THIS PAGE HAS BEEN MOVED
If you are not redirected to its new location in a few seconds, please click here
DON'T FORGET TO UPDATE YOUR BOOKMARKS!
SO, WHAT ABOUT CORPORATIONS?
As legal individuals, are they criminally insane?
Training Handout
Corporations have only one ethic
The revelations that there were high crimes being committed by huge corporations such as Enron is not where
the problem lies.
It is where corporations do exactly what they are designed to do, stay within the law, and do the job well,
that constitutes the greatest danger to society and to the
future of humankind.
Let us look at what corporations are supposed to do:
So
the question is, "Do corporate executives, provided they stay within the
law, have responsibilities in their business activities other than to make
as much money for their stockholders as possible?" And my answer to that
is, no they do not.
Milton Friedman (1912-2006) Nobel Prize-winning
economist, economic advisor to President Ronald Reagan, "ultimate guru
of the free market system."
Commercial corporations have a single ethic: to make a profit.
Historically, our human institutions
had multiple ethics. While they differed, and we might disagree with some
of them, they generally had the responsibility to support community and
society, promote the good health and good will of the population, and generally
support activities with the best interests of people in mind.
Corporations have no such moral requirements.
If a corporation makes
a profit at the expense of your physical environment, fine.
If natural resources are destroyed
to the worsening of our grandchildren’s quality of life, fine.
If people in far away places are
exploited and their rates of morbidity and mortality increase so that a
corporation can make a profit, fine.
Profit as a goal or
objective is based on a single motivation, greed.
Since corporations are usually owned
by their stockholders, who do not watch the every day running of the organisation,
nor care, then there is no conscience in the organisation.
Managers are rewarded (career advances,
salaries and bonus gifts) only if they increase profits, not if they are
good corporate citizens.
The development of free trade, and
of a developing global economy, in itself, is a useful and valuable thing
for society.
It means that goods
and services can be produced in the most efficient way.
Unfortunately, however, labour is
not as mobile as capital, because labourers have families and roots in
their communities, and cannot move easily to new locations.
Furthermore, corporations can take
advantage of international trade by underpricing and overpricing their
own goods as they transfer them between their factories in various countries,
avoiding taxes and misrepresenting their levels of real production in each
place.
Profits can be unfairly
increased where there is lack of transparency.
This not only puts them at an unfair
advantage against local companies, and reduces the amount of tax revenue
for governments, it also defeats the purpose of free trade by raising the
costs to the final consumers.
What about the call
for governments, at various levels, to be more "businesslike?"
It is true that there
could be more in improvements in efficiency in many governments.
Efficiency is the ratio
between costs of inputs divided by value of outputs.
We can get more "bang
for the buck" by increasing efficiency.
Unfortunately, that observation is
subverted by being interpreted that governments should be run like business
organisations, as if a government’s responsibility is to make a
profit.
It is not.
A government has the responsibility
to the well being of every member of its population, not merely to corporations
or stockholders.
Corporations have a vested interest
in reducing taxes, which will increase their profits, to the detriment
of budgets for social services such as education, health and support for
the vulnerable.
If a corporation gives a donation
to a political party with a platform of reducing taxes and social services,
that is a conflict of interest.
The case of Enron also shows that
our society, or that of the most sophisticated and wealthy in the world,
the USA, does not have the mechanisms for watchdogs and policing the activities
of corporations, and only some chance situation where an insider, or staff
member, reports a criminal activity, and is willing to sacrifice their
career and reputation in blowing the whistle (reporting the crime) will
the corporation be brought to task.
Whistle blowers are
rarely protected, and suffer damage for blowing the whistle.
What then are the indications of
future trends of the fast pace of corporate growth in the world
today?
Currently, more than a hundred multinational
corporations have annual budgets that are greater than the sum of the national
incomes of over a hundred nations.
They are a new post national political
force in today’s world, and a force with which to be reckoned.
We, as social scientists,
are not supposed to make value judgements.
We do not see corporations as evil,
but as social organisations with specific structures and
processes.
We do have a responsibility, however,
in bringing to attention, when our social institutions are producing results
that we do not expect and that are beyond society's goals.
This is a classical case.
––»«––
If you copy text from this site, please acknowledge the author(s)
and link it back to cec.vcn.bc.ca/This site is hosted through the Community Development Society (CDS)
By the Vancouver Community Network (VCN)© Copyright 1967, 1987, 2007 Phil Bartle
Web Design by Lourdes Sada
––»«––Last update:
2011.08.15
|