The Man Who Broke Capitalism

Jack Welch spurred a shift in the way US companies treated workers, regulators and government.

In the decades after World War II, US employers, employees and the government settled into a détente. Corporate workers got a fair share of their employers’ profits, and generous wages expanded the American middle class. Corporations didn’t try to dodge their taxes, and they accepted government oversight as a necessary part of doing business. But in the 1970s, a new mind-set began to take hold. Economists like Milton Friedman argued that the path to true prosperity required that private sector operators drive the hardest possible bargain with workers and the public sector. Friedman preached a gospel of shareholder power.

Jack Welch, who personified Friedman’s economic vision, became chairman and chief executive of General Electric in 1981. At the time, GE was worth $14 billion, and it might have been recognizable to its founder, Thomas Edison. By the time of Welch’s retirement in 2001, GE’s value had rocketed to $600 billion. It was the world’s most valuable company, as well as an unwieldy conglomerate that had spread...