Those who know me well know I am more apt to describe myself in terms of principle than of personality. In any subject, I am more taken with the theory than with the practice of it. Unfortunately, it would seem that those who know me are getting fewer and more distant since I began university. So, in hopes of bringing them to know me better, I am sending this letter to describe how my attitudes have changed since I came to Waterloo.
Over the past four years, I have seen and participated
in many things, worked at various companies, traveled, met new people.
I have been changed by these things, as we all are by our experiences.
Over that time, one issue has become more and more important to me, as
it affects, if not dominates all aspects of our modern lives, the corporation.
I will attempt to define it, and suggest how we should deal with it.
In 1997, I would have been most accurately described
as a libertarian, although I don't think I knew then what the word meant.
What I did know is that I considered freedom to be the most sacred ideal.
Even if someone was doing something irresponsible or mean, the law should
not interfere, so long as they weren't infringing on another's freedoms.
If someone wanted to use illegal drugs, let them. If later they died
from an overdose, it was natural selection. If a company sold bread
at five dollars a loaf, let them, we could buy the cheaper, competing bread.
Market forces would make things right. The system worked.
It was that same year that I took two introductory business courses at Wilfred Laurier University. This was the point at which I learned what a corporation was. When an individual has a business, and they sell something, the money goes into their pocket. If they buy raw materials, it comes out of their pocket. If the individual buys so much raw material that they go into debt, and they can't repay the debt, then the creditors can come and take their car and their home as repayment. This is liability. There is another way to do operate a business, however.
The individual has the option to incorporate their business, which gives the business itself the same properties as a person, in the eyes of the law. It is sometimes called an 'imaginary person'. It can own property, accumulate debt, and pay its own taxes. About the only thing it can't do is vote (which, as I will discuss later, doesn't mean it can't be a political player). The individual who incorporated his business still owns this 'imaginary person', and controls what it does, but if the corporation makes money, that's not his money. The corporation has to pay him a salary. Similarly, if the corporation goes into debt, the creditors have only the corporation's assets to reclaim, they cannot touch the owner's car or house. This second property is called limited liability, and it is key to what a corporation is. In class, the professor explained that this property lets investors invest in companies without taking a big risk, which makes the economy grow. Sounds great, right? That's what I thought too.
That summer, I had my first co-op work term at the Ministry of Transportation in Toronto, part of the government -- which can itself be viewed as a monolithic corporation. It could not compete with my image of a private corporation, however. It seemed slow and bureaucratic. One decision required multiple meetings and several levels of approval. I have a fetish for efficiency, and the government definitely did not gratify it. I thought that if I was working at a private corporation, things would actually get done. Looking back, I think I didn't appreciate what the government was trying to do. It's easy to decry them for being slow and bureaucratic, but they do have to answer to the voters. It is easier to chase dollars than to look out for the public interest. It was easier to see them as described by Robert McChesney,
"the incompetent, bureaucratic and parasitic government, that can never do good even if well intended, which it rarely is"
Another opinion I held back then was that governments
were too interfering. I thought the best way for the system to work
would be for commerce to be completely free. People should be able to buy
and sell anything, at whatever price they like. Our choices as consumers
would decide the winners and losers. I was very careful in what,
and from whom I bought, as I was exercising a power I viewed as the primary
shaping force of society.
In 1998, I worked at Sybase Inc., a real deal
billion dollar software corporation. Maybe it wasn't as quick footed
as my expectations, but it could move when it needed to. When I arrived,
it had just shifted focus to the internet, and when I was leaving, it was
shifting towards the Linux and mobile markets, which included a change
of CEO.
But overall, the corporation and the government were very similar. Maybe this is because the corporation is basically the child of the government. Taking a historical perspective will illustrate how the corporation sprung from the loins of government. In this section, when I talk about humans, gods and corporations, I'm examining them exclusively as economic entities.
At one point, the economy was pretty simple -- there were two entities that could own property and exchange property -- humans, and gods. Deities never interacted directly with humans, of course, churches acted as the middlemen. The church was a group of people that acted as caretakers for a god's possessions, accumulating wealth to "do god's work" and "glorify" him. There were no corporations, no modern democracies. When one paid taxes, the money went to the king or emperor, or sometimes, the church. The Modern era saw the origin of modern democracies, a new player in the economy. These new governments were neither individuals nor gods, but a group of citizens (usually the free males) who, as a unit, could hold assets that no particular individual among them owned. It was an abstract, artificial entity that was introduced to the world with considerable controversy. The present day falls into the postmodern era, an era where modern democracies are necessary to our way of life. Though we don't see it as anything new, this is the era in which the corporation emerged.
In the 17th century, during a boom of colonization by Europe, Queen Elizabeth I chartered the first corporations, among them were the Massachusetts Bay Company, and the Hudson's Bay Company ("The Bay", as it is known today). These first corporations were conceived as institutions that served the public interest, in this case, helping along the new colonies overseas. Like the corporations of today, they had their own assets, and had the property of Limited Liability, but in many ways, they were far different from corporations as we know them. Their charters specified that they would operate for a fixed period of time, with fixed capital, and that they would have a fixed set of goals. and of course, at that time, they were not regarded as persons under the law.
Personhood came in 1886 in a legal decision by the United States Supreme Court.[1] Whenever I think about this event I can't help but wonder under what circumstances this decision was made. Corruption of the courts was supposedly widespread at the time[2], maybe this was a factor. Whatever the case, from this point forward, corporations were considered 'persons' under the law the restrictions that previously confined them to goals, timelines, and working in the public interest were lifted. They could now compete directly against real people, own stock in other corporations, and demand equal treatment.
So did it transpire that corporations came into this world, conceived by Queen Elizabeth I, and delivered by the government of the United States. You should notice that churches are no longer seen as representatives of gods, harboring the worldly assets of some deity, instead, as a matter of convenience, they are viewed as corporations themselves. Some might propose the contrary, however, that corporations are simply the postmodern gods.
Back to Sybase and myself... When I worked at Sybase, I wasn't naive, I knew some companies had histories of doing nasty things. In particular, to the environment. But, I thought, Sybase couldn't be like that. It's not like it was an oil company, it made software, little ones and zeroes on a CD. That's what I thought then, but, looking back, I'm not so steadfast in my conclusion.
Consider that, in my first work term, Sybase flew me from Waterloo to San Francisco twice. While I deeply enjoyed these trips, and even grew personally from the experience, I can't help but think about how many resources must have been expended on those trips, gasoline for the taxis and limos, fuel for the airplanes, laundry every day while in the hotels, an expense account for food. Then consider that was for just one person. These trips are going on every day, between Waterloo, California, Europe, and Asia. All simply to market software, to communicate a value proposition, to spread an image. And it was that image that made me assume in the first place that Sybase was a 'clean' company. Because I had that image, I didn't bother to look at any facts. That's why they spend all that money marketing, to get the image into people's heads. "Brand awareness", "product positioning", billions are spent every year in an effort to make people buy. Multinational corporations have it down to a science. They have their fingers into every media source available. They have the final say on what we watch on television,[3] what we hear on the radio, and what we read in the newspapers[4]. I challenge you to think of one cultural activity that North Americans participate in that is not touched by some corporate hand.
Considering this, can we consumers still make good
decisions about what to buy, which corporations to support? Is there
such a thing as an informed decision, when the only information we have
is what corporations choose to dole out to us? If there are reasons
not to buy Cola X, will they be broadcasted on television? Emblazoned
on my complementary coffee mug? I think not.
The argument for laissez-faire capitalism is built on a contradictory view of liberty. Right-wing libertarians understand that state control of all economic activity is tyrannical: that the power to determine if and how people make a living is the power to enforce conformity. But they don't see that the huge transnational corporations that own and control most of the world's wealth exercise a parallel tyranny: not only do these behemoths unilaterally determine qualifications, wages, hours, and working conditions for millions of workers, who (if they're lucky) may "choose" from a highly restricted menu of jobs or "choose" to stop eating; they make production, investment and lending decisions that profoundly affect the economic, social, and political landscape of communities and indeed entire countries -- decisions in which the great majority of people affected have little or no voice. Murray defines economic freedom as "the right to engage in voluntary and informed exchanges of goods and services without restriction." Fine -- but if an economic transaction is to be truly voluntary and informed, all parties must have equal power to accept, reject, or influence its terms, as well as equal access to information. Can anyone claim that corporate employers and employees have equal power to negotiate their exchange? Or that consumers have full access to information about the products they buy? And if we're really interested in freedom, the right to voluntary and informed engagement in economic transactions has to be extended beyond their principals to others affected -- whether by plants that reduce air quality or rent increases that chase out shoe repair shops in favor of coffee bars. The inconsistency of the belief that economic domination by the state destroys freedom, while economic domination by capital somehow enhances it, is often rationalized by attributing the self-interested decisions of the corporate elite to objective, immutable principles like "the invisible hand" or "supply and demand" -- just as state tyranny has claimed to embody the laws of God or History. But the real animating principle of a free society is democracy -- which should include a democratic economy based on enterprises owned and controlled by their workers.
-Ellen Willis
My faith in consumer power, now wavering, is
about to be struck one final blow. One of the first things I had
to learn about Sybase, was that it didn't aim to sell to an individual,
it wanted to sell to other corporations. "Business to Business" -
it sounds simple, but it has far-reaching implications. What if Sybase
were a lumber company, clear cutting forests, and it sold its product to
other companies, so that the consumer didn't see the wood until five links
down the chain, as a desk in Ikea. Do you think the consumer could
even
find out where the wood came from?
I still try to make my purchasing decisions based on what information I do have, but I think that the informed consumer is a creature of myth, and a convenient scapegoat for public relations people to use when a corporation does something unsavory. So then, who has power? I will explore that further, but first I have something more to say about how Sybase sold its products.
Sybase software is an expensive item to buy, in the tens of thousands of U.S. dollars, and it has heavy competition from such companies as Oracle and Microsoft, so the companies that would purchase the software would often spend a lot of money merely deciding which software to buy. Some companies had devised an empirical system to make this decision. The ones I saw involved collecting a set of information, involving how the different products ranked according to different criteria. After the information gathering was over, the purchasing company had a large amount of complex data. As such, if left to a human, the decision would be difficult and error prone, so they employed a computer to perform some algorithms, and sort out which product to buy. Now, I am sure that this is not the only instance in a corporation where decisions are deferred to the intelligence of a computer. In accounting, inventory, stock portfolio systems, etc., a computer could make and execute decisions without even the supervision of a human brain. Now I don't know what all of the criteria on those tests were, but I do know that no measurement was made of the ethics or environmental friendliness of the companies.
It was in 1998 that I read Neuromancer, by William Gibson. It told the story of an artificial intelligence working through a corporation to achieve its (illegal) goals. The scary aspect of the story was that it was not far away from reality. Today's artificial intelligences are not as sophisticated as those in the novel, but I think we can view corporations as intelligent organisms unto themselves. They are cybernetic organisms -- part machine, part biological. We could view each employee as an individual cell. Employees are grouped together into departments which may include computer intelligence or robot workers that perform some particular functions, these could be viewed as organs.
In grade school, we learned that for something to be considered life, it had to perform the seven life processes: movement, consumption, excretion, reproduction, growth, respiration, and stimulus response. If we consider that the corporation exists in the economic environment instead of the natural one, it exhibits all of these behaviors, save respiration. Its physical elements, the employees and assets can move. It consumes money to survive; when it cannot get enough, it goes bankrupt and dies. excretion can come in the form of physical waste, or employees who are laid off. On the other hand, hiring can be considered growth, as well as mergers and acquisitions. A corporation can reproduce by "spinning off" a part of itself as a new company. Finally, it reacts to changes in the economy by focusing its efforts on emerging markets or abandoning old ones. If corporations are alive, do they have their own agenda? Well, all living things have one overriding goal: to survive. The way they do that is by making profit.
Often, their high regard for profit causes them to do things that conflict with our human values. For example, in the late sixties, Ford Motor Company decided that human life was worth less than the cost to redesign the Pinto.[5] Mexico saw its constitution, a document embodying the values of the citizens, edited by corporate power. Even the United States has had it's much-loved constitution superseded by NAFTA[6]. When multinational corporations pushed for acceptance of the North American Free Trade Agreement, parts of the Mexican constitution protecting the rights of workers and indigenous peoples had to be repealed to accommodate it [7]
It is disturbing to consider that corporations are
creatures with values of their own. Can society's interest be preserved
when corporations wield so much power? Can corporations be controlled?
In 1999, I worked at a corporation that was controlled
by its owners. Inline Internet was a far different environment from
both the Ministry and Sybase. It was a small company, having only
fifteen employees when I started. It was the first place I worked where
I actually made real friends. At the time, three people owned Inline---
Russ, Jon, and John, and the direction Inline took was controlled entirely
by them. Perhaps this inferred that larger corporations were also
controlled by their owners, the shareholders. Unfortunately, this
is not really the case in public corporations. Shareholders have
very little means to exercise their power. Their only opportunity
is during an annual shareholder's meeting when the board of directors for
the company is elected. The only information that shareholders usually
have to judge the performance of a corporation is financial statistics,
they are not privy to the inside information accessible to the board.
Hence, the election of the board is dictated by the company's profitability.
Compound that with the fact that the largest shareholders are often not
people, but other corporations, or intermediaries such as mutual funds.
So, if a corporation was engaged in activities that the majority of society objected to, could it be stopped? Well, the government could step in, and change the corporation's behaviour by force... but should it?
I stated previously that I was a libertarian, that
freedom came first. In 1997, even earlier this year, I would have
said that even though a corporation was not being 'nice', the government
should not interfere (as the US government is now doing in the case against
Microsoft). This year, I've had a change of attitude. I no
longer see corporations the way we were taught to see them in business
class, as tools to aquire wealth and encourage economic growth. Originally,
they were created as a means to serve the public good, but that intention
has since been abandoned. I no longer think that libertarian principles
dictate that a government shouldn't take action to limit a corporation.
For one, it was the state that bestowed personhood upon the company during
the act of incorporation, it is only fitting that the state has the power
to take personhood away. Another argument is that one could view
the creation of a corporation as giving extra rights and privileges
to the owners of the corporation. Specifically, the limited liability
property that corporations have. Limited liability insulates the
owners from the corporation's debts, giving them the extra and unusual
privilege that they don't have to pay up if their business venture incurs
some debt. Limited liability is fundamentally not libertarian.
Some people believe, as I once did, that the
way to deal with corporate troublemakers is to simply sit back, and let
market forces take their course. This belief is hinged by the faith
that an unrestricted market will favour efficiency and fairness.
I no longer think that such a laissez-faire attitude will result in good.
Economic fairness will not result in social fairness. I believe that
we must all change how we see corporations. We must look behind the
polished image manufactured by public relations departments, and see the
living creature beneath, a creature that values its own profit and growth,
and holds no regard for the environment, our culture, or justice.
We must all see that these are life forms with their own interests at heart.
We must also be wary of them, for they possess power and resources beyond
that of any human, and their hunger for profit leaves no room for compassion.
Why should we not view corporations as merely a group of people? Because that would allow us to have hope that the corporation will behave ethically without our interference. If a corporation was simply a collection of individuals, we might be satisfied that their consciences will kick in, and the corporation will act rightly. I call that complacence. A corporation has no conscience to answer to. It answers to one thing: the bottom line. Another reason to not think of corporations as a group of individuals is that we think of people as being accountable. If they do something wrong, they can be made to pay for it. The people in a corporation are rarely held accountable for unethical activity, and in the case where the activity makes the corporation a profit, they are rewarded for it.
Like Zach de la Rocha said, "Don't stand on a silent platform"[8], I don't want this letter to be my rant to a passive audience, I want to initiate a dialogue. Do you have an opinion about what I've said here? Do you disagree with some things I've said? Please let us know. If you think someone you know might find this interesting, you are free to forward on all or part of it. Also, if you don't want to be included in the discussion thread, just reply stating so, and we'll cut out your email address.
Sincerely,
Shandy Brown
[1]: Adbusters, Corporate Crackdown, http://www.adbusters.org/campaigns/corporate/tour/2.html
[2]: Adbusters, Corporate Crackdown, http://www.adbusters.org/campaigns/corporate/tour/questions/p2q2.html
[3]: Adbusters, Media Carta, http://adbusters.org/campaigns/mediacarta/battle.html
[4]: Media Awareness Network, http://www.media-awareness.ca/eng/issues/mediaown/owns.htm
[5]: Ford's Pinto, Moral Issues in Business http://www.goramblers.org/RelStudies/Ethics/Ford's_Pinto.htm
[6]: Robert W. Benson, LA Times, http://www.oxybusters.com/nafta/t000056892.htm
[7]: Profit Over People, Chapter 5
[8]: Township Rebellion, from Self-titled. Rage Against the Machine,
1992.