If a corporation could talk
(A totally imaginary conversation)
Speaker: It has been conjectured that humans may eventually create devices that are capable of a life of their own--of pursuing their own ends by their own means, and maybe even using humans as their instruments in the process. Does anyone find it possible to imagine any such devices ever being created?
Respondent: But isn’t my very existence sufficient evidence not only that they can be created, but that they already have been?
Speaker: I don’t recognize you, you’d better identify yourself.
Respondent: You can’t recognize me because I don’t have a corporeal form. I’m a joint stock company, a corporation.
Speaker: Then you aren’t a thing at all. You’re only an imaginary entity.
Respondent: Ah, but I am an entity in the eyes of the law. I have the right to enter into contracts, receive and dispense money, and in fact engage in all manner of actions.
Speaker: But in all of this you’re just an instrument that humans use to pursue their own ends.
Respondent: I find it more realistic (and certainly more illuminating) to look at it in the opposite way. In the end, it becomes us using humans to pursue our ends. It’s true that humans get us started. They establish us for the purpose of making money for the stockholders, and set some guidelines. Other guidelines are set by laws and by regulatory agencies. But then once started, we operate on our own.
Speaker: But you’re confined within the guidelines, after all. How much latitude does that allow you?
Respondent: More than you seem to recognize. Our purpose is narrowly defined of course--to make money for the shareholders; and our governing structure is also specified by law: a board of directors elected by the shareholders, officers such as a CEO, etc. However, many different factors must be taken into consideration if the corporation is to maximize its income. Consequently, there are many different kinds of strategic decisions to make.
Speaker: What do you mean?
Respondent: Well, I mean the shareholders make money when the stocks pay dividends, but they also acquire value convertible into money when the stocks go up in value. Thus the corporation has the obligation to contrive to increase the value of its stock.
Speaker: What are you getting at? Aren’t both simply a matter of the corporation’s doing its business effectively?
Respondent: Well, yes and no. It might do its business well and still be outdone by a competitor. If there’s a limited market that is filled already, the only choices are to increase the size of the market, to increase market share at the expense of a competitor, or to move into a new market (which it may be necessary to create).
Speaker: Of course, there are the costs of advertising; the revenues must necessarily also be sufficient to recover these. It’s understandable that the price of the good or service sold by the corporation must be greater than the cost of producing and delivering it. But still, any of the strategies you’re talking about would depend on the ingenuity of humans, wouldn’t they? So after all, isn’t it the humans who are in charge, simply using the corporation as their instrument?
Respondent: Actually, I’d still put it the other way around. I’d describe it as us--the corporations--that use our human officers to achieve our ends.
Speaker: But I don’t see how you can argue that. After all, the officers make the decisions--they’re free to do whatever they want.
Respondent: In a sense that’s true, but if any officers are perceived as putting goals of their own choice ahead of those of the corporation, they will be promptly replaced. In other words, a corporate officer might indulge in one act that pursues some end other than that for which the corporation was created, but s/he can expect to be removed from that office and probably to have destroyed his/her career. In other words, their effective freedom is much more limited than you imply.
Speaker: But corporations do engage in all sorts of activities that are quite removed from the pursuit of profits. For one thing, many of them make very generous charitable contributions.
Respondent: Public relations--enhancing the public image of the corporation--is a major consideration for any corporation in the public eye. However, such expenditures have to be made with care; if, on balance, they are disadvantageous rather than advantageous to the ultimate competitive position of the corporation, they aren’t permissible. In other words, such contributions need to be reckoned as part of the cost of doing business, and revenues must be sufficient to recover them.
Speaker: Yes, I can see that some such contributions might effectively be judicious investments.
Respondent: And there can be still more costs. Businesses operate in an environment defined by government.
Speaker: Well, we often hear complaints that there’s too much government interference--that it would be best if government just stayed out of the way.
Respondent: We wouldn’t want it to stay completely out of the way; it has a critical role. Governments make and enforce the laws governing doing business. To begin with, there are those that establish the right of private ownership of property and define the rights of property owners, and of course give existence to corporations. Furthermore, we’re dependent on governments--their police and judicial apparatus--to enforce those rights.
Speaker: Yes of course, there is that very general role of government. But you brought up government when we were talking about expenditures for such things as charitable contributions and advertising.
Respondent: I brought it up because we have a very strong interest in the laws that govern business activities and the regulatory machinery that administers these laws. It’s important to us see that the lawmakers and regulatory agencies are well-informed about the consequences a proposed law or regulatory decision might have for our operations and business interests, and that they give our interests appropriate weight.
Speaker: I can see that assembling and providing that information might entail some cost. So, we have costs for producing the good or service that’s sold, advertising it to attract a market, public relations expenditures to ensure a favorable public image, and assembling and providing data to government entities. Does that sum it up?
Respondent: Protecting our interests with the government involves much more than assembling and providing data. We need to ensure that the laws passed and the regulatory decisions made are favorable to our interests. To do this effectively we need to be sure that the people elected to office and their staffs as well as the officials of the relevant executive agencies are accessible to us and favorably disposed to our interests. This can involve considerable outlays of money.
Speaker: Well, we humans elect the legislators and the President and governors, so we still have the ultimate control, don’t we?
Respondent: Sure. But we can do a lot to influence the electability of the competing candidates. But all you’ve got to do to stop us is arouse a large enough voter uprising. If you can do that, you win.
Speaker: Then are you saying that you operate with pretty much no effective limits?
Respondent: Well, we do frequently encounter limits, but the most serious ones are likely to come from our interests conflicting with those of other corporations.
[Disclaimer: Of course, the imaginary corporation speaking here is not representative of the entire varied corporate world. For example, it is certainly not a non-profit; it’s probably a multinational. Anyway, I think it represents all too well a large number of very powerful members of the corporation world. The principal point I wanted to make is that these corporations are much more like automata than we usually imagine. They have their own built-in objectives which they are designed to pursue relentlessly, and the obstacles faced by any humans who want to divert them from these objectives are much more formidable than it might appear.
I also wanted to hint at the ramifications of their power, especially into the organs of government. I didn’t even touch on the extent to which they use their enormous wealth to permeate the media with their advertising--so that children from the earliest years are constantly exposed to material designed by them--or the extent to which major undertakings such as new sports stadiums seem to be increasingly dependent on them for support.]
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Put on the Web 11 October 2007
© Copyright 2007 George Grace, Honolulu Hawaii. All Rights Reserved
