Wednesday, May 12, 2004

The corporation as psychopath | Face value
Unlike much of the soggy thinking peddled by too many anti-globalisers, “The Corporation” is a surprisingly rational and coherent attack on capitalism's most important institution...

My Canopy Economics post connects with this. Corporations do behave like entities with their own self interestes. So do bureaucracies and other bounded collections of interacting humans. Understanding the relationships & interactions between these "meta-entities" is key to understanding Canopy Economics. (Shades of psychohistory! :-).

The Economist article is actually pretty weak in a fashion that's increasingly common in that once formidable publication. After conceding that the thesis of "corporation as psychopath" is surprisingly persuasive, the article concludes with a sniffy dismissal of the idea because "state bureaucracies are worse". The two statements are, of course, not mutually exclusive -- but the editor couldn't allow the article to conclude -- "corporations are psychopathic, but we don't know of a better alternative". Alas, the Economist is now what it once was.

Update 10/2/2010: The Economist review is now inaccessible, but it's reprinted here and I've copied it below. The 2004 book is still available on Amazon.
To the anti-globalisers, the corporation is a devilish instrument of environmental destruction, class oppression and imperial conquest. But is it also pathologically insane? That is the provocative conclusion of an award-winning documentary film, called "The Corporation", coming soon to a cinema near you. People on both sides of the globalisation debate should pay attention. Unlike much of the soggy thinking peddled by too many anti-globalisers, "The Corporation" is a surprisingly rational and coherent attack on capitalism's most important institution.
It begins with a potted history of the company's legal form in America, noting the key 19th-century legal innovation that led to treating companies as persons under law. By bestowing on them the rights and protections that people enjoy, this legal innovation gave the company the freedom to flourish. So if the corporation is a person, ask the film's three Canadian co-creators, Mark Achbar, Joel Bakan and Jennifer Abbott, what sort of person is it?
The answer, elicited over two-and-a-half hours of interviews with left-wing intellectuals, right-wing captains of industry, economists, psychologists and philosophers, is that the corporation is a psychopath. Like all psychopaths, the firm is singularly self-interested: its purpose is to create wealth for its shareholders. And, like all psychopaths, the firm is irresponsible, because it puts others at risk to satisfy its profit-maximising goal, harming employees and customers, and damaging the environment. The corporation manipulates everything. It is grandiose, always insisting that it is the best, or number one. It has no empathy, refuses to accept responsibility for its actions and feels no remorse. It relates to others only superficially, via make-believe versions of itself manufactured by public-relations consultants and marketing men. In short, if the metaphor of the firm as person is a valid one, then the corporation is clinically insane.
There is a tendency among anti-globalisers to demonise captains of industry. But according to "The Corporation", the problem with companies does not lie with the people who run them. Sir Mark Moody-Stuart, a former boss of Shell, comes across in the film as a sympathetic and human character. At one point, he and his wife greet protesters camped on the front lawn of their English cottage with offers of a cup of tea and apologies for the lack of soya milk for the vegans among them. The film gives Sam Gibara, boss of Goodyear, time to air his opinions, which are given a reasonably neutral edit. Ray Anderson, boss of Interface (which claims, with psychopathic grandiosity, to be the world's largest commercial carpetmaker) is given the hero treatment. Having experienced an "epiphany" about the destructive and unsustainable nature of modern capitalism, Mr Anderson has donned the preacher's cloth to spread the religion of environmental sustainability among his peers.
The main message of the film is that, through their psychopathic pursuit of profit, firms make good people do bad things. Lucy Hughes of Initiative Media, an advertising consultancy, is shown musing about the ethics of designing marketing strategies that exploit the tendency of children to nag parents to buy things, before comforting herself with the thought that she is merely performing her proper role in society. Mark Barry, a "competitive intelligence professional", disguises himself as a headhunter to extract information for his corporate clients from rivals, while telling the camera that he would never behave so deceitfully in his private life. Human values and morality survive the onslaught of corporate pathology only via a carefully cultivated schizophrenia: the tobacco boss goes home, hugs his kids and feels a little less bad about spreading cancer. Company executives and foot soldiers alike will identify instantly with this analysis, because it is accurate. But it is also incomplete.
The greater insanity
Although the moviemakers claim ownership of the company-as-psychopath idea, it predates them by a century, and rightfully belongs, in its full form, to Max Weber, the German sociologist. For Weber, the key form of social organisation defining the modern age was bureaucracy. Bureaucracies have flourished because their efficient and rational division and application of labour is powerful. But a cost attends this power. As cogs in a larger, purposeful machine, people become alienated from the traditional morals that guide human relationships as they pursue the goal of the collective organisation. There is, in Weber's famous phrase, a "parcelling-out of the soul".
For Weber, the greater potential tyranny lay not with the economic bureaucracies of capitalism, but the state bureaucracies of socialism. The psychopathic national socialism of Nazi Germany, communism of Stalinist Soviet rule and fascism of imperial Japan (whose oppressive bureaucratic machinery has survived well into the modern era) surely bear Weber out. Infinitely more powerful than firms and far less accountable for its actions, the modern state has the capacity to behave even in evolved western democracies as a more dangerous psychopath than any corporation can ever hope to become: witness the environmental destruction wreaked by Japan's construction ministry.
The makers of "The Corporation" counter that the state was not the subject of their film. Fair point. But they have done more than produce a thought-provoking account of the firm. Their film also invites its audience to weigh up the benefits of privatisation versus public ownership. It dwells on the familiar problem of the corporate corruption of politics and regulatory agencies that weakens public oversight of privately owned firms charged with delivering public goods. But that is only half the story. The film has nothing to say about the immense damage that can also flow from state ownership. Instead, there is a misty-eyed alignment of the state with the public interest. Run that one past the people of, say, North Korea.

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