BOOK REVIEW / Sky-larks and stretch limo jockeys: 'Capitalist Fools' - Nicholas Von Hoffman: Chatto & Windus, 18.99 pounds: Godfrey Hodgson on a bold view of how American businessmen have changed from liberating heroes to hollow celebrities

THE OUTHOUSE is as good a place to start as any. 'Where once there was a little wooden shack with a half-moon in the door behind every American's house,' writes Nicholas Von Hoffman in this personal, this original, this oh- how-different history of American business, 'there came the whoosh of the flush.' Capitalist Fools is original and different because Nick Von Hoffman, radical organiser of the downtrodden turned chronicler of contemporary folly, is neither a booster of business nor a denigrator.

His point, and I believe it is a profoundly true and important one, is that once American business played a revolutionary and liberating role, inventing and marketing products that transformed life, and for the better: a canned ham or chicken soup in every pot, a Model T in every garage, flush toilets, bathroom tissue, metalled roads, affordable petrol, clean water, electric light and cheap, available power for machines in every home, every store and workshop.

But now, says Von Hoffman, the businessman as creator, as inventor, prophet of the better life has been replaced by the CEO, the business celeb, by shallow men and hollow men, Wall Street geniuses selling junk bonds and concept stocks, merger and acquisition sharks, advertising men hyping half-truths, and the whole unholy tribe of flacks, public relations men, lawyers, accountants and non-productive talkathon specialists with Harvard business administration degrees.

The men who made America, in Von Hoffman's admiring bestiary, were monsters. But they made things happen, and those things made life better for Americans, and later for people in those other countries wise enough to imitate them or at least buy from them.

Take John Patterson, the founder of the National Cash Register company. He built a model factory with meals at cost in a canteen with an orchestra playing, with showers and air that was changed every 15 minutes and light to work by. But he was also the original foot-in-the-door salesman. Business was war with Patterson. At meetings he would scream at his sales force, 'Kill them] Crush them]' The similarity between the American business style of the 1880s and the Japanese business style of the 1980s are striking: 'the same before- work calisthenics, the chanting and singing, the company as hovering mother and swinish tyrant, the incessant attention to detail.' The Japanese didn't think up something new, says Von Hoffman. The Americans forgot something they had thought up in the first place.

Take Samuel Insull. When he fell, he was relentlessly pursued and brought back from Turkey in handcuffs because he sold shares in his electricity utilities to a million small investors. He went broke, and the investors, along with his less energetic competitors, howled for his blood. But, Von Hoffman points out, Insull sold stock direct to small investors because Wall Street overcharged him for its loans. He transformed dynamo design, brought in alternating current (which his mentor Thomas Edison resisted), saw the advantage of copper over iron wire. It is only a small exaggeration to say that where Edison invented electric power, Insull brought power to America.

Alfred P Sloan, the management genius who created General Motors, in its heyday probably the best-managed large corporation as well as the largest manufacturing corporation in the world, knew his business inside out. He introduced the concept of return on investment and applied cost accountancy with ruthless logic, not because they were fashionable but because they helped him to make and sell better cars more cheaply than his competitors - who included Henry Ford.

Von Hoffman rightly adds: 'no accomplishment of American business is more astonishing than the rapidity and thoroughness of the national distribution systems which make a commodity universally available across the great land mass which is the United States. The generation which lived through these changes and helped to make them understood these things did not happen because some people chanted, 'Hocus pocus, free marketosis]' Free markets are necessary, but business and business organisation, which are the same, are more important.'

'It is our fate today,' Von Hoffman complains, 'to be under attack from people with bad complexions and rheumy eyes, who lecture us on the free market, the capitalist system and laissez-faire. Instead of making buzz-buzz with their ideological prayer wheels, they should be dramatising the careers of some of these very remarkable business people.'

Von Hoffman has a lot of fun with the fallen idols of the Wall Street years. He has a particular contempt for Henry Kravis, the mergers and acquisitions acrobat he calls 'the Dough Boy'. He is less than kind about James Robinson III, the head of American Express, whom he dubs 'Jimmy Three Sticks'. He is scathing about Carl Icahn, the raider who rustled TWA and left it a dying cow. He wishes CBS had fallen into the hands of Ted Turner, because he knows the broadcast business inside out, not into those of Lawrence Tisch, a real estate man. You get the drift.

Von Hoffman set out to write a biography of Malcolm Forbes, the shallow show-off who was the publisher of his eponymous magazine. He soon realised that Malcolm was not worth a biography, but that there was a book in the contrast between Malcolm, the playboy Chief Executive Officer, and his father, the Scots immigrant who lived quietly in unfashionable New Jersey, worked harder than his son played, and created something new: business journalism.

He works his contrast too hard, and his prose often soars way over the top. He writes like a revivalist preacher crossed with an Australian journalist in a pub. But everyone knows his basic point is right. At the head of American business, those hard, disciplined men who knew their business and had a vision of how their success would meet society's needs have been replaced by the Milkens and the Trumps, impotent figures who have allowed the great wealth-creating machine to come close to losing its momentum.

He quotes no less an authority on corporate egotism than Harold Geneen repeating the old truth that American CEOs are impaired by their narcissism as much as an alcoholic by his martinis. 'All those ego-feeding activities, the long hours in the limousine, the sky-larking in the corporate jet, the collecting of press clipping, the unnecessary speeches make a corporate problem out of what had been an otherwise perfectly competent, even brilliant executive.'

Von Hoffman is not soft on these men. 'After a company has been conglomerated and dis-conglomerated, sucked and resucked, and left for dead in the bankruptcy court, the biz-animals come out, shimmering a cold silver in the dark.'

What has all of this to do with us? Alas, our business world, where it is not still slumbering in cosy complacency of the kind the business heroes of 70 and 100 years ago swept away in the US, takes the beat from sad sycophants who spent a few years on the lower slopes of the Manhattan towers, and only wish they were CEOs in the worst tradition of the stretch limo jockeys Von Hoffman so mercilessly takes apart. Who in British business journalism has Von Hoffman's grasp of the relationship between business style and its consequences for society? Who would even try to write it with this cold passion, this rictus of outraged contempt that makes you laugh, even through the rage.

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