Review and summary by GRAIN
The article below is based on a book and a film both titled "The Corporation" (see below) by Joel Bakan et al. Both the book and film (DVD or VHS) are widely available and are highly recommended by GRAIN. The book is very well written and easy to read, much like a novel providing the most extraordinary details about corporations. The film is long, but a joy to watch and includes subtitles in French and Spanish. Although the film is based on the book there is also supplementary information provided in interviews with a wide range of people. Overall the book provides the information in the most coherent manner.
The Corporation focuses solely on the Anglo-Saxon type of Corporation, and nearly entirely on Corporations within the US. This was a missed opportunity by Bakan to appeal to a wider international audience and show that corporate governance is not the same around the world. Indeed corporations around the world vary widely to the extent that there is no one homogeneous system of corporate structure or regulation. Having said this, it is clear that there are many who are successfully pushing for the adoption of this Anglo-Saxon type of corporation, the most liberal type of corporation, around the world, though there is still a long way to go to achieve this. Indeed, there is still hope that laws can be changed to provide vital restrictions on this psychopathic and immortal Frankenstein.
In the past 20 or so years, the world has witnessed the extraordinary rise of the corporation. Even though the corporation has been around for many more years, it is really only in the last few decades that their overpowering world domination makes sure that they are part of every day life for those living in industrialised countries. We eat their food, we read their news, they deliver our letters, we watch their films, we invest our money in them through banks and pensions, we use their household and office products, their fuel, their cosmetics, their seeds, their pesticides, their fertilisers, their water and the list goes on and on. And even though we may not be conscious that we are completely dependent on corporations, we are reminded every day with advertising and marketing and their brands flashed at us where ever we look. Although in the South, particularly in rural areas, the corporation does not yet always dominate lives, you can be sure that it is coming, and coming very fast.
What is a corporation?
A legal person...: A corporation can be defined as a company which is 'owned ' by its shareholders. However, legally, a corporation is not treated as a group of people but is actually treated as a person - a 'person ' with 'rights '. Yet in reality, this legal 'person ' does not have a moral conscience, and only has one legal aim - to make as much money as possible for their shareholders, that 's it. Corporations are not interested in the environment, they 're not interested in social welfare, they don 't care about fairness, suffering, illness or death as long as the corporation is able to maximise its profits at all times which is then paid out to its shareholders.
...of limited liability...: Shareholders are protected by what is known as "limited liability" in that only the amount they invest is liable, no more. Employees can be held liable, but only for specific issues related to the good of the corporation or for acts which are considered illegal by national law. However, if the corporation does something illegal, then employees are not usually prosecuted - it is usually the corporation as a whole which has to pay a fine. Limited liability becomes particularly troublesome when a corporation subcontracts activities which are at risk of causing harm. For example a corporation may outsource production to tiny local companies that run sweatshops producing running shoes or clothes. It is these local companies which are responsible for any laws that are broken, and rarely the corporation itself.
...and immortal: A corporation will exist beyond the lifetimes of its employees and investors - it has a perpetual lifetime. This means that shareholders or employees are not able to shut down a corporation. Officially this is to allow for the 'stability of capital ' but in reality this means that judges and juries find it nearly impossible to shut down a corporation for malpractice.
Maximising profits
One of the main techniques to maximise profits is to reduce costs by what economists call externalising costs - these are the costs that a corporation would rather be paid by someone else such as the government, employees, the biosphere or even future generations. For example, these can include low pay to factory workers, intensive animal husbandry with little thought to animal welfare, unconcerned pollution of the biosphere and people losing their lives. External costs can also be paid for by the government yet are often in the best interests of large corporations, not the taxpayer - for example the building of a road to help with the timely transportation of goods, or providing an army to quell social unrest and defend the interests of a corporation.
"A coporation is an externalising machine in the same way that a shark is a killing machine" - Robert Monks - Corporate governance advisor
"The pressure is on the corporation to deliver results now and to externalise any costs that this unwary or uncaring public will allow it to externalise" Ray Anderson - CEO Interface, (commercial carpet manufacturer)
Costs are being externalised at such a rate, that the entire planet is now suffering. All aspects of the biosphere are in decline from pollution and the extraction of natural resources.
Often, a corporation is eager to externalise a cost, but is faced with the possibility of breaking a law. But at the end of the day, this is simply seen as another cost-analysis study, with potential profits compared to a potential fine (if caught). It is nearly always the corporation which is penalised, and not the individuals involved. Corporations are some of the worst criminals in the world, as documented by the Multinational Monitor magazine.
"Again and again we have the problem of whether you 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 the cost to comply, our people just think of it as being a business decision." - Robert Monks - Corporate governance advisor
Furthermore, corporations are always keen to remove legislation that limits their freedom. And they have been very effective at removing laws which they do not approve of through lobbying, political funding and sophisticated public relations campaigns. This involves staggering amounts of money and provides corporations with a disproportionate influence over the political system. This deregulation is based on corporations self-regulating themselves when it comes to respecting the environment or social rights. Yet corporations are unable to regulate themselves - an institutional psychopath being allowed to govern itself?
Psychopath!
If the corporation is legally a person then that person is a psychopath:
- Callous unconcern for the feelings for others
- Incapacity to maintain enduring relationships
- Reckless disregard for the safety of others
- Deceitfulness: repeated lying and conning others for profit
- Incapacity to experience guilt
- Failure to conform to social norms with respect to lawful behaviours
Even though a corporation is a psychopath, they have the same rights as an individual. Indeed, a corporation has MORE rights than an individual. With the rise of the World Trade Organisation (and other similar international bodies such as UPOV and WIPO), corporations now have the right to set themselves up in any country at any time, and then to leave again at any time - and national governments or individuals cannot stop them from their inalienable right to be a part of the global free market economy.
Yet, interestingly, it is not the employees or the shareholders who are psychopaths - these are 'normal ' people who have a family, friends, give to charity and may even feel that are doing something positive for society. But at the same time shareholders and employees do not have the power to make big changes in a corporation - not even the chief executive:
"[As a] CEO, ... even though the perception is that you have absolute power, the reality is that you don 't have that power" Sam Gibara - Chairman and former CEO of Goodyear Tire
Legally, employees (such as the Chief Executive) are not allowed to divert funds away from shareholders to pay workers more money or reduce their impact on the environment, unless it means that ultimately shareholders will benefit from more money.
Although it can be argued that it is best not to be an employee or an investor in a corporation, sometimes this decision is very difficult to avoid (e.g. workers in a sweat shop, pension investments, etc...). So the problem is not so much in the individuals who make up the corporation, but the laws that created and now enshrine the corporation.
Image is everything
A corporation is clearly a psychopath. It is also a polluter and an exploiter. Yet most corporations need to give a good impression to people, especially those who buy their product. Corporations are therefore heavily reliant on advertising, marketing and in particular branding. Branding is what a corporation uses its personable face, as a way to ensure that people return to using their product. And in many industrialised countries, particularly the US, branding is everywhere. Corporations will spend a lot of money and time to ensure that people will have a positive impression of themselves. And they will go to extreme measures to ensure consumers are manipulated into buying. For example, corporations in the US now realise that around 40% of sales targeted at children comes from nagging. Therefore advertisements on children 's ' television, publications and billboards, ensure that children know about a product, and, most importantly, nag their parents to buy the product. And it works - aggressive advertising targeted at children increases sales.
Corporations also need to look as though they are being responsible and accountable - for example looking after the environment or treating their workers correctly. Go to any corporation website and they will have a section called 'corporate responsibility ' or similar. Corporations show they are responsible, but not because they want to be responsible but because they want to be identified as being responsible. Remember that legally, corporations cannot waste money on being responsible unless it increases their profits, so the easiest and cheapest method is to provide the image of responsibility.
Opportunity
Ultimately, there are many who would like to see 'everything ' privatised - everything owned by someone or groups of people. Governments ' roles would be minimised (to perhaps running the military) and all decisions are made by the market, in particular by shareholders and those holding private pensions. As global politics moves unswervingly in this direction, the legal concept of the corporation grows stronger and stronger. Governments have now lost control over corporations and have become powerless as it is now corporations which are the new high priest. For example, in the US, it is clear that the government now works for corporations, and this is now rapidly spreading to other countries. Yet corporations are not nationalistic - anything but. Corporations will trade with any flag and with any political persuasion. In particular corporations have had very close relationships with dictatorships as the one tends to support the other. Corporations also tend to have a strong relationship with destruction and devastation such as wars or even the loss of biodiversity - in destruction there is opportunity.
GRAIN perspective
Today, corporations lie at the heart of GRAIN 's work. Corporations are pushing for more privatisation and more rights for themselves whilst at the same time they are also trying to curb the rights of farmers - it makes financial sense. In the last issue of Seedling we saw how farmers in industrialised countries are often not allowed to freely save and use their own farm-saved seed. Behind these types of laws lie corporations eager to outlaw seeds except their own to ensure that their profits continue growing. Corporations push mercilessly using intellectual property rights and marketing laws to ensure that laws are established to provide the markets they need for their own survival.
But simply placing more legal restrictions on farmers isn 't usually enough. They also seek new frontiers over which they can have complete control. The main new frontier for agro-chemical corporations is the living gene and the rise of GM plants and animals (at its more extreme form, corporations have even come up with the terminator seed). Ethically dubious and environmentally polluting maybe, but a way for corporations to continue increasing their profits and dominate their market; GMOs ensure that they can patent their crops and animals and establishes a compulsory link between specific agro-chemicals to specific crops.
Corporations may have complete control of food from farm to fork in many industrialised countries, but they still have a lot of work to do to achieve this in many countries in the South. And although they are supported by eager-to-please governments with dollar signs in their eyes, there is a growing sense of unease amongst farmers and the general population of the undemocratic power that these monstrous corporations contain. Indeed, such is this unease, that resistance in many places is turning to rebellion.
Book: The Corporation: The pathological pursuit of profit and power by Joel Bakan, 2004. Published by Constable in the UK and Free Press in the US.
Film: The Corporation, A film by March Achbar, Jennifer Abbott and Joel Bakan, 2004
Website for the film: www.thecorporation.com
Joel Bakan is Professor of Constitutional Law at the University of British Columbia, Canada.
Quotations included in the text above are taken from the film and book.