Customer Reviews

The Corporation: The Pathological Pursuit of Profit and Power

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The modern corporation, according to law professor Joel Bakan, is "singularly self-interested and unable to feel genuine concern for others in any context." (p. 56) From this Bakan concludes that the corporation is a "pathological" entity.

This is a striking conclusion. The so-called pathological personality in humans is well documented and includes serial killers and others who have no regard for the life and welfare of anyone but themselves. But is it really fair to label the corporation, managed and owned by normal caring and loving people, in this way?

Bakan thinks so. He begins with a little history showing how the corporation developed and how it came to occupy the dominate position that it enjoys today. He recalls a time before "limited liability" when shareholders were legally responsible for the actions of the corporation, a time when corporations could not own stock in other companies, a time when corporations could not acquire or merge with other corporations, a time when shareholders could more closely control corporate management.

Next he shows what corporations have become, and finally what can be done about it.

Bakan's argument includes the point that the corporation's sole reason for being is to enhance the profits and power of the corporation. He shows by citing court cases that it is the duty of management to make money and that any compromise with that duty is dereliction of duty.

Another point is that "corporations are designed to externalize their costs." The corporation is "deliberately programmed, indeed legally compelled, to externalize costs without regard for the harm it may cause to people, communities, and the natural environment. Every cost it can unload onto someone else is a benefit to itself, a direct route to profit." (pp. 72-73)

And herein lies the paradox of the corporation. Designed to turn labor and raw materials efficiently into goods and services and to thereby raise our standard of living, it has been a very effective tool for humans to use. On the other hand, because it is blind to anything but its own welfare, the corporation uses humans and the resources of the planet in ways that can be and often are detrimental to people and the environment. Corporations, to put it bluntly, foul the environment with their wastes and will not clean up unless forced to. (Fouling the environment and leaving the mess for somebody else to clean up is exactly what "externalizing costs" is all about.)

Furthermore, corporations are amoral toward the law. "Compliance...is a matter of costs and benefits," Bakan writes. ( p. 79) He quotes businessman Robert Monks as saying, "...whether corporations obey the law or not is a matter of whether it's cost effective... If the chance of getting caught and the penalty are less than it costs to comply, our people think of it as being just a business decision." (p. 80)

The result is a nearly constant bending and breaking of the law. They pay the fine and then break the law again. The corporation, after all, has no conscience and feels no remorse. Bakan cites 42 "major legal breaches" by General Electric between 1990 and 2001 on pages 75-79 as an example. The fines for maleficence are usually so small relative to the gain that it's cost effective to break the law.

Bakan disagrees with the notion that corporations can be responsible citizens and that corporate managers can act in the public good. He believes that corporations can and sometimes do act in the public interest, but only when that coincides with their interests or because they feel the public relations value of acting in the public interest is greater than the cost of not doing so. He adds "business is all about taking advantage of circumstances. Corporate social responsibility is an oxymoron...as is the related notion that corporations can...be relied upon to promote the public interest." (p. 109)

As for corporations regulating themselves, Bakan writes, "No one would seriously suggest that individuals should regulate themselves, that laws against murder, assault, and theft are unnecessary because people are socially responsible. Yet oddly, we are asked to believe that corporate persons--institutional psychopaths who lack any sense of moral conviction and who have the power and motivation to cause harm and devastation in the world--should be left free to govern themselves." (p. 110)

Bakan even argues (and I think he is substantially right) that "Deregulation is really a form of dedemocratization" because it takes power away from a government, elected by the people, and gives it to corporations which are elected by nobody.

Some of the book is devoted to advertizing by corporations, especially to children, and the effect of such advertizing. Beyond advertizing is pro-corporate and anti-government propaganda. Bakan quotes Noam Chomsky as saying, "One of the reasons why propaganda tries to get you to hate government is because it's the one existing institution in which people can participate to some extent and constrain tyrannical unaccountable power." (p. 152)

What to do? Well, for starters, make the fines large enough to change corporate behavior. Make management responsible--criminally if necessary--for the actions of the corporation. Bakan includes these among his remedies on pages 161-164. He also wants the charters of flagrant and persistent violators to be suspended. He writes that corporations are the creations of government and should be subject to governmental control and should NOT (as we often hear) be "partners" with government.

He would also like to see elections publically financed and an end to corporate political donations. Indeed if we could take the money out of elections, our representatives would not be beholden to the corporate structure and would act more consistently in the broader public interest. I think this is one of the most important challenges facing our country today, that of lessening the influence of money on the democratic process.

Bottom line: a seminal book about one of the most important issues facing us today.

As a small business owner, I am attuned to the impositions of governmental intrusions. I decided to read this book in order to get a more balanced view. Although this author definitely has a bias, he does not come across as overtly fanatical, and has plenty of examples to document his position.

The corporation is compared to a sociopath. The sociopathic personality is "irresponsible, manipulating, grandiose, lacking in empathy, has asocial tendencies, refuses to accept responsibility for actions, and cannot feel remorse....Many of the attitudes people adopt and the actions they execute when acting as corporate operatives can be characterized as psychopathic."

Moreover, by the legal way a corporation is set up, its only motive is profit. Every action taken, no matter how altruistic it looks, has to ultimately be a search for profits. Otherwise, the corporation is subject to litigation by the shareholders. "The corporation is deliberately programmed, indeed legally compelled, to externalize (dump) costs without regard for the harm it may cause to people, communities, and the natural environment. Every cost it can unload onto someone else is a benefit to itself, a direct route to profit."

"Many major corporations engage in unlawful behavior, and some are habitual offenders with records that would be the envy of even the most prolific human criminals." Following this quote is a list of 42 heavy fines levied over 11 years to GE. This sounds akin to keeping a hardened repeat criminal under perpetual parole with minimal supervision and occasional hand slaps. A law professor is quoted, "The practical business view is that a fine is an additional cost of doing business....the corporation, once convicted and fined, will simply have learned how to cover its tracks better."

Within the past 20 years, corporations have really gotten in bed with government in the United States. Billions in PAC money is spent every year for lobbying and political contributions. "It's very hard for a politician to turn someone down who has given a hundred thousand dollars to [his or her] campaign. In terms of getting in the door and making your case, it's obviously easier." How can virtually unfunded (by comparison) watchdog groups compete with this machine aimed toward sugar-coating their industries and de-regulation.

I recommend this book highly, and am looking at the current political campaign with another view as to why certain programs are supported or not supported. Perhaps in their votes our politicians are exhibiting sociopathic traits they borrowed from their corporate contributors or from lobbyists representing the corporate mindset.

The author accurately describes the corporation as a pooling of money by shareholders into a legal, protected entity run by managers and directors, hopefully to the benefit of the investors but too often with an unsettled trust in the board. Limiting the shareholder?s personal liability to their investment undoubtedly has nourished the growth of corporations, jobs and the economy. But it is bittersweet, as Bakan notes the hyping of worthless stock and corporate fraud that facilitates the wealth of those extracting enormous and unjustified salaries and perks. As well, he notes that ?? over the last 300 years corporations have amassed such great power as to weaken governments ability to control them.? But he who gives it can take it away.

Indeed congress has gotten its piece of the action as corporate leaders share part of their profits with the very politicians charged with regulating them. Some politicians even own stock in the companies they regulate.

What else would explain why congress has failed to strongly intervene in the blatant corporate corruption of late? Is there any question that, were money not changing hands at the political level, corporate CEOs would have been allowed to form sweetheart deals with the very corporate boards charged with their oversight, when instead they should be protecting the shareholders? In virtually every congressional vote, one needs only to follow the money to predict its outcome.

Bakan has many good ideas for cleaning up the corporate system, but his (and any) proposed fixes simply will not happen under the current moneyed political system. Until we stop the cash that flows from those who want laws written to those who write them, corporate abuse of shareholders and the taxpayers will continue. Only full public financing of our electoral system (at a cost of about $10 per taxpayer) will stop the abuses and the $1500 per taxpayer congress soles out each year to its funders.

In any other country we?d call our system bribery and payola; in America we call it freedom of speech. In the corporate world we fire employees who take money from vendors; in the political world we reelect them. Where are our heads?

This book is a must read for anybody interested in cleaning up the political system before we pass it on to the next generation.

I agree with just about all of Joel Bakan's contentions here, but this book comes up woefully short on in-depth analysis or truly useful prescriptions for change. Bakan has a great basic thesis here, in that corporations are legally mandated to behave in ways that would be diagnosed as psychopathic in a human being. It is against the law, not to mention the longstanding traditions of western capitalism, for corporations to do anything but maximize profits and shareholder value, with no regard whatsoever for the social, political, or environmental consequences. A more self-centered and uncaring entity is hard to imagine, and the modern corporation is certainly a self-obsessed psychopath. And the damage to popular democracy is mounting. Once again, this is a great thesis, but Bakan does little with the idea besides rattling off a few examples of poor corporate behavior. Bakan also occasionally contends that spectacular corporate failures like Enron are not the result of a few corrupt employees, but that these collapses are symptoms of the larger systemic disease of unchecked post-capitalistic hubris. However, this is another great idea that Bakan throws out for discussion but for which he does little in-depth exploration.

The main overall problem with this particular book, notwithstanding its solid thesis, is the quick and fast-moving narrative, with ideas and examples zooming by before they can be truly beefed up with corroborated evidence or exploratory speculation. This indicates that Bakan was probably more concerned with his associated video documentary, as the book shows the soundbite tendencies of a two-hour script rather than in-depth research that the informed reader can really sink his or her teeth into. At just 167 pages of text (not including end notes), this book just doesn't do justice to the incredible seriousness of its subject matter. In fact, others have written far meatier tomes on the problem of corporate domination and malfeasance, and I personally have become familiar with many of them through my academic research. That's how I know that Bakan's book might be a good summary of current criticisms of the corporate form, and that he has a solid thesis, but the informed and interested reader can find much more elsewhere. In particular I would recommend the works of Robert Bryce, Jarol Manheim, Thom Hartmann, or even the infamous Noam Chomsky for far deeper analyses of the perils of runaway corporatism. [~doomsdayer520~]

The modern corporation is a legally constructed entity with the overriding purpose and mandate of maximizing shareholder return. That seems innocuous enough, but the author clearly shows that corporations go far beyond that narrow focus by now dominating our social, economic, and political affairs, not just as business entities, but as legal persons with all the rights of genuine people. Their immense resources permit them to overwhelm average citizens in all of the realms in which they are active, advancing their agendas, but perhaps most notably in the political process. They are the main force behind the developments of globalization, immigration, out-sourcing, privatization, and de-regulation that have largely eliminated checks on their relentless pursuit of profits, despite the consequences, or "externalities," to the general population. The author contends that such a devotion to self-interest, to the exclusion of impacts on others, would be regarded as pathological in normal people.

Of course, corporations are not unaware that they need to soften their image as being beyond control. They devote considerable resources to public relations, "branding," and charity - to the convincing of being socially responsible. But the author points out that the charity comes as a cost to taxpayers and is an undemocratic determination of whom should benefit. Furthermore, the charity can be withdrawn on a whim. The drive for profits will always trump greater social concerns.

Substantial inequality of resources and power do not bode well for democracies. It is clear that the modern trans-national corporation undermines the influence of average citizens. As late as the mid-nineteenth century, corporations were chartered for specific public tasks with the charters subject to renewal or revocation. Now corporations view themselves as "partners" with the state, not subservient.

The author debunks the idea that market forces can reign in corporations. In the first place, wealth has the upper-hand in markets, which violates the one man, one vote basis of democracy. Secondly, the ability of random citizens to acquire enough information and to then act in concert to regulate corporations is a chimera.

The Corporation is a succinct discussion of the fiction that corporations are somehow persons, entitled to be regarded as the equal all citizens. The author, as a legal scholar, seems to be concerned that corporations, by charter, cannot be socially responsible, as are normal people, and any such behavior is only a means to the end of increasing profits. But even a perfect track record of doing good cannot eliminate the fact that corporations are internally tyrannies, through and through. Citizen empowerment should begin within companies and then proceed to overall societal control.

This book, a sort of companion to the excellent film of the same title, examines the dominant social institution in American--and increasingly global--life: the corporation.

It all started in the 19th century, when we chucked the ideas of the founding fathers out the window in order to reward artificial entities (corporations) the same rights we reserve for actual, flesh and blood people. Seemed like a great idea, until we fast forward to the present, and find our very lives subordinated to pathological institutions that care only about survival, with little regard for the flesh and blood people that still walk the earth.

The 'pathological' part comes from the idea that if you psychoanalyzed a corporation as you would a person (since indeed, on paper, legally, they are the same thing) you would find yourself surrounded by a bunch of psychos who can, and will destroy you in order to meet the bottom line. Welcome to now.

The range of opinion in the book, as in the film, is very wide, covering Noam Chomsky, who sees corporations as monsters that want us to consume things we don't want nor need, to Milton Friedman, who figured out that since a corporation is owned by shareholders or partners, it doesn't need to give a damn about the people that live in the sphere it occupies. This genius insight has provided the rational basis for every greedhead to walk the planet in the last few decades or so.

Occasionally, there is a CEO out there who actions some concern about the future of the planet, and the example here is Ray Anderson, who figures prominently in the film. Needing only a few decades or so to realize that carpet manufacturing MIGHT be harming the environment, he took steps to make his firm 'sustainable', meaning your kids will have a planet to live on. But more often, we have institutionalized insanity like steps to claim rainwater from the sky as corporate property, trying to pull a fast one on the poor folks of Bolivia, who are not 'educated' enough to see the brilliance of this. Or the folks of India, who think that maybe, just maybe, ownership of seeds should not be defined by corporate patents. But what do they know?

Not an easy book to digest for some, since the revelation that we've once again designed the gigantic gun that can blow us all away is a bit much to handle. But there is hope, however slim. It's in work like this that serve to educate us, if just a bit, in between Starbucks breaks at work, about the massive phenomena that shape our lives.

This is a very readable exploration of the characteristics of the corporation as an institute. The author contends that the modern corporation "can neither recognize nor act upon moral reasons to refrain from harming others. Nothing in its legal makeup limits what it can do to others in pursuit of its selfish ends, and it is compelled to cause harm when the benefits of doing so outweigh the costs." As stated in the book's introduction, the book is intended for the layperson. I found the author's exposition clear, and the examples he used to back his arguments compelling.

Despite the fact that the book discusses a dry topic the book has attracted popularity. This may be due to the documentary based on the book, but in my opinion can be ultimately attributed to the author's idea of giving a face to the abstract entities that are corporations. In a chapter the author pointedly asks a renowned psychologist (Robert Hare) to diagnose the characteristics of the corporation as if a person. The psychologist likened the corporation to a psychopath (The passage I quoted in the preceding paragraph should be read in this vein).

Shocking the amoral characteristics of corporations the author exposes may be, the critique against them is hardly new. The core-periphery theory in social sciences placed the harms of multinational corporations at the center of its argument. In fact it may be argued that the entirety of the author's criticism lies within the sphere of Marxist theory.

The strength of the book lies in its accessibility and updated, relevant examples. Inclusion of passages from interviews the author conducted with eminent scholars ranging from the far right (as Milton Friedman) to the far left (as Noam Chomsky), as well as with current business executives makes sets for an animated tone. However what I found most original and interesting was the author's legalistic viewpoint:

"No one would seriously suggest that individuals should regulate themselves, that laws against murder, assault, and theft are unnecessary because people are socially responsible. Yet oddly, we are asked to believe that corporate persons -- institutional psychopaths who lack any sense of moral conviction and who have the power and motivation to cause harm and devastation in the world -- should be left free to govern themselves."

"One premise of democracy is that, as citizens, all people are equal, at least within the political sphere. Everyone has one vote, regardless of his or her wealth or social position, and that means, in relation to corporations, that every citizen has an equal say about how these powerful entities must behave. Moving regulation of corporations from government to the market immunizes them to the effects of citizen's participation in the political process and leaves their control to an institution where one dollar -- not one person -- equals one vote."

And this incidentally is where the personification of corporations appeared most poignant.

In his new book "The Corporation: The Pathological Pursuit of Profit and Power" author Joel Bakan has made a very thoughtful and convincing presentation about how corporations have come to play an ever increasing role in all of our lives. And he argues vehemently that this is not necssarily a good thing.

Before the advent of the corporation most larger businesses were partnerships. Under this arrangement all of the partners could be held personally liable for any losses incurred by the business. However, with the advent of the corporation, investors have been relieved of this personal liability. And this according to Bakan is one of the major problems. As Bakan points out the sole purpose of a corporation is to make money for its shareholders. And as a practical matter corporations pursue profits at the expense of anything and everything and every one in their way. There is no room for morality in corporations. A few well-intentioned CEO's have tried to place significant emphasis on moral concerns. But due to the nature of the beast this approach is almost always doomed to failure.

There is an old expression that "nature fills a void". Corporations operate in much the same fashion. In these trying economic times when city and state governments are strapped for cash, corporations are ready and willing to step in. It is not because they are benevolent or good citizens. Rather, it is because it is good business to do so. Bakan cites the disturbing example of Channel One, a daily TV news program seen by 40% of the students in the U.S. Corporations provide all kinds of electronic gear to schools in exchange for a promise that students will watch the news program on a daily basis. And of course this news program is "brought to you by" any number of major corporations.

Now I am a pretty conservative fellow, but I share the authors outrage at practices like this. And while I am a big advocate of private and parochial schools as an alternative to the public school system I abhor the concept of "for profit" schools run by corporations. Are we interested in producing good well-rounded citizens or automotons to one day work in the corporate world? Joel Bakan cites many other issues where the interests of corporate America clash with the interests of the average citizen. And who is out there speaking up for us? I found "The Corporation: The Pathological Pursuit of Profit and Power" to be a highly informative and very well-written book that is certainly worthy of your time and attention. Highly recommended!

Joel Bakan's THE CORPORATION is a short 167 pages. Yet, the book presents a complete thesis with all the requisite details and convincing examples.

His thesis is as follows: Corporations are entities created by governments. Originally the corporate form was created for specific purposes (such as canal building) to serve the public good. However, they transformed to become pathological, psychopathic entities that will do anything for profit.

What caused this transformation? Governmental legislation. For instance, governmental legislation introduced limited liability, so masses of stockholders would invest in corporations to finance large projects such as railroads (as the most they could loose was their initial investment, but their gain was limitless). However, such large numbers of owners could not all possibly run a corporation, leading to the fear that corporate managers would misuse funds (other people's money). Thus 'best interest of the corporation' principle was born, in which legislation REQUIRES companies to put shareholder financial interest, or profit, above all other interests.

Bakan goes into considerable depth as to what corporations will sink to in order to maximize profits, including 'externalization' which is transferring as much of their costs as possible onto vulnerable 'third parties' (ex, dumping toxic waste into rivers) and exploitation (ex, using sweatshop workers and making money from disasters such as 9-11), excessive lobbying of political leaders for deregulation (ex, of energy markets causing the enron scandal), manipulating children so they can manipulate parents (to buy not just toys and fast food, but cars and beer!) and fooling most of us with the rhetoric of 'social responsibility' (a public relations ruse to actually make more profit).

Bakan offers a number of both short-term and long-term suggestions on how to control this Frankenstein monster. Most importantly, we must remember that corporations are entities created and shaped by governmental legislation (the best interest principle and also pro-corporate legislation such as corporate law and property law), thus, they can be controlled and yes, even revoked, by governmental legislation.

In democratic societies, this ultimately means us! In the short term, we can increase pro-public regulation (and reduce pro-corporate legislation), remove corporate financing of elections, protect the public sphere from corporate infringement (such as utilities, education, health, parks, etc) and challenge neo-liberalistic ideologies. In the long term, we can work to create a more just human order by either changing corporate structures (ie, defining the 'best interest' principle more broadly than just profit, say by including human and environmental welfare) or by getting rid of corporations all together.

Bakan contends that ultimately, things will have to change because corporations and the corporate world-view are based on too narrow of a conception of humanity-self interest and greed. On the other hand, he believes that humans are empathic, compassionate creatures.

Unfortunately, I am not so sure. I am disturbed by nagging doubts that we as democratic citizens of the US maybe getting exactly the system we deserve. After all, many of us realize to some extent or another that corporations use sweatshop labor, yet we (including me) still buy Nike Shoes and shop at Walmart. Most of us realize that gas guzzling SUVs pollute the environment, but SUV are still very popular. Most of us realize that fast food isn't healthy but happily eat it anyway (not just the poor who can't afford many other options, but many middle class and wealthy Americans as well).

Are we really ready to push for regulation and change that, although may improve the world around us, may result in higher prices? Unfortunately, I would say probably not, barring another catastrophe such as the Great Depression, which indeed did result in powerful governmental regulation that reined in corporate power...for awhile.

Bakan's thesis is right on the mark. Its readabilty and brevity are its strongest points. I especially enjoyed the story of the 1934 coup plot by corporate powers against the FDR administration. I hadn't seen it before, although I'd seen the Gen. Smedley Butler quote on foreign interventions of the Marines at least twice before. And, the characterization of corporations as legal psychopaths was great.

If were to add anything, it would be a brief discussion of finance theory and its implications with respect to corporate behavior. For example, if a corporation performed an action which had a 1% chance of destroying the Earth in 100 years, in order to increase profits by 10% now, and it was legal, it would be right thing to do from a financial standpoint.

I do not share his optimism about the potential for change, at least in the near term. So long as the campaign finance system is reformed, significant change is impossible. What is needed is for the US Supreme Court to realize the obvious: in politics, the paid speech by non-citizens (corporations)abridges the free speech rights of citizens by drowning it out. Unfortunately, it is unclear if their is enough integrity on the existing Court to take appropriate action even if this viewpoint was circulated among them.