The Hindu Business Line : A psychopathic animal is out of the cage

HOWEVER much you clothe a monster with the finest frills, it would still show. So too with one of the symbols of capitalism. Joel Bakan's The Corporation, published by Free Press (www.simonsays.com) argues that what law created as an entity with perpetual succession is now but a Frankenstein — "a psychopathic personality whose destructive behaviour, if left unchecked, leads to scandal and ruin." That could make auditors breathe easier, because the blame shifts to a different quarter.

When alive and kicking, the corporation pursues its mandate of economic self-interest, unmindful of harm that is caused in its trail, doing only lip service to social responsibility. Deregulation and privatisation free these entities from government constraints. And when they self-destruct, they sink along with investors' money.

The intro lays out the purpose of the book: "To explore the corporation, as an institution." The author, however, avoids `unduly academic and technical jargon' because his object is to address `the lay reader and the professional'.

A dangerous message that one would encounter in chapter 1 is this: "Corporations now govern society, perhaps more than governments themselves do." And that is making the helmsmen work overtime to present their animals as "human, benevolent, and socially responsible." Branding, more than being a marketing mantra, tries to create a personality for the company that people look at as "a dangerous mix of power and unaccountability".

Bakan points out that pious social responsibility themes now vie with sex for top billing in corporate advertising, to show "they are part of the solution to world ills, not the cause". But Milton Friedman would disagree: "New moralism in business is in fact immoral." For him, the one social responsibility for corporate executives is "to make as much money as possible for their shareholders" by treating social and environmental values as means to maximise shareholder wealth. "It's like `putting a good-looking girl in front of an automobile to sell an automobile.'"

Also, that explains why "Pfizer and its shareholders make more money from drugs that treat baldness and impotence than they would from drugs to treat diseases, such as malaria and tuberculosis, that are leading causes of death in the developing world."

What are the qualities you find in a corporation to signal its psychopathic nature? It is `irresponsible' because goals are pursued even if others are put to risk. It tries to `manipulate everything, including public opinion.' It is `grandiose', insisting to be number one. It lacks `empathy' and refuses `to accept responsibility' for actions, is `unable to feel remorse' and relates to others `superficially'.

How much does a death cost? If the question makes you squirm, you can check how General Motors computed cost of `fuel-fed fatality' as $2.40 per automobile. "(500 fatalities x $200,000/fatality) / 41,000,000 automobiles = $2.40." As the arguments in the Patricia Anderson case showed, GM saved $6.19 per Chevrolet Malibu "if it allowed people to die in fuel-fed fires rather than alter the design of vehicles to avoid such fires." In what could question the ongoing disinvestment process, the author observes privatisation is "flawed for its reliance on for-profit corporations to deliver the public good." The inconvenient question is: What kind of society do we create "when we put corporations in charge of the very sinews of our society"?

The author offers `general prescriptions' to control the corporation, such as to improve the regulatory system, strengthen political democracy and so on. "Most important, we must remember the most subversive truth of all: that corporations are our creations."

That is an optimistic note to conclude; and for accountants there are ample thoughts in the book to mull over in conferences on corporate governance.

BooksOfAccount@thehindu.co.in

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