A Critique on Corporations

There has been a lot of talk on the news about the recent oil spill off the Gulf of Mexico. However, most of the talk surrounds ‘who to blame’ and the ‘environmental impacts’. Very few people are digging deeper and questioning the ethics and morality behind the corporation responsible for the mess: British Petroleum, (BP).

When Massachusetts congressman, Edward J. Markeys said the oil company had “lost all credibility”, that their estimates are “dead wrong” and that “we can no longer trust them”, he is actually hitting the nail on the head. [4]

I would like to discuss corporations in general and why their current behavior is detrimental to the survival of the human species.

But first, some very interesting background reading:

Corporations were originally associations of people who were chartered by a state to perform some particular function….Like a group of people who want to build a bridge over a river or something like that.

There were very few chartered corporations in early United States history. And the ones that existed had clear stipulations in their state issued charters. How long they could operate, the amount of capitalization, what they made or did or maintained —was in their charter and they didn’t do anything else. They didn’t own or couldn’t own another corporation. Their shareholders were liable. And so on…

So in both law and the culture, the corporation was considered a subordinate entity that was a gift from the people in order to serve the public good. This all changed with the industrial revolution.

The Civil War and the Industrial Revolution created enormous growth in corporations. Banking, heavy manufacturing and corporate lawyers realized that they needed more power to operate, and wanted to remove some of the constraints that had historically been placed on the corporate form.

The 14th Amendment was passed at the end of the Civil War to give equal rights to African-Americans. It said: “No state can deprive any person of life, liberty or property without due process of law.” This was intended to prevent the States from taking away life, liberty or property from African-Americans as they had done for so much of American history.

Interestingly, corporations came into court and said “oh you can’t deprive a person of life, liberty or property. We are a person, a corporation is a person.” And so the Supreme Court goes along with that. [Corporate lawyers are very clever]

What was particularly grotesque about this was that the 14th Amendment was passed to protect newly freed slaves. So, for instance, between 1890 and 1910, there were 307 cases brought before the court under the 14th Amendment. 288 of these brought by corporations, 19 by African Americans! [2]

Six hundred thousand people were killed to get rights for people, and with strokes of the pen over the next thirty years, judges applied those rights to capital and property while stripping them from people.

Here lies the rub:

Having acquired the legal rights and protections of a “person”, the question arises: “What kind of person is the corporation?”

Corporations were given the rights of immortal “special” persons, persons who have no moral conscience. These kinds of persons are designed by law, to be concerned only for their stockholders. And not, say, what are sometimes called their stakeholders, like the community and/or the work force.

All publicly traded corporations have been structured — through a series of legal decisions — to have a peculiar and disturbing characteristic. They are required — by law —- to place the financial interests of their owners above competing interests.

In fact, the corporation is legally bound to put its bottom line ahead of everything else, even the public good.

To whom do these companies owe loyalty? What does loyalty mean? Well, it turns that corporations have always owed obligation to themselves to get large and to get profitable. In doing this, it tends to be more profitable to the extent it can make other people pay the bills for its impact on society. There’s a terrible word that economists use for this called “externalities”.

So in keeping with the “Corporation as a Person” idea, let us now look at contemporary corporate behavior:

1. Callous unconcern for the feelings of others [Harm to workers] 

  1. Layoffs
  2. Union Busting
  3. Factory Fires
  4. Sweatshops

2. Incapacity to maintain enduring relationships [Harm to human health]

  1. Dangerous Products
  2. Toxic Waste
  3. Pollution
  4. Synthetic Chemicals

3. Reckless disregard for the safety of others [Harm to Animals]

  1. Habitat Destruction
  2. Factory Farming
  3. Experimentation
  4. rBGH/rBST Posilac

4. Deceitfulness: repeated lying and conning others for profit

  1. Exxon pled guilty in connection to federal criminal charges with the Valdez spill and paid $1 billion in criminal fines
  2. General Electric was guilty of defrauding the federal government and paid $69 million in criminal fines
  3. Chevron was guilty of environmental violations and paid $6.5 million dollars in fines
  4. Mitsubishi was guilty of anti-trust violations and paid $134 million in fines
  5. IBM was guilty of illegal exports and paid $8.5 million
  6. Eastman Kodak was guilty of environmental violations and paid $1.15 million
  7. Pfizer was guilty of anti-trust violations and paid $20 million
  8. Odwalla was guilty of food and drug regulatory violations and paid $1.5 million
  9. Sears was guilty of financial fraud and paid $60 million
  10. Damon Clinical Laboratories was guilty of financial fraud and paid $119 million
  11. Hoffman la Roche guilty of an anti-trust violation, paid five hundred million dollars in criminal fines…

…You get the point.

5. Incapacity to experience guilt [Harm to Biosphere]

  1. Clearcuts
  2. C02 Emissions
  3. Nuclear Waste
  4. Corporate paradigm

6. Failure to conform to social norms with respect to lawful behaviors

Now that we have looked at general corporate behavior, it would not be unreasonable to classify a corporation as a Psychopath. They have all the characteristics, and in fact, in many respects, the corporation of that sort is the proto-typical psychopath.

So where does this leave us? If the dominant institution of our time [the corporation] has been created in the image of a psychopath, who bears the moral responsibility for its actions?

A corporation is simply an artificial legal structure, but the people who are engaged in it, whether the stockholder, whether the executives in it, whether the employees, they all have moral responsibilities.

It’s a fair assumption that every human being, real human beings, flesh and blood ones, not corporations, but every flesh and blood human being is a moral person. We’ve got the same genes, we’re more or less the same, but our nature, the nature of humans, allows all kinds of behavior. I mean every one of us under some circumstances could be a slave owner and a saint.

When you look at a corporation, just like when you look at a slave owner, you want to distinguish between the institution and the individual. So, slavery, for example or other forms of tyranny, are inherently monstrous, but the individuals participating in them may be the nicest guys you could imagine – benevolent, friendly, nice to their children, even nice to their slaves, caring about other people. I mean, as individuals they may be anything. In their institutional role they’re monsters because the institution is monstrous. And then the same is true here!

I’m sure U.S. President Obama, Bush, and all presidents before are great persons to have a beer with [White house staff have told me so], but in their institutional role, they are a very different persons.

Corporate institutions to which we all belong and subscribe to are monstrous. In the end, this is what we should be questioning. We need to challenge the status quo and question our established institutions. To not do so, would be detrimental to human progress.

Please read Understanding Money Part 1: Making Magic and Part 2: Making Slaves for a review of our financial institution. See also my critique of our religious institutions. More reviews to come.

 

Thanks for reading,

Notes:

  1. Bakan, Joel; “The Corporation: The Pathological Pursuit of Profit and Power”, Free Press (February 2004), ISBN-10: 0743247442
  2. “The Corporation” Website: http://www.thecorporation.com/; watch the movie for free: http://www.youtube.com/watch?v=Pin8fbdGV9Y
  3. BP and Coast Guard Officers Block Journalists From Filming Oil-Covered Beach (VIDEO) http://www.huffingtonpost.com/2010/05/19/bp-coast-guard-officers-b_n_581779.html
  4. BP Attacked Over Oil Leak Video: BP estimates are “dead wrong”. Massachusetts congressman, Edward J. Markeys said the oil company had “lost all credibility” and that “we can no longer trust them”BP estimates are “dead wrong”. Massachusetts congressman Edward J. Markeys said the oil company had “lost all credibility”. We can longer trust them!: http://news.bbc.co.uk/2/hi/americas/8696073.stm?ls
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