I have just finished The Corporation, a book by University of British Columbia law professor Joel Bakan. It is an excellent book, very readable and accessible, and I recommend it to all who are interested in the state of our world. The book has also been made into an award winning documentary.
The basic premise of the book is that, as the corporate legal entity under present law is considered a person, then that person, based upon it’s personality and characteristics, is a psychopath.
Bakan bases this viewpoint on a number of things but putting the question to a Psychologist and expert on psychosis, the assessment was as follows. The Corporation is:
Irresponsible – it puts others at risk in pursuit of its own goals.
Manipulative – it manipulates people an opinion in pursuit of its goals
Grandiose – it always insisting that it is the best
Reckless – it refuses to accept responsibility for its actions
Remorseless – it cannot feel remorse
Superficial – it relates to others always in a way that does not reflect their true selves
Put this all together, and you have a psychopath.
An important point to make at this stage is that the argument that Bakan makes in the book is that not necessarily are all corporations psychopaths, but that it is the very organizational structure of the corporation which makes it a psychopath. This quite simply is based on the fact that the corporation’s single and solitary goal is to create profit and increase share value, all other concerns are secondary.
The sole responsibility of the officers of the corporation is to serve the interests of the shareholders, and most often the shareholders interest is to increase their share value. Altruistic desires and social responsibility do not increase the corporation’s bottom line, necessarily, and thus such actions are in effect banned for the officers that run the companies, whether these officers may desire to be more socially responsible or not.
An example that Bakan uses is the story of Anita Roddick, founder of the Body Shop. Roddick always refused to separate her personal values from her business, indeed, that is what made the Body Shop different; that it was a kindlier, gentler corporation. It was, and Roddick was extremely successful using this business model. Then in 1982 an initial public offering of Body Shop stock was floated on the London Stock Exchange; the money raised was needed to grow the business. Later, in the 1990′s the company began to have troubles, and came under pressure from stockholders to revise it’s business model. Outside managers were brought in to head the company and it was reorganized to make it more efficient. Roddick to her credit responded to the changes by working hard to maintain the companies progressive values and programs. Things came to head when during the Seattle protests against the WTO, Roddick wanted the Body Shop to take a public stand against the meeting, but the company leadership refused. “Roddick then realized that her once maverick, eccentric, unusual Body Shop had become all to usual” Bakan writes, she now looks at the initial stock offering as a “pact with the devil”. The underlying moral to this story is how no matter how altruistic the goals of the executive they must always ultimately succumb to the will of the corporation goals of increasing shareholder value and the bottom line.
I do not believe that all corporations are bad, for some I think that their social responsibility is truthful, most often this is the case when social responsibility happens to also be good for the bottom line. An example is Toyota and their spearheading of the drive to get more hybrid vehicles on the road, and success in engineering the technology to make that possible. Yes, Toyota serves to gain quite a bit by selling hybrid cars and licensing the technology to other automakers, but spearheading such a new technology (new at least for the marketplace, if not for engineering) is a great risk for a company, with quite a lot of capital needed to back up those goals. I still believe that corporate officers can be visionaries and socially responsible. On the other hand, I also believe that some corporations are Hannibal Lecter incarnate.
So what to do? Bakan doesn’t propose a world without corporations as some on the far left might advocate. He admits that corporations are here to stay, at least for a long time. But an important point that he makes is that the corporation is given its existence by laws, and that same law which creates the corporation can also dissolve it. And as well, as it is the law which dictates the structure of the corporation, and what the corporation can or cannot legally do, through political action to alter those laws the people can work to attempt to control the power of the corporation, at least in a functioning democracy.
In the end the book advocates a set of approaches for control the Frankenstein we have created. First is improve the regulatory system; give government more teeth in order to regulate the corporation to protect citizens, communities and the environment, next is strengthen political democracy; elections should be given back to the public and corporate manipulation of politicians should be curbed, next create a robust public sphere; we should think twice before the march down the road of privatization, some institutions should be protected from the potential vices of the capitalist system, and finally, challenge international neoliberalism; nations should work together to change the ideologies of international institutions such as the WTO and World Bank away from market fundamentalism.
While I may not believe in everything that the book advocates, I do believe in much of it. And Bakan uses a number of interesting and moving stories to present his case. I very much recommend the book; the subject matter is ever more important in the wake of somewhat recent corporate scandals, and the frightening power of the corporation internationally.