Friday, February 13, 2015
Of the Corporation, by the Corporation, for the Corporation: A Short History Lesson (Part 3)
In part 2, I briefly chronicled the path corporations have followed to achieve dominance in American society. We’ve pretty much come full circle now in our economic preferences. After retreating from a distant feudal past and attempting for a time to create an economy in harmony with our political ideals, we are once again embracing an aristocratic system. Accumulated wealth has a way of imposing its will and shaping the perceptions of those who do not share materially in the wealth. But viewed objectively, the corporate form of capitalism is an anachronistic remnant from our aristocratic past. Thus, in an ironic twist of fate, we have embraced a strangely schizophrenic system in which we purport to enjoy political democracy and yet openly embrace economic authoritarianism. This perfectly disharmonious arrangement has turned Abraham Lincoln’s assessment of the proper relationship between capital and labor on its head: “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves the higher consideration.”1 But in today’s economy, labor, even though it creates capital, receives none in the typical structuring of corporate ownership.
Questioning this system, Marjorie Kelly points out an inconsistency in our thinking about property rights: “In believing that property rights spring not from all labor but only from the labor of entrepreneurs and CEOs, we value aristocratic rights over natural rights. The point is not that the skills of a CEO aren’t scarce and valuable but that they realize their value only in conjunction with the skill of others. The point is not that the property rights of the entrepreneur are illegitimate but that they have been stretched beyond reasonable bounds—much as the property rights of kings were once stretched beyond reasonable bounds.”2 The result is a sort of feudalistic form of capitalism in which a few elite feudal lords own not only the property where the peasants work but also the products created and sold by the serfs. And this corporate system of aristocratic ownership has now engulfed nearly the entire global economy. How did we ever come to this pass?
The Corporation System
After World War II, the United States experienced a period of growth and prosperity perhaps unrivaled in the history of the world. The rationing of goods during the war years had finally ended. Wartime industries were converted into a manufacturing base for consumer products. The GI Bill sent a generation of young veterans to college, preparing them for responsibilities in the burgeoning economy. Perhaps the most significant factor, however, was the fact that the rest of the world was in shambles. It would take Europe and Japan many years to become industrial powers. China and the Soviet empire had retreated behind their respective curtains—bamboo and iron—and did not pose serious economic threats.
For nearly two decades, Americans reveled in this climate of opportunity and prosperity. Then came the Sixties. Old inequalities seethed and stirred; civic unrest boiled over in a variety of radical movements. The Baby Boom generation, bored with the mores and values of their parents and weary of an unpopular war in Southeast Asia, pushed against boundaries on all sides. As a result, the Sixties became the decade of civil rights, feminism, free love, flower power, LSD, rock and roll, war protests, and general rebellion against the “establishment.”
Chaos appeared to reign. It seemed the whole world had turned upside down. But I would suggest that all this upheaval was merely a diversion. All the headline-grabbing movements of the ’60s and early ’70s were really just leaves blown upstream by a brief puff of wind. The deeper current, that turbulent era’s most real and certainly most significant development, which began in earnest at the end of World War II and flowed forward with stolid, unsentimental, and unstoppable momentum, was the rapid expansion and entrenchment of corporate capitalism. When the free-love, rock-and-roll, new-morality, drug-experimentation, radical-feminist, war-protest, and civil-rights movements of the ’60s and ’70s had spent their fury, we Americans awoke one gray morning to discover that in the meantime all of us—hippies included—had been quietly absorbed into a global economy dominated by multinational corporations, professional managers, and organizational values.
By the time the ’80s rolled around, Wall Street was king and greed was good. Corporate capitalism had not only weathered the social storm, it had absorbed it and adapted it to its own uses. How was this possible? Noted historian and social critic Christopher Lasch explains:
The market notoriously tends to universalize itself. It does not easily coexist with institutions that operate according to principles antithetical to itself: schools and universities, newspapers and magazines, charities, families. Sooner or later the market tends to absorb them all. It puts an almost irresistible pressure on every activity to justify itself in the only terms it recognizes: to become a business proposition, to pay its own way, to show black ink on the bottom line. It turns news into entertainment, scholarship into professional careerism, social work into the scientific management of poverty. Inexorably it remodels every institution in its own image.3
Americans generally and narrowly view corporate capitalism as the opposite of communism and naïvely assume it must therefore be good because its opposite is evil. But two opposites can both be corrupt. Both communism and corporate capitalism, particularly if the latter is unfettered by government interference, are authoritarian systems that are inimical to the well-being of most individuals. Both systems are actually more similar than different when viewed through the lens of America’s social and political ideals. But, as Lasch observes, the values of the market system tend to absorb anything in their path. And so we now have former hippies in pinstripe suits on Wall Street, and rock and roll has become just another industry. Feminism and civil rights may have started as liberal cries for general equality, but where they eventually focused their attention was on the desire of women and minorities to gain economic equality. Politics, increasingly, is dominated by the economics of power: not only are elections often determined by who has the most money to spend, but corporate interests routinely sway the perspectives and decisions of both elected officials and voters. Similarly, the media, once an institution that helped preserve our liberties by disseminating pertinent information and thoughtful analysis of current issues, has become primarily a profit-making venture, and advertising dollars often shape both the content and the slant of the news. Perhaps most tellingly, a university education—once intended to produce a well-rounded, moral, intelligent, and informed citizen—is now unashamedly promoted as a means to a far different end: producing marketable commodities for multinational corporations. Even English departments advertise themselves as good preparation for law or business school.
Regardless of the target, first the corporate values infiltrate it, then they slowly remodel it from the inside out until it is an adequate reflection of the preferred corporate pattern. Why is the corporate system so persuasive, so powerful? Precisely because it is a system; it is the system. Robert Pirsig, in his classic Zen and the Art of Motorcycle Maintenance, gives this insight:
To speak of certain government and establishment institutions as “the system” is to speak correctly, since these organizations are founded upon the same structural conceptual relationships as a motorcycle. They are sustained by structural relationships even when they have lost all other meaning and purpose. People arrive at a factory and perform a totally meaningless task from eight to five without question because the structure demands that it be that way. There’s no villain, no “mean guy” who wants them to live meaningless lives, it’s just that the structure, the system demands it and no one is willing to take on the formidable task of changing the structure just because it is meaningless.
But to tear down a factory or revolt against a government or to avoid repair of a motorcycle because it is a system is to attack effects rather than causes; and as long as the attack is upon effects only, no change is possible. The true system, the real system, is our present construction of systematic thought itself, rationality itself, and if a factory is torn down but the rationality which produced it is left standing, then that rationality will simply produce another factory. If a revolution destroys a systematic government but the systematic patterns of thought that produced that government are left intact, then those patterns will repeat themselves in the succeeding government. There’s so much talk about the system. And so little understanding.4
Redefining the Corporation and Its Purpose
Once we understand the nature of the corporate system and the values upon which it operates and justifies its existence, we can begin to question these basic assumptions. Perhaps the most fundamental notion we should question is the very definition of what a corporation is. The current definition, which shapes both our laws regarding these institutions and the way we allow them to behave, is a paradoxical or self-contradictory definition. First, we define a corporation as a piece of property, something that is owned. This definition allows shareholders to claim ownership of the corporation, and it also allows the corporation to define its purpose as maximizing profit for its owners. According to this definition, then, a corporation is piece of money-producing property whose sole function is to enrich an elite group of shareholders and executives. If a corporation is property, however, then by definition everything that is part of the corporation is also property, including employees. According to this definition, people are not the focal point; the focus is money, and people are merely tools to be employed in the pursuit of almighty profit.
The second definition insists that the corporation is an individual, a “person,” with all the constitutional rights human beings claim as citizens of a free country. In this sense, Mitt Romney’s campaign gaffe was ironically accurate. Corporations are indeed “people too.” But corporate persons are more than mere human persons. They are allowed to exist in perpetuity. In essence, they have eternal life. They outlive their founders, their investors, their customers, and their rulers. They also have the resources to exert far greater influence―not just economically, but politically, socially, and morally―than any human citizen can manage. These two definitions, while contradictory, are still recognized by our current laws, and this creates moral, social, political, and economic conflicts in our modern society.
But what if a corporation is much, much more than either a manmade person or a piece of profit-producing property? As illustrated by the story of the consultant and the high-level executives in a previous post, corporations do have deeper and more fundamental purposes than merely to generate profit. What might those purposes be? I would argue that any corporation has two primary purposes: first, to produce a valuable good or service to improve society and, second, to provide opportunities for members of the community to have meaningful employment. Profit, while not unimportant, must be understood correctly as a byproduct of these two higher purposes. Additionally, it is obvious that a corporation is not a person. It is a collection of individuals working in concert to perform a vital function for human society.
If we discard these traditional, illogical definitions, we can then see that a corporation is both a community where people find meaning and a vehicle for bettering society. When we define a corporation as a community whose purpose is to improve society through the production of valuable goods or services, the corporation does not seek to employ as few people as possible and pay them as little as it can justify so that it might maximize profits; instead, it hires as many people as it can meaningfully employ and pay them as much as possible while still generating enough profit to secure the perpetuation of the organization. This definition of corporate meaning and purpose directs the company, in effect, to minimize profit so that it can maximize employment and worker pay. This scenario is entirely consistent with Adam Smith’s ideal of benevolent or sympathetic organizations.
If we do not reject the prevailing definition of corporate existence and purpose that drives the current system, we will, to put it bluntly, arrive at the destination toward which we are heading. And this is not a destination any of us really wish to reach—even the obscenely wealthy, because at this destination they too will soon be impoverished.
Corporate capitalism may be the most powerful system this world has ever known. Indeed, it has now consumed nearly the entire world. But what we have come to call the global economy is really nothing more than corporate capitalism nearing its inevitable destiny. It has so much momentum that the sheer force of it is almost irresistible. Even when it has proven to be both destructive and irrational, most of us cannot imagine a world without it. Even when it is falling apart all around us, we still want to fix it instead of replacing it. Most people can’t even imagine a different system, one that is more just and equitable and healthy. The current system has a logic of its own that in its own illogical way is virtually unstoppable. The only thing that can stop it is itself. Unless . . . unless we can tear ourselves away from incorrect definitions and shallow perceptions of the system. So, what can we do to avert the inevitable system failure, when the whole structure will collapse under the weight of its own inherent excesses? How do we build something new without simply repeating the mistakes we’ve embraced as corporate capitalism has engrained itself in our collective psyche? Well, welcome to a small slice of sanity. Stay tuned.
1. Abraham Lincoln, “Annual Message to Congress,” December 3, 1861, in Roy P. Basler, ed., The Collected Works of Abraham Lincoln: 1861‒1862, vol. 5 (New Brunswick, N.J.: Rutgers University Press, 1953).
2. Marjorie Kelly, The Divine Right of Capital: Dethroning the Corporate Aristocracy (San Francisco: Berrett-Koehler, 2001), 111.
3. Christopher Lasch, The Revolt of the Elites and the Betrayal of Democracy, 97–98.
4. Robert M. Pirsig, Zen and the Art of Motorcycle Maintenance: An Inquiry into Values (New York: Bantam Books, , 1980), 87–88.