This Magazine

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The Corporation revisited

This Magazine Staff

(Edited to add more homework assignments)
The May/June issue of This Magazine contained two pieces about The Corporation. A review of the film, by Joseph Heath, and a very short review of the book by me, Andrew Potter. A longer version of my review had previously appeared in the National Post. I didn’t like the book, and Joe didn’t much like the film, though he did find it instructive. Many This Magazine readers didn’t much care for our apparently “right wing” positions, and some of their responses appear as letters to the editor in the current issue of the magazine.
Over the next few weeks, Joe and I would like to use a share of this blgospace to reply to some of the criticisms and to clarify our position. Since I am going to be on the road for the next little while, perhaps we can begin with a homework assignment:
Read Joe’s piece on the film, either in the May/June This Magazine, or the original article in Policy Options
Read the longer version of my review of Joel Bakan’s book, appended at the end of this blog entry.
Read David Beatty’s review of the book in The Globe and Mail
Ask yourself the following questions:
1. Are the arguments that Joe and I make necessarily right-wing arguments? That is, if one criticises the claims made in the film and book, is one automatically siding with the political right?
2. Do you think Joel Bakan (author of the Corporation) would agree with Beatty’s review?
3. What might a left-wing criticism of The Corporation look like?
Give this some thought, and we’ll take up the first question in a week or so.
Here’s my review:

The Corporation: The Pathological Pursuit of Profit and Power
By Joel Bakan
Viking Canada
228 pp.; $37.00
By Andrew Potter
In the highly competitive global moral economy, Canada has managed to carve out a substantial niche for itself. Thanks to writers such as Naomi Klein and John Ralston Saul, and magazines such as the Vancouver-based Adbusters, nobody criticizes global capitalism better than we do. A bit of brand extension has now arrived in the form of The Corporation, by UBC law professor Joel Bakan. This book also served as the intellectual inspiration for the feature-length documentary of the same name that has played to rave reviews at film festivals abroad and to packed houses here in Canada.
For anyone acquainted with the anti-globalisation literature, Bakan’s book builds on a familiar narrative. From the New Deal until the early 1970s, corporate power was tempered by a substantial welfare state, strong unions, and government ownership of vital industries and utilities. The economic shockwaves that trailed in the wake of the energy crisis caused governments to embrace a neoliberal agenda of deregulation, privatization, cuts to spending and taxes, and the gutting of the social safety net. As a consequence, we are now effectively ruled by corporations: “They determine what we eat, what we watch, what we wear, where we work, and what we do. We are inescapably surrounded by their culture, iconography, and ideology.”
The Corporation’s more or less original contribution to this story is that, while Klein and the people at Adbusters blame the success of neoliberalism on the power of advertising and branding, Bakan thinks the real problem is with the basic institutional character of the publicly traded corporation.
Once upon a time, corporations were creations of government, empowered to serve the public good and the national interest. Things started to go wrong in the 19th century with the introduction of limited liability, which restricted a shareholder’s liability for corporate debts to the amount he or she had actually invested. Designed to attract investors from the middle-classes, an unintended effect of limited liability was to encourage reckless investment behaviour, by limiting losses while offering unlimited potential for gain.
Within a few decades, the corporation had become a “legal person,” a free individual able to acquire assets, employ workers and pay taxes, and entitled to the full protection of the law. Bakan hits on a wonderful conceit: If the corporation is a legal person, then what sort of person is it? Well, thanks to its legally defined mandate to pursue, “relentlessly and without exception, its own self-interest,” it turns out that the corporation is a psychopath. Is it any wonder the world is a lot screwed up?
This is all very clever, except that it relies on a rather obvious fallacy: just because corporations directly pursue their private interests, it does not follow that the public interest is not indirectly promoted. That is the whole point of Adam Smith’s “invisible hand” argument. It is outrageous that anyone – let alone a professor of law – can write a book criticizing the supposedly pathological nature of corporate self-interest and not once confront the reasoning that serves as the entire rationale for a free market economy.
This is just one example of the lack of care for balance or even-handedness that permeates this book. The treatment of the wto is similarly one-sided, while Anita Roddick’s discovery that she couldn’t use the publicly-traded body shop as a platform for promoting her privately-held values is given a bizarrely sympathetic treatment. The Corporation is shot through with special pleading, half-truths, and misleading arguments, so much so that no one with the slightest understanding of how the economy works is going to find any of it persuasive. Of course, that won’t really affect Bakan’s target audience, since the anti-globalisation left wears its economic illiteracy as a badge of honour. As far as most of them are concerned, economics is just right-wing ideology.
But let’s suppose, for the sake of argument, that Bakan is right. The corporations have taken over, colonizing almost every available inch of public space, weakening government, and transforming us from public-minded citizens into selfish consumers. As he puts it, “the modern business corporation, an artificial person made in the image of a human psychopath, now is seeking to remake real people in its image.” So what do we do about it?
Our options are limited. One possibility would be to take away the “personhood” of corporations and repeal limited liability laws. Alternatively, we could try to go back to a time when corporations existed at the pleasure of the government of the day, their charters subject to revocation at any time. Finally, we could just eliminate the problem of private interest by simply nationalising most of the economy.
Bakan doesn’t really endorse any of these solutions, and one can see why. A return to unlimited liability would mean the return of the debtors prison, while recent events in Canadian politics, provincially and nationally, have made it abundantly clear what happens when governments decide to manipulate Crown corporations for the “public good.” As for large-scale state ownership, Bakan is clearly tempted, yet he ultimately rejects it on the grounds that “such a solution, even if desireable, is currently too utopian to be reasonable proposed.” What he does propose is tightened government regulation and increased government accountability, an agenda so mainstream that even George w. Bush agrees with it.
That pretty much tells you everything you need to know about why the political left in this country is on permanent vacation from the pressures of governing. They are still trotting out variations on the profit-is-evil argument, but they are no longer willing to swallow its hard-edged conclusions. This new brand of reasoning without responsibility for the consequences isn’t Marxism, and it isn’t democratic socialism, it is something entirely different. Call it limited liability politics.

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