The Corporation - The pathological Pursuit of Power and Profit

Citation

Coleman, J. (2005), "The Corporation - The pathological Pursuit of Power and Profit", European Business Review, Vol. 17 No. 5. https://doi.org/10.1108/ebr.2005.05417eab.005

The Corporation - The pathological Pursuit of Power and Profit

The Corporation - The pathological Pursuit of Power and ProfitJoel BakanConstable2004Review DOI 10.1108/09555340510620401

This is certainly one of the most important books I have read in recent years. It is a convincing account of the harm done by the giant corporations which have grown to enormous sizes in a context which is now global. The nub of its message is that corporations exist only to make money for their shareholders. No other purpose is legally acceptable. If it has the opportunity to steal and get away with it, its legal duty is to do so. I once attended a lecture by David Corton and a woman in the audience asked, "Why should we oppose these companies. They are only a collection of people", to which he answered, "No they are not. They are a collection of legal documents". The book mentions that both Milton Friedman and Naom Chomsky held the same view of their legal responsibilities in spite of being diametrically opposed about what should be done about it.

It may be good for the business of a company to appear socially responsible and there has been much talk about corporate social responsibility in recent years, but that is only justifiable legally if it furthers its interests and therefore its profits. Henry Ford, Bakan tells us, has been reported to have said, "I do not believe we should make such awful profits on our cars. A reasonable profit is right, not too much". He was later to learn his mistake in court. The Dodge brothers who were shareholders in the Ford Company took him to court for paying his workers too much and reducing prices to his customers when he could have squeezed more out of them - and won the case.

IBM was supplying goods to the Nazis until 1941 in the full knowledge that they were being used in the concentration camps because it was their legal duty to increase profits and not to be concerned about the morality of it.

A third example and perhaps the most worrying because of its effect on contemporary society is how advertising is concentrating on influencing children: "... the Nag factor, a brilliant new marketing strategy that takes the manipulation of children to the extreme. Lucy Hughes, who serves as director of strategy and insight for Initiative Media, the world's largest communications management company, is one of the creators of the Nag factor, 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?", "Hughes and her colleagues at Initiative Media, with the help of child psychologists, developed a scientific breakdown of the different kind of nags that children use and the different impact they have on different kinds of parents".

When I came to the conclusions I was a little disappointed. The author seems to suggest that social programmes and economic regulation, such as Roosevelt's New Deal introduced in America, are broadly the answer. I was not quite happy with that, I thought of Leopold Kohr's saying: "when something is wrong, something is too big". But that does not deal with the fact of what we have at the moment and is rather like telling an elephant in an elephant trap that the answer is to get out which is precisely what the elephant can't do. The real answer is to help the elephant to find a way to get out and then warn him to watch out for elephant traps in the future. In the journal Simultaneous Policy (Winter 2004-5) Peter Challen is quoted as describing "corporatocracy and monetocracy as ogres bestriding the world", and here as with the elephant we have to demonstrate a way of overcoming their power before we can counsel against ever allowing such monsters to arise again. And it is here that the book offers some interesting clues about how the all powerful corporations were allowed by deliberate acts of government to come into being. Such projects as building a railway across America seemed publicly desirable and therefore, it seemed perfectly justifiable to allow the public's money to be raised for the purpose, that is to say to legalise shares. The problems came when the principle of shares were allowed for projects which didn't need it and were not necessarily in the public interest. The situation was exacerbated further when the element of risk was taken away with the idea of limited liability being added. Businessmen took huge risks and many were successful and got away with it and enormous corporations were the inevitable consequence. How many would have taken those risks if they knew might lose their house and home and their possessions down to the last farthing. The author tellingly quotes the Gilbert and Sullivan song:

• •

  Though a Rothchild you may be, in your own capacity,

  As a company you've come to utter sorrow,

  But the liquidators say, "Never mind, you needn't pay,"

  So you start a new company tomorrow.

Though the two-year prohibition attempted to address this problem there are plenty of ways around it. The Banking Acts have also played a major part in enabling the giant corporations to come into existence and the book lays stress on the point again and again that it is laws that have allowed it to happen. Incidentally, one Canadian study claims that just over 61 per cent of the shares in all the major multinational companies happen to be owned by the world's financial companies, which means a controlling interest. Not surprisingly Professor Bakan - since he is a professor of law - emphasises that all these things have come about through legal processes, and that is only through legal processes they can be changed. He quotes the authors of The Commanding Heights: "the general movement away from traditional state control of the commanding heights [of the economy] continues, leaving it more to the realm of the market". He comments himself: "While that statement captures the diminishing role of the state in protecting citizens from corporations, it ignores the expanding role of the state in protecting corporations from citizens". David Rockefeller, who went to China to prepare the way for Kissinger and Nixon and is probably responsible for its conversion to capitalism, expressed his view of the situation in Newsweek (1 February 1999): "In recent years there's been a trend towards democracy and market economies. That has lessened the role of government, which business people tend to be in favour of. But the other side of the coin is that somebody has to take government's place, and business seems to me the logical entity to do it".

John Coleman