Room Enough for the Do-Gooders: Corporate Social Accountability and the Sherman Act – Note by Sarah Rackoff

From Volume 80, Number 5 (July 2007)

Congress passed the Sherman Act in 1890 to combat the monopolies, trusts, and pooling arrangements that arose as businesses expanded in the wake of the Industrial Revolution. The purpose of the Act was to prohibit the price gouging effects that resulted from the cartel-like behavior of rapidly growing businesses, best represented by the controlling – and later, declared illegal – position of the Standard Oil Company. The nation resented growing corporations that “[s]eemingly at will…could raise prices to consumers, cut the wages of labor, favor some customers over others, and control the supply of basic commodities.” President Cleveland emphasized the need for legislation to protect average consumers stating, “Corporations, which should be the carefully restrained creatures of the law and the servants of the people, are fast becoming the people’s masters.” Legislators hoped that the Sherman Act would be a solution to these ills and that consumers, and later workers, would be protected from the power being amassed by corporations.

These Populist sentiments resonate over a hundred years later as activists, nongovernmental organizations (“NGOs”), and multinational corporations (“MNCs”) seek solutions to similar backlashes against the activities of behemoth companies. President Cleveland’s concerns are discernible as consumers demand greater accountability and protection from major corporations. The demands for reform, however, now come directly from consumers and NGOs, rather than legislators. Moreover, the sought after regulations to limit corporate excesses are being self-imposed in the wake of such pressure. The private sector is developing creative solutions to address the abuses that resulted from the rapid globalization of commerce and production.



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