THE CORPORATION

The Pathological Pursuit of Profit and Power
By Joel Bakan

A Review by Paul Henderson

When I first saw the movie The Corporation and again when I subsequently read the book, what popped into my head was a quote from the comedian George Carlin: “When fascism comes to this country it won’t be wearing jackboots it’ll have sneakers with lights in them and a smiley face and a Michael Jordan T-shirt.”

That in a way sums up the smiley-faced yet insidious corporate infection into industrialized society. In a legally mandated insatiable lust for profits, corporations will pop up to sell anything and everything possible. Corporations are not inherently evil nor are they filled with people who are malevolent and nasty. Rather, as the book and the movie elucidate, corporations have an institutional flaw, they have outlived their narrow utility, and their infestation into every corner of modern life leads to a sick society.

That’s because, as the argument goes: the corporation’s legally mandated structure compels it to always aim for one thing, harmful consequences to others be damned: Profit. And as a result of the fact that historically when corporations began to be traded publicly, shielding the owners (shareholders) from liability, the law had to find some “person” to be held accountable for the actions of corporations. The 14th amendment to the U.S. constitution was a result of the civil war and was written to free the slaves. But by the end of the 19th century “through a bizarre legal alchemy” the corporation was granted personhood in the eyes of the law and used the 14th amendment to gain the rights of a person under the law. Thus the corporation began its existence of personhood through a brutal logic of narrow self-interest manipulating the public good.

Joel Bakan is a law professor at UBC, a Rhodes Scholar, former law clerk to a Supreme Court Justice, and holder of law degrees from Oxford, Harvard, and Dalhousie Universities. He has written widely on law and its social and economic impact and in addition to as writing The Corporation the book, he is the co-creator and writer of the film of the same name. Co-directors of the film are Jennifer Abbott and Mark Achbar who is most well-known as the co-director of the top grossing Canadian feature documentary of all time most: Manufacturing Consent: Noam Chomsky and the Media.

Bakan’s analysis of the ubiquitous modern institution of the corporation starts by asking the question, if a corporation is a person, what kind of a person is it? Taking that bizarre rule of law that gives a corporation the legal rights that you or I have, Bakan uses a standard diagnostic checklist of psychopathic traits and finds that the corporation fits every one. For example, corporations, like psychopaths, are notorious for the ability to charm others with a false front, hiding the dirty secrets hidden beneath. Corporations like psychopaths “refuse to accept responsibility for their own actions” and are “unable to feel remorse.” The list goes on.

In the book Bakan gives the example of a huge energy company that was a “paragon of social responsibility and corporate philanthropy,” doing things like pledging to cut greenhouse gases, and to put human rights, health and safety, biodiversity, indigenous rights all at the core of its business operations. In their 2000 “Corporate Responsibility Report” the company stated “We believe that corporate leadership should set the example for community service.” Noble words, even some seemingly noble deeds. But as Bakan says, “Unfortunately, this paragon of corporate social responsibility, Enron, was unable to continue its good words after it collapsed under theweight of its executives’ greed, hubris, and criminality. Enron’s story shows just how wide a gap can exist between a company’s cleverly crafted do-gooder image and its actual operations and suggests, at a minimum, that skepticism about corporate social responsibility is well warranted.”

But Bakan’s main point is that Enron, though famous for its collapse from within, is not the exception or – as is pointed out ad nauseum in business programs and articles – a “bad apple.” Rather the institutional structure that allowed Enron to collapse is the structure of all corporations. “Obsession with profits and share prices, greed, lack of concern for others, and a penchant for breaking legal rules,” are rooted in corporate culture. Enron is a good example of a company taking that to the extreme but they are not an aberration nor are they unusual. No, the corporation is intrinsically flawed and while useful as an institution originally created by groups of people to do things like build bridges, it has not only overstayed its welcome but the corporation’s dominance as the most important institutional structure in society is as ridiculous as it is dangerous.

(One point of importance regarding corporations that was never mentioned in the movie but in the introduction of the book is that Bakan is not writing about small incorporated businesses or any-sized not-for-profits or even privately owned business. When he says “corporation” he is only talking about “large Anglo-American publicly traded business corporations.”)

HISTORY OF THE CORPORATION
In The Corporation Bakan gives a history of corporations based on numerous interviews with leading economic thinkers, business executives, critics, and folks who have been victimized by corporate treachery.

In the 17th century the business form of the corporation was becoming a popular way of financing colonial enterprises. In the 18th century, fueled by the industrial revolution, corporations multiplied exponentially in postrevolutionary America. But it was in the 19th century that the American railroad barons really brought the corporate era to the forefront. My the mid-19th century even the middle class were starting to put money into these corporate enterprises but there was a major barrier stopping the general public from becoming involved: personal liability was still apart of business. So the concept of “limited liability” was introduced, protecting investors from losing anything more than they invested.

Critics at the time contended this was immoral as it protected investors from their own failures. Essentially limited liability was used as a tool to manipulate the middle class to make the rich get richer while at the same time teasing much of the population with the carrot of possible wealth.

As these newly protected individuals invested in corporations, someone needed to be responsible for the misdeeds of those corporations. Since the 14th amendment was protecting individual’s rights to due process and equal protection, and since the the Supreme Court in 1886 decided that corporations were “persons,” corporations suddenly were afforded the same protections as human beings.

PR REARS ITS UGLY HEAD
In 1908 the art of public relations came into being as a tool to decieve and mislead the public about corporations’ true intentions. AT&T was one of the largest companies in the country at the time and they launched an advertising campaign including real employees to try “to make the people understand and love the company. Not merely to be consciously dependent upon it – not merely regard it as a necessity – not merely to take it for granted – but to love it – to hold real affection for it,” as Bakan quotes an AT&T official at the time.

Bakan recounts some frightening history of the corporation as it developed over the years. In 1934 when corporations were being vilified by the public as a result of the Great Depression, the president of General Electric, in a logic of Orwellian arrogance, stated that corporations needed to take the lead in being responsible to employees and the public, “rather than that democratic society should act through its government.”

This disdain for government regulation and activity remains to this day, in no small part as a result of the ongoing corporate campaign to discredit all things done by the public, and glorify all things done with private interest.

For corporations democracy is now seen as either a road block on the paved road of trade, or the term “democracy” is co-opted, twisted, and redefined to be synonymous with neoliberal economic policy. When honest, we can see that democracy is the enemy of the corporation because the corporation’s interests are at odds with the public. When dishonest, in the arms of PR experts, democracy’s meaning is turned on its head, re-packaged, and fed back to a preseumably dim-witted public as something other than it is.

Bakan points out a fearful state of affairs that may come to pass in 2005 as a set of “disciplines” set out by the World Trade Organization (WTO), and agreed to by member states including the U.S., come into effect. As Bakan says, this means democratically nations all over the world have, “subjected themselves to standards imposed by, and soon to be adjudicated by, an outside and undemocratic body.”

Because of the globalization of world trade we are, as Bakan puts it, amidst a “battle to the bottom” prescribed by corporations looking for the cheapest (see: most unregulated) place to do business where they can pry open government spending and take it as tax cuts.

CORPORATIONS DOING GOOD?
Bakan suggests that in today’s world, corporations are competing for ever higher moral ground and that “pious social responsibility themes now vie with sex for top billing in corporate advertising.”

For example BP and Shell go to great lengths to advertise their investments in alternative energy while, on the other hand, Esso denies global warming exists, spends millions pushing this, and refuses to invest in alternative energy. But are BP and Shell acting “morally” or are they more “responsible.” According to the legally mandated role of corporations the answer is no. According to the dictates of corporate activity, either BP and Shell see economic value in these renewable energy sources, or they are lying and the PR is nothing more than doublespeak.

Bakan interviews Milton Friedman, Nobel laureate and pre-eminent economist, who argues that the only moral imperative a corporation has is to its shareholders.

“There is…one instance when corporate social responsibility can be tolerated, according to Friedman – when it is insincere,” Bakan writes.

This sort of cycnicism from the belly of the beast of the conservative, corporate world is evident throughout the book. Some of Bakan’s interviews brilliantly elucidate some of the most frightening and hypocritial and ridiculous positions that the corporate world espouses. One example is Ira Jackson, former director of the Center for Business and Government at Harvard’s Kennedy School of Government who says that corporations and their leaders have, “displaced politics and politicians as…the new high priests and reigning oligarchs of our system.”

Another example is Sir Mark Moody-Stuart, former Chairman of Royal Dutch/Shell. Moody-Stuart in the film is eloquent and convincing in his “change-from-within” rhetoric helping to diffuse protesters who come to his home in England protesting Shell’s activities in Nigeria and the company’s complicity in the hanging deaths of Ken Saro-Wiwa and eight other Ogoni anti-Shell activists. But he too misses the point, or merely slips up, when he says, “we need to be seen as constructive members of society.” He didn’t suggest in any way that corporations should “be” constructive, just that they should be “seen to be.” An important distinction presumably lost even on this executive.

One of the best examples of this scary corporate image of itself comes from Pfizer. In the movie they interview a Pfizer spokesperson, Tom Kline, who is out on the street, greeting neighbours of the pharmaceutical giant. The absolute transparency of Kline as a human being is disturbing as he talks about being a good neighbour with locals coming out of the subway station who look at him suspiciously, nodding and smiling warily.

The company, out of “good will,” installed call boxes on the subway platform for emergencies and the very representative scene in the movie is when Kline, bragging about how socially responsible Pfizer is, pushes a button on a call box, then another, and gets no response.

As Bakan suggests in the book’s accounting of this scene: “Corporate responsibility is like the call boxes. It holds out promises of help, reassures people, and sometimes works. We should not, however, expect very much from it.”

In fact the opposite is true. For example, Pfizer brags a great deal about the free drugs they give away but admit (because they have to, to their shareholders) that the giveaways cost the company almost nothing because of their low marginal costs. Yet the company gets good PR, doctors think Pfizer is great, the employees and community think they are great. The reality?

“(T)he Nobel Prize-winning organization Doctors Without Borders estimates that U.S. taxpayers spend four times as much money to donate fluconazole to South Africa through tax benefits to drug companies as they would to send the drugs to South Africa through aid programs.”

EVIL-DOERS?
Some examples of corporate behaviour in the book include how Monsanto still has not admitted guilt for using agent orange in defoliating Vietnam yet they settled for $80 million with veterans. An “incapacity to experience guilt” is a trait of the psychopath.

Yet the executives who work for Monsanto might coach little league softball, might kiss their children at night, might even volunteer at a food bank. That is the “schizophrenia,” of the businessperson compartmentalizing their corporate and noncorporate lives.

And as Noam Chomsky says in the movie, slavery is clearly monstrous but slave owners might be genuinely nice guys, nice to their children, friendly, good-natured, even nice to their slaves; “but in their institutional role they are monsters because the institution is monstrous. The same is true here.”

Throughout the book there are stories of corporate hypocrisy that has never been apologized for, or even admitted to, giving weight to the argument that corporations have an institutional psychopathy. For example: IBM was selling and servicing business machines to the Nazis for the purpose of tabulating the Jews, gypsies, homosexuals, etc., who were being exterminated in concentration camps; Coca Cola was supporting the war effort in the U.S., so naturally couldn’t overtly support the Nazis but instead of pulling out of Germany, they invented Fanta Orange for the Nazis; Ford was building vehicles for the Nazis; General Motors was building Opel Blitz tanks for the Nazis and is particularly hypocritical as they are currently – or at least very recently – running television commercials of dramatic bridge building in the 1940s, proudly stating that GM helped the U.S. war effort overseas. But GM was doing just as much for the Nazis.

However, Bakan points out that the historical criticism of these companies out of context should be kept in context as there are countless corporations currently doing business with dictatorships. The reality, of course, is that corporations prefer dictatorships; it is easier to do business. The Wall Street Journal recently reported 86 companies including IKEA and Goodyear who had been fined under the Trading with the Enemy Act between 1998 and 2002.

SMEDLEY BUTLER: THE DICTATOR WHO WASN'T
One of the most incredible and underreported historical stories told by Bakan in the book and recounted well in the movie is that of Smedley Butler. Butler was a former U.S. Marines general, who was propositioned by a group of corporate leaders “to raise an army, seize the White House, and install himself as fascist dictator of the United States.” In the face of Roosevelt’s new regulatory-heavy New Deal, many business people felt fascism was the way to go.

Butler, however, was the wrong man to pick and had come to loathe the U.S. imperialism that, of course, still exists today. As quoted in Jules Archer’s 1973 book The Plot to Seize the White House, Butler said: “I spent 33 years…being a high-class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer for capitalism…
“I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. I helped make Mexico…safe for American oil interests in 1916…

“In China in 1927 I helped see to it that Standard Oil went its way unmolested…I might have given Al Capone a few hints. The best he could do was create a racket in three cities. The Marines operated on three continents.”

Little has changed to this day. We just don’t have a Smedley Butler coming forward admitting as much. Vice-President Dick Cheney’s Halliburton rakes in millions reconstructing a country destroyed by the U.S. The hypocrisy of some of these corporations and their ideological backers is astounding.

This notion that everything is for sale is precisely why, as Michael Moore puts it, that the very corporations being criticized will print this book or show this movie on its screens: blinded by a drive for profit, a corporation will sell you the gasoline and matches to burn them to the ground. Just as U.S. corporations sell weapons of mass destruction to unstable and repressive regimes all over the world so too will a chain of movie theatres show a movie that could move an audience to revolt against chain movie theatres. As long as there is a greasy buck to be made, there will be a corporation there to make it.

CORPORATE IDEOLOGY LAID OUT
Much of The Corporation, like a good institutional analysis, simply lays out the facts, the means, the history, of how things are done, and the reader/viewer is left to draw their own conclusions. A few more examples of corporate attitude and behaviour laid out in great detail by Bakan to leave a bad taste in your mouth:

• Corporations are “externalizing machines,” meaning that a key element of doing business, making money, is ensuring that someone else pay the costs. When factories dump effluent into a river and the public pays for the clean-up or when corporations decide to get push the government to send over troops to defend their oil, that is referred to by corporations as "externalizing costs." It could be argued that much of the world’s problems are a result of corporate externalizing. A down and dirty example illustrated by Bakan is that of Patricia Anderson and her four children suffering horrible and disfiguring burns as a result of a poorly designed fuel tank on her 1979 Chevrolet Malibu. General Motors knew the fuel tanks were dangerous as they had paid out several settlements in the previous 15 years. The company did a calculation: they estimated that if 500 fatalities occurred, multiplied by $200,000 paid out for each fatality, divided by 41 million cars, equals $2.40 per automobile. But it would cost GM $8.59 per car to fix the problem. So a 12-year-old could do the math and figure out that GM would save $6.19 per vehicle by leaving the destructive cars on the road.

• Michael Walker, executive director, of that oft-quoted, right-wing think tank in Vancouver, the Fraser Institute, is interviewed in the movie and outlines his ideological belief that every square inch of the planet should be owned. Each stream, pond, field, tree should be owned privately by someone with some “interest” in it.

• Drug company Eli Lilly donated more than a million dollars to congressional candidates in the U.S. and “found itself the beneficiary of a provision, buried in the Homeland Security Act, that protected thimerosal manufacturers – of which it is the only one – from lawsuits arising out of harm caused by the drug’s use.” This was even too much for the American people so when it was made public the provision was eventually removed.

• Corporations infiltrating school curriculum with the forced advertising American kids have to watch on Channel One. McDonald’s has a school program on nutrition where they use a Big Mac to illustrate the four food groups. Procter & Gamble too has a program called Decision Earth, which teaches that “clear cutting removes all trees…to create new habitats for wildlife. P&G uses this economically and environmentally sound method because it most closely mimics nature’s own processes. Clear cutting also opens the floor to sunshine, thus stimulating growth and providing food for animals.”

WHAT IS TO BE DONE?
Analysis of corporate behaviour illustrating what is bad about corporations runs throughout the book. The press release for the book suggests that Bakan offers a plan for change to increase corporate accountability and to provide some optimism in the face of the the overwhelming facts and figures in this book. I have to say that his “plan” isn’t really that detailed and seems almost to be an afterthought, necessarily included to avoid frustrating those who want to make a difference. His optimism is present though the first glimmer of hope doesn’t hit the reader until page 139 (of 167 pages). He does point out that, “History humbles dominant institutions. Great empires, the church, the monarchy, the Communist parties of Eastern Europe were all overthrown, diminshed, or absorbed into new orders. It is unlikely that the corporation will be the first dominant institution to defy history.”

Bakan’s main thrust is a need to return to government regulation. Corporations are our creations and, like Frankenstein, have run amok and out of control once out of the lab.

“Now is the time to reinvigorate, not abandon, democratic institutions, and to craft them into truer reflections of the ideals upon which they were founded….Most important, we must remember the most subversive truth of all: that corporations are our creations. They have no lives, no powers, and no capacities beyond what we, through our governments, give them.”

There are other points of optimism that are inadvertently brought up in this book and movie. The first and maybe most important is simply how popular the movie and book have become. Since 1999 in Seattle when the world’s eyes looked at the massive protests of the World Bank and the WTO and the IMF we have seen a massive and growing grass roots opposition to private gain at the expense of the public good. The popularity of this movie and book shows that if not the activism, the interest in that opposition, the lust for information on the topic, is widespread.

The best thing about a book or a movie that elucidates some wrongdoing amongst some persons or organizations is that it; a) tell you something you don’t already know, or b) articulate something you knew or at least suspected.

The Corporation – the book and the movie – does both in spades.

If you are prone to activism this movie/book may serve as a revitalizing force helping get you off the couch to go protest factory farming or picket an Esso station or at least write some letters to politicians or newspapers or magazines.

One thing about reading Vitality is that there is some inevitable “preaching to the converted” going on. Like most Vitality readers you are probably politically and intelletually aware of what goes on in the world. You have heard what mainstream medicine will do to keep you sick. You know the pharmaceutical companies are raking in billions in profits all while inventing diseases and then pills to accompany them. But The Corporation helps to articulate what you were already thinking. It will help to further ingrain what you already suspected, it will give you intellectual and factual ammunition in your day to day battle with those who refuse to believe our current system of insidious corporate integration into society is anything but beneficial to all of us. In other words, no matter who you are this movie could change your life, piss you off, and make you say, “enough is enough.”

If you are happily going through life eating beef from grocery stores, wearing Nike clothing, following all the dictates fed to you for your entire life from mainstream network T.V. and other media, then this movie may either shock you into a change of heart, or it might make you turn it off in disgust. That disgust might be at your self for not facing uncomfortable facts or it might disgust at Joel Bakan for writing this book in the first place. Either way, it is worth facing.