It happened before, and may be happening again. There have been many cases in the past where corporations built dormitories and even whole towns to house employees, then saddled them with a situation where they could barely survive on what they made, had to buy from the company-owned store, and couldn’t afford to go elsewhere. I don’t know if that’s exactly what happens in China, but factory workers are, in some cases, living in company owned dormitories and spending long periods of time away from their families. As corporations continue to gain power relative to national governments (let alone individuals) phenomena such as company towns could return to North America. This brings up an important question.
Is it too late to restore the standing of the individual? Are we in a runaway condition in which corporate power has already passed the point where it can be curbed? Will regulation of business be gradually eliminated until corporations are the dominant force in politics and the economy at every level and around the world? Are we beyond the point where practical regulation of business at a national or global level is possible? Will the ability of people to understand, let alone influence, the world around them be reduced to that of most people in the dark ages? In 1990 my corporate strategy professor at The University of Michigan Ross School of Business said that there were then 100 corporations with more resources than all but the 7 largest countries in the world. How much more lopsided has this ratio become since then?
Corporations can’t be viewed as people for many reasons. The most fundamental is rarely cited, however: corporations have only one goal, profit, and there is no natural conscience to keep the corporation from creating a war that kills millions, for example, if that might have a positive return on investment. Humans, except for sociopaths and similar sick people, have scruples, a conscience, a sense of ethics and morality, a sense of responsibility to friends and family, and a general understanding that there is more to life than money. Corporations have none of this except in the rare instance where a founder or top executive puts their own principles into the running of the company. Sadly, shareholders will see only that the company could have made more money for them if it had been more single-mindedly profit-focused, and a CEO with a conscience will be replaced for lackluster performance due solely to socially responsible behavior. In cases where either the shareholder base share similar goals or the company is closely or privately held, the leadership will still eventually retire or move on, after which it is likely the profit motive will take over as the single prime motivator for the firm.
The transition from socially responsible to greedy can be seen in many companies. Look at how Disney changed after Walt passed away. Some family remained on the board of directors, and there were years of infighting over the direction the company was taking, but eventually it became another greedy major conglomerate, albeit with a glowing history. It is natural that a founder would want to sell his company eventually or otherwise move on (with huge financial reward in some cases), and that turns the firm over to “the sharks”. These sharks are people with generally good intentions, but whose jobs are essentially to increase profits for their employer, a direction which almost always supersedes all others.
Executives don’t mean corporations to be “sharks”, but they can’t help it. When you are running a publicly held company you are responsible for shareholder profits, and shareholders have the power to fire you if they don’t think you are doing enough for them. Neither customers nor employees have such power, so they naturally get only secondary consideration, and can rarely be allowed to get in the way of profits.
Corporate management teams naturally demonstrate “groupthink“. It is instructive to realize that members of corporate management teams identify form small, relatively-closed groups. They work with each other a great deal, a lot of their time spent in meetings with their peers, so they share ideas and world views on a constant basis and build a micro-culture that is only somewhat related to the culture of the organization as a whole or the countries in which they are operate. This insulates them from consideration of their effects on outside groups including customers or society. As a result they often feel little or no sense of responsibility to individuals or groups affected by the way they do business, and make decisions based almost solely on the profit involved.
Corporate leadership culture can excuse actions that seem “evil” to outsiders. Executives give each other ideas and direction in a way that excuses antisocial or ecologically irresponsible behavior. In many companies executives are relatively isolated and deal mostly with each other, besides a few direct reports. As a result they have trouble getting information from outside at the same time that they build a body of knowledge, cultural and otherwise, that can cause them to create policies poorly suited for the business or its relationship with society. In essence, there are so many authority figures involved that they can subconsciously regard suggestions, however good or bad, as coming from authority, and that leads to a syndrome similar to that revealed in the Milgram experiments - most people are capable of doing terrible things if directed by a figure they perceive as having sufficient authority. These combined factors result in executive groups that will approve policies and actions harmful to employees, customers, and the countries and geographic regions where they operate.
The expanding markets created by overpopulation foster corporate irresponsibility. As the world population explodes faster than at any previous time in history, demand for products also explodes, but even faster as the poorer people work to move up the socioeconomic ladder and adopt the comforts of the developed countries. When there are so many customers that a business begins to feel it can abuse them and still be profitable, and expect to be more profitable in the short term, corporate abuses are bound to result. If markets were static companies would have to compete much more for repeat customers, and would have to behave in much more responsible ways. As it is, however, corporations can chase short-term profits with relative impunity, and do business where they can most cost effectively operate, even it if means feeding corruption and breaking laws, local and international, to do so.
Globalization fosters corporate irresponsibility. Social, political, and economic differences between countries, along with different resource bases, populations, infrastructure, etc., allow companies to shop around for markets with little regulation and supply situations that have the lowest cost even as they allow the highest levels of pollution and abuse of the land, people, and other resources. Now that it has become so inexpensive to move materials and information around the globe, companies have the flexibility to move their assets and focus their markets where the highest profits will result, even though that may mean the country (and global ecology) suffers severe and sometimes irreversible damage. As corporations “go multinational” they owe less and less to their countries of origin, and see opportunities for increased profit such as those that come from operating in countries with few regulations, few taxes, and an appetite for bribery.
A prime example is Nigeria, where Shell and other major energy corporations have done heavy damage to the rain forest and the Niger river delta, destroying the livelihood and lives of millions. The government of Nigeria has deployed troops many times over the past fifty years or more, even going so far as to use Shell-provided helicopters for military missions to shoot residents from the air with machine guns. (It is perplexing that there is a great outcry over Syria’s government using violence against peaceful protesters when a much worse situation in Nigeria has gotten no such attention.) To this day, ecological and human destruction on an almost apocalyptic scale continues in the Niger river delta, all to support the profits of Shell, Chevron, and a list of other multinational energy corporations as well as corrupt government officials. Your retirement funds may be helping support such atrocities.
Corporate power continues to grow, with predictably bad results. Given the strong predilection to profit over social and ecological responsibility, and the growing power of corporations to move quickly and cheaply across borders and buy off individuals and governments, I can’t help but be pessimistic. I see no sign that the situation is going to get any better any time soon. We can expect corporate power to increasingly eclipse that of national governments, let alone individuals, resulting in increased abuses such as the limiting and reduction of wages to unreasonably low levels, the elimination of unions and any other form of recourse available to individuals, increasingly widespread ecological destruction, and corporate domination of national political systems.
It is highly probable that corporate feudalism, still around, will expand greatly. As we see the rise of company-owned housing in China we can’t help but think of the conditions that spawned the American labor movement – the company towns and stores, and the millions whose lives were made miserable or ended as a result of corporate corruption and profit-over-people policies. Corporate feudalism has many similarities with the feudalism of the middle ages in Europe, where most people were regarded as property of the local lord or king, whose power over them was almost infinite. There is every reason to think that, without strong and coördinated regulation by national governments, corporate feudalism is going to expand through a lot more of the developing countries and increasingly become a divisive influence on the developed countries as well.
Corporate feudalism has proven worse than the feudalism of the middle ages. While historical feudalism represented a great potential for abuse of individuals, it was still run by people with complex motivations and (most) with a sense of social responsibility. The lord of the fief could not expect to get what he needed from his property and people unless he acted from the standpoint of having responsibility for them. That factor does not exist in corporate feudalism, as our exploding population has created markets where making sales is relatively easy and impersonal, and corporations don’t have to be particularly responsible to their customers, the environment, or the countries in which they do business. Brownfield pollution, for example, remains for decades after the company responsible has been bought and sold many times, or gone out of existence, leaving the public to suffer from it and pay for cleanup, usually through their taxes. While history records the existence of company towns intended to improve the lives of employees, most of them were created by companies still run by their founder or the family of the founder – people with guiding principles other than the pure profit motive that drives almost all publicly held corporations.
Important questions abound. Is there any way that the expansion of corporate power can be limited? Regulation by a single government will just drive a corporation to relocate, and their economy will be harmed. Is there any sort of regulation that will make corporations act in responsible ways when they can just as easily move their headquarters across borders, set up new facilities, and carry on just as before? Like the population explosion, this is a huge problem nobody will talk about, though it is keeping attention away from the population explosion and related concerns, essentially helping humanity destroy itself and possibly a lot of the planet with it. Certainly you’ll never see it in the media (they’re almost all owned by corporations, or at least are beholden to corporations for their existence). What can we do? It seems like the less we do or attempt, the more we and our descendants will suffer.
As always, I welcome your comments. — Tim
