Most people are familiar with the destructive behavior of corporations: closing factories and exporting jobs; dumping toxic waste; devastating the environment; abandoning communities for “free-trade zones,” where environmental and social laws are lax. But few understand why corporations behave this way. We tend to see corporate behavior as merely reflecting human greed, and the problems caused by corporations as stemming directly from the makeup of the people within the corporate structure — people who are inevitably irresponsible, dishonest, overly ambitious, and so self-interested as to eschew moral, ethical, social, and environmental values.
To see the behavior of corporations as rooted in the people who work within them is far too narrow a view, and, in the end, excuses corporations from ultimate responsibility, for it puts the blame on individuals. In fact, the corporate structure is at fault; the behavior of corporations is inherent in the forms and rules by which they are compelled to operate. The corporation is not as subject to human control as most people believe it is; rather, it is a largely autonomous “entity” that behaves by a system of logic uniquely well suited to its primary functions: to make profit, to give birth to new products and technologies, to expand its reach and powers, and to spread the consumer lifestyle around the globe. If all the problems caused by corporations could be traced to the personnel involved, then the problems could be solved by changing the personnel. Unfortunately, all employees are obligated to behave in accordance with corporate form and law. If someone attempted to revolt, the corporation would simply throw that person out and replace her or him with someone who would play by the rules.
Our society’s failure to grasp the nature and inevitabilities of corporate structure has helped corporations increase their global influence, power, and freedom from accountability. More than any other institution (including government), corporations dominate our conceptions of how life should be lived. Corporate ideology, corporate priorities, corporate modes of behavior, corporate value systems, and corporate methods of organization have become synonymous with “our way of life.” Corporate culture virtually defines American life, and is to be defended at all costs, even militarily. Now that global trade agreements have removed most obstacles to corporate invasion of all the countries of the world, and with the U.S. media globally dominant, U.S. corporate culture will soon be ubiquitous.
If you switch on your radio, flip on your television, or open your newspaper, corporations speak to you through public relations and advertising. U.S. corporations spend more than $150 billion yearly on advertising — far more than is spent on all secondary education in this country. In some ways, corporate advertising is the dominant educational institution in our country — surely, in the realm of lifestyle.
According to Advertising Age, about 75 percent of commercial network television time is paid for by the hundred largest corporations in the country. Many people do not balk at this statistic. But consider that there are presently 450,000 corporations in the U.S. and some 250 million people with extremely diverse lifestyles, politics, and personal and national priorities. Yet only one hundred corporations get to decide what will appear on television. These corporations do not overtly censor programs that contain views disconsonant with their own; their control is far more subtle. When television producers think about which programs to produce, they have to subordinate other considerations to the need to sell the programs to corporate backers. An effective censorship results.
Those one hundred corporations not only dominate the commercial channels, they now also pay for more than 50 percent of public television. During the Reagan years, federal support for noncommercial television was virtually eliminated, leaving a financial void that public television has filled by appealing to corporations. In 1995, the Gingrich-led Congress threatened to remove the remainder of public support, leaving the field entirely dependent upon corporations. As corporate influence grows in “public” television, so do the visibility and length of the corporate-sponsorship tags before and after shows. Whereas public television once featured such modest messages as “This program has been brought to you through a grant by Exxon,” now we see the Exxon logo, followed by an advertising phrase or two and an audio slogan. Recently, several so-called noncommercial stations, such as PBS affiliate KQED-TV in San Francisco, have announced that they will accept commercials. This, of course, was the original intention of defunding them.
The average U.S. viewer already watches twenty-two thousand commercials every year. Twenty-two thousand times, corporations place images in our brains to suggest that there is something great about buying their products. Some commercials advertise cars, others advertise drugs, but all agree that you should buy something, and that human life is most satisfying when inundated with commodities. Between commercials there are programs, also created by corporations, that espouse values consistent with the ads.
Corporations are also the major providers of educational materials for schools in the U.S., Canada, and some other countries, too. Some of the largest corporations are now providing books, tapes, films, and computer programs free of charge to public and private schools, as a “public service” in these budget-conscious times. They get a lot of praise for these contributions. Oil and chemical companies have been particularly generous in providing materials that help explain nature to young people. The materials portray nature as a valuable resource for human use and celebrate concepts such as “managing nature” through chemicals, pesticides, and large-scale agribusiness. Thus, a generation of American youngsters is trained to regard nature in a way that coincides with corporate objectives.
This same ideological training via television is inevitably becoming the norm all over the world. It is all part of the way corporations create the ideal conditions for expansion.
I keep awaiting the day when the president of a Fortune 500 company expresses shame for a corporate transgression against the public or the environment. The statement would go something like this: “On behalf of my company, its management, and its shareholders, I wish to express our grief concerning injuries suffered by people living downstream from our factory. We are ashamed to admit that, over the years, our poisonous wastes have found their way into the river, putting the community in peril. We will do anything to relieve the suffering we have caused. We are also concerned that safe storage for such potent chemicals now seems impossible, and so henceforth we will use our facilities only for safer forms of manufacturing. Under no circumstances will we give thought to abandoning this community or its workers.”
No such statements are made, for several reasons. No manager of a publicly held company could ever place community welfare above the corporation’s interest. An individual executive might personally wish to do so, but such a gesture could subject the company to seriously damaging lawsuits by victims, and even open up management to being sued by the shareholders. Corporate law holds that managers of publicly held companies must act primarily in the economic interests of shareholders. So managers are actually legally obligated to ignore community-welfare issues (such as worker health and satisfaction and environmental concerns) if those issues interfere with profitability. And corporate managers must deny that corporate acts have any negative impact, especially if an admission might translate into costly damage suits that would reduce profits.
As a result, we have witnessed countless cases in which companies deny any responsibility for acts that caused death, injury, or illness. We have heard cigarette-company executives lie, with great transparency, about their products’ harmful effects. We have heard the same from manufacturers of pesticides, chemicals, asbestos materials, and birth-control technologies. In instances such as these, withholding information means that people — perhaps tens of thousands of them — will become sick. Some will die. In another context, murder charges would be in order.
That murder charges are not levied against corporations, and that corporations do not express shame at their own actions, is a direct result of the peculiar nature of corporations — their split personality, if you will. Though human beings work inside corporations, a corporation itself is not a person (except in the legal sense) and does not have feelings. A corporation is not even a thing. It may have offices or a factory where it manufactures products, but a corporation does not have any physical existence or form — no corporality. So when conditions in a community or country become unfavorable — safety standards are too rigid, or workers are not submissive enough — a corporation can dematerialize and rematerialize in another town or country. This tendency is dramatically accelerated under the new free-trade agreements.
If a corporation is not a person or thing, then what is it? Basically, it’s a concept that is given a name and a legal existence on paper. Though there is no such creature, our laws recognize the corporation as an entity. So does the population. We think of corporations as having concrete form, but they truly exist only on paper and in our minds.
Even more curious is the way our laws give this nonexistent entity a great many rights similar to those given human beings. The law calls corporations “fictitious persons,” with the right to buy and sell property or to sue in court for injuries. And corporate “speech” — advertising and public relations — is protected under the First Amendment. This right has been extended to corporations despite the fact that, when the Bill of Rights was written in 1792, corporations as we now know them did not exist. (The First Amendment was originally intended to protect personal speech in a century when the media consisted only of single-page news sheets, handbills, and books. The net result of expanding First Amendment protection to include corporate speech is that $150 billion in advertising from a relative handful of sources gets to dominate public perception, free from nearly all government attempts at regulation.)
Though corporations enjoy many “human” rights, they are not required to abide by human responsibilities. Even in cases of negligence causing death or injury, the state cannot jail or execute the corporation. In rare instances, individuals within a corporation can be prosecuted if they perpetrate acts that they know will cause injury. And a corporation may be fined or ordered to alter its practices, but its structure is never altered — its “life” is never threatened. Unlike human beings, corporations do not have to die. A corporation usually outlives the human beings who are a part of it, even those who own it. A corporation actually has the potential to be immortal.
Lacking the sort of physical, organic reality that characterizes human beings, this entity, this concept, this collection of paperwork called a corporation is not capable of such feelings as shame or remorse. Instead, corporations behave according to their own unique system of standards, rules, forms, and objectives, enshrined in state charters and confirmed through our legal structures.
The most basic rule of corporate behavior is that it must show a profit over time. Among publicly held companies especially, there is a second basic rule: it must expand and grow, since growth is the standard by which the stock market judges a company. All other considerations are secondary, including the welfare of the community, the happiness of workers, the health of the planet, and even the general prosperity.
So human beings within the corporate structure are prevented from acting on their personal morals and feelings. Like the assembly-line workers who must operate at the speed of the machine, corporate employees are strapped onto the apparatus of the corporation and forced to operate by its rules.
In this sense, a corporation is essentially a machine, a technological structure, an organization that follows its own principles and its own morality. In such a structure, human morality is anomalous. Because of this double standard — one for real human beings and another for fictitious persons called corporations — we sometimes see bizarre behavior from executives who presumably know what is right, yet behave in a contrary fashion.
For example, in 1986, Union Carbide’s chemical plant in Bhopal, India, accidentally released methyl isocyanate into the air, injuring some two hundred thousand people and killing more than six thousand. Soon after the accident, the chairman of the board of Union Carbide, Warren M. Anderson, was so upset by what had happened that he informed the media he would spend the rest of his life attempting to correct the damage his company had caused and to make amends. Only one year later, however, Anderson was quoted in Business Week as saying that he had “overreacted” and was now prepared to lead the company in its legal fight against paying damages and reparations. What happened? Very simply, Anderson first reacted as a human being, then later realized (and perhaps was pressured to realize) that this reaction was inappropriate for a chairman of the board of a company whose obligations are not to the poor victims of Bhopal but to its shareholders — that is, to its bottom line. If Anderson had persisted in expressing his personal feelings or acknowledging the company’s culpability, he certainly would have been fired.
Clearly, human beings within corporations are seriously constrained from acting on their personal sense of right and wrong. And so far I have mentioned only two of the rules that serve to constrain them: the profit imperative and the need for growth. The following list is an attempt to articulate all of the obligatory rules by which corporations operate. Taken together, they help reveal why corporations behave as they do, and how they have come to dominate our environment and the human beings within it.
1. The Profit Imperative
This is the ultimate consideration in corporate decision making. It takes precedence over community well-being, worker health, public health, peace, environmental preservation, and national security. If there is profit to be made, corporations will even find ways of trading with national “enemies” — Libya, Iran, Cuba — though public policy may abhor it.
2. The Growth Imperative
Corporations live or die by whether they can sustain growth. Growth determines relationships to investors, the stock market, and banks, and affects public perception. The growth imperative also fuels the corporate desire to find and develop scarce resources in faraway parts of the world. This effect is now clearly visible, as the world’s few remaining pristine places are sacrificed to corporate production. The peoples who inhabit these resource-rich regions are pressured to give up their traditional ways and climb onto the production-consumption wheel. Corporate planners consciously attempt to “bring less-developed societies into the modern world” in order to create both infrastructures for development and a cadre of new workers and consumers. Corporations claim they do this for altruistic reasons — to raise the living standard — but corporations have no altruism.
Theoretically, privately held corporations — those owned by individuals or families — do not have any intrinsic imperative to expand. In practice, however, their behavior is usually the same. There are economies of scale at work, and usually increased profits to be had from growth. Privately held giants such as Bechtel Corporation have shown no propensity to moderate growth; in fact, they’ve shown quite the opposite. And even among smaller privately held companies — “green” companies with “enlightened” management — resistance to growth is difficult. Banks will avoid funding companies that limit their growth. And even internally, middle managers and staff tend to see their opportunities for advancement diminished.
Corporate culture abhors limiting goals and profits. The growth imperative and the profit imperative are the most fundamental corporate drives; together, they represent the corporation’s instinct to live.
3. Competition and Aggression
On the one hand, corporations require a high degree of cooperation within management. On the other hand, they place managers in fierce competition with each other. Anyone interested in a corporate career must hone his or her ability to seize the moment and gain an edge, whether over another company or over a colleague within the company. As an employee, you are expected to be a part of the “team,” aggressively pushing to win against the other corporations — but you also must be ready to climb over your teammates.
4. Amorality
Not being human, corporations do not have morals or altruistic goals, so decisions that may be antithetical to community needs or environmental health are made without misgivings. In fact, corporate executives tend to praise managers who are nonemotional and can make “objective” decisions.
Corporations, however, seek to hide their amorality and give the appearance of being altruistic. Lately, U.S. industries have made a concerted effort to seem concerned with contemporary social issues such as environmental cleanups, community arts, and drug-rehabilitation programs. Corporations try to exhibit social responsibility precisely because they are innately irresponsible. They have little interest in community goals except the ones that serve their purposes.
For example, corporations have taken to advertising how they work to clean the environment. A company that installs offshore oil rigs will run ads that show fish thriving under the rigs. Logging companies known for clear-cutting will run millions of dollars’ worth of ads about their tree farms, as if they were interested in renewable resources.
In fact, it is a fair rule of thumb that corporations will tend to advertise the very qualities they do not have, in order to allay a negative public perception. When corporations say, “We care,” it is almost always to cover up the fact that they do not. How could they?
Corporations do not have feelings or morals. All their acts are in service to profit.
5. Hierarchy
Corporate law requires that employees be organized into classes of superiors and subordinates within a centralized pyramidal structure: chairman, directors, CEO, vice-presidents, division managers, and so on. The efficiency of this hierarchy — which also characterizes the military, the government, and most other institutions in our society — is rarely questioned. (Lately, there has been some focus on new Japanese-style “flat” structures, but these are flat only at levels below top management, which still sets overall corporate policy.)
The pervasiveness of these hierarchical forms makes it seem natural that we have all been placed within a pecking order. Some jobs are better than others; some lifestyles are better than others; some neighborhoods, some races, some kinds of knowledge. Men over women. Westerners over non-Westerners. Humans over nature. Most Americans barely realize that effective nonhierarchical modes of organization exist on the planet and have been successful for millenniums.
6. Quantification, Linearity, and Segmentation
Corporations require that subjective information be translated into objective form — that is, into numbers. This excludes from the decision-making process all values that cannot be quantified. The spiritual aspects of forests, for example, cannot be quantified and so do not enter into corporate equations. Forests are evaluated as “board feet.” Production byproducts that pose a danger to public health or welfare — pollution, toxic waste, carcinogens — are translated into value-free objective concepts such as “cost-benefit ratio” and “trade-off.” Auto manufacturers deciding on the safety level of their products calculate the number of probable accidents and deaths at each possible level. This number is then compared with the cost of insurance payments, lawsuits from dead drivers’ families, and public-relations expenditures, and a balance is sought.
The drive toward objectification enters every aspect of corporate activity. On the production end, for example, great effort is made, through time-and-motion studies, to measure each fragment of every task performed by a worker. The goal is to segment tasks to the point where they can eventually be automated, and workers eliminated altogether. Where the task cannot be automated, it is reduced to its simplest repetitive form. As a result, workers become subject to intense comparisons with other workers. If they survive on the job, their repetitive tasks leave them horribly bored and without a sense of participating in corporate goals. They feel like mere cogs in the machine, and they are.
7. Dehumanization
Just as the environment and the community are objectified by corporations, so is the employee. Corporations make a conscious effort to depersonalize worker relations. The recent introduction of computer-surveillance technology, which measures the performance of office workers, has made the task of dehumanization simpler and more thorough. Now every keystroke of every worker can be counted by a central computer that compares each individual’s performance against others and against corporate standards. Those found to be too slow or inconsistent, or who take too many breaks, are disciplined or dismissed.
Though not subject to quite the same indignities, managers nonetheless must practice a style of decision making that “does not let feelings get in the way.” This applies as much to firing employees as it does to dealing with the consequences of corporate behavior in the environment or the community.
8. Exploitation
All corporate profit is measured by a simple formula: Profit equals the difference between the amount paid to an employee and the economic value of the employee’s output, whether that employee mines or farms the raw materials used in production, or processes those materials into a product. Karl Marx was right: A worker is not compensated for the full value of his or her labor. The owners of capital skim off part of the value as profit. Profit is based on underpayment.
Capitalists argue that this is a fair deal, since both factory workers and the people who mine or farm the resources (usually in Third World countries) get paid something. But the arrangement is inherently unbalanced. While the worker earns a wage, the owner of the capital — the corporation or the bank — receives the benefit of the worker’s labor plus the surplus profit the worker produces, which is then reinvested to produce yet more surplus. This even applies to the rare cases where workers are very highly paid, such as with professional athletes and entertainers. In those cases, the corporations pay high wages because the workers will generate enormous income for the corporations. But the formula remains intact: corporations pay less than actual value for work and resources.
9. Ephemerality and Mobility
As we have seen, corporations are legal creations that exist only on paper. They do not die natural deaths; they outlive the people who work in them. And, especially under the new rules of global trade, they have no commitment to locality, employees, or neighbors. This makes the modern global corporation entirely different from small businesses that survive by cultivating relationships with their neighbors and customers. Having no morality, no commitment to place, and no physical nature (a factory, while a physical entity, is not the corporation), a corporation can relocate all of its operations to another place at the first sign of inconvenience: troublesome employees, high taxes, restrictive environmental laws. Community engagement is antithetical to corporate behavior.
10. Opposition to Nature
Though some individuals who work for corporations may personally love nature, corporations themselves are intrinsically committed to intervening in and altering the natural world. For corporations engaged in commodity manufacturing, profit comes from transforming raw materials into salable forms. Metals from the ground are converted into cars. Trees are converted into houses, furniture, and paper products. Oil is converted into energy. In all such activity, a piece of nature is taken from where it belongs and processed into a new form. In rare instances, natural resources can be renewed — such as trees being replanted — but in such cases they do not return to their original forms. So all manufacturing activity depends upon intervention in and reorganization of nature. After natural resources are used up in one part of the globe, the corporation moves on to another part.
This transformation of nature occurs in all societies where manufacturing takes place. But in corporate societies, and especially in a global economy, the process is accelerated because corporations must grow. Extracting resources from nature everywhere on earth and reprocessing them at an ever-quickening pace is necessary to corporate existence. Meanwhile, the consumption end of the cycle is also accelerated — corporations have an intrinsic interest in convincing people that commodities bring satisfaction. Modes of fulfillment based on self-sufficiency, inner satisfaction, and contentment are subversive to corporate goals. The net result is the corporate ravaging of nature.
11. Homogenization
Corporate rhetoric claims that a society based on commodities delivers greater choice and diversity than other societies. Choice in this context means choice in the marketplace: many brands to choose from and diverse features on otherwise identical products. Actually, corporations have a stake in all of us living our lives in a similar manner, achieving our pleasures from the things that we buy. While it is true that different corporations seek different segments of the market — elderly people, say, or organic-food buyers — all corporations share an identical economic, cultural, and social vision, and seek to broaden the acceptance of that vision.
Lifestyles and economic systems that emphasize sharing commodities and labor, discourage commodity accumulation, or celebrate nonmaterial values are not good for business. People living collectively, for example, sharing expensive hard goods such as washing machines, cars, and appliances — or, worse, getting along without them — is outrageous to corporate society. The nuclear-family model is far better for corporations, because each family lives alone in a single-family home and has all the same machines as every other family on the block. Recently, the singles phenomenon has proved even more productive than the nuclear family, since each person duplicates the consumption of every other person.
Native societies, which have an utterly nonmaterial relationship to life, the planet, and the spirit, are regarded as inferior, unenlightened, and backward. We are told they envy the choices we have. To the degree native societies continue to exist, they represent a threat to the homogenization of worldwide markets and culture. Corporate society works hard to retrain such people in attitudes and values conducive to corporate goals. In the nonindustrial parts of the world, where corporations are recent arrivals, the ideological retraining process is just getting underway. Satellite communications technology, which brings Western television and advertising, speeds up the pace of development. Most of this activity is funded by the World Bank and the International Monetary Fund, along with agencies such as U.S. AID, the Inter-American Bank, and the Asian-American Bank, all of which serve multinational corporate enterprise.
As for the ultimate goal, in the book Trilateralism, editor Holly Sklar quotes the president of Nabisco Corporation: “One world of homogeneous consumption . . . [I am] looking forward to the day when Arabs and Americans, Latins and Scandinavians will be munching Ritz crackers as enthusiastically as they already drink Coke or brush their teeth with Colgate.”
The most important aspect of these rules is the degree to which they are inherent in corporate structure. Corporations are innately bold, aggressive, and competitive. Though they claim to operate by moral principles, they are structurally amoral. It is inevitable that they will dehumanize the larger society as well. They are disloyal to workers, including their own managers. If community goals conflict with corporate goals, then corporations are similarly disloyal to communities, even those they have been a part of for many years. It is essential to corporate survival that they seek to drive all consciousness into one-dimensional channels. They must attempt to dominate alternative cultures and effectively mold the world population into a form more to their liking. Corporations do not care about nations; they live beyond national boundaries. They are intrinsically committed to destroying nature. And they have an inexorable, unabatable, voracious need to grow and expand. In dominating other cultures, in digging up the earth, corporations blindly follow built-in codes, as if such behavior were part of their genetic programming.
Articulating these characteristics gives us a picture we should have had a long time ago. Now that we see the inherent nature of corporations, we must abandon the assumption that the corporate structure is a neutral form. Given the rules of corporate behavior, to ask corporate executives to behave in a morally defensible manner is like asking an army to adopt pacifism. Corporations and the people within them are not subject to moral behavior. They are following a system of logic and rules that leads them inexorably toward dominating behavior. Form is content.
“The Rules of Corporate Behavior” is excerpted from the anthology The Case against the Global Economy (Sierra Club Books). © 1996 by Jerry Mander and Edward Goldsmith. It appears here by permission of the author.
— Ed.
