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

New York Times Bestseller New York Times reporter and “Corner Office” columnist David Gelles reveals legendary GE CEO Jack Welch to be the root of all that’s wrong with capitalism today and offers advice on how we might right those wrongs.In 1981, Jack Welch took over General Electric and quickly rose to fame as the first celebrity CEO. He golfed with presidents, mingled with movie stars, and was idolized for growing GE into the most valuable company in the world. But Welch’s achievements didn’t stem from some greater intelligence or business prowess. Rather, they were the result of a sustained effort to push GE’s stock price ever higher, often at the expense of workers, consumers, and innovation. In this captivating, revelatory book, David Gelles argues that Welch single-handedly ushered in a new, cutthroat era of American capitalism that continues to this day. Gelles chronicles Welch’s campaign to vaporize hundreds of thousands of jobs in a bid to boost profits, eviscerating the country’s manufacturing base, and destabilizing the middle class. Welch’s obsession with downsizing—he eliminated 10% of employees every year—fundamentally altered GE and inspired generations of imitators who have employed his strategies at other companies around the globe. In his day, Welch was corporate America’s leading proponent of mergers and acquisitions, using deals to gobble up competitors and giving rise to an economy that is more concentrated and less dynamic. And Welch pioneered the dark arts of “financialization,” transforming GE from an admired industrial manufacturer into what was effectively an unregulated bank. The finance business was hugely profitable in the short term and helped Welch keep GE’s stock price ticking up. But ultimately, financialization undermined GE and dozens of other Fortune 500 companies. Gelles shows how Welch’s celebrated emphasis on increasing shareholder value by any means necessary (layoffs, outsourcing, offshoring, acquisitions, and buybacks, to name but a few tactics) became the norm in American business generally. He demonstrates how that approach has led to the greatest socioeconomic inequality since the Great Depression and harmed many of the very companies that have embraced it. And he shows how a generation of Welch acolytes radically transformed companies like Boeing, Home Depot, Kraft Heinz, and more. Finally, Gelles chronicles the change that is now afoot in corporate America, highlighting companies and leaders who have abandoned Welchism and are proving that it is still possible to excel in the business world without destroying livelihoods, gutting communities, and spurning regulation.

Genres: Business, Nonfiction, History, Biography, Economics, Politics, Finance

271 pages, Kindle Edition

Published May 31, 2022

About the author

David Gelles is a reporter for the New York Times, covering mergers & acquisitions, corporate governance, and Wall Street. You can find most of his most recent work on DealBook.

Before joining the Times in September 2013, he spent five years with the Financial Times. At the FT, he covered tech, media and M&A in San Francisco and New York. In 2011 he conducted an exclusive jailhouse interview with Bernie Madoff, shedding new light on the $65 billion ponzi scheme.

David is writing a book about mindfulness at work, bringing together his 15 years of meditation practice with his work as a business journalist. ‘Mindful Work’ will be published by Houghton Mifflin Harcourt in 2015, and will explore the growing influence of Eastern wisdom on Western business.

He lives in New York City with his wife and daughter.

Reviews

[Ali · Rating 5 out of 5]

The book America needs now: the legacy of toxic leadership, and how to undo it
Picture this: I'm a little kid in my living room in West LA, watching an episode of "60 Minutes." A group of distraught factory workers have their factory closed and their jobs destroyed for no discernible reason. By who? "Neutron Jack" Welch, the CEO of General Electric. Wasn't the factory making useful things? (It was.) To compete with Japan, didn't we need *more* manufacturing? (We did.) How would these highly-specialized workers survive? (Who cares!) The firings seemed senseless, capricious, and cruel. Why was Welch being such a dickhead? That's when I understood the "Neutron Jack" moniker: like a neutron bomb, Jack Welch left buildings standing while annihilating the people inside them.

That negative impression of Jack Welch persisted for some time. But then, over the years, I kept seeing articles and magazine covers praising him for his managerial acumen. The chorus of commendation was so loud that I had to pause to reconsider. After all, he met quarterly earnings estimates umpteen times in a row! He made GE the most valuable company on Earth! He was Fortune's "Manager of the Century"! I must have been missing something; clearly these business folks understood what was *really* going on.

Except that they did not. This little kid grew up, got his business degree, and realized that Jack Welch was one of the *worst* CEOs of all time. He destroyed GE, brainchild of Thomas Edison and *the* iconic American company—the maker of everything from light bulbs and washing machines, to jet engines and giant 10-story hydroelectric turbines.

So I was thrilled to see a new book finally endeavor to dismantle the cult of Jack Welch, exposing his managerially toxic and morally bereft ways. Comeuppance at last!

Turns out I *was* missing something after all. Welch was far, far more destructive than I had ever imagined.

David Gelles makes the case that Jack Welch's damage reverberated far beyond the confines of GE into the world economy and society at large. Can one man really do that much damage, though? If the guy was super smart, blindly ambitious, greedy as hell, sociopathic, unwise, with legions of well-placed protégés, he could.

According to Gelles, "Welch employed three main tools in his crusade: downsizing, dealmaking, and financialization."
• Downsizing: Welch "was the first CEO to take a healthy company and treat it like a turnaround job, preemptively laying off tens of thousands of workers." He popularized mass firings, moving jobs offshore, and outsourcing. I didn't realize 250,000 GE workers lost their jobs during Welch's tenure — that's the population of Madison, Wisconsin! So much for "Generous Electric."
• Dealmaking: When he couldn't sell more toasters and jet engines, Welch artificially boosted the bottom line by making nearly 1000 acquisitions for $130B, most having nothing to do with GE's core business.
• Financialization: First, he got rid of GE's manufacturing businesses and instead beefed up GE Capital, its investment and insurance arm, so GE could make money without having to make things. Second, he used share buybacks and accounting fraud to meet Wall St forecasts quarter after quarter.

Welch's protégés then went off to deploy these tactics, making them part of the modern corporate playbook, and wrecking dozens of decent companies in the process: John Trani at Honeywell and Stanley Works; Larry Stonecipher at Boeing; Jim McNerney at 3M and Boeing; Bob Nardelli at Home Depot and Chrysler. They not only laid off thousands of workers, but also killed innovation.

These Welch Weenies and their Welchist tactics are still affecting us today. You can draw a straight line between the obsessive cost-cutting tactics of GE acolytes and the failures of the Boeing 737MAX. Turns out when you cut corners and rush production schedules of passenger jets, planes go down and people die.

That's what makes Welchism so damning: its disregard for basic human welfare in favor of maximizing share price. When did people go from being the main show to becoming overhead? 1981, apparently—when Welch took over GE: "There is capitalism in America before Jack Welch, and after him. His career serves as a line of demarcation, a split between the past and the present. Look at the trend lines for any number of key economic indicators—wages, mergers and acquisitions, manufacturing jobs, union representation, executive compensation, corporate tax rates—and it’s clear that right around 1981, the year Welch took over, things started to go off the rails."

One more thing started to go off the rails right around then that's beyond the scope of the book: the well-being of Americans. That's when the "deaths of despair" from hopelessness, addiction and suicide started ticking up, culminating in a *decline* in US life expectancy starting 2017—the only such decline in rich countries. Coincidence? I don't think so.

Gelles closes with some sensible ideas for reversing the damages of Welchism: better pay; employee profit- and equity-sharing; putting workers on boards; capping executive compensation. Principles of "stakeholder capitalism" can mitigate some of the toxic, short-termist effects of Milton Friedman's frankly sociopathic doctrine of maximizing shareholder value, while bringing us closer to the "Golden Age of Capitalism" when the thriving of employers and employees were intertwined. Capitalism isn't the enemy. Greedy, short-sighted assholes with bad ideas are.

Gelles's fluent prose and seamless storytelling turn what could be a somber subject into a fast, stimulating read. Mainly, though, we all need to read this because Welchism and greed have arguably become the operating system of American society. That ain't sustainable. "The Man Who Broke Capitalism" depicts a gigantic train wreck unfolding in slow motion—but we have the pause button. We're here on Earth to take care of one another. We can move towards that today by giving less power to rich jerks, and electing wiser, kinder people with our long-term interest in mind. Jack Welch is dead. Let's make sure his toxic ideas die, too.
-- Ali Binazir, M.D., M.Phil., Happiness Engineer and startup coach, author of The Tao of Dating: The Smart Woman's Guide to Being Absolutely Irresistible, the highest-rated dating book on Amazon, and Should I Go to Medical School?: An Irreverent Guide to the Pros and Cons of a Career in Medicine

PS: For further reading on capitalism going off the rails and sensible ways to fix it, I highly recommend Kate Raworth's Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist and Douglas Rushkoff's Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity.

[Wick Welker · Rating 5 out of 5]

Shareholders rule the world.

I’m a sucker for any book that drags corporate neoliberalism out in the back and beats it with a bag of quarters until it screams and this book does that. This book is about Jack Welch, the “greatest CEO of our time”. This is a story about a man who took advantage of the changing narrative and redefinition of “Freedom” brought to you by the Powell Memo, Milton Friedman and the Business Round Table and then practically applied those principles. I love books that dunk on these clowns that have corporatized the world while destroying the wealth of normal people so this was a major practice in confirmation bias for me and I’ve read a bazillion books like this before.

Jack Welch normalized and mainstreamed the focus on shareholder quarterly earnings and short term profit. He pivoted into treating labor as a liability, rather than an asset, cutting jobs and benefits as much as possible to squeeze every penny from his own company. He shifted from stakeholder capitalism to shareholder and concentrated enormous wealth even more to himself and the shareholders. He used profits to expand dividends and stock buybacks. He did this crap for 20 years and created an absolutely behemoth out of GE. And now in 2024, what has become of the company? It’s freaking gone. He dismantled and destroyed the actual value of the company and now it doesn’t even really exist in its original form. Jack Welch didn’t invent this tactic but he popularized and metastasized it to many other companies. Part of the discussion in this book is Home Depot, Boeing, 3M and others.

If you haven’t read a book that lays out the absolute highway robbery that CEOs and shareholders have perpetuated over the world for the last 40 years, this is a good place to start.

[Brian Segrave · Rating 1 out of 5]

The title of this book makes some fairly sweeping claims-the heartland is gutted, capitalism is broken, that Jack Welsh specifically is responsible for both and that this work will include a remedy for such tragedies.

The book falls short on all these claims. To plagiarize another reviewer this book is "relentlessly basic". It's a five year old's understanding of capitalism.

Let me preface this with my views on Jack. He was a boorish, mediocre manager who deliberately misrepresented financial results. Not a fan. So although I share Gelles' low opinion of Jack it's impossible to enjoy this book.

The author's thesis in a nutshell seems to be:

- peak capitalism was achieved somewhere around the Eisenhower administration. Stable employment, decent wages, reasonable earnings
- fanatic economists, and specifically Milton Friedman developed a theory of shareholder primacy, encouraging benevolent corporations to severely curtail workforce numbers, wages & benefits
- Jack Welsh, ascending to the CEO role at GE embraced Friedman's doctrine and maliciously slashed US manufacturing
- Jack's energetic mergers & acquisitions activity overextended GE into unfamiliar industries and complicated quarterly results to be essentially indecipherable
- a national embrace of shareholder capitalism will bring us all back to the glorious 1950s

The opening 20% of the book is, in fairness, competent. It essentially a timeline of GE and Jack's career and elevation to the throne. After this it goes seriously off the rails. It become a a bizarre sort of Seven Steps to Kevin Bacon as Gelles dives in the further careers of Jack's former subordinates and lays out all sorts of disasters as traceable back to Jack. Modifications to the returns policy at Home Depot? That's on Jack. Flawed coding in the nosecone stabilization software at Boeing? Jack. 3M's declining morale on the R&D team? Clearly Jack. Deepwater Horizon? Fyre Festival? Ok, no, Gelles doesn't lay those on Jack, but goes one better: Pizzagate, QAnon and Charlottesville- all Jack, I kid you not. Man, I dislike this Jack guy, but seriously?

Gelles frequently quotes anonymous Wall Street analysts throughout- the same guys who helpfully, a decade later, confessed to never understanding GE's quarterlies anyway. Aside from that, the only direct interviews with GE personnel he refers to are with Dave Calhoun and Jeff Immelt for a total of 3 hours. Even with the author's slanted presentation Immelt comes off as self-aware, reflective and insightful. (Anyone who wants a deep dive on Immelt, Light's Out by Thomas Gryta is solid). The rest of the narrative is essentially from already public sources or just personal invective. There is really no new information in this book. There is however factually untrue information- Marriott did not continue to pay dividends during the pandemic. This is easily verifiable.

Gelles seems to have a very simplistic understanding of capital formation, competitive advantage and global sourcing. He seems to be genuinely mystified as to why capital intensive manufacturing of low margin, domestic consumer appliances by a highly compensated, sclerotic workforce wasn't a long term strategy for GE by the mid-80s. In his analysis of the pre-Jack 1950 through late seventies Golden Age he completely omits the Carter administration because apparently all was fine and dandy then also.

His grasp of stakeholder capitalism as pushed by the World Economic Forum is infantile. Much like Southpark's Underpants Gnomes, a number of wealthy investors put their capital at risk, economic activity occurs and a wise and sensitive corporate management distribute the largesse to any comers they determine to be worthy on a scale of universal goodness. Utopia ensues. This is actually his thesis, without misrepresentation. Even Klaus Schwab would say "yeah, there's a bit more to it, son".

Finally, specific to the audiobook, the narration had me progress through confusion, irritation and eventually hilarity as he repeated, repetitively and reiterated again and once more "Irishman Bad".
The subjective Jack-bashing was unrelenting and essentially the same point over and over. Much like M Night Shyamalan's Lady in the Water it was becoming so bad as to be almost good. The narrator alternates tone from sanctimonious to scolding and back again, much like my third grade convent school nun teacher. It really does become hilarious over time but probably not to everyone's taste.

In summary, this is repetitive, overly simplistic, conventional effort with no new information on a man who was essentially not that interesting at root. Not recommended.

[Graeme Newell · Rating 5 out of 5]

Such a delightfully readable book that tells the amazing story of GE’s Jack Welch. Gelles carefully dissects the tactics and philosophy of one of America’s most famous celebrity CEOs.

He methodically tells the story of Welch and the birth of a new generation of business tactics that prioritized stock performance, layoffs, mergers, and financial obfuscation. Welch and his followers became the leaders of a business movement that motivated big companies like GE to stop prioritizing the making of actual products, and to drive revenue through financial manipulation.

By slashing worker pay and benefits, CEOs were able to skyrocket their own compensation and satisfy Wall Street’s need for uninterrupted growth and revenue. But the problem was that they were eating their young. The house of cards collapsed. GE and companies like it crashed one after another.

Gelles shows how Welch’s influence is still alive today with corporations that regularly lay off thousands of workers and cut benefits. It has led to a deeply contentious relationship with labor, and an entire generation of working class people who can no longer find jobs that pay a livable wage.

Gelles did a masterful job of writing a compelling story that clearly lays out a fascinating journey. I highly recommend this book.

[Phillip Fuller · Rating 4 out of 5]

Milton Friedman promoted the belief that corporations were only responsible for maximizing shareholder values over all else. This philosophy was the main reason that General Electric CEO Jack Welch turned a once respected corporation into the ground. His methods of cutting costs, acquiring other companies, questionable accounting, focusing on the short term, and getting into finance were all factors in the fall of GE. David Gelles points out that his disciples at GE became CEOs at other companies like Boeing which had a problem with software that led to a plan crash because they cut corners to maximize shareholder earnings. Before Welch there was an economy that had decent pay, good jobs and less income inequality. The fact that this involves a GE executive hits home because my brother used to work for them and my sister lives in Pittsfield Mass that lost much of the population when GE outsourced the work overseas. It is awful that this man was revered as a great leader when he created a culture that led to inequality and an economy screws over working people. David Gelles gives the reader some remedies for this sickness like raising the minimum wage, promoting more worker friendly policies, and strengthening antitrust laws. What he fails to see is there is no political will to do this by our government that thanks to the campaign contributions as free speech rulings by the Supreme Court and elected representatives with close ties to the wealthy. As mentioned there is a Supreme Court that has constantly ruled in favor of big business and not working people. What is needed is Constitutional Amendments and the political system should be more like the proportional representation in Europe that allows for more fairness.

[Gary Moreau · Rating 5 out of 5]

If you want to understand the source of the polarization, the anger, and the paralysis that consumes America today, this is your book.

Thomas Edison created one of the great industrial companies of all time – General Electric. It stood for everything that those who want to return to the America of old wish for. And Jack Welch, who ultimately became the CEO of that icon of American strength and might, destroyed it all, although in a classic perversion of Orwell’s doublespeak, he was universally lauded for his brilliance and his executive prowess. And still is!

Welch was the CEO Milton Friedman, famed economist, dreamed of. He put profits above all else. Employees weren’t assets, they were an expense. Taxes aren’t the price we must pay to support our way of life, they are the poison over-reaching bureaucrats use to crush innovation and investment. Making things is for fools. Moving numbers around is where the easy money is.

Welch’s trilogy of “downsizing, dealmaking, and financialization” are all simply and adequately explained in the book, so I won’t be redundant here. To truly understand them, however, you have to accept that words have no meaning, truth is just a perspective, and your self-interests trump those of all others.

In fairness, Welch was a mere figurehead of our current troubles, but he thrust himself into that position by historically unparalleled self-promotion and the narcissism it takes to push to the front of every news cycle.

In the end, however, he was empowered by the forces that he exploited in an endless cycle of reinforcement. The real failure was that our social, economic, political, regulatory, corporate governance, and capital systems failed to keep pace with the times. He didn’t do anything, in other words, that the world was not begging to be done.

Here was a man that never invented anything, did not found the company he ran, and destroyed the lives of hundreds of thousands of Americans but was nonetheless rewarded with a personal worth of $1 billion and a retirement package that would make the most greedy among us blush.

Perhaps the biggest victim of Welchism, as David Gelles so adroitly defines it, is accountability. Welch, like so many since him, perfected the ability to take all of the credit for his successes and none of the blame for his failures. Blame is for losers.

Meritocracy is an Orwellian sham used to cover up the self-serving malfeasance with which the institutions we rely on for both our daily bread and our sense of self-worth are managed. The real problem with Welch’s infamous “rank and yank,” what he referred to in the Orwellian cloak of the “Vitality Curve,” is that it assumes that individual performance in a large organization can be isolated and measured. It can’t. Any attempt to do so simply introduces structural prejudice and mediocrity into what is supposed to be an objective process.

I started life in the corporate world in the mid-70s. And I, like so many corporate executives of the era, stood in awe of what Welch appeared to be accomplishing. Ultimately, however, as we were taught as children, when something appears too good to be true, it usually is.

A must read by a very capable author and researcher.

[AnnieM · Rating 5 out of 5]

I feel like I have been waiting for this book my whole career! Finally someone has the courage to say not only does the Emperor have no clothes, Gelles effectively and successfully unmasks the great fraud perpetuated by Jack Welch and his acolytes. Gelles lays out the evidence of how Welch rose to power and how he decimated profitable businesses in order to chase short-term earnings (laying off people and closing factories does wonders for your stock price short-term). But ultimately this quarter-to-quarter mindset covers up all times of financial manipulations and fraud.. Not only can this impact the long-term viability of a company (just look at GE now as it is being sold off for parts), but it also devastates the employees, retirees, families and whole communities. Gelles describes Welch as a virus and his "lauded" approach to leadership (by Fortune Magazine, and others), has spread to other corporations. I have worked in many organizations where executives wanted to adapt many of Welch's leadership development processes such as "stack ranking" etc. and had to point out the potential downsides on the culture and morale buy adopting this type of performance management. What is fascinating as Gelles points out, is that when GE leaders went to become CEOs at other corporations, the GE playbook failed miserably but typically the damage was already done before they would exit with a huge severance package. They would focus on such severe cost-cutting that it would completely hollow out the business and leave many employees out of a job. One of the most costly examples is the rise of the CEO at Boeing (former GE) who applied the GE Playbook and cut costs, cut engineering talent and outsourced the building of and safety of planes. We know now the terrible history of the Boeing Max 737 and crashes which Gelles has reported on brilliantly for the New York Times. Today, business people are scratching their heads on why there is a rise in unionization and union campaigns - yet GE, Bezos, Musk, Zaslav, have created workplaces that hates labor and workers and is dehumanizing. Corporate greed has decimated the middle and working classes and entire communities particularly outside urban centers. If this all sounds dire and pessimistic, Gelles does end with examples of corporations that are doing right and getting out of the quarterly earnings report pressure and mindset - such as Unilever. Gelles outlines specific actions Executives can take as well as legislation. He provides a new framework for how to measure success of corporations.

This book is a must-read and is one I will refer back to. I highly recommend it!

[Jim Razinha · Rating 4 out of 5]

Back in 1979, I took a macro economics class and the Korean-American professor was all full of adulation for Milton Friedman. I was too young to understand the danger of Friedman's voodoo economics being taken literally*, and too inexperienced to argue against their perceived merits (and I was too naive to appreciate the class anyway.) A couple of years later, the newly inaugurated Saint Ronnie began the dismantling of corporate safeguards in order to promote Friedman's doctrine. And Jack Welch just happened to rise to power at the same time. Welch is as deified as Reagan and for all the wrong reasons (actually, there are no reasons to deify either, but the cults still do, "Business schools treated Welch like an oracle, turning his strategies into case studies and curricula.") Corporate "citizens" soon had more rights and paid less tax than actual citizens and we've never recovered. What Mr. Gelles has done here is wipe off the veneer and expose the tarnish of Welchism ("...to Welch, labor was a cost, not an asset .") Yes, he can be a bit ... earnest (the not-left wing will use a different adjective for sure) ... and at times repetitious, but the reporting is solid. And the story is infuriating...unless you're a shareholder, in which case you'll hate the exposition.

Years ago, someone I once admired recommended Welch's Winning and I put in on my List. Years later, I had less admiration for that person, and I had learned more about Welch's much less than admirable style. Sure, abusive management can be effective, but that's not leadership and I aspire to lead, not dictate. And though Welchism is still a main force in the corporate world, there are glimpses of hope ("Whereas Welch and so many of his followers saw labor as a cost to be minimized, [PayPal CEO Dan] Schulman saw his work force for what it was—PayPal’s greatest asset.")

So, Gelles concludes that

Welch redefined what it meant to be a successful CEO. Achievement was measured not by jobs created, but by jobs cut. Value creation was measured not over the course of years, but in discrete, predictable ninety-day cycles. The quantity of a company’s profits became more important than the quality of its products. Welch set the bar against which other CEOs were measured soon after he took over, and even now, with stakeholder capitalism on the rise, many executives continue to model his behavior. Years after his death, Welch still looms over the corporate world as Manager of the Century, living rent-free in the minds of CEOs around the world.

With the current US court makeup and power wielded by corporations, we'll not see a return to civility and production in our lifetimes. My words, not Gelles's. [update July 2024, it’s worse]

One technical complaint about this book: the notes section in the detestable form of sentence fragments after the main body with no links in the text. Superscripts - even hyperlinked asterisks - are small, unobtrusive, and do not interfere with the reading. It is maddeningly annoying to guess as to whether a passage has a note or not and to all publishers who inflict this on readers, you should be embarrassed at the laziness. And the presumption. Let me decide whether I want to check something and don’t make it a burden.

Selected outtakes:
[on Welch's investors at any cost approach] All three of these tactics — downsizing, dealmaking, and financialization — served the same aim for Welch, aiding his endless quest to enrich his investors. If that meant cutting hundreds of thousands of jobs, so be it. If that meant companies were acquired and then sold for parts, c’est la vie. If it meant playing fast and loose with accounting rules, what was the harm?
{This is a tad editorialized. Still, it probably should have had more emphasis on “at the expense of” ... everything but the shareholders.}

*[on Friedman's doctrine, Friedman's own words:] “What does it mean to say that ‘business’ has responsibilities? Only people can have responsibilities,” he wrote. “Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.”
{Then I'll submit that businesses should not be “citizens” because once that wall was burned down, businesses had responsibilities.}

[on ...feelings] Like so many of the rich and powerful, Welch had thin skin, and he was devastated by the article.
{Gosh if that doesn't read like The Former Guy .}

[on the change from production to acquisition] The deals for RCA and Kidder were pivotal in another way, too. They proved to Welch that growth could come from buying, rather than building. He could acquire his way to the top, rather than innovate his way there.
{So many problems with this. Eventually you run out of companies to buy. So called "free market" competition is stomped before it can start. And anti-trust? Well, deregulation renders that point moot.}

[on tax evading following a change in the law in 1997] Once the change was made, GE vastly increased the amount of profits it recorded in low-tax countries such as Ireland and Singapore. Those weren’t the countries where GE was doing the most business. Instead, it was where Welch had his accountants booking the profits.
{All part of ... yeah, you know... three-card monte/shell game scheme .}

[more law changes thank to Reagan] Buybacks weren’t illegal, per se, but if companies did them, they could easily be exposed to charges of manipulation. Then in 1982, the Securities and Exchange Commission blessed a change to the law that gave companies the green light to start buying back their own stock. It was another gift from the Reagan administration to the business community. Rather than invest in new products and services, or their employees, companies could now use their profits to simply repurchase their own shares, driving their stock price up.
{And the Reagan swamp comes back again.}

[on word choice] Iacocca, another larger-than-life CEO who ran Chrysler during the 1980s and early 1990s, closed factories and thinned the ranks at headquarters even as he earned $20 million a year.
{Earned? Say rather, “was paid” }

[on the halo effect] “A lot of GE leaders were thought to be business geniuses,” said Bill George, the former CEO of Medtronic and a board member at Goldman Sachs. “But they were just cost cutters. And you can’t cost-cut your way to prosperity.”

[on Six Sigma] In the mid-1990s, [Jim] McNerney became one of the most zealous champions of Six Sigma, a new quality improvement methodology that Welch was pushing on the company. Inspired by the Japanese notion of kaizen, or continuous improvement, Six Sigma used a complex system of feedback and buzzwords to try and root out any lingering vestiges of inefficiency. Whether it actually helped or just created a lot of paperwork was a subject of fierce debate.
{I have seen a lot of fads come and go and Six Sigma is one I know, but have avoided.} [update 2024, I am still astounded at some of the companies I’ve interacted with preaching the buzzwords hard]

[more deceit] But according to GE’s accounting methods, these transfers of goods from one GE plastics unit to another were reported as sales, even though no new money was being generated. [Welch's successor, Jeff] Immelt found a way to use this to his advantage. When his numbers for the quarter weren’t quite adding up, he would call on the head of the Asia-Pacific region for a favor: Would it be possible for him to place a few more internal orders? Doing so would allow Immelt to meet his numbers for the quarter and keep the bosses happy. Immelt claims he didn’t remember the episode that way, and broadly defended his tenure during this time. “One of the things that I felt like has been wrong about the way the company has been covered is this notion that people could just invent numbers,” he said. “You had a dozen checks and balances in the system that would keep you from doing that.”
{they were quite good at the shell game and got away with it}

[on Welch's foray into NYC public school reform] He suffered from the delusion that his money was representative of some greater intelligence, as if his ability to wring profits from a hyper-financialized multinational corporation bestowed him with the gifts of an educational reformer. It’s a delusion common to the wealthy, and Welch has hardly been the only one to turn his attention to repairing our public schools.
{John Taylor Gatto had a thing or two to say about the monied intruding on education.}

[on Bezos and Amazon's grinder] To ensure that Amazon workers not become too complacent, Bezos devised a strategy he believed would keep them on their toes: he would make their employment status as tenuous as possible. Indeed, Amazon’s human resources strategies are designed to ensure that the vast majority of employees have only the thinnest connection with the company, a transactional relationship that might be severed at any moment. Whereas Welch had to rely on stack ranking to enforce his mandate, Bezos uses technology, and has turned Amazon’s warehouses into laboratories where workers are subjected to ever more dystopian forms of management, where people are treated like machines, workplace injuries are common, and any vestige of sentimentality is snuffed out. “We’re not treated as human beings, we’re not even treated as robots,” said one worker. “We’re treated as part of the data stream.” That’s more than just a metaphor. At Amazon, employees are increasingly managed not by other people, but by software.
{This is true. My son was dinged for clocking out early after his supervisor told everyone to leave, AND he was dinged for clocking out late when he was held over at medical by the medical staff. It got corrected but not without a lot of inflicted anxiety and having to take personal time to get a human HR staff to fix it.}

[preach it Mr. Gelles] During President Obama’s second term, Welch’s affinity for Trump became more consequential than he could have imagined. By appearing next to Trump for so long, Welch became one of many who lent the real estate huckster a veneer of legitimacy, and thus power. More than once, when Trump was asked who he would select for his cabinet, he floated Welch as a potential treasury secretary.
{Huckster is a mild description.}

[on baseless conspiracies and bizarre adulation] Before long, Welch was claiming that the Democrats had “made up” the Trump campaign’s ties with Russia and that Trump was a uniquely gifted president. “This guy was rolling up his sleeves and talking about the issues, and his depth of knowledge on every issue was amazing,” Welch said after another meeting with the new president. It was a reprise of Welch the conspiracy theorist, only this time, instead of spouting nonsense about the Obama administration fabricating job numbers, Welch was glorifying Trump. The Manager of the Century had been conned by the huckster of the millennium.
{Welch may once have had a brilliant mind, but in his waning years...nope. The Former Guy has demonstrated time and again that he has zero depth of knowledge on anything.}

[Khan · Rating 3 out of 5]

This book was like watching a stock ticker go through a series of prices with highs and lows. At one point it was about a 2 than jumped to a 5 then back to 3 and finishing off around 3-4. Maybe not in that particular order but thats the feeling I had as I turned the pages. The book essentially points to Jack Welch the infamous GE CEO that lead the company to extraordinary success that eventually morphed into a "What happened story". Sort of like going from the prom queen to a crack head. He was named "Manger of the century"! Wow! What a title. As time went on, many of his infamous policies like "rank and yank" where employers fire the bottom 10% of the staff every year , endless acquisitions/ mergers and sly accounting practices which turned loses into revenue have all been debunked. The books overall synthesis portrays Welch as one of the fore figures in breaking capitalism. Turning it away from competitive markets into monopolies and then into oligopolies. I have read the back story of the fall of GE and Boeing, which features top GE executives as CEOS in both companies who ran them into the ground. If you're an MBA, I would probably stop reading at this point. I think MBA's are the lowest form of human with advanced degrees to have ever drawn a breath.


Lets get to Jack Welch, the mythical man and wizard of management. Jack Welch is no doubt hard working, ambitious and excels at taking risks. Making decisions on the fly, with no committees or bureaucracy to get into the way. This I can admire, so far so good. Committees and hundreds of managerial positions who hold fancy titles and who don't actually create anything are the epitome of bloat and wasteful resources. They get in the way of progress and advancements in the core business and often times resort to corporate politics, the type of political games that make people say "fuck it, I am gonna go open up a bagel shop instead than deal with these psychos" <-- Something I myself have contemplated.

Welch ran GE in a way where he made key cuts, understanding the age of the upcoming globalization. Welch cuts thousands of jobs and moved factories overseas, cut engineering departments and replaced them with financial divisions, which created financial instruments that would turn apocalyptic in the future for the company's survival. Welch, neglected R&D spending, did not invest in any new technologies and created a system where executives would compete game of thrones style against one another, often times reporting loses as gains, gimmick acquisitions which again were disastrous, cutting costs that were vital to the business and overall gaming the system to meet earning rather than organically growing the business.


Heres why these acquisition's were so damaging, often times merging with another company without any plans for integration, creating products they did understand in hope to increase share price. Jeff Bezos said this (I know for some of you he is Satan.), he said the stock market value is the output of the inputs in our business. Welch, would often times look for gimmick moves to move the share price rather than long term investments, GE had so much capital they were able to turn their business into a dark cloud where no one understand their finances. Hiding them through obscure and somewhat illegal accounting practices they would pay fines for in the future. Last but not least, the company spent tons of money on stock buy backs instead of investing into their companies core technologies. GE was such a behemoth, this could last for over 2 decades creating spectacular wealth and then would fall in epic fashion because the business failed to innovate in the long run. Do not focus on numbers, focus on products. Steve Jobs famously rejected all business types from the core executive team with the exception of Cook.


What was most interesting to me was that not only how Jack was revered but many members of his senior executive team were sought after from other companies. Such as Home Depot, Boeing and 3M. Many completely blew up the companies, cut costs, bought back stocks and then the company faltered when the quality of their products fell drastically behind their competition. This is apart of the philosophical discussion we will have later.

GE would implode in the 2000's, at one point GE capital had leveraged that acceded over 4 times its credit lines. The financial instruments they created ended up being apart of the sub prime crisis, blowing up the housing market and their balance sheets. They would receive a bailout of over 139 billion for their finance division. Meanwhile their products, faltered. Completely missing revolutions they were in prime positions to capitalize on if they had intelligible leadership, they failed to create a culture of risk exploring and implementing new engineering practices for fear of failure. Once a business internally has these qualities, its over. They will not be able to innovate and its time to dump the stock.

The infamous rank and yank policy where companies fire the bottom 10% is infamous across corporate America, Jack Welch was the father figure of the movement. This policy not only makes employees take no risks or suggest ideas, it actually turns them against one another rather than innovate. This is why no one at GE wanted to take risks, quarterly earning goals were always met but that did not mean the company was innovating, it meant that executives were finding loopholes to meet these goals. Basically trading away the future for the short term, the expense of the company in return for their short term gain or career trajectory. Many of them MBAs.

This brings us to the philosophical part, many MBAs with credentials from fancy schools would go on to essentially bankrupt companies, make over 20-50 million a year, fail spectacularly and yet find themselves at another CEO position. The expert problem, GE received 140 billion in loans from tax payers once their company blew up but what about all the money they made when times were good? Many of them made bonuses after they blew up the company. Essentially, capitalism when times are good, socialism when times are bad. Placing the risk onto the tax payers for their terrible decision's. Many of these executives will write books on success, risk taking, or visit schools and give talks as if they succeeded rather than gamed a system. Many of them happen to have MBAs or business degrees. This is the part I loathe, we're living in a time where someone can blow up a company, get paid 30 million, the company fails and then give a TED talk on success with some bullshit headline like "What it takes to make it". Welch, released courses, books, gave talks... Jeff Immelt who would ran GE after Welch, would do the same tricks Welch had played, has a book out about business. As if his entire track record was anything but a colossal failure, no doubt he was given a terrible hand by Welch. If you go onto do the same things as your predecessor and expect different results, the blame also on you.

Is Jack Welch solely responsible for breaking capitalism? Of course not, the problem is far more complex but he did usher in a new era and he made himself the face of that era with some of the policies he stewarded in.

I liked this read overall but at times there were some red flags, Welch said the Clinton foundation compromised Hillary in the 2016 election, the author treated it as a conspiracy to say that an elected official who received donations from foreign government's, corporation's and billionaires is somehow not compromising yet conspiratorial. Again Trump did the same thing but you cant be a partisan hack, of course political donations from the donor class compromises elected officials. You would have to be a delusional to admit otherwise. The author strikes me as overtly partisan at times even though I am partial to leftist economic arguments given where we're at currently and the underlying trends. I debated about giving this book 4 stars but ended up with 3 stars. The author listed Davos as a place where they're discussing about "changing" capitalism. As if that whole event is not a forum for the wealthiest individual's to gather and make deals rather than solve the problems they themselves created.

[Rj · Rating 2 out of 5]

2 stars because anything that exposes Jack Welch for his showmanship and lack of competence is automatically socially valuable in my view. The problem with the book is in the exposing liberal talking points about wealth and capitalism that are heavily biased and don’t provide an honest assessment of the true underlying drivers. The analysis is really lacking, and there is no acknowledgement of how some of these trends don’t really matter.

Definitely plenty of room to shame bad corporate citizens, but let’s not say some bad actors completely ruined society.

Whatever you want to say about how deliberate it is, ESG and DEI are themes that corporations are going to promote that will ultimately improve society in ways the reflect the values of the majority of Americans.

Business and humanity are deeply intertwined, and I would generally say that it has reflected society’s values, which are governed by a tremendous amount of reflexive factors.

Let’s expose the bad actors and hold them accountable. And let’s not also pretend like we aren’t living in the greatest moment in human history, and we can be fairly confident that the world our next generation experiences will be way better in ways we could never imagine.

[Betsy · Rating 4 out of 5]

[13 Aug 2023]
This was an interesting and well written book about corporate America. Gelles briefly describes the period between 1935 and 1970, which he calls the Golden Age of Capitalism. It was a time when businesses served their communities and their employees, as well as their owners. Working people and businesses both thrived. Then Reagan was elected and Milton Friedman became a popular economist. In the 80s and 90s, capitalism changed. Workers were no longer partners with owners. Instead they became the enemy, an expense that should be minimized as much as possible. Likewise, corporations no longer felt any obligation to the community where they operated nor to society at large. Profit at any cost became the objective, and it was profit that benefited only the shareholders and executives. The results of this change was communities all but destroyed, crushing inequality and unemployment, and failing corporations which no longer focused on innovation or quality products. It also resulted in the crash of 2008, and the recession that followed.

It was interesting to see how this all happened. Gelles primarily blames Jack Welch who was the CEO of General Electric during the 80s and 90s and who made GE into the largest, richest company in the world for a time. He also influenced many other business leaders to follow his example. But all of them traded long term growth for short term profit.

Gelles, who is an investigative reporter, not an economist or historian, has a very clear bias in this book. The unrestrained profit-taking of these American corporations is bad. The socially responsible capitalism of the post War years is infinitely preferable. I frankly share his bias, even though I'm currently living on my retirement plan investments. However, when a writer is so overwhelmingly one-sided, I can't help but wonder what he's leaving out. I also feel he did not spend enough coverage of the political changes in the 70s which enabled the business changes of the 80s and 90s. I don't have the knowledge to evaluate his historiography, but I would not call this a scholarly work. Probably more of reportage than history.

Still I enjoyed it and would not hesitate to recommend it. It's short -- less than 250 pages of actual text -- and an easy read.

[Jacob Rogers · Rating 4 out of 5]

This was really enlightening, provided some better historic framework and specifics for how American capitalism transitioned from a model in which all stakeholders in a company mattered to shareholder value (and therefore quarterly earnings) being the end all, be all at the expense of the average worker (who was often viewed as the enemy) and in some cases general safety (Boeing 737-MAX). The book, I think accurately, paints Jack Welch as a largely negative force in corporate America which we are still struggling to purge ideologically. The author also highlights examples of companies working against his “profits at any cost” methods and are focusing on their overall role in society and long term growth, which goes to show that an economic system that doesn’t pay a living wage and take care of the least of these is a choice, not just a rule of life.

[Arnold · Rating 1 out of 5]

Can you review a book that you only made it 75% through? It violates a rule I have, but I was handed this book, used, by a friend, so I did not research the author. At the 75% mark of this drivel, I did a basic search. Gelles has no financial, accounting, nor even economic qualifications. Either he's totally pig ignorant of even the basics of business or he knows his intended reader is.
We've went from columnists pretending to be journalists, to activists pretending to be columnists.
Side note: It's Dr. Welch. Welch was a STEM PhD. His doctorate was useful, which is why he did not insist on being called doctor.


This book is aimed at the financially and economically illiterate, the embittered, or those who want to use the former. Those who have used the term 'not real socialism' et cetera, who blame society, capitalism, Jack Welch for their own failures and the economic reality of today. Those who have no real notion of how business or the economy work, so who fall for any vodoo economics. Those who'd rather have Elizabeth Warren running things than Elon Musk. Who want the government to borrow more and more money and then can't figure out why they can't afford a house.


Welch is one of the most successful CEOs in world corporate history. He took a failing company in a country that was failing, and turned it into the most valuable U.S. public company. These facts are so repugnant to Welch's detractors that they have to label him nasty, destroyed manufacturing, or the latest thing spouted by simpletons in the comment section: he cooked the books. No evidence, of course, just a whinge. He cut tens of thousands of jobs? Leaves out he created hundreds of thousands of jobs both directly and indirectly, which is what winning companies do.

The red flags are in the title itself. Clickbait for the hard of thinking.

Broke Capitalism
Gutted the Heartland
Crushed the Soul of Corporate America

While Gelles makes a convoluted attempt to provide any argument, let alone evidence, to substantiate these silly charges, that's the point. The charges are so broad that any argument can claim to have proved them. Krugman 101!
He's taking our jobs. A company that goes under provides no jobs.
He's a meany. Before cancel culture, Welch spoke the truth that the incompetent and talentless did not want to hear. Both business and science requires Popperism. The ability to withstand cross-examination.
If it costs you more than you can sell it for, or there are better alternatives, you get failure. Both at the company level and government.


Perhaps if Gelles wishes to look at the actual reason for economic defeat, his comic book newspaper might look in the mirror at the party The New York Times shills for:
Clinton tore up Glass–Steagall. You know, the piece of legislation brought in after the Great Depression to stop a Great Depression from happening again.
Clinton signed the Commodity Futures Modernization Act, which exempted credit-default swaps from regulation. The nuclear weapons of the '08 crash.
Clinton rewrote the Community Reinvestment Act forcing financial institutions to give out NINJA loans.
But most of all, Clinton signed the U.S.-China trade agreement giving China accession to the WTO.
He said more trade with China would "advance America's economic interests". Jesus H. Newton.
He also signed NAFTA into law.
More taxation, more borrowing, and more suffocating laws might be more of a culprit than Jack Welch, comrades.





Welch didn't rise from privilege and yet contributed more to America in a month than the likes of Gelles will contribute in a lifetime.
Gelles would never last in a Jack Welch company, as the Welchism says: The team with the best players wins. This is revealing.

 
"No other management book will ever be needed." -Warren Buffet on Welch's book Winning.
" A candid and comprehensive look at how to succeed in business. For everyone from college grads to CEOs.' - Bill Gates.
.....
"Jack Welch is a meany who destroyed everything." - Some guy at the New York Times, who you wouldn't put in charge of a candy store.

[Ietrio · Rating 1 out of 5]

The text is on a par with the title. What a moronic title! Capitalism has a definition. And ”breaking” capitalism is pretty much like breaking ”hot water”. The text itself is a bit lower in quality, as it weaves the conspiracy of a man who single-handedly did this and that. And it's the rehash of the Blood Libel of the 19th century Europe, remember The Protocols of the Learned Elders of Zion? It's in the same spirit, but for the people of the 2000s, and not for the people of the 1880s.

[Marks54 · Rating 3 out of 5]

I just finished William Cohan’s book “Power Failure” about the history of GE and then moved to the new book by David Gelles: “The Man Who Broke Capitalism” - about Jack Welch and GE. Both books rely upon similar fact patterns and I agree with the overall punchlines of both - up to a point. While I liked the Cohan book, I ended up not liking the Gelles book nearly as much. I guess my issue with the book is that not only should the story be a good one but the story should also be well told. Without effective framing and evidence of craft, it is possible to weaken the message.

Gelles chronicles the rise of financially driven corporate diversification that pursued profits for shareholders at any and all costs. This pursuit became associated mass layoffs with dire consequences on the traditional industrial heartland, a weakening and creeping impoverishment of the working class, the weakening of unions, and the growth of extreme earnings inequality in the US with all of the negative social consequences that follow such inequality. I am oversimplifying, but not by much. This general story of US deindustrialization is well known and not much disputed. At least we got more Bruce Springsteen and John Mellencamp songs out of it.

Gelles sees Jack Welch, who took over the helm of GE in 1981, right around the time when many of these economic developments were gathering steam and spreading, as central to his story. He quickly became the most visible and widely lauded CEO in America and was the CEO of the century at the time he left GE. Because of his impacts on GE, his further impacts from firms that imitated GE, his further impacts from his superstar reputation and visibility, and his further impacts from assuming the role of advisor to politicians, other managers, and the public - Gelles argues for a causal role for Welch in the transformation of the US and world economy. I get it - some CEOs can be much more consequential and transformative than others. But when does the fundamental attribution error start appearing - blaming deindustrialization on this guy pushing his subordinates to make their numbers no matter what? I did not realize it that macro economics can be reduced to executive psychotherapy. The book’s title says it all, Welch was “The Man Who Broke Capitalism”. And so when GE goes down the tubes in the decades after Welch’s exit, it is his legacy. When the economy crashes in 2007-2008, it is his legacy. Case closed; problem solved; right?

Not so fast. I am not a fan of Jack Welch and the arguments about his long term versus short term legacy at GE make much sense to me. But this poorly crafted argument makes much less sense, despite its being grounded in what was actually going on at GE and who was getting hurt in the name of enriching shareholders and fattening executive salaries.

The context of economic trends and arguments in which Welch was operating have a long history. Mr. Gelles is not the first to be concerned about corporate governance. For example, he mentions that the corporate ethos of taking care of the country and of employees goes back to the book “The Modern Corporation and Private Property”, written by Berle and Means in the Great Depression. The trouble is that the same work came to provide guidance for those arguing that corporations should only pursue the welfare of corporate shareholders, such as Milton Friedman, since granting large stock positions to executives would be the best way to provide them with incentives to enrich shareholders (and themselves too). Gelles mentions that these ideas were in the air but that they needed Welch to channel them - huh? Were the economic trends important or not? Was Welch channeling Milton Friedman or was Welch the agent of action? It seems like Mr. Gelles is trying to have it both ways. Layoffs did not begin in the 1970s and 1980s. The unemployment rate was well over 20% at times in the 1930s - who broke capitalism then? What about earlier recessions and panics in the US economy (1837; 1893; 1907)?

Perhaps Mr. Gelles’ claim that capitalism between 1931 and 1981 was a “well oiled machine” needs some clarificationn too. Between the New Deal, Full Employment during WW2, and a Postwar period when US competitors were rebuilding, perhaps that period should be better seen as an anomaly rather than the base case of well functioning capitalism? Just a thought.

Correlation is not causation. That Welch took power at GE and prospered for two decades does not mean he caused the demise of the US economy.There were lots of other trends at work at the same time. Reagan was elected in 1980 and began getting his tax cuts enacted. Without those cuts, it would not have made much sense to push the pursuit of profits and stock based compensation to the extremes that they were pushed. The surplus would have gone to taxes. Gelles; alludes to this but does not draw the conclusion. So is it Welch’s fault that taxes were slashed and that executives drew the conclusions about how to spend their time and effort? I suspect that there were a lot of important people involved. Jack Welch did not invent layoffs not did he personally weaken America’s smokestack industries. Steel had been in a long decline. The automobile industry was in the process of failing to respond to the Japanese car makers. The Vietnam war had ended and with it much industrial demand. There had been multiple energy spikes in the 1970s and high inflation. Was Welch running the Fed then too? When he joined GE in 1981, did he cause the “Volker Recession” of 1981-1982?

Capitalism is presumably international as well, so what about Margaret Thatcher, who came power in 1979 and was starting to privatize the British economy? Didn’t she have a role in how capitalism developed after 1981?

What about Deng Xiaopeng? He was beginning the liberalization of the Chinese economy in 1978, an economy that is now depending on your measures the second largest in the world? That reform, which some call capitalism (state capitalism?) has brought a billion people out of subsistence poverty and has led to strong competition with the US was also going on when Welch was running GE. The idea of “breaking” capitalism is an odd one and I am not sure what it means. Were the Chinese breaking capitalism too?

There is more than enough to talk about with Welch and GE. It is a heavy lift to broaden the story to include the US and world economies and focus on Welch without regard to all the other events that were going on at the time. Why not just tell that story well? And while Welch was important and influential, why not talk about the broader fixes needed in the economy that go far beyond the damage wrought by one executive, no matter how powerful he may have been at his prime?

I expected more from this book.

[Maćkowy · Rating 5 out of 5]

Ważna książka pokazująca jak przez ostatnie 40 lat zgównowacił nam się kapitalizm. Postać Welcha, choć dobrze opisana, jest tylko pretekstem do zobrazowania do czego prowadzi stosowanie się do neoliberalnych dogmatów w połączeniu z nieokiełznaną chciwością i brakiem poszanowania dla podstawowych kapitalistycznych wartości.

[Darcy · Rating 3 out of 5]

I don't remember who recommended this book to me, I do know it was one day when I was scrolling twitter. My library had it, so I thought why not check it out. I honestly thought it would end up in my dnf pile. Instead I found myself very much drawn in, was rage listening to it, often times yelling at what this POS was doing. Sadly I'm old enough to have a bit of a clue of what he was doing in the late 80's and early 90's, but wasn't really paying much attention to the world, like most Gen X'ers.

Now as an adult who pays close attention to things you can see his finger print all over how us "little guys" are treated in the business world. How it's shit on your people, I got mine. The rate of pay for these CEO's drives me nuts, but that is nothing compared to how they fare when they fail and still gets 10's of millions of dollars. Sure there are a few "good" companies out there, but not enough. I really hope it changes...or maybe we need to burn it all down and start over. Could hardly do worse.

[Lamia · Rating 4 out of 5]

Prawie wszystko co jest nie tak z kapitalizmem końca XX w. Do tego dołóżmy Technofeudalizm Warufakisa i mamy komplet.

[David S. · Rating 2 out of 5]

Book provides some good examples of how Welch's business strategy led to the collapse of GE and created a model that damaged the country as a whole. It also mentions how many former GE executives tanked other companies while walking away with small fortunes. First, if you are well read on business there is nothing here that has not been covered by other books. There is little insight into Welch other than he likes to yell and scream. But most significant is while the author lectures on the evils of issues such as outsourcing and moving jobs out of the country he never addresses whether industries would have survived against low wage competitors by keeping the jobs here in the U.S. This book is OK but it is thinly researched and doesn't provide anything really new.

[Reena R. Nawani]

Everyone who has ever taken a business course knows the name, Jack Welch. When I was studying for my business degrees, his book "Straight from the Gut" was one of my required readings. He was one of the first celebrity CEOs as he radically changed the way not only GE, a household name in manufacturing, but business was conducted. Jack's legacy and techniques are still used today in corporate America.

What this book explores that is unique is to talk about the long term effects of Jack's strategy. He bought small companies and either transformed them or destroyed them. This made way for the destruction of main street to be bought by major corporations to basically put them to rest. It created the big push in the "Too Big To Fail" movement amongst corporations. It brought about the loss of a true free market, which capitalism as an economic concept is based on.

Before reading this book, I hadn't really seen the correlation behind Jack Welch's strategy and the long term effects it has had on our current American economy and how it pushed us into a late stage of Capitalism.

I do wish this book would have given more insight into the numbers versus the strategy theories. They are well documented, even from studies on GE and Jack Welch, but to look at the way it affected short term and long term economy and the damage it did to a true free market would have helped drive these points further.

What this book did well is provide a critical eye to how revering a single strategy can provide short term benefits to a single company but following that strategy has very negative long term effects on the economy as a whole. I do also enjoy that the author added his own commentary on how he feels we can potentially start to think about fixing this, but I fear that it may be a little too late. You'd have to continue to showcase the damage of buying and breaking apart Main street by Wall Street really damages the economy as a whole in order to combat the effects. You'd have to teach across every school the ethical nature, not just the one that provides the most profit in a short term.

I wouldn't blame only Jack Welch either, but his widely public strategy and promotion of how he changed GE should be reviewed as not a success story, but a short term success for a few and a long term failure on the ethics of business.

[Becky · Rating 4 out of 5]

Well, this book was enlightening, and so, so very depressing, but informative and necessary. It explains just how this Profits Over People corporate mindset took hold.

I only wish it had been published before Jack Welch died, so that he could see the truth of who he was laid bare for the whole world to see that he is responsible for the suffering his "business practices" led to.

Highly recommend reading this, and then donating to a union. Or better yet, unionize.

[Mark Walker · Rating 5 out of 5]

If this book doesn't boil your blood you're part of the problem. In this account of the late GE CEO Jack Welch, David Gelles illuminates the essence of what is wrong with corporate business—and exactly how we got here. Gelles documents how the three principles of Welchism are still in action today: Downsizing, Deal Making, and Financialization. It centers on valuing profits and share value over all other factors, including tone deafness to its detrimental effects on people and society.

Welch was instrumental in actualizing the theories of Hayek and Friedman, and it resulted in the extensive human suffering these practices produced. Gelles illustrates how the policy of shareholder primacy led by Welch destroyed the economy for everyone else. This book traces how the Financialization practices (i.e. creating pseudo-profits by cooking the books) pioneered by Welch had created hollow shells out of formerly healthy companies with no one getting rich except private equity firms and those who played along with them. It's incredible that anyone today would think these theories viable, as (in a statement attributed to Keynes) Capitalism is the extraordinary belief that the nastiest of men for the nastiest of motives will somehow work for the benefit of all.

Gelles' suggestions to remedy the economic and social damage done by Welchism may be the very reverse shock therapy to that of neoliberalism needed to remove that toxic dogma from serious consideration—and achieve a world beyond Welchism. One suggestion in the book is stakeholder capitalism, which empowers others (such as employees and customers) in addition to just investors, and it is the antithesis of Welchism—we need more of this. Another example is the public benefit corporation, with a stated purpose of serving the public good in addition to shareholders—Gelles illustrates how these are naturally complementary and do not conflict with one another.

Although parts of Europe are ahead of the US in this, as it becomes increasingly evident that the Welch playbook is long past its expiration date, progress is being made in the private sector external to government policy initiatives. At this stage, there is no alternative to dispensing with Thatcherism—and the Welchism is enables. As a more socially aware investment community expands, bringing with it like minded CEOs, a healthy business environment may once again be in our future.

[Daniel Swisher · Rating 5 out of 5]

“Before Welch took over, productivity and worker pay rose in tandem; following his campaign against loyalty, they diverged, and worker pay has never recovered. Until Welch came on the scene, CEOs were well-paid managers; after his gargantuan paydays, other bosses came to expect extraordinary compensation packages, too. With workers earning less and CEOs earning so much more, income inequality began to soar. Manufacturing jobs in America peaked just as Welch took over, then began to decline as he sent work overseas. Mergers and acquisitions ballooned on his watch, concentrating power in the hands of just a few companies in sector after sector, leading to higher prices, fewer options for employees, and a less dynamic economy overall. And the amount of taxes paid by corporations has plummeted, while buybacks and dividends have exploded.

This is the world Welch bequeathed us. One where Jeff Bezos can afford to send himself to space, while hourly employees at Amazon warehouses are monitored by robots. One where a handful of private equity executives can buy up iconic American food companies and squeeze them dry. One where a media company can go $80 billion into debt buying up rivals, then lay off tens of thousands of workers in the name of profitability. Welchism has made America poorer, less equal, and more insecure. It has hollowed out factory towns while filling Wall Street's coffers. It has left corporations unaccountable for their failings, while leaving more of the population vulnerable to the whims of highly paid executives. And it has created an economy where once-proud industrial companies lose their way, with sometimes fatal consequences.”

[Neill Hunt · Rating 2 out of 5]

Gave up halfway through. The book is on solid ground when it describes Welch as a jerk. But it fails with its take on shareholder capitalism. Are stock buybacks bad? Well, it depends on what the company’s other options are. Are layoffs bad? Well, it depends on the competitive environment and business performance (layoffs being better than bankruptcy). Unless you’re willing to grabble with the context you end up writing an entry-level rant. Very disappointing.

[Mal Warwick · Rating 5 out of 5]

Sometime late in the 1980s, I was speaking with the CEO of a major Fortune 500 company. The conversation turned to the stock market and how poor a guide it was to the country’s economic health. He pointed to General Electric and its CEO, Jack Welch. The company had consistently been posting 15 percent annual increases in net profits, quarter after quarter. “Jack Welch,” he said, “is cooking the books. There is absolutely no way any company GE’s size could honestly be turning in such rosy results every quarter for years on end, through all the economy’s ups and downs.”

This misleading pattern was the result of the misguided policy of putting shareholders first, he explained. Now, more than three decades later, I understand exactly what Jack Welch was doing to pull that off. It’s the dominant theme in New York Times business journalist David Gelles’ eye-opening biography, The Man Who Broke Capitalism.

HOW JACK WELCH DESTROYED GE BY PUTTING SHAREHOLDERS FIRST
When Welch took charge of General Electric as Chief Executive Officer in 1981, he immediately proceeded to set aside the strategy that had made the company one of the world’s most successful and admired business enterprises. “During his tenure, GE posted annualized share price growth of about 21 percent a year,” Gelles notes. But the way he achieved that growth was catastrophic. The policies he put in place—policies faithfully pursued by his chosen successor—nearly drove the firm into bankruptcy.

“At its nadir,” Gelles writes, “GE needed a $139 billion rescue from the Obama administration and an eleventh-hour investment from Warren Buffett to stave off collapse.” Eventually, the company was removed from the Dow Jones Industrial Average as one of the nation’s bellwether businesses. In 2021, what was left of GE was broken into three smaller companies. And the policies Jack Welch pursued—downsizing, dealmaking, and financialization—became the hallmarks of Big Business in America, as CEOs throughout the land rushed to mimic the man Fortune called “The Manager of the Century.”

THE AVATAR OF SHAREHOLDER PRIMACY
A decade before Welch was named CEO, University of Chicago economist Milton Friedman had gained fame by insisting that the true purpose of any business was to make money for its shareholders. He dismissed talk of “the social responsibility of business” as “taxation without representation” for shareholders. Throughout the 1970s, other conservative economists and business school professors built on Friedman’s thesis. Putting shareholders first became a byword in conservative business circles. But in 1981 few if any large US corporations had put policies in place consistent with Friedman’s mandate. Jack Welch changed all that. He became the poster boy for shareholder primacy in the 1980s. And that misguided doctrine has dominated Big Business in America for the past four decades.

DOWNSIZING, DEALMAKING, AND FINANCIALIZATION
Jack Welch gained the nickname “Neutron Jack” during the first four years of his tenure, when he divested 117 business units and slashed more than a quarter of the company’s jobs. But he continued to earn the reputation for the “rank and yank” policy he imposed on GE throughout his time as CEO. This was the practice of firing the 10 percent of employees who received the lowest annual performance reviews. And, in the process, Welch slashed funding for research and development, stifling the company’s well-earned plaudits for a century of innovation. After all, GE was the company of Thomas Edison. He also moved aggressively to spend billions of dollars buying back the stock, year after year, all in the interest of delivering value to shareholders. But, more broadly, Gelles views Welch’s strategy for GE as resting on three pillars.

DOWNSIZING
“For generations,” Gelles notes, “it was generally true that once you got a job at a company like GE you could keep it until you retired.” In fact, Big Business, and the US economy as a whole, had prospered for decades grounded in this understanding. But “this was blasphemy to Welch.” The ink was barely dry on his employment contract when he launched a series of mass layoffs that shattered morale in the company’s workforce and set a pattern followed by other large corporations in the decades ahead. The jobs moved to new plants overseas, or to suppliers that were often overseas themselves, or simply disappeared. When Welch became CEO in 1981, GE employed some 400,000 workers. When he retired in 2001, the head count was down to 300,000 even after acquiring hundreds of companies during his 20 years at the helm.

DEALMAKING
To meet Welch’s arbitrary profit targets, he and the men he commanded turned to acquisitions to fatten GE’s revenues and meet Wall Street’s rosy expectations. They spent $130 billion acquiring nearly 1,000 companies (including RCA and NBC). Many of these companies later proved to be hugely unprofitable—but they’d served their function by adding to the short-term bottom line. Which was entirely consistent with the commitment to put shareholders first. They’d also converted General Electric from a manufacturing company into a conglomerate dominated by its financial division, a massive unregulated bank called GE Capital.

FINANCIALIZATION
GE Capital was the centerpiece of Jack Welch’s strategy for the company. At the outset in 1981, the unit was a tiny operation that backstopped the company’s manufacturing businesses by financing customers’ purchases of GE appliances. Under Welch, GE Capital became the tail that wagged the dog, growing into a colossus with $370 billion in assets and “ultimately accounting for 40 percent of revenues and 60 percent of profits.” With worldwide operations, the unit grew into a multibillion-dollar bank that loaned money to retail customers and businesses alike from Romania to the Philippines.

“Thanks to the sprawling finance division,” Gelles writes, “[Welch] could produce ‘earnings on demand,’ as one analyst put it at the time . . . [I]n the last days of each quarter, GE Capital would often unleash a flurry of activity, adding profits and taking restructuring charges as needed to help the parent company meet Wall Street’s expectations.” At times, Welch went even further. “It even took to reporting growth in its pension fund’s investment portfolio as income.” All because Jack Welch had swallowed whole Milton Friedman’s theory that business operated best by putting shareholders first.

AN ICON FOR TWO GENERATIONS OF CORPORATE MANAGERS
Throughout, Gelles emphasizes Welch’s far-ranging influence on the American economy as a whole. During his 20 years running GE, he was lionized in the press and regarded as a hero by millions. His impact on Big Business was immense. Welch trained hundreds of senior executives, and many of those “executives went on to lead dozens of other major companies—including Boeing, 3M, Honeywell, Chrysler, Home Depot, Albertsons, and many more—where they seeded new clusters, spreading Welchism across the whole of corporate America.” And we live today paying the steep price of that legacy.

ABOUT THE AUTHOR
The bio on David Gelles‘s author website reads in part: “David is a reporter for the Climate desk and the Corner Office columnist for the New York Times. At the Times, he previously covered mergers and acquisitions for DealBook. Before joining the Times in 2013, he spent five years with the Financial Times. At the FT, he covered tech, media and M&A in San Francisco and New York. In 2011 he conducted an exclusive jailhouse interview with Bernie Madoff, shedding new light on the $65 billion ponzi scheme. He lives in New York City with his family.”

[matt · Rating 5 out of 5]

I have, at best, a passing interest and knowledge of business theory and history. Still, i remember the GE appliance park in my hometown and the loss it suffered under Jack Welch’s GE reign. And I feel like I know people (which I’ll take over knowledge of market theory most days).

This book resonated in part because it catered to my concerns: a market system that sees labor as a burden, not an asset; lionization of shareholder profits; celebrity status of CEOs who make 1000x more than their employees; dehumanization of people in pursuit of maximal margins; the cult of justified greed and excess.

Those are my biases, but aren’t those the concerns that any citizen concerned with the long-term health of American culture and society should have? This book reminds me that the status quo is more fluid than I might choose to believe, and that capitalism can serve more broadly than some practitioners pretend it can. The Gilded Age ended. So will this age. I hope that it is replaced with an age that values labor and humanity above dividends and buybacks.

[Ben Sicnolf · Rating 3 out of 5]

Jack Welch is my nemesis. Hate this guy so much. The confluence of CEOs like Welch and Reagan Era Trickle Down Economics and the rise in the importance of share holder value that all came together in the early 80's really paved the way for so many economic issues happening in the US and the World today.

In that way, I like a book that takes him and people like him down, and I enjoyed seeing how much of what he built ended up failing and how so many of his proteges and minions who went on to prominent positions at other companies ended up tanking. Any echo chamber book like this that I tend to agree with, I'm going through it thinking "This book is great!" but I feel like it didn't really tell us much about Jack Welch the person and, perhaps, needed more specific anecdotes about things he had done or input from other people.

Anyway, I will always enjoy reading any take down of people like Jack Welch.

[Andy Auger · Rating 3 out of 5]

3.5 Didn't seem to have structure and tended to tangent off on liberal rants. Those things aside, it's a great perspective and heck of a story ("other side of the story") of someone hailed as a "management hero".

[Kamil Gruner · Rating 4 out of 5]

Potrzebna książka ale mam wrażenie, że redakcja zawiodła i w pierwszej części czułem się nieco zagubiony.

[Colin Thomas · Rating 5 out of 5]

Part of what was delightful about this book was that I didn’t know it was going to be a screed against Welch when I picked it up. Welch is mentioned fondly, if infrequently, in my MBA classes so I assumed this was just going to be a new book espousing the secrets of his managerial success. Boy howdy. This book nearly credits Welch with instigating the 2008 financial crisis. And though it stops a bit short there, it DOES credit Welch with executing and evangelizing Milton Freedman’s vision of Shareholder Economics with the effects of destroying many great American companies, hobbling many great American cities, and exponentially inflating the wealth gap.

I’m not sure I found the arguments of Welch’s global-economy altering, National-history swaying influence completely convincing (I think the blame for what is cast exclusively on Welch here lies with many other parallel style executives as well as dozens of politicians and thousands of investors and voters), but I did find them vastly entertaining and illuminating.

I’ll admit that I’m someone who often defaults to a defensive of Capitalism and cringes at the almost ubiquitous preference of all my friends for a poorly defined and idealized alternative socialism. That said this book (along with “History of Equality”) have helped me articulate better for myself what I think the handful of legitimate strengths of Capitalism are while more clearly seeing the seeming ocean of weaknesses.

The brand of Capitalism this book left me yearning for is the Capitalism of FDR: which really is a kind of socialism lite.

I certainly think we need to purge corporate America of Welchism.