“The Corporation”

This is a post I wrote elsewhere, in June 2007. I am trying to work out whether the turmoil in the economic and financial markets over the last year make me want to revise my views…

“The Corporation” was a film which was turned into a book, by Joel Bakan; or maybe it was the other way around. A film described as “the thinking man’s Fahrenheit 9/11”. I’ve not seen the film; but I have read the book.

It describes how large companies – the multinationals, the global firms that are so economically active and powerful – are by their nature dysfunctional, set up to solely to meet the short term needs of shareholders by means fair and foul – the book focuses on the foul – and how, based on medical definitions, if they were people they would be defined as sociopathic.

It was interesting. I am not sure if I was the target audience or not. I am accountant, I have worked for large, multinational organisations; I have a strong belief in the ability of market forces to distribute economic resources. I am relatively wealthy (certainly by global standards); I invest in shares, and that generally means multinational companies.

I am also fairly left of centre in my political beliefs, believing in social equity, and I am concerned for the environment.

I found very little to disagree with in “The Corporation” – except maybe its broadest conclusions; but mostly, it made sense. I can’t say whether corporations per se are psychopathic or sociopathic – the book had a list of five characteristics which psychiatrists apparently use to identify sociopathic behaviour, and it reckoned corporations ticked all the boxes.

It also reckoned that the trend for “corporate social responsibility” – CSR – amongst companies is a sham, and this is something I have believed (and ranted about) for a long time. Indeed, I believe it is wrong for companies to indulge in CSR – or at least, they should come clean about why they do. Companies shouldn’t provide billions of pounds to charities, they shouldn’t educate their workers, they shouldn’t take on the functions of the state – except where there are business reasons for doing so.

And when they do, they should come clean about it.

Companies do not support charities because they are warm and cuddly. They do not support local communities because it makes them feel better about themselves. They have no feelings. They are there to generate profits.

They indulge in CSR because it gives them good publicity; because it makes their staff feel good about their employers (who let’s face it are trying to get their staff to do more for less), because it could help them to employ better employees; because it could buy them political favour.

Because it will help them in the ongoing struggle to make profits.

In my view, they shouldn’t do this. Companies are not good at educating people – the education system should do this. Companies shouldn’t support local community activities – there are local networks and local government to do this, and local people (who may of course be employees) to devote their time if they wish.

As an employee, I took advantage of my last employer’s several schemes to support my preferred charities (which cost them several thousand pounds a year on my account alone). But as a shareholder – as the owner of the company (even if it is just a tiny little bit of the company) – it annoyed me. It is my money they were giving away. I would be rightly annoyed if they were to leave buckets of money in the street for people to help themselves to; but that is really what they were doing. It was my money. If I want to support charities – and clearly I did – that is my choice: and I could use the dividends or capital gains provided by ownership of the company’s shares to do so.

The purpose of companies – big and small – is to make shareholders money.

The only reason that companies undertake CSR is because it helps them make more money. It is just that they are rarely open about it.

The Corporation agrees: it thinks CSR is a scam, and one which clouds the real issues. Indeed, the real problem the book identifies are the large scale networking and lobbying that companies involve in, using huge resources to influence social and political processes for their own ends. In this, I think the book swayed me. Before, I would probably have said “leave it to the market”: corrupt organisations will lose customers and shareholders, as will companies who mistreat their workers or exploit their customers.

Now, I think I would argue for stronger, more targeted regulation, to ensure companies behave in a fair and proper fashion – the resources companies can use so far outweigh those of ordinary people that they need to be regulated in their dealings. And that includes their lobbying of politicians.

It was an interesting, if somewhat polemic, book. But probably preaching at least to the semi-converted.

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