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Difficulty: Very hardPolitical Realignment, Watergate, and Rise of Conservatism

Lewis F. Powell Jr., "Confidential Memorandum: Attack on American Free Enterprise System," memorandum to the U.S. Chamber of Commerce, August 23, 1971.

"No thoughtful person can question that the American business system is under broad attack. This varies in scope, intensity, in the techniques employed, and in the level of visibility. . . . The most disquieting voices joining the chorus of criticism come from perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians. . . . Business must learn the lesson, long ago learned by labor and other self-interest groups. This is the lesson that political power is necessary; that such power must be assiduously cultivated; and that when necessary, it must be used aggressively and with determination — without embarrassment and without the reluctance which has been so characteristic of American business."

Which of the following developments in the late 1970s and 1980s represents the most direct result of the arguments made in the excerpt?

  1. A
    The adoption of federal demand-side economic policies that increased corporate tax rates to balance the budget.
  2. B
    The passage of federal legislation that expanded Great Society programs to appease corporate leaders.
  3. The growth of politically active corporate lobbying groups and conservative think tanks, such as the Heritage Foundation.Answer
  4. D
    The retreat of American corporations into isolationist economic strategies that rejected global trade agreements.

Answer

The growth of politically active corporate lobbying groups and conservative think tanks, such as the Heritage Foundation.
The correct answer is correct because the Powell Memo served as a foundational call to action that catalyzed the corporate community to build a political infrastructure. In the 1970s and 1980s, this resulted in the establishment of politically active business organizations (such as the Business Roundtable) and conservative think tanks (such as the Heritage Foundation) to counter liberal influence in media, academia, and government.

Step-by-Step Solution

1
Analyze the source context and author's thesis.
Lewis Powell argues that the American business system is under systematic attack from liberal institutions (academia, media, politics) and must aggressively cultivate political power to defend free enterprise.
Understanding the core argument of the stimulus is necessary to project its long-term historical impact.
2
Connect the arguments to developments in the late 1970s and 1980s.
The memo directly inspired the corporate community to fund conservative think tanks (like the Heritage Foundation and the American Enterprise Institute) and form advocacy groups (like the Business Roundtable) to shift public policy and public opinion to the right.
This establishes the causal link between the intellectual mobilization of the early 1970s and the organizational successes of the conservative movement in the late 1970s and 1980s.
3
Evaluate and eliminate incorrect alternatives.
Keynesian demand-side policies (tax increases) and Great Society expansion contradict the free-market, anti-regulatory goals of the business mobilization. Isolationist trade policy contradicts the movement's promotion of international free markets and globalization.
Evaluating all options ensures that distractors containing chronological or ideological errors are ruled out.

Key Concept

The corporate and organizational mobilization that fueled the rise of the conservative movement.
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Topics

Political Realignment, Watergate, and Rise of Conservatism

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