, notably by his own executive-track underlings who learned his way of doing business and went on to implement those policies at Boeing, 3M, Honeywell, Home Depot, and other firms. In this story, Welch is depicted as something more than an influential business leader, more than a mere man. He is the embodiment and promoter of Welchism, an ideology and a “warped worldview” that has shaped how almost everyone does business. Far from a man of his times, Welch is seen here as the man who made our times and is responsible for the undoing of the American dream (even for the rise of Trumpism).
By making such an overdetermined case against one man, Gelles has become himself a promoter of the myth of the Celebrity CEO—only, in this case, the man in question is not a great man but a very, very bad one. But Gelles is not alone in losing sight of the larger picture of institutions and governance by focusing so closely on compelling characters. Peter S. Goodman’s Davos Man: How the Billionaires Devoured the World (2022) exposes the havoc wreaked by jet-setting leaders of global capitalism, taking special aim at the pettiness, hypocrisies, and other vices of such men as Marc Benioff and Jeff Bezos. Goodman should be credited for at least being alert to the realities of economic class and to the structures of economic institutions—and to the way this system undermines the lives and livelihoods of vulnerable immigrants and blue-collar service workers. The longtime author of the Times’s “Corner Office” column featuring softball interviews with powerful executives, Gelles unfortunately displays little interest in the complicated world outside the C-suite. In his concluding chapter, “Beyond Welchism,” his suggestions for how corporate America can put Welch-style depredations behind it, such as “investing in workers” and “thinking long term,” put the onus on a new generation CEOs and their ability simply to become better leaders. Yet one lesson we might learn from the life of Jack Welch is that a new spin on business leadership is the last thing we need.