Are corporations evil, and if so why?

Great Debates
1

I came across a trailer for a new independent Michael Moore-esq film called “The Corporation”:

http://www.thecorporation.com/

Now according to the web site, if you apply the “actual diagnostic criteria of the World Health Organization and the DSM-IV, the standard diagnostic tool of psychiatrists and psychologists” to the behavior of a corporation (being a legal “person”), that “person” would exhibit the same traits as a “psychopath”.

Taking this with the standard anti-Walmart, anti-corporation, anti-Haliburton, etc arguments that most people are generally familiar with, as well as the various Enron, Worldcom, Martha Stewart, etc scandles everyone has heard:

  • is there something inherently “evil” or at the very least amoral about how large companies operate (point of fact that legal corporations can be any size there are other forms of businesses besides S-corps, most people just assume that large companies are “corporations”) or is it just a few bad apples?

  • given that most people who work for companies are regular people, not evil masterminds bent on poisoning the earth and sky and driving people from their homes, why does this happen?

2

One word comes to mind: responsibility. A corporation is a good thing because it is a shield investors have from the consequences of their machinations: should a corporation go bankrupt, or get sued, the line is drawn at the corporation’s pockets and the shareholders and CEO and etc aren’t personally responsible for it. This is what makes the corporation such a remarkable vehicle for investment. But this is also what makes the corporation such a dangerous entity, and any comparison to psychopaths is totally unsurprising to me. The very same shield that exists to protect investors also creates a sort of detachment from behavior. The corporation is an ageless entity that has no personal responsibility to anyone, not its employees, not its customers, not its shareholders–no one. It has no empathy, no sympathy, and no feelings. (In many ways I think it compares to various dictatorial governments.)

I think it is entirely improper to suggest that just because a corporation is run by people that it must therefore have all the associated properties of people.

There is nothing that forbids a company from behaving like a responsible person, and I’d suggest that quite a few companies, likely the majority, do behave more or less responsibly, provided there is sufficient motivation. But what motivates people to behave and what motivates corporations to behave are certainly not the same thing.

Is it just a few bad apples? I don’t know. Probably not. I think the model inherently lends itself to “abuse” because of the detatchment from responsibility. But I don’t think this makes corporations evil, and I certainly have nothing to suggest in the place of corporations that could possibly have a similar beneficial impact.

3

A corporation is, in the end, merely a thing. And like other things, it is only as moral or evil as the people in control of it.

The problem with current corporations right now is that a lot of them are led by folks who feel that the corporation’s primary responsibility – if not the only responsibility – is to “maximize profits.” That’s a dangerous attitude to take; it suggests that the only reason Phillip-Morris isn’t selling crack cocaine and making record profits is because selling crack cocaine is illegal (“Those pesky government regulations!”)

Of course, there are lots of corporations that conduct their business in a fair and ethical manner. Unfortunately, there are also lots of corporations that conduct their business in a “whatever it takes to win” manner, and the only thing that’s stopping them from running amok are those aformentioned pesky government regulations – and, given how politicians have been dismantling those regulations for several decades now, that just means more opportunity for the “bad apples” to run amok, jepoardize the populace, and make all corporations look bad in the process.
And to close the cinematic loop started in the OP, Spider-Man taught us “With great power comes great responsibility.” Films like Fahrenheit 9/11 and The Corporation are there to tell us “These (government/corporate) leaders are welding their great power irresponsibly.”

4

I don’t think corporations are inherently evil. The evil comes from the people who run them, frequently into the ground, solely for their own self-interest, with no regard for the employees, the community at large, or even for the long term health and growth of the company.

I think a lot of the problem is the “inherited wealth” factor. There are quite a few big corporations (Wal-Mart, Boyd Gaming, Station Casinos) that were found by good, decent people who were both devoted to customer service and to paying/treating their employees well. Then the “old man” would die, retire, whatever, and the son, (and now, in the case of Station Casinos, the grandson) took over. They didn’t have an active hand in building the company, didn’t have a real understanding of what made the company a better place to spend (or waste) than the other companies in the same business, and instead of doing things that grow the company in a healthy way, start looking for ways to increse profits without making any investment - cutting back on customer service, cutting into employee wages/benefits, short-staffing stores, etc.

Station has managed to survive by buying out much of its competition, and by forming a ring around downtown so that they could absorb local business just by being closer to home, but a lot of their customers are mailing in their slot cards with letters explaining why they are going to gamble elsewhere. Boyd is in decline. Wal-Mart continues to spread, like a great plasmodium, across the surface of the planet, building their business by driving out any potential competition, but I think within the next several years they will go into decline as customers get fed up with waiting in line for a half hour or more in filthy stores where they can’t find help on the sales floor and decide that it really isn’t all that more expensive to shop at Target, and the service is sooo much better…

With other companies, I think the “inherited wealth” factor may hold true, as new high-level execs take over from the people who founded and built the company, and who have a cognitive disconnect from the human factors that make a company a viable, and ethical business.

5

I’m trying to come up with examples of “unethical” corporate conduct, that’s not harmful to the corporation, and I can’t come up with any. The scandals of the last few years are basically con-man scams, where investors are told one thing while their money is being squandered, and this can only last so long before it implodes.

Pollution, maybe, but regulations cover that (although I think the market could too).

A corporation is basically trying to get people to willingly hand them money, so a scamming corportation isn’t going to last long. What else is there?

6

No loyalty? Check. Hiring two part-time employees so no benefits need to be paid to one full-time employee? Check. Decisions that affect hundreds of people being made by one guy who makes enough money that even if the whole company shits the bed he’s still able to retire today? cough

But maybe you don’t consider those “unethical”.

Eh, the big scandals are nothing. It is the everyday, sell-your-employees-down-the-river-one-penny-at-a-time stuff that you need to be on the lookout for.

7

Well, as msmith537 suggested, there are many forms of coporations. There are also other forms of companies which are not quite corporations. They all have different characteristics (mostly to do with taxes in my limited experience). Some are very close to the sterotypical corporate structure that we are all familiar with. Others a closer to what we might call a sole proprietorship.

I agree with some of the points that erislover made. I’d quarell with a fe things, but not many.

I think the problems we see right now in the corporate world have as much to do with flaws in the legal structure we have built up around them as they do with flaws in the concept of corporations themselves. We have several policies (and even more importantly harsh political debates) which encourage short term thinking on the part of corporate boards of directors, and investors. This leads to decisions which produce short term profits but at the expense of long term profitibality. CEOs are given huge benifit packages tied to short term profits, and they are thus encouraged to lay off more workers than they might, or merge more than they otherwise might. These sorts of things look good in the short term, but they can severly harm a company’s productivity in the long term. Meanwhile, many investors are using mutual funds to “play the stock market”. This allows them to partake in the wealth creation but distances them from the other responsibilities of a stockholder. Boards of directors are no better. They are encouraged by the lack of stockholder oversight, uncertain tax policies, and uncertainty about other governmental (and societal) policies to encourage the short term profit taking I spoke of.

I won’t even mention the way in which corporations participate in our political system.

To me, everyone involved in the economy has a responsibility to fix the problems I mention. I’d point out, as erislover did that the majority of corporations do just fine. The private enterprise system works quite well on the whole. But there are surely problems which need to be addressed.

Firstly, investors could take a more holistic to investing. I don’t mean only investing in environmentally friendly companies (unless that is important to you). I mean taking your position as a stockholder seriously enough to vote on issues. This partly would require some sort of change in the legal status of mutual funds. I’m not certain how they “vote their shares”, but I suspect that they simply don’t.

Secondly, Boards of directors need to start holding CEOs more accountable for long term profitability. I have nothing against the amounts of the compensation packages in principle. But I do have a problem with the way they are measured. I think that many of them encourage executives to make decisions which are harmful to long term health of companies.

Finally, I think we need to address the principles by which we govern our economy. We seem to have this fantasy that anything is up for grabs politically. As long as enough people vote for a regulation, new regulation body, or law, it is ok. We need to get rid of this populist notion, and return to the principles of Constitutional Republic under which we operated for so many years. That is overstating it. What I really mean is the we need to develop a set of economic rights to go along with our civil rights. Some set of principles which defines the limits on governments power to regulate our economic activities.

8

I agree with this assessment of the short-term focus of many companies. I’m not sure you give enough credit to economic realities as opposed to policies/cultural causes. It is an economic fact that money now is more valuable than money later. This won’t change even if corporate culture, shareholder behavior, and regulatory policies all undergo massive changes. This fact will remain a stumbling block between corporations and longer-term, broader thinking/policies.

Enjoy,
Steven

9

I can’t speak for Curt, but none of your examples strike me as unethical.

10

I don’t think they’re evil. It is the people who run them who make certain ones evil.

The cruel money grubbing nature has been with mankind since Ug saw Thar with more fruit than he had. The disparity between the poor and the rich was not invented with corporations.

One of hte fundamental bits of capitalism in general is that, like democracy, it really requires active participation by the Average Citizen. The theory is that IF a corporation is bad, THEN investors will stop investing in it, purchasing its products, etc. While a nice ideal, consumers and investors either don’t know or don’t care that the megacorporations they are supporting are having an ill effect (the aforementioned political entanglements, pollution, etc).

In reality, only a minority of consumers follow commercial morals (like shoppiong at local farmers markets). Or sometimes, the consumer is completely powerless (like doing something against Haliburton - here they could theoretically vote for Democrats, but Haliburton still gets a good chunk of contracts). Or the consumer HAS to play along (like with Microsoft).

In the absence of corporations, other interests would simply take the place of these. Is there something better? I’d bet money on it, society and economics won’t reach an end goal in evolving. Hell, we may devolve.

11

Of course, this is a ridiculous concept. The DSM-IV is meant to be applied to human beings - living creatures of a particular species, with brains. Corporations, while treated as “persons” for some specific legal purposes, are not humans.

You can no more say a corporation is “psychopathic” than you can say a coffee table has schizophrenia, or a refrigerator is neurotic. The movie, which I’ve seen, is paranoid, alarmist nonsense.

It is to my mind almost absurdly obvious that large companies are not “evil,” but can in some cases be run by assholes.

To use a counterexample, I don’t see anyone making movies saying we should do away with nation-states. In fact, a great many people, including some on this board, have argued that corporations take too much power from nation-states. But objectively speaking, it is unquestionably true that nation-states, as an organization, have committed more murders, more economic crimes, and more damage to the environment than any other sort of organization. What corporation’s ever done the evil that Nazi Germany did? But nobody’s arguing that we get rid of nation-states (well, not many people, anyway) because we all agree that the problem with Nazi Germany was the Nazis, not the Germany.

12

Oh, I agree. I did give these sorts of things short shrift. I was trying to concentrate on the sorts of things that we can discuss as people other than those involved in particular corporations. That kind of limits us to government policies and such. But I agree that right now we have a culture which values short term profit more than long term growth. I’m not convinced that this is universal. Not that it is inevitable. Many types of investments still require very long term planning indeed. Building a new mine, for instance, means planning in the many hundreds of millions of dollars accross many decades.

One thing I think long term planning has in its favor is the fact of compound interest. Those little words are magical. The can be dark magic (credit cards) or they can be good magic (investment dividends). But there is definately a reason to value returns down the road over short term returns. The question is how much to value each. When you factor in the uncertainty of returns down the road, it can be a difficult choice indeed.

13

I have spent a lot of time looking at the operations of mostly large companies and one thing that always strikes me is how disorganized most of them truly are. It often makes me wonder if decision makers truly have any influence or if it is like steering an oil tanker by leaning to the left or right side of the boat.

I would say that one similarity that a coporate entity has with a real person is the need for self-preservation. We all have an instinct to keep ourselves alive, often at the expense of others. Companies also act in the interest of self preservation, driven by employees and officers who do not want to lose their positions.

To stay alive in the business world, a company must make a profit. This is a good thing as all it means is that it is making more money than it spends. The problem is that when a company is threatened, just as when a real person is, they tend to let ethics slide.

It becomes a lot easier to behave in an immoral or unethical manner when you are removed from the immediate effects of your decisions. Mostly, people are dealing with headcounts and numbers. Incremental changes resulting from small decisions from higher up. All driven by a marketplace many times removed from the effects of their desires. No one sets out to demolish the rainforests or fill the skies with toxic fumes. We just buy products like paper or gasoline becuase we need them.

14

This comment inspired me to another thought. I agree that it is easy to act imorally when the consequences of such actions are removed from immediate view. I would like to add that it is also a problem when morals are themselves discredited. When morality itself is portrayed as whimsically arbitrary constructions, they are also easy to ignore. I’m talking about one of the unintended consequenses of legislating business ethics. It becomes so easy to get away with things like “I did nothing actionable”.

I’m not saying that business ethics laws cause unethical behavior in any great amount. Just that part of the overall discrediting of historically accepted morals and the loosening of inhibitions has been the loosening of the sorts of self discipline that we are decrying in this thread.

15

This bothers me, too, though you’d have a better first-hand perception of this than I. At my company, the owners dodge their salary first, tighten spending as an immediate second, and only lay people off when there’s no clear sign of anything letting up. We went almost a year like this before we finally (and quite unfortunately) had to let someone go. I understand that it is not particularly uncommon for CEOs to do something similar, to take pay cuts in order to get things going and save some cash, and I wish these behaviors had a bigger, or any, spotlight, because it might change perception of corporate bosses from cigar-chomping, greedy pigs to people who give a shit about their company and their employees.

Quite so, quite so. Unfortunately this gap cannot be reclaimed. But I don’t think we’ve quite learned to deal with it properly.

Mmm… maybe. But when there is a large profit motive and a personal disconnect from responsibility, corners will be cut that, I think, wouldn’t otherwise be cut. What was the old buzzword? Plausible deniability. For someone whose decisions affect hundreds and thousands of people, this shouldn’t even be a personal option.

16

On the other hand, there are lots of people who are arguing that there should be a stronger international justice system to reign in the power of nation-states to commit atrocities, to arbitrarily go to war without just cause, etc. Likewise, there are those who are arguing that there should be similar curbing of the power of corporations. That doesn’t mean doing away with them.

17

Depends what your goal is. Ethics do require a goal!

18

They do? Must be a broader definition of the term than I’m familiar with. In any case, none of the examples given struck me as remotely unethical.

19

Ethics is about how to get from here to there.

You have a desire, you look at your situation … the ethic is what gets you from here to there.

Say you have a desire to not starve to death. The ethical thing to do, would be to ingest certain substances at regular intervals (as a generalization).
The unethical thing to do, would be to refuse to eat food.

Meta ethics gets into which desires, if any are ethical to have? Self referrential ethics.

Depending upon who you talk to, ethics and morals are synonyms.
The rule of thumb for their difference is, in the case of eating food…

It is always moral to ingest certain substances at certain intervals (unconditional rule – it doesn’t matter whether you want to or not).

This is generally the distinction. Ethics need to be falsified and falsifiable, morals do not. In fact, per the system of morals, as distinguished from ethics (if you don’t use them as synonyms) — it is immoral for a moral statement to be falsifiable (because that suggests accountability, which is a nono for exploitation of other human beings; hence post modernism and whatnot). The rule for morality is much older than post-modernism though!

So, ironically, it is business ethical (if you want to exploit people for profit) to to use ethics and morality as sysnonyms, but to use the definition of morality and pretend that your using the definition of ethics. In this sense, it is ethical to make sure that it’s unknown that it’s unethical to have ethics be a term of falsifiability.

But, to return to the original point… for any ethic, you need a desire.

20

Harmful to the corporation yes, but not necesarily to the individuals who performed the bad acts. That is the problem that everyone is identifying and I have long agreed with that view of the corporate structure.

For example, the Ford Motor Co. exectutives were told that the fuel tank on the Pinto was prone to explosion in rear end collisions. They decided that it was cheaper to settle any lawsuits resulting from injury accidents than it was to redesign and retool so late in the production cycle.

Result, they probably got bonuses based on that year’s results because the shit didn’t hit the fan until later. And then when it did hit the fan it wasn’t the executives who made the decision who suffered. Their salaries continued at the same level, or even higher because now they had to steer the company through rough times and that’s worth more salary, right? It was the stockholders, and of course the Pinto customers who were killed or badly injured, who suffered. Also the Pinto owners who suddenly found themselves with a car than they had a hard time selling to anybody.