| .............. |
.
| So,
What About Corporations? |
.
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| The
revelations that there were high crimes being committed by huge corporations
such as Enron is not where the problem lies. |
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| 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. |
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| Let
us look at what corporations are supposed to do: |
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| 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-) Nobel Prize-winning
economist, economic advisor to President Ronald Reagan, "ultimate guru
of the free market system."
|
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| Commercial
corporations have a single ethic: to make a profit. |
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| 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. |
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| Corporations
have no such moral requirements. |
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| If
a corporation makes a profit at the expense of your physical environment,
fine. |
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| If
natural resources are destroyed to the worsening of our grandchildren’s
quality of life, fine. |
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| 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. |
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| Profit
as a goal or objective is based on a single motivation, greed. |
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| 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. |
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| Managers
are rewarded (career advances, salaries and bonus gifts) only if they increase
profits, not if they are good corporate citizens. |
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| The
development of free trade, and of a developing global economy, in itself,
is a useful and valuable thing for society. |
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| It
means that goods and services can be produced in the most efficient way. |
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| 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. |
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| 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. |
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| Profits
can be unfairly increased where there is lack of transparency. |
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| 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. |
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| What
about the call for governments, at various levels, to be more "businesslike?" |
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| It
is true that there could be more in improvements in efficiency in many
governments. |
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| Efficiency
is the ratio between costs of inputs divided by value of outputs. |
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| We
can get more "bang for the buck" by increasing efficiency. |
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| 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. |
.
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| A
government has the responsibility to the well being of every member of
its population, not merely to corporations or stockholders. |
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| 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. |
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| 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. |
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| 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. |
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| Whistle
blowers are rarely protected, and suffer damage for blowing the whistle. |
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| What
then are the indications of future trends of the fast pace of corporate
growth in the world today? |
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| 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. |
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| They
are a new post national political force in today’s world, and a force
with which to be reckoned. |
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| We,
as social scientists, are not supposed to make value judgements. |
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| We
do not see corporations as evil, but as social organisations with specific
structures and processes. |
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| 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. |
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| This
is a classical case. |
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