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Interview with Joel Bakan, author of The Corporation: The Pathological Pursuit of Profit and Power
The May/June 2004 issue of Dollars & Sense features an excerpt from Joel Bakan’s powerful new book The Corporation (The Free Press) on the multiple and expanding dimensions of corporate power in the United States and worldwide. The book is a companion to the highly anticipated film of the same name, which will be released in U.S. cities this summer. (See www.thecorporation.tv for more details.) Bakan was interviewed by D&S collective member Thad Williamson after a recent showing of the film in Cambridge, Mass.
D&S : This book and the film focus on the corporation. Why do you think the corporation qua corporation has evaded direct attention in most academic circles — law, political science, sociology, and so forth?
Bakan : I think the corporation as an institution has attracted critical work in the academy, but not a lot of it. You tend to see a lot of it in the 1930s, perhaps not surprisingly because of the Depression and what was seen as the failing of corporate America. There was a lot of very good academic work in the 1930 by law professors on the institutional nature of the corporation. It’s kind of an obscure corner of legal academia, and you find it in economics and in business work, but I think part of the reason the corporation evades scrutiny as an institution is because people find it very difficult to see the corporation as an institution. They see corporations as particular businesses — you’ve got blue-chip companies , and you’ve got brand name companies, and you’ve got good companies and bad companies, and you’ve got the service industry and manufacturing, so they see the corporations as these individual units, and they talk a lot about the differences. Most of the business press is about how corporations differ from one another — this one’s a bad investment, this one’s a good investment, this one makes bad products, this one makes good products. But what people don’t talk about is what all corporations have in common, which is their institutional structure.
Why that is I think has a lot to do with the fact that people often don’t see below the surface — they don’t see the structures, they don’t see the institutional imperatives that operate in any system, they see what’s on the surface. They see the people, the CEOs, they see the business and whether they’re good or bad, but they don’t actually pay attention to the structural nature of the phenomenon they’re looking at. I think that’s not just true of corporations but of a lot of phenomena.
D&S : Walk through why you describe the corporation as "pathological", and why you think that’s a useful metaphor?
Bakan : I think the metaphor of the psychopath is very helpful for underlining an institutional feature that all publicly traded corporations have, that is that they are required to always and only pursue their own self-interest. A second institutional feature corporations have is that they are deemed by law to be persons. So what we do is say, if the corporation is deemed to be a person, what kind of person is it? It’s a person that’s structured and required by law to be purely self-interested. Well, if that person were a human being, and were structured to be purely self-interested, and unable to be concerned about others, we would call that person a psychopath. So the metaphor is quite powerful in underlining those two institutional features of the corporation. It’s important that we not take the metaphor too literally and think we’re going to be carting corporations off to institutions, and we’re not suggesting that the individuals in corporations are psychopaths. We’re simply saying, this is a fact about how corporations are put together, and the psychopath metaphor is a useful way of illustrating that fact, in a cheeky way.
D&S : A generation ago in the United. States, there was a common assumption that having a corporate job involved a lot of benefits, a lot of job security, above average salary, that corporations could be pillars of the community. With downsizing and so forth, do you think the decline of that model has produced new openings for this kind of analysis to make sense to people?
Bakan : I think there’s no question that things have changed from 50 years ago, for many reasons. It’s too complicated to get into why, but certainly there’s more emphasis on short-term profit, and there’s a broader labor pool, so there’s less incentive on the part of corporations to actually develop relationships with particular communities. Goodyear Tire is a really good example of a company that historically sought to take a leadership position in being community builders as a company, to the point where the President and CEO of the company for the better part of the 20th century, Paul Litchfield, was called by a lot of his business colleagues a communist and a socialist — he had all these programs for his workers and what not. What he said was, look, I’m doing this out of self-interest — if my workers are happy, they’ll be loyal and they’ll be more productive. So I think there was a certain incentive on the part of corporation 50 years ago to promote good feelings in the communities where they operated because they relied upon those communities for employees, and loyal employees. Now they can pick up and go just about anywhere, whether it’s service industries who are farming out their phone banks to Jamaica from the United States or farming out their manufacturing, there isn’t that need anymore to be community builders and stay within any given community. We’re seeing the result of that --workers now are seen as dispensable and communities are seen as dispensable.
D&S : You say in the book that you favor reinvigorated regulation of corporations as a better approach to corporate power than relying on "corporate responsibility." First, say a few words about why you think the corporate social responsibility approach is so limited, but also respond to the argument that after Ralph Nader and the consumer movements of the 1960s, corporations were able to hit back hard in terms of their lobbying in Washington. Why would a regulation strategy today be able to overcome the seemingly endless capacity of corporations to respond to whatever political threats they face?
Bakan : When I say that we need to reinvigorate the regulatory state, I see that we have, in pragmatic politics as opposed to utopian politics, one of two options: We can either hand over the function of regulation to the corporations and ask them to regulate themselves, or we can have some kind of external, democratic model of regulating. At a purely abstract level I think it’s obvious that the second is better than the first, because the corporations themselves don’t have the same kind of accountability built in that democratic institutions do. Now having said that as a matter of principle, it then becomes a very difficult practical problem as to how you actually do it. But I don’t think we have a choice but to do it — if we simply hand over the regulatory function to corporations, I don’t know what happens to democracy, and I think we lose, at least in terms of regulation of the economy. For me it’s not a question of having a choice — if we believe in democracy, then we need somehow to make it work and to make it govern the activities of corporations.
Now, it’s true that we have the problem of agency capture, which is the problem that the agencies that are supposed to be regulating industry are themselves regulated by industry, through lobbying, through the revolving door of personnel between industry and government, through campaign financing. We can create laws that stop those things — we can ban financing by corporations of politicians’ campaigns — that can be done, subject to some First Amendment problems. Theoretically, we can find ways to certainly limit the influence corporations have on elections, we can place greater restrictions on lobbying, we can ensure that the people who staff agencies are not people who are just fresh from presidencies or top managerial positions in the industries that the agencies are regulating. These are all things that are within our grasp as citizens and as democratic governments to do. My proposal is that we think very seriously about how to go about rebuilding and reinvigorating the regulatory state. I don’t mean simply taking it back to where it was in 1972, I think we really need to change the very way we conceive it. But again, I don’t see a choice. Either we’re a democracy and we have democratic oversight the economy, or we’re not, and we hand over oversight to the actors themselves, the corporations.
D&S : In your heart of hearts do you think that 75 or 100 years from now the corporation will still be the dominant economic and social institution? Will democratic power be able to rein it in?
Bakan : I think that all dominant institutions ultimately have a certain narrative or life arc. They start small, they get big, and they diminish again. The Communist Party is a good example of that. The church is a good example. The Egyptian empire doesn’t exist any more, nor does the Roman empire. These institutions, at the time they were at their peak, seemed invincible, it seemed like they would be around forever. So if you look at history, to suggest that the corporation is somehow immune to that process is a bit odd — the idea that corporate capitalism is the first system through which we organize ourselves that is somehow going to last forever. Because none have lasted forever.
But I don’t know where we are on the time line. I don’t know if in 50 years or 100 years or maybe in 500 years it will change; and I don’t know what will replace corporate capitalism or how it will be diminished. It could be something a lot worse, and not necessarily better! But I do believe when you look at history, when institutions become too powerful, they forget that have to legitimate themselves to the broader public, they become arrogant, and they start to believe they’re omnipotent. That’s usually when they are the most vulnerable, because they stop trying to balance power against the legitimate and real needs of the people. I think we’re at a point now where a lot of people, not just populists or left-wing people but "Main Street" Americans, are feeling that things are getting out of hand — with Enron, with Worldcom, they’re very anxious about the state of the environment, seeing their own job security decreasing, seeing corporations come in and set up Coke machines in their kids’ schools. I think there’s a lot of angst out there, and it’s quite possible we’re at a time now when people are going to start demanding that politicians and government exert a stronger hand in trying to protect the public interest from corporations. The next election is crucial in regard to this. I see that we may be at a swing point in terms of that—where it goes from there, it’s very hard to know.
D&S : The film is fairly lengthy, and allows people to marinate in this alternative worldview for a while, and it does it through stories. Even as many times as you’ve seen the film, is there any particular anecdote or piece of it that still causes your jaw to drop?
Bakan : When I went into this project, my hypothesis was that the corporation is what it is institutionally, and that if people are honest about it, they’ll talk about that — and they do so in the film. The stories we show, whether it's IBM working with Hitler or Monsanto firing reporters, in a way we only scratched the surface of what's happening in the world today, in terms of human rights, in terms of workers’ rights, in terms of the environment, in terms of consumers' interests. We only really scratched the surface.
Joel Bakan is Professor of Law at the University of British Columbia.
Thad Williamson is a Dollars & Sense collective member and co-author of Making a Place for Community: Local Democracy in a Global Era.
Issue #253, May/June 2004
Copyright © 2003 Economic Affairs Bureau, Inc.