THE CORPORATION The Pathological Pursuit of Profit and Power Joel Bakan Free Press, 2004, 226 pp. ISBN 9-7432-4744-2

“We have over the last three hundred years constructed a remarkably efficient wealth-creating machine, but it is now out of control.” (159) Thus Joel Bakan views today’s corporations. Bakan is professor of Law at the University of British Columbia. He has written widely on law and its social and economic impact. A documentary film and TV miniseries was based on this book. “Citizens today—and many business leaders too-are concerned that the faults within the corporate system run much deeper than a few tremors on Wall Street would indicate. These larger concerns are the focus of this book.” (10) “The corporation’s legally defined mandate is to pursue, relentlessly and without exception, its own self-interest, regardless of the often harmful consequences it might cause to others. As a result, I argue, the corporation is a pathological institution, a dangerous possessor of the great power it wields over people and societies.” (2) “The purpose of this book is to explore what the corporation, as an institution, truly is.” (3) “Over the last 150 years the corporation has risen from relative obscurity to become the world’s dominant economic institution.” “We are inescapably surrounded by their culture, iconography, and ideology.” (5) “...corporations have amassed such great power as to weaken government’s ability to control them.” (8) “In 1712, Thomas Newcomen invented a steam-driven machine to pump water out of a coal mine and unwittingly started the industrial revolution.” (9) “By the end of the nineteenth century, through a bizarre legal alchemy, courts had fully transformed the corporation into a ‘person,’ with its own identity, separate from the flesh-and-blood people who were its owners and managers and empowered, like a real person, to conduct business in its own name,....” “The corporate person had taken the place, at least in law, of the real people who owned corporations.” (16) Corporations’ transportation and mobility. “By leveraging their freedom from the bonds of location, corporations could now dictate the economic policies of governments.” “Governments would now have to compete among themselves to persuade corporations that they provided the most business-friendly policies.” (22) Economic globalization “has substantially enhanced corporations’ abilities to evade the authority of governments. “Corporations and their leaders have ‘displaced politics and politicians as...the new high priests and reigning oligarchs of our system.’” (25, quoting Ira Jackson) “Corporations now govern society, perhaps more than governments themselves do; yet...the corporation now attracts mistrust, fear, and demands for accountability from an increasingly anxious public.” (25) “The ‘best interests of the corporation’ principle, now a fixture in the corporate laws of most countries...compel corporate decision makers always to act in the best interests of the corporation, and hence its owners. The law forbids any other motivation for their actions, whether to assist workers, improve the environment, or help consumers save money. As corporate officials, ...stewards of other people’s money, they have no legal authority to pursue such goals as ends in themselves—only as means to serve the corporation’s own interest, which generally means to maximize the wealth of its shareholders.” (37) “The rule that corporations exist solely to maximize returns to their shareholders is ‘the law of the land, universally accepted as a kind of divine, unchallengeable truth.’ (quoting business journalist Marjorie Kelly) “And today, even the most inspired leaders of the corporate social responsibility movement obey it.” (39) “By implication, social responsibility is not appropriate when it could undermine a company’s performance.” (45) “The 80 percent of the world’s population that lives in developing countries represents only 20 percent of the global market for drugs. The entire African continent represents only 1.3 percent of the world market.” “In the year 2000, no drugs were being developed to treat tuberculosis, compared to 8 for impotence or erectile dysfunction and 7 for baldness. Developing drugs to deal with personality disorders in family pets seems to have a higher priority than controlling diseases that kill millions of human beings each year.” (49) “At work, Barry says, he is a predator engaged in morally dubious tasks. Corporations hire him to get information from other corporations: trade secrets, marketing plans, or whatever else might be useful to them. In his work, he lies, deceives, exploits, and cheats.” He says he’s worked for more than a quarter of the Fortune 500 companies. (54) “Greed and moral indifference define the corporate world’s culture, which is why, he says, his business is booming.” (55) “Yet Barry believes he is a decent person because he can draw the line at his personal life.” “His work’s absence of moral concern does not affect his personal life...and his life’s moral concerns do not affect his work.” “‘The way you live with yourself,’ he says, ‘is to have a very compartmentalized life.’” (54) [This self-proclaimed example has some powerful implications for considering our lives as Christians. I fear this ‘compartmentalization’ is, to some degree, nearly universal, and is a primary factor in why our huge evangelical population has such a negligible affect on our culture. Your thoughts? Dlm] “Roddick [Anita Roddick, founder of Body Shop] blames the ‘religion of maximizing profits’ for business’s amorality, for forcing otherwise decent people to do indecent things: ‘Because it has to maximize its profits...everything is legitimate in the pursuit of that goal, everything....” “The managers who do these things...compartmentalize their lives...disassociate themselves from their own values...” (55) “It ‘is fashioning a schizophrenia in many of us.’” (Roddick, 56) Dr. Robert Hare, a psychologist and expert on psychopathy has developed a diagnostic checklist of psychopathic traits which include: irresponsibility, manipulating everything, grandiosity, lack of empathy, asocial tendencies, refusal to accept responsibility for their own actions, and unable to feel remorse if caught, relating to others superficially. Hare says the corporation fits all these criteria. “Human psychopaths are notorious for their ability to use charm as a mask to hide their dangerously self-obsessed personalities. For corporations, social responsibility may play the same role. Through it they can present themselves as compassionate and concerned about others when, in fact, they lack the ability to care about anyone or anything but themselves.” (57) Enron was a paragon of corporate social responsibility. However it collapsed under the weight of its executives’ greed, hubris, and criminality. “The underlying reasons for its collapse can be traced to characteristics common to all corporations: obsession with profits and share prices, greed, lack of concern for others, and a penchant for breaking legal rules. These traits are, in turn, rooted in an institutional culture, the corporation’s, that valorizes self-interest and invalidates moral concern.” (58) “Only pragmatic concern for its own interests and the laws of the land constrain the corporation’s predatory instincts, and often that is not enough....” (60) “...the routine and regular harms caused to others—workers, consumers, communities, the environment--...tend to be viewed as inevitable and acceptable consequences of corporate activity—‘externalities’ in the coolly technical jargon of economics.” (60) “ ‘An externality,’ says economist Milton Friedman, ‘is the effect of a transaction...on a third party who has not consented to or played any role in the carrying out of that transaction.’” That is, other people’s problems. These ‘externalities’ have enormous effects on the world at large. (61) “The corporation, like the psychopathic personality it resembles, is programmed to exploit others for profit. That is its only legitimate mandate. From that perspective, Wendy Diaz, and the millions of other workers across the globe who are driven by poverty and starvation to work in dreadful conditions for shocking wages, are not human beings so much as human resources. To the morally blind corporation, they are tools to generate as much profit as possible.” (69) A corporation tends to be more profitable to the extent it can make other people pay the bills for its impact on society. (70) “The difficulty with the corporate entity is that it has a dynamic that doesn’t take into account the concerns of flesh-and-blood human people who form the world in which it exists; that in our search for wealth and for prosperity, we created a thing that’s going to destroy us.” (71, quoting businessman Robert Monks) “The notion that we can take and take and take and take, waste and waste, and waste and waste, without consequences is driving the biosphere to destruction” (71 quoting businessman Ray Anderson) “The market alone cannot provide sufficient constraints on corporations’ penchant to cause harm...because it is blind to externalities, those costs that can be externalized and foisted off on somebody else.” (72, referring to Ray Anderson) The corporation feels no moral obligation to obey the law. Only people have moral obligations. Corporations cannot have moral obligations any more than buildings. “For a corporation, compliance with the law, like everything else, is a matter of costs and benefits.” (79) And all the regulations in the world do little good if there is no enforcement. (83) “Regulations that limit their freedom to exploit people and the natural environment are obstacles, and corporations have fought, with considerable success over the last twenty years, to remove them.” (85) “Thought the assistance provided to the Nazis by U.S. corporations may seem shocking in retrospect, it should not be forgotten that many U.S. corporations today regularly do business with totalitarian and authoritarian regimes—again, because it is profitable to do so.” (89) According the author, after lobbying for deregulation, Enron helped manufacture an artificial energy shortage in California in 2000 that drove the price of electricity and its profits sky-high. (101) “When corporations lobby governments, their usual goal is to avoid regulation.” (102) “It’s very hard [for a politician] to turn somebody down when they’ve given a hundred thousand dollars to [his or her] campaign.” (per Anne Wexler). “Corporate donations now fuel the political system and are a core strategy in business’s campaign to influence government.” (104) “Yet where are the desperately needed countervailing lobbies to represent the interests of average citizens?” (107) “The corporation too is all about creating wealth, and it is a highly effective vehicle for doing so. No internal limits, whether moral, ethical, or legal, limit what or whom corporations can exploit to create wealth for themselves and their owners. To ‘exploit,’ according to the dictionary, is to ‘use for one’s own selfish ends or profit.’ Over the last century and a half, the corporation has sought and gained rights to exploit most of the world’s natural resources and almost all areas of human endeavor.” (111-12) “One barrier remains, however, to corporations being in control of everything: the public sphere. The twentieth century was unique in modern history for the widely held belief that democracy required governments to protect citizens’ social rights and meet their fundamental needs.” “Human beings could not be owned and children could not be exploited, either as workers or as consumers.” (112) Education is bigger than any other segment of the American marketplace except health care. There is a bright future for corporate schools. What does/would this mean? (115) “From the public’s standpoint, however, we have to ask what kind of society we create when we put corporations in charge of the very sinews of our society—the institutions that define who we are, that bind us together, and that enable us to survive and live securely.” (118) The Nag Factor “is a brilliant new marketing strategy that takes manipulation of children to the extreme.” [It] “is a solution to a problem that has vexed marketers for years: How can money be extracted from young children who want to buy products but have no money of their own?” “Advertisements must be aimed not at getting them to buy tings but at getting them to nag their parents to buy things.” (119) Advertisers have identified 4 kinds of parents: 1) “bare necessities,” 2) “kids’ pals,” 3) “indulgers,” and 4) “conflicted.” The kids nag the first group with the importance of the product. They nag the other 3 groups with persistence. “Children’s influence on what products the parents are buying is huge.” (121) “Kids are amazing when they watch TV. They’re paying attention to the advertising.” (per Lucy Hughes, director for strategy for Initiative Media, the world’s largest communications management company) (121) Children are much easier to manipulate than adults. “Within the psychopathic world of the corporation, vulnerability is an invitation to exploit, not a reason to protect.” (122) “The average American child sees 30,000 commercials a year on television alone.” (123) “It is more difficult for a parent to say ‘no’ to a child when the child has been urged by advertisers to question the parent’s authority over food and is persuaded that he or she needs the advertised product. Under these conditions, the result of saying ‘no’ is often petulance, sulking, acting out, and family conflict—which is why so many parents are prone to just put the kids in the car and drive to McDonald’s.” (125) “Hooper says his job is to create ‘images that are trying to sell products to people that they don’t really need’ and that ‘encourage very sophomoric behavior, irresponsible, hedonistic, egotistical, narcissistic behavior.’” (Chris Hooper is “a highly successful television ad director and voice-over artist working for corporations like McDonald’s, Coca-Cola, and other major corporations.) (125-26) We are producing kids as consumers first and becoming less good at creating competent citizens, good, moral and virtuous human beings. “We are teaching children that it’s all bout ‘me first’ and failing to instill in them fundamental skills of democratic citizenship: ‘cooperation...living in a society...and working and playing with other people.” (127) “The corporation, after all, is deliberately designed to be a psychopath: purely self-interested, incapable of concern for others, amoral, and without conscience—in a word, inhuman—and its goal, as Noam Chomsky states, is to ‘ensure that the human beings who [it is] interacting with, you and me, also become inhuman.” The ideal is to have individuals whose “sense of value, is ‘Just how many created wants can I satisfy?’” (134-35) “Increasingly, we are told, commercial potential is the measure of all value....” (138) The antiglobalization protests are a sign that business may be overplaying its hand. (141) “The problem with capitalism is that ‘we have a global theology without morality, without a Bible.’” (142, quoting Ira Jackson at Harvard) Capitalism is facing a crisis. Beneath the Wall Street scandals lies a culture that is increasingly defined by selfishness. (142) “Regulations are designed to force corporations to internalize—i.e., pay for—costs they would otherwise externalize onto society and the environment. When they are effective and effectively enforced, they have the potential to stop corporations from harming and exploiting individuals, communities, and the environment.” (150) “The corporation depends entirely on the government for its existence and is therefore always, at least in theory, within government’s control.” A corporation is “a product of public policy, a creation of the state.” (153) “The question is never whether the state regulates corporations—it always does—but how, and in whose interests it does so.” (154) “As a creation of government, the corporation must be measured against the standard applicable to all government policies: Does it serve the public interest?” (156) “Charter revocation laws are a ‘well-kept’ secret.” (157) “The question of what to do about, and with, the corporation is one of the most pressing and difficult of our time.” (158) “We have over the last three hundred years constructed a remarkably efficient wealth-creating machine, but it is now out of control.” (159) “Corporate rule must be challenged in order to revive the values and practices it contradicts: democracy, social justice, equality, and compassion.” (166)