fxm
14th October 2007, 05:48 PM
Review of The Corporation: The Pathological Pursuit of Profit and Power, by Joel Bakan
This review may be a bit late in coming, as the book (and the documentary film that was produced along with it) has been out for a few years. However, it has been used as a reference containing supporting evidence for some of the arguments made in other threads, so I thought I would get my hands on a copy and look it over.
Bakan’s argument is that corporations are inherently “psychopathic” in nature, provides some examples that purport to support this argument, and concludes with some recommendations to rein in corporate power and prevent the downfall of civilization as we know it. Unfortunately, the premise is weak at best, the book is laden with alarmist rhetoric, and the examples are not particularly compelling. However, even those who already subscribe to the view that corporations are evil are likely to be disappointed, as the recommendations Bakan makes in the final chapter are realistic rather than revolutionary.
The “psychopathic” designation is derived from the fact that a corporation, as a legal entity, exists purely to benefit its shareholders. The way a corporation achieves this is to make profits; it has no other reason for existence. Bakan compares this with people, who are typically composed of a mix of self-interest and an altruistic sense of obligation to others or to society as a whole. He interviews a psychologist, who runs through the DSM criteria for psychopathy and declares that corporations meet those criteria. I have two basic problems with this argument.
First, Bakan uses the term “corporation” to mean a very specific type of company, the “large Anglo-American publicly traded business corporation.” The book mentions companies such as BP, General Electric, and Pfizer, but does not provide any guidance as to the fundamental difference between the type of corporation he thinks is “psychopathic” and the smaller ones or privately-held ones. All such companies have the same basic form.
Second, the term “psychopathic” implies that a corporation is a “person” in more than just the legal sense. This anthropomorphizing conjures up the image of a corporation as a being that has its own thought, feeling, and morality, when in fact it is purely a tool for structuring a business -- which is how even the author describes it later in the book. The “diagnosis” is useless for any sort of analysis, and does little more than grab attention away from the actual guilty parties in most of Bakan’s examples: people.
The book presents several examples of how corporations, even those that have Corporate Social Responsibility initiatives, still manage to commit acts that are either illegal or immoral. In almost all of these examples, however, the actual illegal or immoral act can be traced to one or more people, not the corporations themselves. Some of the examples, such as the Triangle Shirtwaist fire in 1911, don’t even pertain to corporations -- Triangle was a partnership -- although that particular example is used merely as a lead-in to the fact that sweatshops, which were outlawed after that fire, still exist in the US today. What the book fails to mention is that those sweatshops are not owned by corporations, but are typically small businesses. But corporations buy clothing produced by sweatshops, so of course corporations are to blame.
Or take the example of the near-coup of the Roosevelt administration as FDR was engineering the New Deal. I found this story interesting, as I never heard about it in my history classes in school. Bakan goes into some detail about it, including naming the people that were behind the effort. These were individuals, not corporations -- individuals who represented, or were part of, some very wealthy families that were not in favor of changing the status quo. Again, the example fails to support the book’s premise. This, too, was perhaps used only for historical context, to introduce the subject of current weak government regulation of corporations. If so, however, Bakan could have been clearer about it.
Enron, the poster child for corporate misbehavior, is mentioned multiple times throughout the book. Enron influenced government regulation to manipulate energy markets and create the California electricity crisis. Enron cooked its books to create fake profits, bilked investors, and went bust. Yes, this is all very bad, but it still fails to support the book’s premise, because at the root of it all, it was people who took advantage of the system. People, not some legal instrument structuring a business.
And since the corporate form is just a legal instrument, a tool that was created by laws passed by our governments, it can be changed and regulated by governments. This is the essence of the final chapter. Bakan does not advocate abolishing corporations entirely -- that would not be realistic -- but suggests strengthening the tools we already have for keeping corporations in check: the regulatory system, democratic institutions, public enterprises, and international cooperation. It’s a bit surprising that after 150 pages of scare stories, the prescription is not more drastic. I could even agree with some of the suggestions; perhaps I would agree more had the rest of the book been as moderate and reasoned.
Throughout history, the wealthy have had power over the less-wealthy, and they have exerted influence on governments and people. One could even argue that today’s large corporations, because they have such broad ownership and serve such a broad customer base, are less of a worry than the monied interests of past centuries. Bakan even mentions “consumer democracy” and “shareholder democracy” as being “not entirely implausible,” but not as effective as democratic government regulation in ensuring that society’s interests are being upheld.
Overall, The Corporation misses the mark. Likening corporations (but only large ones) to psychopaths is at best a fanciful metaphor and provides little explanatory power. Large corporations happen to have the greatest concentration of economic power in the world today, and it is certainly wise to be wary of such power, especially as it impinges on our democracies. However, the book fails to prove that this is uniquely inherent in corporations. People do bad things, and people who do so that also happen to be in positions of power (economic or political), can do a lot of damage. This is nothing new.
This review may be a bit late in coming, as the book (and the documentary film that was produced along with it) has been out for a few years. However, it has been used as a reference containing supporting evidence for some of the arguments made in other threads, so I thought I would get my hands on a copy and look it over.
Bakan’s argument is that corporations are inherently “psychopathic” in nature, provides some examples that purport to support this argument, and concludes with some recommendations to rein in corporate power and prevent the downfall of civilization as we know it. Unfortunately, the premise is weak at best, the book is laden with alarmist rhetoric, and the examples are not particularly compelling. However, even those who already subscribe to the view that corporations are evil are likely to be disappointed, as the recommendations Bakan makes in the final chapter are realistic rather than revolutionary.
The “psychopathic” designation is derived from the fact that a corporation, as a legal entity, exists purely to benefit its shareholders. The way a corporation achieves this is to make profits; it has no other reason for existence. Bakan compares this with people, who are typically composed of a mix of self-interest and an altruistic sense of obligation to others or to society as a whole. He interviews a psychologist, who runs through the DSM criteria for psychopathy and declares that corporations meet those criteria. I have two basic problems with this argument.
First, Bakan uses the term “corporation” to mean a very specific type of company, the “large Anglo-American publicly traded business corporation.” The book mentions companies such as BP, General Electric, and Pfizer, but does not provide any guidance as to the fundamental difference between the type of corporation he thinks is “psychopathic” and the smaller ones or privately-held ones. All such companies have the same basic form.
Second, the term “psychopathic” implies that a corporation is a “person” in more than just the legal sense. This anthropomorphizing conjures up the image of a corporation as a being that has its own thought, feeling, and morality, when in fact it is purely a tool for structuring a business -- which is how even the author describes it later in the book. The “diagnosis” is useless for any sort of analysis, and does little more than grab attention away from the actual guilty parties in most of Bakan’s examples: people.
The book presents several examples of how corporations, even those that have Corporate Social Responsibility initiatives, still manage to commit acts that are either illegal or immoral. In almost all of these examples, however, the actual illegal or immoral act can be traced to one or more people, not the corporations themselves. Some of the examples, such as the Triangle Shirtwaist fire in 1911, don’t even pertain to corporations -- Triangle was a partnership -- although that particular example is used merely as a lead-in to the fact that sweatshops, which were outlawed after that fire, still exist in the US today. What the book fails to mention is that those sweatshops are not owned by corporations, but are typically small businesses. But corporations buy clothing produced by sweatshops, so of course corporations are to blame.
Or take the example of the near-coup of the Roosevelt administration as FDR was engineering the New Deal. I found this story interesting, as I never heard about it in my history classes in school. Bakan goes into some detail about it, including naming the people that were behind the effort. These were individuals, not corporations -- individuals who represented, or were part of, some very wealthy families that were not in favor of changing the status quo. Again, the example fails to support the book’s premise. This, too, was perhaps used only for historical context, to introduce the subject of current weak government regulation of corporations. If so, however, Bakan could have been clearer about it.
Enron, the poster child for corporate misbehavior, is mentioned multiple times throughout the book. Enron influenced government regulation to manipulate energy markets and create the California electricity crisis. Enron cooked its books to create fake profits, bilked investors, and went bust. Yes, this is all very bad, but it still fails to support the book’s premise, because at the root of it all, it was people who took advantage of the system. People, not some legal instrument structuring a business.
And since the corporate form is just a legal instrument, a tool that was created by laws passed by our governments, it can be changed and regulated by governments. This is the essence of the final chapter. Bakan does not advocate abolishing corporations entirely -- that would not be realistic -- but suggests strengthening the tools we already have for keeping corporations in check: the regulatory system, democratic institutions, public enterprises, and international cooperation. It’s a bit surprising that after 150 pages of scare stories, the prescription is not more drastic. I could even agree with some of the suggestions; perhaps I would agree more had the rest of the book been as moderate and reasoned.
Throughout history, the wealthy have had power over the less-wealthy, and they have exerted influence on governments and people. One could even argue that today’s large corporations, because they have such broad ownership and serve such a broad customer base, are less of a worry than the monied interests of past centuries. Bakan even mentions “consumer democracy” and “shareholder democracy” as being “not entirely implausible,” but not as effective as democratic government regulation in ensuring that society’s interests are being upheld.
Overall, The Corporation misses the mark. Likening corporations (but only large ones) to psychopaths is at best a fanciful metaphor and provides little explanatory power. Large corporations happen to have the greatest concentration of economic power in the world today, and it is certainly wise to be wary of such power, especially as it impinges on our democracies. However, the book fails to prove that this is uniquely inherent in corporations. People do bad things, and people who do so that also happen to be in positions of power (economic or political), can do a lot of damage. This is nothing new.