Big Business and Small

The socialist magazine Jacobin offers an (unsurprisingly) Marxist interpretation of Trump’s base of support among middle-income small-business owners (call ’em kulaks!) without college degrees.

This corresponds, of course, to the classic scenario in which the petty bourgeois — the middle class whose ownership of small parcels of property does not protect them from vulnerability in the business cycle and the need to exact self-exploitation — experience worry and insecurity following a financial crisis and economic slump, making them receptive to right-wing authoritarian solutions and scapegoating of ethnic-racial minorities. [The tensions within the Republican Party] are reminiscent of the classic tensions between big and petty bourgeois — or, in American terminology, big and small business — in central European politics during the worldwide slump of the 1930s…A malfunctioning bourgeois politics can be solved, this projects, by a billionaire megalomaniac who will suspend his class’s self-interest because he cannot be bought, a scenario particularly attractive to a small-business mentality that resents taxes, minimum wages, and “red tape” and seeks someone who knows “the real world.”

Here’s something I notice about small business these days. I basically encounter three types of small business. The first is sole proprietorships or family businesses- a solitary guy or a father and son who do plumbing or electrical or masonry and so on. The second is the landscape and construction businesses that run almost entirely on illegal immigrant labor. And the third are well-connected, well-educated people who run restaurants or cafes or the occasional downtown boutique, often at a loss.

The thing to notice is that in the first and second case, the business is specifically set up not just to minimize red tape or the cost of compliance with employment regulations, but to avoid them altogether. Sons aren’t likely to sue their dads, all things considered, and illegal immigrants have a tricky time calling attention to their employers’ business practices without putting themselves at risk. In other words, for people whose small-business isn’t just a vanity project or a hobby, more often than not complying with regulations isn’t just an obstacle, it’s an ever-more insurmountable wall, with only those specifically shielded from compliance even being able to keep themselves in the black. For example, here are new regulations that the Obama administration put out on Wednesday:

Millions of Americans will get a raise beginning Dec. 1, and not because their employers will have a sudden outbreak of Christmas generosity. Rather, it will come courtesy of the Obama administration, which on Tuesday evening released the final version of a long-planned update to the nation’s overtime regulations.

Under the new Department of Labor rules, salaried employees earning less than $47,476 annually will automatically receive overtime pay when they work more than 40 hours in a week, double the current $23,660 ceiling. Administration officials estimate that more than 4 million workers will be impacted by the change, which will increase their pay by an estimated $12 billion over the next decade. “It is based on a simple proposition. If you work overtime, you should actually get paid for working overtime,” Vice President Joe Biden said on a press call.

The dangers of getting sued for non-compliance with labor regulations you might not even fully be aware of, as a small business, might be even greater than the costs of compliance themselves, whether for overtime, minimum wages, health insurance, or discrimination in hiring or accommodation.

Larger businesses have the legal know-how and larger profit margins to deal with more regulation– and even potentially benefit, in the long-run, from the cushion from competition they provide. They also have the headroom to keep up with fashions and trends among the Powers that Be that haven’t yet made it into regulation and law. So, for example, in  2011 and 2012 I heard CEOs talking about their worries about budget deficits; in 2013 and 2014 I heard them talk about LBGT awareness and support for gay marriage; in 2015 and 2016 racial diversity was back front and center. Does your average electrician trying to go from two to three employees have time to keep track of these waves that crash against the cultural shore, let alone incorporate them into his day to day business? Someone like Howard Schultz, who instructed his Starbucks employees to write “Race Together” on coffee cups and invite patrons to have a “discussion about race,” is like the Polish cavalry commander in War and Peace who marches into the Neman river, drowning horses and men, so as to impress Napoleon, who isn’t even paying any attention. He might be over-enthusiastic, but there’s no doubt he’s on the side of TED Talks and Davos and the National Book Award, even if the coffee tastes rather burnt.

I can’t say if small business owners are right to support Trump; I was wildly wrong in underestimating Trump’s success in the primaries and will try to keep my mouth shut when possible on the specifics of what will happen during or after the election. But there seems little doubt to me that the general pattern of increasing alignment between big business, elite education and government on the one hand, and of increasing alienation of small business from those same elites, is not merely a matter of false consciousness or willful antipathy but, as Marx would put it, a rational response to the material conditions of life.


3 thoughts on “Big Business and Small

  1. “The dangers of getting sued for non-compliance with labor regulations you might not even fully be aware of, as a small business, might be even greater than the costs of compliance themselves,” or, as is actually the case, there may be very little danger of getting sued for non-compliance with labor regulations. In fact, you might not even be able to be sued for non-compliance, but simply reported to the state Department of Labor, who does not have the staffing to follow up on penny-ante issues like wage theft against low-wage workers, whose complaints by their nature involve small sums of money. At least, that’s the way it works here in oh so liberal and labor dominated Rhode Island. When one group of workers won such a dispute at the Dept. of Labor in a restaurant in Providence recently, Jobs with Justice still had to repeatedly picket until finally the restaurant paid the back wages, which was considered a great and unusual victory.


    1. I don’t doubt that’s the case; but it’s interesting to me that I hear more often about large employers doing wage theft systematically than about small; that could be simply a matter of reporting bias (large employers are more newsworthy).


      1. I wish to confirm what the writer earlier noted. The DOL is a federal agency and has limited impact on how the policies are actually implemented. Almost all the small employees that you are discussing here can escape the DOL regs without ever being sued.

        I wish to differentiate between the small service provider like the family service business Case 1 (the construction business can be easily added to this); few of these businesses ever come under the DOL radar. They are more governed by the economic situation and economic feeling of the public. The second category of business owner is a shop/restaurant owner who has to compete with Walmart and chains. They may attribute the impact of competitive economics to the governmental regulation, and are probably correct. In any event, a small business owner has no room either in Democratic or republican party. What they need is a third “small business/protectionist” party and Trump fills the role. Why he does or how he will do it is not clear.


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