Review: The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America―and How to Undo His Legacy

The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America―and How to Undo His Legacy by David Gelles
My rating: 2 of 5 stars

I agree with the thrust of this book’s argument: American capitalism took a dark turn in the early 1980s when a “Greed is good” mentality took over. The idea of “corporate citizenship” came to seem quaint, and whatever good corporations might once have done – it’s a dubious good, but there is evidence of corporate culture that enabled the growth of many middle-class families and their communities – turned into history.

Gelles locates this transformation in the philosophy and work of Jack Welch, the CEO of General Electric who pioneered the notion – or at least pioneered applying the developing philosophy – that shareholder returns trumped all other concerns. That meant offshoring production, breaking unions, skimping on research and development, and ruthlessly turning over personnel who were -- rather than a company’s asset – a company’s expense.

At his most extreme, Gelles tells us, Welch actually tried to ban the company directors from using the word “loyalty” because he had come to see everyone attached to the company as there for purely transactional reasons.

I don’t doubt Gelles ’s account of all this. I’m old enough to remember some of it taking place, and I remember “Neutron Jack” as the kind of corporate blowhard that my long-haired college friends and I alternately cursed and laughed at.

And I do admire Gelles ’s passion in showing how Welch’s legacy has turned so sour. The man once haled as the “CEO of the century” had the company he built melt away under his successor and had his various disciples run, raise, and ruin a series of other major corporations.

What I do question is how much of the blame he assigns to one man. In Gelles ’s view, Welch is the architect of all that went wrong. While I acknowledge that he was a major player, I’m inclined to see him more as a symptom rather than a creator of that social sickness.

Gelles ’s approach makes for a very thin narrative. He has a lengthy introduction that tells more or less everything there is to say about Welch’s life and career. Then, in the next several chapters, he retells it. In some of those later chapters, I had an odd sense of déjà vu, a feeling that I was hearing something I’d heard before.

Then I remembered that Gelles had said it in the introduction.

I take that repetition as supporting my concern about the thinness of the narrative. Welch played a pivotal part in applying theories that people like Milton Friedman were proposing, but this book might have been just as successful if it focused on Friedman and his influence rather than Welch and his practices.

Or, maybe this could have centered on the Reagan-era deregulations that made possible the corporate growth, acquisitions, and under-scrutinized accounting that underlay Welch’s work.

My point is that this corruption of American capitalism has many authors. Putting Welch at the center of it is almost an optimistic move. It suggests – as the final chapters do – that we can return to a more benign economic structure of only we counteract his legacy through more enlightened corporate practices.

I don’t pretend to know the solution myself, but I can see – in many ways from the evidence of this book – that it’s bigger than one man. This story tries to make it about that one man, when – depressing legacy that he no doubt leaves – it’s really about a culture that lost its way.


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