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The public's attitude toward capitalism: 1980-1989

Business Horizons, Sept-Oct, 1991 by Robert A. Peterson, George Kozmetsky, Gerald Albaum

Capitalism is a cornerstone of American society. For better or worse, it has shaped the cultural, economic, political, and social milieu of American life for nearly 500 years. But what is the attitude of the "average American" toward this cornerstone as we enter the final decade of the century? Is this attitude stable or changing? If changing, is it becoming more positive or negative?

The purpose of this article is to document, or benchmark, the American public's attitude toward capitalism at the beginning and end of the 1980s. In our previous research we found that only about 35 percent of the American public could correctly define capitalism. We also found that the term "capitalism" is more negatively perceived than terms such as "free enterprise system" and "private enterprise system," and tends to evoke stereotypical images of big business.

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At the end of 1980 the American public was looking forward to a Reagan revolution--less government regulation of business, lower income taxes, and a higher standard of living for everyone through the magic of supply--side economics. But the decade was tumultuous, both economically and politically. Indeed, the 1980s witnessed the virtual restructuring of American industry and unprecedented global competition. The use of so-called junk bonds to finance highly leveraged mergers and acquisitions--both friendly and hostile--became rampant. Japanese and Korean firms made major competitive inroads into American industrial domains previously considered sacrosanct. Simultaneously, scandals in the financial and commodities markets, the exploits of Ivan Boesky and Michael Milken, the savings and loan debacle, and the behaviors of well-known firms such as E.F. Hutton (financial transactions), Union Carbide (Bhopal tragedy), and Manville (asbestos) led to public questioning of both the ethical standards and the ethical conduct of business.

By the end of the decade the political infrastructures of several communist nations literally imploded. Pressures for democratic principles and capitalism-based economies resounded throughout the USSR, Hungary, Romania, Bulgaria, Poland, Czechoslovakia, and East Germany. Established governments were replaced, with the new governments embracing capitalism, often without thought of the consequences.

In brief, while capitalism was being praised throughout much of the world as a panacea for economic ills, events taking place in the United States may have reduced the public's confidence in it. Although there were few organized attacks on capitalism per se, its efficacy was increasingly (albeit indirectly) criticized by the media in their coverage of alleged business wrongdoing.

Consequently, it is logical to ask whether the public's attitude toward capitalism changed during the 1980s. Did it remain stable, or did it become more or less favorable? To answer this question, we must know what the public's attitude toward capitalism was at both the beginning and the end of the decade. This article reports the results of a research program that documented the public's attitude toward capitalism at two points in time-1980 and 1989.

THE RESEARCH PROGRAM

To assess the public's attitude toward capitalism, data were obtained in 1980 by surveying a sample of 2,400 households randomly selected from a national consumer mail panel. Half of the questionnaires requested that the male head of household respond; the other half requested that the female head of household respond. Replies were received from 1,556 individuals, representing a response rate of 65 percent. The data were subsequently weighted using gender and age information from the Census Bureau to arrive at a sample that can best be described as representing "middle-class Americans."

Survey participants provided data regarding their attitude toward capitalism by responding to a set of 16 Likert-type items (see Table 1). Each item consisted of a declarative statement followed by a six-point numerical scale that was verbally anchored by "strongly agree" and "strongly disagree." The statements were derived from several sources. Some were obtained by content-analyzing the writings of well-known capitalism authors; others were derived from responses to a previous survey we conducted that examined perceptions of selected economic systems.

In late 1989, questionnaires were mailed to a random sample of 2,250 households selected from the same national panel used earlier. To facilitate attitude comparisons, an identical research approach to that employed in 1980 was utilized. For example, survey participants were asked to respond to the same 16 items used in the initial study. A total of 1,108 questionnaires were returned. This represents a 49 percent response rate. Similar to the 1980 study, the data were weighted prior to analysis by gender and age to arrive at a sample that can be described as representing the "middle class" as of the end of 1989.

WHAT THE PUBLIC THINKS

Responses to both surveys were analyzed at the total sample level as well as by gender, age, and education. Table 1 contains agreement percentages for the 16 attitude items for both the 1980 and 1989 samples. As the table indicates, the American public was generally favorably disposed toward capitalism in both years. Because each item addresses a different dimension of capitalism, collectively the response percentages reflect its complexity and multifaceted nature.

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The public's attitude toward capitalism: 1980-1989

Business Horizons, Sept-Oct, 1991 by Robert A. Peterson, George Kozmetsky, Gerald Albaum

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