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Corporate Malpractice By: John Williamson
FrontPageMagazine.com | Monday, May 16, 2005


The Corporation. Produced by Joel Bakan, Jennifer Abbott, and Mark Achbar, 2005, Zeitgeist Films, New York, N.Y. 2 DVD set.

Introduction.

Joel Bakan, author of The Corporation: The Pathological Pursuit of Profit and Power, the book upon which the eponymous film is based, was being interviewed by the renowned economic theorist-turned-B-film actress Janeane Garofalo, when Bakan began to tell her the story of a plot to overthrow the U.S. government during the early days of FDR’s presidential administration. (This interview, by the way, which appeared to be conducted on a live radio program, is part of the movie’s five hours of supplemental material in a 2-CD set.)

 

At any rate, the coup, which went nowhere, purportedly involved disgruntled veterans and was to be led by scions of some of the great corporations of America.

           

What corporations? Garofalo wanted to know.

 

Corporations such as Du Pont…, replied Bakan.

 

…and Remington Steel.

 

Remington Steel? Did he mean Remington Steele, the fictionalized TV detective? (That’s me asking that question. Garofalo didn’t question it.)

 

And so this Bakan character, who has written a book and produced a film whose purpose is to reveal to the world fundamental flaws in the American economic model, confuses a well-known American firearms manufacturer (Remington Arms Company, Inc.) with a defunct television show, and fails to correct his error either at the time of the interview or during the editing process.

 

Gotta admit, I was hooked. I watched the whole daggone thing.  

 

Part One. Ready…Fire…Aim!

The Corporation relates the belief of the filmmakers and their on-camera contributors that there is something profoundly wrong with our corporate economy. Their film covers quite a bit of territory in its eight or so hours of interviews and related material: corporate malfeasance and the suppression of the press, manipulative marketing practices, and the issue of sustainability of resources. A central focus of the film is on comparing – or, rather, equating – the behavior of corporations to that of psychopaths.

 

Such a comparison raises the all-important question: is the problem with the corporate structure itself or with the people who own them and work in them? In other words, is the problem one of of legal mechanics or one of human nature?  

In two consecutive segments of The Corporation, Nobel Prize winning economist Milton Friedman and MIT Institute Professor Noam Chomsky give their views on this question.

 

Friedman espouses the nearly universally-held belief, which is that corporations themselves are simply legal frameworks, and their acts, whether for good or bad, are determined by the character and motives of those who run them.

 

On the other hand, Chomsky, who is to serious intellectual thought what The National Enquirer is to journalism, which is to say that he is far more interested in sensationalization than in the pursuit of sometimes mundane truth, made the opposite claim: that the institution of the corporation, like the institution of slavery, is, in and of itself, evil, and that it turns otherwise nice folks into monsters.

 

Clearly Chomsky’s view is diametrically opposed to that of Friedman.

 

And so one is left wondering: What is the point of view of these film makers? Is the corporation broken or isn’t it? If the corporation is inherently evil, then it needs to be changed. If not, then something else needs remediation in order to address the problems of the world which concern Bakan et al.

 

But there has to be a determination here, one way or the other; this, however, the producers of the film have clearly failed to do. And so we are left asking, If you folks can’t even define what the problem is, how can you expect anyone to follow your lead?

 

Now, if we follow Chomsky’s thinking, which is that the corporation is, as an institution, just as evil as the institution of slavery, and if we take, as prima facie evidence for that claim, the various acts of corporate malfeasance and exploitation which the producers exhibit for us, then it stands to reason that what Chomsky is saying is that institutions in which instances of malfeasance and exploitation can occur ought to be dismantled.

 

Fair enough. By that argument, organized religions should be dismantled, since many acts of abuse, exploitation, and destruction have been done in the name of various religions.

 

And by that argument, most if not all governments should be dismantled, since many acts of abuse, exploitation, and destruction have been perpetrated by nearly every government in history.

 

And by that argument, while we’re on the subject, institutions of higher education should be dismantled, since all of them have their share of professors whose “product” – his or her research – is of little proven value, or who become unproductive after receiving tenure, or who spend little time helping their students, or who use their classrooms as political platforms, and so forth.

 

As Chomsky is famous for demanding that the United States meet the same high standards that it requires of other nations, perhaps he should call upon academic institutions to meet the same high standards which they expect of the corporate community, which is to say: Either perform flawlessly, or be dismantled. 

 

Part Two. The socially conscious community and the amorality of corporations.

 

It is not difficult to see how the world view of Michael Moore evolved with respect to corporate America. “Iron Mike”, as it is well known, grew up in Flint, Michigan, where the great auto manufacturers loomed much larger in the life of the community than did any local or state governments or even the distant federal government. On behalf of the vast automotive workforce, the auto unions demanded a continually increasing benefits package and the all-important benefit of job stability. Even in economic downturns the workers were cushioned by generous layoff benefits.

 

And then it all went away. From the trauma of that experience it is easy to see how the anti-globalization movement – indeed, the anti-corporation movement – gained force. Thus, permeating the movie is a sort of vague expression of the idea that the corporate model is no longer the best means of conducting business. What is needed, it is argued, is for the “people” to “take back the corporation”. There needs to be a return to the days when corporate charters could be issued only for socially constructive purposes.

 

Unfortunately, it is hard to know what to make of that prescription. Setting aside enterprises which are clearly unethical, who is to determine what a “socially constructive” purpose might be? Is it the purpose of the corporation to be a stable provider of jobs and benefits for workers, or is it to be a vehicle by which its stockholders make for themselves as much profit as they can?

 

If an auto manufacturer can make its cars more cheaply by having them built overseas, and it benefits its many stockholders, but hurts its workers, to do so, what is to be done? Clearly, the Michael Moores of the world would say: To hell with the stockholders; you can’t take our jobs overseas!

 

And that is what is, in essence, the mandate of those who style themselves the socially conscious community. The film makers would impose upon the American economy a restraint whereby the economic benefits of the workers must be placed ahead of the interests of the stockholders.

 

In reality, the film makers simply refuse to follow their own arguments to their own logical conclusions. They don’t seem to realize that if, for example, automobiles can be manufactured more cheaply overseas, they will be, and not necessarily by American companies, but by Japanese ones, or Korean ones, or Chinese ones. And so, just to stay in business, the American companies are forced to send jobs overseas, or to automate, or to go out of business altogether. And those are exactly the choices they faced.

 

And so how do we answer the film makers, who claim that the corporation is simply amoral, concerned only with the perpetuation of its own interests? We answer by saying this: If that is a fair claim, then it can be applied to worker’s unions just as easily:

 

·        There never was a union leader who voluntarily negotiated for lower pay and benefits for his members;

 

·        There never was a worker’s union that looked around the community and said, ‘Ah, there’s an enterprising new business with a great idea, whose owners have a great work ethic. Let’s get behind this struggling business, risk some of our union funds by investing in it, perhaps even donate some labor to it, in the hopes that one day this business will take off and be a major provider of jobs.’

 

·        There never was a worker’s union which voted to selflessly come to the rescue of a business which had fallen on hard times due to changing market conditions, even if that business had provided well for its employees for many years.

 

Worker’s unions come onto the scene after the heavy lifting has been done, which is to say after the capital has been risked, the product created, the markets have begun to fluorish, the hazards have been jumped. A worker’s union comes into existence in order to negotiate the best possible deal it can for its members, a membership made up no doubt of many fine and hard-working individuals, but individuals who nevertheless might not have had a job to begin with had it not been for the efforts of those who risked their capital and made the effort to create the business. If corporations work for the interests of owners, and this makes them amoral, then clearly the same can be said of those who represent workers in the pursuit of their own narrow interests.

 

Furthermore, worker’s unions are notoriously susceptible to corruption and influence, to infiltration by racketeers, and to a culture of intimidation of its members, of forcing them to toe the party line. And so Chomsky’s claim that corporations are evil institutions must surely give rise to the question of how one would characterize unions.

 

Leaving all that aside, it remains that there can be no more “right” to permanent and guaranteed employment for the worker, as Chomsky and Moore argue for with such bleeding hearts, than there is an “obligation” on the part of the entrepreneur to go out and create a business so that people can have jobs.

 

What would the job-seekers, who have only their willingness to work a day’s labor for a day’s pay, do? Would they put a gun to the head of the more talented man or woman and say, “We demand that you use your talents and risk your money in order to create a viable enterprise. Not we but you must take the risks so that we can enjoy job security and job stability. And even if it is in your best economic interests to locate your business elsewhere, you may not do so.”

 

What person of talent, energy and resources would respond agreeably to an “offer” of that nature?

 

It is interesting to note that graduates of MIT, where Chomsky holds forth, have gone out into the world and created something on the order of four thousand corporations over the years. Clearly, anti-corporatism is an idea which has not exactly caught fire, even at the “Ground Zero” of the movement. Still, Chomsky may have something to offer: if what you are looking for is guaranteed lifetime employment with no obligation to produce anything of value, perhaps Chomsky can explain to you how he managed to pull it off.

 

Part Three. You can run, but you can’t hide from the laws of economy.

 

I am not a student of economics and yet, if I were to peruse the basic college textbooks on the subject, I feel quite certain that I would find spelled out somewhere in those books this basic idea:

 

The more efficiently you use your resources, the higher your standard of living.

 

This idea can be illustrated in many examples from daily life:

 

·        Buy low, sell high. The lower the price at which I buy, and the higher the price at which I sell, the greater the return on my investment;

 

·        Buy, don’t rent. Money spent on the rental of property is money lost. Money spent on the purchase of property goes from my bank account into my property;

 

·        The lower the price you pay for a commodity, the more of them you can buy. In a word: Wal-Mart.

 

Now if we can say one thing on behalf of the corporation, it is that a well-run corporation is a marvel of efficiency. The profit motive ensures that capital, labor and resource materials will be moved about as efficiently as possible in order to produce the greatest supply of goods at the lowest price and that they will be distributed to as many buyers as want them. That’s Economics 101.

 

But what the producers of The Corporation would have you believe is that there needs to be an alternative to the corporation, a system whereby we deal on a one-on-one basis with other individuals in order to negotiate for our needs. This sounds nice, but doing such a thing will immediately introduce inefficiencies into the equation. Imagine going about and negotiating with the original maker of every product you need. Are you going to travel to Saudi Arabia to get your own oil for your car? Are you going to contract with a local mechanic to build that car?

 

For each person to negotiate for the manufacture and distribution of each and every product her or she uses means that one of two things must occur, if the laws of economy hold:

 

·        The inefficiencies created by the abandonment of the corporate system would mean that each of us would use far more resources than we do now just to be able to maintain our current standard of living;

 

·        If we choose not to increase the rate at which we use up resources, then the inefficiencies created by the abandonment of the corporate system would mean that our standard of living would drop.

 

These are the iron-clad choices we face, if we adopt the model advocated in The Corporation. No doubt the producers and stars of this film did not think their ideas through to their logical conclusions, or they would have arrived at the very same ends. I suppose that they were too busy playing cutesy with their psychological analyses of corporations as “psychopaths”.

 

It should be noted that to abandon the corporate system means that we would eventually return to an agrarian society, as the inability to raise large amounts of investment capital means that new factories could not be built, Earth could not be explored for new sources of fuels, and new medicines could not be developed to the extent they are today. For it takes well-funded, well-educated risk takers to do all of these things. People who have nothing more to offer than the willingness to do a day’s labor for a day’s pay are, though perfectly honorable, not ordinarily the kind of people who could be described as well-funded, well-educated risk takers.

 

It is a harsh fact of life that not everyone has the same capabilities. It may make some uncomfortable to have to confront that truth, but there it is.

 

Besides, if the supremacy of the interests of the laboring classes were the key to economic well-being, then the Soviet Union would have been the wealthiest empire in the history of the world. To the contrary, the quintessential “worker’s paradise” was mired in poverty for the entirety of its existence.

 

To choose the course of abandoning the corporate model and our current standard of living would of course require a political decision. Based on what I have seen in The Corporation, from the confused point of view and lack of seriousness in much of the presentation, to the poorly conceived arguments and the inability to deal with the fundamental questions for the simple reason that the fundamental questions are not even discussed, I can’t imagine why any serious society would use this film as an argument to change course. The appeal of this film, as I understand it, is mainly to some – but surely not all – college students, which is not surprising as the quality of the film is pretty sophomoric.

  

Part Four. Fascism, and communism, and corporatism, oh my!

 

Noam Chomsky plays the same role in this constellation of “stars” that Kate Jackson played in Charlie’s Angels. Remember Kate Jackson? She was the smart one.

 

In another of the supplemental material segments, Chomsky explains, in his typically smarmy manner, that the intellectual basis of the corporation is the same as that of fascism and communism, in that treating organic entities such as governments and corporations as “persons” is an idea which is anathematic to classical liberalism, in which only real people have rights. He calls this a “neo-Hegelian” idea, after the  nineteenth-century philosopher.

 

Sounds pretty deep, doesn’t it? Oh, it’s deep, alright. So just be sure you don’t step in it or you’ll get it all over your shoes.

 

Is the corporate economy really the same as a fascist or a communist society? Hmm, let me think about that for a nanosecond or two and I’ll tell you if I see any flaws in that sort of thinking.

 

OK. Time’s up. Well, actually, there is one similarity between corporations and fascistic societies: the former are not usually democratically-run organizations, and so corporate executives have been known from time to time to act in a dictatorial manner. On the other hand, if we’re going to make these sorts of facile comparisons, then the comparison of communist societies to worker’s unions is equally apposite; after all, unions, like communist states, often have a dictatorial central leadership and they often put their own interests above that of the membership. So there!

 

Having said that, Chomsky’s arguments don’t hold up at all. For one thing, a huge number of corporations can survive and thrive in a democratic society – in fact, they survive quite well in that environment – and it is the competition which a free society offers – competition for the best workers, for talented managers, for capital at the lowest rates, for raw materials at the lowest prices, for customers and for vendors, and even competition for the best public image – which makes life in a corporate society vastly different from life in a totalitarian state. All of this competition mitigates to a huge degree the problems which can be wrought by miserly or dictatorial behavior of corporate executives. If talented workers leave Corporation X for better pay and better treatment at Corporation Y, then corporate managers at Corporation X will either clean up their act or face the consequences of the marketplace.

 

Fascistic and communist states, on the other hand – as if I need to tell you, unless you are a student of Chomskyan thought, in which case, yes, I do need to tell you – do not offer alternative forms of government within their borders. Fascism is authoritarianism, which means that the government is a dictator, and the military and the police are its goons.

 

Communism is totalitarianism, which employs the same goons, with one difference: the government is so centralized that not even the church is allowed any authority, and thus it is outlawed. (Mussolini, a fascist, would have had a hard time getting rid of the Vatican.)

 

And so if you live and work in a capitalistic society, you can leave your job and go get a better one. If you live and work in a fascistic society, you will stay where you are and you will like it. If you do not like your job in a communistic society, perhaps you will enjoy your new employment opportunity in Siberia.

 

Hegel, schmegel.

  

Part Five. Janeane Garofalo, meet Paul Newman.

 

Anyone who has spent a career working in the corporate environment knows that there is a very real and very individualistic element of corporate life called “the corporate culture”. The culture of any given company is determined by the nature of the business being conducted, the type of people attracted to the work, and the values of the people who founded or now manage the company.

 

Chomsky calls the corporate structure evil; Friedman calls it amoral. I would suggest that there are many corporations which are quite moral:

 

·        Johnson and Johnson, Inc., a maker of a number of high quality medical products, voluntarily recalled all of its Tylenol products when someone tampered with the bottles and replaced the medicine with poison;

 

·        The board of directors of the former Equitable Life, which had sold life insurance policies for many decades with a war exclusion provision, voted to waive the exclusion during World War Two, thus making voluntary payouts for its many policyholders killed in the war;

 

·        Paul Newman, renowned as an actor, formed a company which sells food products; from the profits, Newman has donated a couple of hundred million dollars to medical research and charities over the years. Would anyone seriously want to suggest that Newman’s Own is a corporate psychopath? Besides Chomsky, I mean.

 

To maintain that all corporations are evil and psychopathic, or that every move they make is simply for the oppression of others or for the blind pursuit of profit, is a point of view which is simplistic, wildly overstated, and deliberately misleading, a description which sums up the point of view of The Corporation

pretty well, I think. 

 

Part Six. Credibility is all.

 

See the president.

 

See the president who is victorious in war.

 

See the president who has been elected to a second term of office.

 

See the president try to make one small but significant change to one government program (social security).

 

See the people resist. See the polls in support of this idea go down, down, down.

 

See how tough it is for a popular and successful politician to make a change which affects the financial welfare of the people.

 

See Comrades Garofalo, Chomsky and Moore. See them on the margins of the political process.

 

See them try to impose upon the country their ideas for revamping the economic system of the country.

 

See how huge their task is in comparison to the task the president is attempting.

 

See The Corporation. See how Chomsky and Moore try to come across as neighborly, reasonable and friendly folks. See Moore admit that, yes, maybe he too has been guilty of patronizing the “bad” corporations such as McDonald’s a little too often.*

 

See Chomsky, Moore and others such as Howard Zinn not breathing fire, not comparing America to Nazi Germany, not applauding the destruction of the Twin Towers. See them for once not telling the American people what idiots they are.

 

See yourself thinking, “These seem like reasonable folks. Maybe we should look into this and think about going ahead and throwing the baby out with the bath water.”

 

See The Anti-Chomsky Reader (Encounter Books, 2004, Collier and Horowitz, eds., 248 pp.) See the many distortions, misrepresentations, and outright fabrications concocted by Chomsky over the years in his various books, speeches and articles. Pay particular attention to Pages 1 through 248.

 

See Fahrenheit 9/11. See Dave Kopel’s Fifty-nine Deceits in Fahrenheit 9/11. See Miramax pay Moore $21,000,000 as his share of the film profits. See if that doesn’t work out to $355,932.20 per deceit.

 

See deep into your heart. See if you really want to surrender your political will to clowns like these. 

 

* Note to self: Iron Mike to cease dining at Mickey D’s. Call stockbroker soonest, advise sell all McDonald’s holdings ASAP. 

 

Part Seven. What I liked about The Corporation.

 

Watching The Corporation reminded me of the comment of the man who was served a rotten egg for breakfast: “Parts of it are excellent.”

 

·        The Monsanto story. This story of corporate malfeasance was chosen well in that it showed how an investigative journalistic effort by reporters in the employ of Rupert Murdoch’s News Corporation was stopped from bringing to light a problem of legitimate public concern, which was the tainting of milk supplies by the use of Monsanto’s flawed hormone drug, Posilac, which had been designed to increase bovine milk production. What we are treated to is a picture of the interminable battle by the reporters Steve Wilson and Jane Akre as they try to get their story on the air. Admirable as their integrity was, one wonders why, for a problem of such apparent gravity, they didn’t simply quit their jobs, turn the information over to an ethical journalistic organization, and sue for personal damages at a later date. Still, the story illustrates the point that a free and unfettered press is necessary to bring unethical corporate conduct to light.

 

·        The sustainability argument. One issue which the producers of The Corporation address very well is that of sustainability: the idea that corporations should reduce as far as possible the consumption of Earth’s resources in order to sustain themselves upon renewable resources. As their poster boy for this issue, they introduce Ray Anderson, former CEO of Interface, a carpet manufacturer, who experienced some success along these lines. Anderson is a North Carolina good old boy who projects credibility and integrity, and is responsible for much of what is salvageable about this film. Of course, what is left unsaid is that the problem of sustainability of resources is one which will almost certainly be solved by profit-motivated companies working in conjunction with government and academic institutions – in other words, by the system currently in place, assuming that Chomsky and Moore will let us keep it.

 

·        Naomi Klein, author of No Logo, was one of the most incisive and interesting commentators. Whether you agree with her opinions or not, she came across as a much more interesting thinker than any of her elders. 

 

Part Eight. What do we make of The Corporation?

 

I mentioned above the problems that the president is facing in trying to sell the privatization of social security. The problem lies in convincing people that the changes suggested will really make their lives better twenty, thirty, or fifty years down the road. If Alexander Hamilton were president, he might have a chance, but the people sense that the president’s strength is not as a financier, and they’re not buying it. It may also be the fact that, despite his popularity in many quarters, the public is not so eager, after Iraq, to take the president at his word on the rationale for embarking on a difficult course of action.* Now they want proof.

 

The producers of The Corporation face the same sort of problem that the president does: in the first place, how do we know that the changes they espouse would make the overall picture better a half century down the road? If there are problems of corruption and abuse in the corporate system, how can they assure us that their new system won’t suffer from other types of corruption and abuse? The model most diametrically opposed to the American model is the Soviet model, and we have already seen that centralization of control of the economy and the abolition of private enterprise leads not to wealth and prosperity but to poverty, famine and genocide. Why would we want to go down that road, or even half the way?

 

The producers and on-camera contributors to this film make much of the fact that it is the corporation which is the heart of the problem; and yet, as they point out, the corporation has been a major factor in the American economy for only a century and a half. Do they mean to suggest that, before the rise of the corporation, workers were never exploited and resources were never plundered? Are they really that naïve, or is it that they think that we are?

 

Furthermore, what do they bring to the table in terms of experience and credibility? What significant enterprise has been built upon the principles they espouse, which can be pointed to as an example of their ideas? What town, state, or country has experimented with their ideas and seen success?

 

Writing books, giving lectures, and making movies is not a sufficient qualification, in the eyes of most, to be given the freedom to re-engineer an economic system. Writing books, giving lectures, and making movies which are notorious for their casual relationship with the truth ought to be a major impediment to qualification for any role in shaping the future of a free society.

 

*I should amend my statement by acknowledging that the United States had perfectly valid legal and moral reasons to go to war in Iraq. The president’s problem arose when he chose to focus heavily on one reason (WMD) which could not be clearly substantiated before the invasion and was only marginally so afterwards. 


John Williamson is a contributor to The Anti-Chomsky Reader.


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