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The modern corporation, according to law professor Joel Bakan, is "singularly self-interested and unable to feel genuine concern for others in any context." (p. 56) From this Bakan concludes that the corporation is a "pathological" entity.
This is a striking conclusion. The so-called pathological personality in humans is well documented and includes serial killers and others who have no regard for the life and welfare of anyone but themselves. But is it really fair to label the corporation, managed and owned by normal caring and loving people, in this way?
Bakan thinks so. He begins with a little history showing how the corporation developed and how it came to occupy the dominate position that it enjoys today. He recalls a time before "limited liability" when shareholders were legally responsible for the actions of the corporation, a time when corporations could not own stock in other companies, a time when corporations could not acquire or merge with other corporations, a time when shareholders could more closely control corporate management.
Next he shows what corporations have become, and finally what can be done about it.
Bakan's argument includes the point that the corporation's sole reason for being is to enhance the profits and power of the corporation. He shows by citing court cases that it is the duty of management to make money and that any compromise with that duty is dereliction of duty.
Another point is that "corporations are designed to externalize their costs." The corporation is "deliberately programmed, indeed legally compelled, to externalize costs without regard for the harm it may cause to people, communities, and the natural environment. Every cost it can unload onto someone else is a benefit to itself, a direct route to profit." (pp. 72-73)
And herein lies the paradox of the corporation. Designed to turn labor and raw materials efficiently into goods and services and to thereby raise our standard of living, it has been a very effective tool for humans to use. On the other hand, because it is blind to anything but its own welfare, the corporation uses humans and the resources of the planet in ways that can be and often are detrimental to people and the environment. Corporations, to put it bluntly, foul the environment with their wastes and will not clean up unless forced to. (Fouling the environment and leaving the mess for somebody else to clean up is exactly what "externalizing costs" is all about.)
Furthermore, corporations are amoral toward the law. "Compliance...is a matter of costs and benefits," Bakan writes. ( p. 79) He quotes businessman Robert Monks as saying, "...whether corporations obey the law or not is a matter of whether it's cost effective... If the chance of getting caught and the penalty are less than it costs to comply, our people think of it as being just a business decision." (p. 80)
The result is a nearly constant bending and breaking of the law. They pay the fine and then break the law again. The corporation, after all, has no conscience and feels no remorse. Bakan cites 42 "major legal breaches" by General Electric between 1990 and 2001 on pages 75-79 as an example. The fines for maleficence are usually so small relative to the gain that it's cost effective to break the law.
Bakan disagrees with the notion that corporations can be responsible citizens and that corporate managers can act in the public good. He believes that corporations can and sometimes do act in the public interest, but only when that coincides with their interests or because they feel the public relations value of acting in the public interest is greater than the cost of not doing so. He adds "business is all about taking advantage of circumstances. Corporate social responsibility is an oxymoron...as is the related notion that corporations can...be relied upon to promote the public interest." (p. 109)
As for corporations regulating themselves, Bakan writes, "No one would seriously suggest that individuals should regulate themselves, that laws against murder, assault, and theft are unnecessary because people are socially responsible. Yet oddly, we are asked to believe that corporate persons--institutional psychopaths who lack any sense of moral conviction and who have the power and motivation to cause harm and devastation in the world--should be left free to govern themselves." (p. 110)
Bakan even argues (and I think he is substantially right) that "Deregulation is really a form of dedemocratization" because it takes power away from a government, elected by the people, and gives it to corporations which are elected by nobody.
Some of the book is devoted to advertizing by corporations, especially to children, and the effect of such advertizing. Beyond advertizing is pro-corporate and anti-government propaganda. Bakan quotes Noam Chomsky as saying, "One of the reasons why propaganda tries to get you to hate government is because it's the one existing institution in which people can participate to some extent and constrain tyrannical unaccountable power." (p. 152)
What to do? Well, for starters, make the fines large enough to change corporate behavior. Make management responsible--criminally if necessary--for the actions of the corporation. Bakan includes these among his remedies on pages 161-164. He also wants the charters of flagrant and persistent violators to be suspended. He writes that corporations are the creations of government and should be subject to governmental control and should NOT (as we often hear) be "partners" with government.
He would also like to see elections publically financed and an end to corporate political donations. Indeed if we could take the money out of elections, our representatives would not be beholden to the corporate structure and would act more consistently in the broader public interest. I think this is one of the most important challenges facing our country today, that of lessening the influence of money on the democratic process.
Bottom line: a seminal book about one of the most important issues facing us today.
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