I F YOU DID a psychological profile of the corporation, what would it look like? Self-interested, manipulative, avowedly asocial, self-aggrandising, unable to accept responsibility for its own actions or feel remorse - as a person, the corporation would probably qualify as a full-blown psychopath.
Sensationalist? Joel Bakan, whose provocative film documentary, The Corporation , is due out at this month and whose book of the same is in the shops (Constable, pounds 9.99), doesn't think so.
The opposite of a blunderbuss-wielding Michael Moore, Bakan is a Canadian law professor whose brief is as well- ordered, concise and sober as the accusation is grave: behind its benevolent face, he argues, the most important institution of modern capitalism is a Frankenstein's monster that has broken its chains and is now consuming the society that created it.
Three key legal interventions have made the corporation what it is, Bakan says. The first two were the innovations of limited liability and the granting to the corporation of a legal personality. At a stroke, 'the corporate person had taken the place, at least in law, of the real people who owned corporations'. And the company, previously dependent on government grant and charter, could now be seen as an independent being, a 'natural entity' with the same rights to exist as an individual.
The corporation turned out to be a work of genius, a brilliant amplifier of capital and effort that has made possible the sensational improvements in living standards (in the developed world) of the past 150 years. But it is a flawed genius, and the flaw, perhaps fatal, is the third enabling condition: exclusive emphasis on profit.
This is expressed in the book's subtitle, The Pathological Pursuit of Profit and Power . On the basis of case law, Bakan insists, 'managers and directors have a legal duty to put shareholders' interests above all others' and no authority to serve any other interests - the 'best interests of the corporation' principle.
The combination of these three conditions (Bakan could have added a fourth, which is that, unlike a human being, the corporation has no natural life span. It can in effect live and get bigger for ever) has far-reaching consequences.
The first is that among the interests the corporation has no business serving are those of the society that framed its governing rules. In the interests of shareholders, the corporation is not only entitled but obliged to offload on to others as many of the costs of making profits as possible.
In short, says shareholder activist Bob Monks, quoted by Bakan, the corporation is 'an externalising machine, in the same way that a shark is a killing machine' - not because it's malevolent but because that's the way it is designed. This in turn makes the whole notion of corporate social responsibility a logical nonsense, permissible only when it is in the best interests of the corporation (in which case it's not corporate social responsibility) or when, ironically, it is insincere (ditto).
CSR, says Bakan baldly, 'is an oxymoron'. You might just as well ask a great white to be nice to fish or a fox to go vegetarian. When it comes down to it, responsibility always takes second place to shareholder interests, in the name of which corporations constantly test the edges of legality and far overstep those of morality.
This truly is a world where, as he says, legal compliance is just another cost-benefit analysis. Bakan has hair-raising and gruesomely entertaining sections on spying, cheating and amazingly unethical marketing devices. He also notes three pages of alleged legal breaches by corporate role model GE sweatshops turning out goods for Nike and Wal-Mart and American companies' reluctance to cease their involvement in Nazi Germany because it was good business for their shareholders.
Extraordinarily, Bakan recounts a fortunately inept but serious (and authenticated) business-backed plan to depose Roosevelt and install a fascist regime in the US in the 1930s.
The corporation has been much more successful by persuasion, to the extent that swathes of what used to be the public sphere and interest have been surrendered to it. And it still wants more.
But as the dominance grows, so do the flaws. In a nightmare version of the effect of the invisible hand, everyone pursuing their own self-interest increasingly produces results no one wants or intends (in the extreme, planetary collapse), but for which no one is responsible. And the pathologically narrow and materialistic view of human nature that underpins today's corporate form not only dominates economic activity - it is also altering humanity.
'In a world where anything or anyone can be owned, manipulated, and exploited for profit, everything and everyone will eventually be,' Bakan warns. The sorcerer's apprentice is running amok the corporation is remaking us in its own stunted and undersocialised image.
This lucid and urgent book does leave a couple of stones unturned. It perhaps overestimates the global hegemony of the US model (although not its fundamentalist zeal for hegemony) shareholders certainly own rights in companies, but the assets themselves?
Then again it underestimates, or rather does not address, the formidable extent to which the model is underpinned by dominant academic theory. And, perhaps not surprisingly, Bakan's remedies are less well thought-out than his cool and authorititative analysis.
He is, though, undoubtedly right that it's time to destroy the pernicious and self-serving idea of the corporation as a 'natural entity'. It's not. It has a right to exist because society gave it one.
The corporation was created as an instrument of public policy, and its licence can still, theoretically, be revoked. The presumption of freedom from regulation is otiose. The corporation needs to be re-made in our image - in law, in theory and in practice.
The Observer, 24 October 2004