What are corporates for?

 
 
A corporate is a human construct. It’s not an aspect of nature that we have no choice but to contend with. We make corporates. They’re a device  designed to facilitate the satisfaction of needs and the exchange of wealth within our societies. We made them. We are not beholden to them. We’re supposed to control them.

If it becomes apparent that the activities of corporates, as driven by those who run them, is going against the general good, then we should be able to effect them such that they stop working against us and continue to work for us. Isn’t this common sense?

Two elemental forces play a big part… democracy and greed.

We seem to have built societies that use wealth as a measure of everything that’s of value. The unending complexity of our societies requires that we have formulae to allow us to calculate appropriate ways forward in virtually every regard – cost benefit analyses. So everything becomes reduced to numbers, and the only available metric that could arguably encompass all variables is a monetary one. Just how much is that landscape worth to you? Enough to pay off your mortgage? More? Less? Never mind your first reactions. When the man from the corporate comes knocking on your door with a checkbook, what’s your price?

Democracy is supposed to be a process whereby decision making is collective. Decisions are supposed to reflect a consensus, and the supposition is that a consensus represents a kind of average view that stands the best chance of satisfying all parties at least to some degree. Those whose opinions vary from the mainstream are quietened by needing to acknowledge that their view isn’t shared by most and therefore wouldn’t command many followers. And so would probably be unworkable.

This all depends upon what people regard as being worth voting for. Why do people vote the way they do? Broadly, two reasons. national or global interest, or self interest.

Corporates are human constructs, but they’re also devices of power within society. Given the power of their role, they ought to be subject to democratic principles. But they’re not. Instead, they’re subject only to the democracy of people who deem the corporate a device for personal wealth creation. Noting else. Shareholders. People who could live anywhere on the planet, who’ve bought shares in the corporate with a view to selling those shares at a profit at some point in the future. And Directors, who can become wealthy beyond the wildest dreams of almost everyone, and they do.

Remember that these organisations… these corporates… are societal devices that we invented to facilitate general well being. The provision of goods and services, of social well being and of employment.

But corporates are run by people who’s brief is to generate profits for shareholders. They have no other defined objective. They’re not subject to any democratic process beyond that which reflects the ambitions of shareholders. In our free market economy based society, corporates seek to grow. And they do this by swallowing up any other company that threatens it’s position in the market, or which offers it the opportunity to become more powerful. Ultimately, corporates wield such power of the distribution of wealth and jobs that they become powerful enough to influence the decisions of our governmental representatives in our democracies even though only a tiny minority of vested interests ever voted for them.. the shareholders. And their motives are not necessarily for the common good. So these organisations that wield such economic and political power, with their industry lobbies and their ability to fund political parties, with all the societal ramifications thus implied, are in effect mini republics in their own right, the electorates of which vote purely out of financial self interest.

So where are we? We live in a democracy, but it seems that an undue proportion of influence within a system that is supposed to be driven by majority sentiment, which in turn is supposed to reflect a desire for a common good is actually driven by financially driven minority vested interests.

Why do these corporates wield such power? And is it a bad thing? Let’s look at our key players again; democracy and greed.

On the democratic front, corporates appear to lose out completely. But if there are enough corporates, and everyone in society has a shareholding, then doesn’t this equate to increasing democratic control over the means of production? No actually. Firstly, the way wealth is distributed means that most people are unable to become shareholders, as they simply can’t afford it. And even if they could, corporates standardise their operations wherever they are and are rarely able to accommodate specific local needs and requirements. Just because Joe Soap happens to own a few shares in ABC Inc, doesn’t mean he’s then able to influence their decision to demolish two hundred houses to make way for a shopping mall in his community any more than he’d be able to as a non-shareholder.

And as far as greed is concerned, as long as the raison d’etre for a corporate is the generation of shareholder profits, and nothing else, then by virtue of this, other priorities will always take second place. The whole organisational edifice is structured to harvest money from everyone in society and to funnel it to shareholders, and in particular to the top of the organisation. And if it can achieve this, then it’ll be deemed to have been successful, regardless of any negative impacts it may have on other aspects of life.

In short, a corporate’s financial interests are rarely the same as the interests of the regional or national communities in the more immediate sense. Consider  a mining or oil production facility that destroys or at least damages the local natural environment, removing that form of wealth from the people who live there and making billions from it on global markets. Or a factory in India that employs people on a pittance working fifteen hour shifts to provide cheap clothes for the West at a huge markup to the cost of production. Or closer to home, a retail giant that overwhelms and kills local businesses purely by virtue of it’s enormous buying power and control it wields over suppliers, and the resulting uniformaity of choice, wherever one goes within a given country. All three examples are making money and so are deemed to be successful. But if one agrees that a corporate is supposed to exist to be of use and benefit to society, are they successful?

Consider how wealthy countries rely upon cheap labour for their quality of life. Corporate buying power in a globalised world. How cheap would plastic toys be if they were produced in America? And whilst you’re about it, consider how carbon emissions by consumer oriented countries such as constitute the West are actually externalised to other countries such as India, where the goods they use are produced. So the carbon emissions of those factories are deemed to be Indian, even though the factories only exist to supply cheap goods for the West. Things operate in this way regardless of the nature of the national governments that are in place. Corporates operate in a global economy and governments are malleable.

There’s a need for a third player to balance the greed and the lack of democracy. Wisdom. Corporates are constructs designed to facilitate progress and structure in society. So why are they run in such a way that their only prerogative is the generation of wealth for the people who run them and for shareholders who are usually unaffected in their lives by their physical activities? We need to be wiser in the way that we utilise these constructs within our society. We’ve allowed ourselves to forget why corporates exist. We’ve allowed them, as legal entities, to get out of control and to dominate us rather than serve us. We need to redefine what the corporate is and why we have them.

And in the process of doing this, we need to look again at our own individual behaviour. Just what are aesthetic and qualitative benefits worth to us? And how do we value them? Is monetary value always appropriate? And are we sufficiently driven by a desire for general well being, as much as for our own?

We need to reconsider how our corporates are run. Who they’re run by and who they’re run for. And what they’re run for. And we need to look again at the concept of shareholders. Who should own the shares in an organisation that can wield such enormous damage, or benefits, on communities locally, or on democratic nation states?

We need to consider why we have corporates. A wiser approach to the way we implement them at present would surely include consideration of who owns them, and how the real interests of those affected by their operations is reflected in the purpose of the organisation. The generation of monetary wealth is all very well, but if the end result is inequity and the exploitation of people, and the degradation and destruction of other more abstract forms of wealth such as quality of life, happiness and the aesthetic value of the natural environment, all to serve the burgeoning bank balances of a few, then these institutions that we’ve invented are failing. They need to be reinvented. They need to be formed in such a way that they nurture and support society and people and the world we live in. They need to be forces for positive improvement and progress in a sustainable way, that preserves all forms of wealth and value and benefits us all, including generations to come. They should be tools within democracies that further societal well being and progress.

Corporates are constructs that are supposed to work for us. So it’s time they functioned as more integrated components of democratic society that reflect our real needs, and they should be utilised in such a way that recognises all forms of wealth and value, not just cash.

[There are no truly good examples. Yet. But one that goes a long way in the right direction is the Mondragon Corporation. See http://en.wikipedia.org/wiki/Mondragon_Corporation for more.]
 
 

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