A terrifying realization hit me yesterday. In their current form, corporations are the most dangerous things on earth--because they threaten the survival of humankind and the entire planetary ecosystem. They are far more dangerous than natural disasters like tsunamis, earthquakes, and hurricanes. In fact, today's corporations present a level of threat equivalent to an asteroid hitting Earth.
About me: I'm a practicing physician. Over the past decade, I've spoken out on political issues, and worked to improve things , but often felt frustrated as I watched life become more difficult for most people. I started to dig for some root causes of our social problems, and finally had a flash of insight that explained a lot for me. Maybe I’m the last guy to figure this out, but I'm compelled to present my ideas here for discussion in case this is new and helpful to someone else. I’ll describe my major concerns first. Then toward the end of the diary, I’ll present a couple ideas that might improve the situation. Have you had a similar enlightenment? Am I worrying too much? Any ideas? Solutions?
(Thanks to Critithinker. His thoughtful, autobiographical lookback at corporate life Corporate Oxymoron stimulated my thinking and led to writing this.)
Here's the conflict--Humans vs Corporations. Even though we created them, we do not share their values or motivations. Just to clarify my terminology, in this essay, I’ll refer to corporations as if they have feelings or motivations. Of course they don’t; what guides them is the human activity of their executives, boards of directors, managers and employees. However, all the human emotional factors of the people in the corporation pass through a “filter” created by the two basic rules of corporations* (see below). Human emotional reactions that don’t comply with the two basic rules are screened out. The decisions and resulting actions that pass the “filter” are what I call the personality of the corporation.
Humans: On the one side, we humans are governed by our consciences, empathy for others, the desire to procreate, need for security, fear of criticism, fear of punishment, and by our wish to obtain love, acceptance and respect from others. And yes, we are also driven by some lower instincts such as fear, hatred, lust, and greed. We have all learned--to some degree--that openly expressing or gratifying those baser instincts can bring disapproval or worse, so we attempt to regulate lower impulses in order to minimize our guilty feelings and be accepted by society.
Corporations: On the other side are corporations, entities that we live with, but with which we share very little except the corporate equivalent of fear and greed. Other than that, corporations are devoid of anything resembling human feelings. They have no empathy or guilt, and are driven by two basic operating rules*. Yet they have been given rights, privileges, immunities, and "personhood" by our legal system. Corporations are truly alien to human society.
Humans who act like a corporation: Here's a strange anomaly. A few humans operate according to the same standards as corporations--that is, only for self gratification, and without guilt or respect for the feelings or welfare of others. Society generally takes action to protect itself from those individuals, identifying them as sociopathic or mentally ill.
*Two basic operating rules for corporations:
1. Maximize profit
2. Do whatever is necessary to continue the business.
(Rule number 1 should be modified when it conflicts with rule 2)
Here is how the rules work:
The corporation bases its decisions on maximizing profits--until its actions threaten its ability to make profits, or threaten its continued existence. For example, that could occur when corporate activities cause a disaster that swings public opinion against it, (e.g. Bhopal, Exxon Valdez). Then the corporation moves to Rule 2 and does what it must to stay in business. That often involves temporarily using a part of its profits for good works (highly publicized) to convince the surrounding community that it should be allowed to continue to exist. And it uses its profits at that point to pay for legal defense.
One of the most malignant corporate behaviors to decide on a course of action by weighing only the potential profit to be made against the financial risk of violating a law and paying the fine. If the action still looks very profitable after subtracting the fines, legal expenses, and loss of sales from negative publicity--if apprehended--then the action is carried out, whether legal or not.
The Corporation, amoral, "sociopathic", and powerful: Governed only by these two rules of behavior, the corporation is an amoral entity, i.e., not governed by human moral values. It lacks guilt for what it does, or empathy for those it harms. What's worse, this "sociopathic" entity is given the rights of a human being, but not similar responsibilities. A corporation is particularly dangerous because of its great concentration of money, power, and political influence--which it uses freely to reach its goals. The U.S. Federal tax system also helps corporations operate in this amoral way by allowing them to deduct from their profits, with some limitations, the cost of public relations campaigns to cover for the damage they cause, the compensation to victims, the cleanup operations, the cost of legal defense, legal damage awards, and the cost of lobbying to change the laws in their favor or gain exemptions from the law. In other words, if they are caught, corporations pay the costs of their destructive, illegal activities with tax-free money. (Tax free for one corporation = somebody else pays more taxes.)
Why do corporations exist? Prototypical corporations were created hundreds of years ago in Europe to encourage wealthy individuals to risk their money in ventures considered beneficial to society. For instance, sending merchant ships to distant ports for trading was thought to be beneficial to the society, so there was reason to encourage that sort of activity. The wealthy were reluctant to invest in ventures if failure meant that others (e.g. families of the crew of a wrecked ship) could go after their personal property, bank accounts, land, and home if the venture failed. Thus, the corporation was created to protect those investors from personal liability in case things went very badly. U.S. laws have continued to grant wealthy individuals special privileges and immunities to encourage them to invest their money in new ventures, but the benefits to society are no longer so apparent as they were in Holland in the 1600's.
Aren't there some corporations with a heart and a conscience? The short answer is, "Yes, but you can't count on it." The longer answer is that among the many changes in corporations and society, the massive increase in size seems to have the strongest tendency to depersonalize and eliminate the effect of human conscience on the decisions of a corporation. As a result, the corporate executive, or even the corporate employee, in a large corporation does not personally know the people who are affected by corporate decisions. No longer are owners and executives of the corporation required to interact with customers, or with the employees who are affected by their decisions--as they did when corporations were smaller. For instance, the insurance executives do not have to see the family of the individual whose cancer requires expensive treatment, but whose health insurance they terminated because of a technicality. The CEO probably lives in different part of the country, in a penthouse or expensive gated community among other very rich people.
My best guess about which factors favor the presence of human values in corporate decision-making are: smaller size, closely held corporation that still carries the founders' family name, location in a smaller community, original owners and family still involved in daily operations, and finally, a smaller, customer base that lives nearby. And the opposite of all those factors will likely minimize the importance of human values in the company's decision-making.
My diagnosis: Corporations are powerful, amoral entities created by humans, but which they failed to endow with enduring humanistic qualities. Corporations have grown far beyond their original purpose. Like a cancer cell, they do not respond to normal limits on cellular growth such as feedback mechanisms and contact inhibition. They focus only on growth and replication--without consideration of their effect on the body that nourishes and supports them. Similarly, corporate executives have been (accidentally?) protected from most consequences of the "antisocial" corporate activity they oversee.
Is there a cure, Doc? We had better do something quickly because this is a life-threatening condition--and I mean a threat to life on this planet. Should we abolish corporations? That's not the first thing to try, because these organizations have useful features that would be hard to replace. So the big question is how to bind human values inextricably to the corporate thinking process so that their decisions reflect values beyond profit or corporate survival.
This is not an easy task. Corporate lawyers will complain that there are already far too many laws and regulations controlling corporate behavior. That may be true in terms of numbers of laws. The problem is that our laws usually don’t penalize corporate executives and employees for taking actions that they know will hurt people or harm the environment.
For positive change to occur, corporations must have rules built into their "corporate DNA" that prevent violation of human values. These rules must be as strong and as integrated with their activities as a person's need to breathe, or the resistance to poking out one's own eye. An excellent example of rules to protect people from entities of their creation are those Isaac Asimov invented for robots about 1942.
In I Robot and in his later books, he provided basic operating rules to be programmed into each robot’s operating system to protect humans and humanity.
The Three Laws of Robotics:
1. A robot may not injure a human being or, through inaction, allow a human being to come to harm.
2. A robot must obey any orders given to it by human beings, except where such orders would conflict with the First Law.
3. A robot must protect its own existence as long as such protection does not conflict with the First or Second Law.
Later, Asimov added an overarching primary law to govern the other three:
0. A robot may not harm humanity, or, by inaction, allow humanity to come to harm.
Asimov's Laws of Robotics are a fantasy, but we need real controls on corporations that are at least as good. Today, the two internal rules of corporate operations do nothing to protect the individual human being, or humanity, or Earth's ecosystem on which our life depends. Our federal and state laws regulating corporate behavior allow corporations to intentionally break the law and pay their way out of it. Corporate executives and owners are shielded from prosecution for actions that hurt or kill people. I recall several corporate executives going to jail for tax fraud, where nobody was physically injured or killed, but can't recall any executives doing time for endorsing corporate actions (or failures to act) that hurt or killed people. Are there any?
In Summary, society invented a useful device to encourage economic development, but over centuries, and without the awareness of most people, the corporation has developed into a sociopathic monster, a cancer on society, a machine to generate profit without consideration of human or ecological values.
The solution is uncertain, but the first step requires education. People must become aware of the dangerous organizations that they live with. Most folks know about isolated instances where corporations acted against humanity or the environment; however, I don't think they understand that each instance is an example of a deep systemic failure to incorporate human values into corporate decisions. I didn’t realize this either until I started looking for the root cause of problems I saw around me. I'm hoping that an educated public would demand changes for their own protection.
Fortunately, the corporation can exist only with our permission, through laws that give it special privileges and rights. Those laws can be modified. Unfortunately the lawmakers are increasingly under the control of the corporations. And corporations will resist any threat to their profits, privileges, and power in any way they can. Of course, their push-back will not be inhibited by their humanistic concerns, because they aren't built that way. (We didn't build them that way.)
Remind anyone of Hal, the computer in Kubric's movie, 2001?
To close on a more optimistic historical note, the current situation is similar to the end of monopolies about a hundred years ago. The interests of the people were eventually served. It could happen again.