The Corporation by Joel Bakan - Movie Review Example

The Corporation” is a work by Joel Bakan which deals with the history of corporations and the key features it exhibit today. In the book the has discussed about the procedure of business conducted by the firms of the recent era and the impacts it has on the general people. The topic of corporate social responsibility has also been covered in the book and the work has been primarily addressed to the public at large making them aware of the malpractices of the corporations as well as the provoking attitude of the firms (Bakan 2005). Bakan in his book states the account of the organizations belonging to the 18th century and draws a comparison with the current corporate practices. During the past, the corporate structure was fairly exceptional and facilitated exclusively the methods for carrying out specific big projects for the interest of the public. Today the firms tend to govern our societies and economies. Greater emphasis can be found on the main attributes of management control and restricted liability, and on the reasonably modern notion that the organizations have a separate legal entity (Davies 2010 p.55), who might even have the benefit of several human rights. The writer puts further stress on the fact that financial controversies related to firms are not a new thing. Such scandals have always formed the part and parcel of the organizational framework of conducting business. The transformation in the early parts of 20th century, gave rise to the concept of corporate social responsibility, which is showcased as a response by the business organizations to the general public’s common threat about the power and size that corporations started to build up, and to the associated requirement of a stricter administrative regulation on them. The concept of the fiscal idea of externalities has been also mentioned in the book which argues that the organization’s propensity to outsource costs is at the source of most of the world’s environmental and social issues. Interesting instances has been presented in the text regarding the cost-benefit study within the car business where the passengers’ protection is considered to be the main concern. Unlawfulness in the business activity is universal, and it takes place from the- unethical character of the corporation And from the breakdown of the regulatory structure, due to laidback regulations and futile enforcement. The corporations today focus mainly on their own interest neglecting the harmful and long-lasting effect on the society at large. There were many commercials that were created for the promotion of a product but ended up in causing injury to the humanitarian interests. The complaints lodged regarding the commercials amounted to a total number of 25,214 complaints in 2010 among which 96% were lodged by the associates of the public forum and 4% belonged to the industry. The controversies were raised mainly focusing on the 13,074 adverts that encouraged sexually explicit ads and animal cruelty to a large extent (BBC NEWS 2011). Privatization and outsourcing seems to be profitable from the corporation’s perspective but as per the findings by the analysts, business outsourcing can no way provide an appropriate solution for the hiking costs in the market. Some organization doesn’t have the evaluation techniques in place to verify in advance that the outsourcing process will cut costs. Today outsourcing has become a trend than a necessity. Issues from inadequately envisaged contracts can generate cost increments that exceed the charges of domestic services. Also if there’s a substandard contract error, the government is susceptible to profiteering and corruption. The privatization of the public corporations can corrode transparency and accountability, and compel the governments into deeper debt traps. Susan Duerksen, the director of communications for “In the Public Interest”, which is a venture that evaluates the pros and cons of contracting and privatization, states that “Governments at all levels are just desperate to balance their budgets, and they’re grasping at privatization as a panacea.” (NICHOLS 2010) “But there’s evidence that it often is a very bad deal with hidden costs and consequences when you turn over public service to a for-profit company.” Bakan speaks about story of Anita Roddick, who established the Body Shop. Roddick always kept aside her personal values from her business, and that is what made her business to be different; that it was a benevolent, gentler corporation. Roddick was excessively successful using this business model. But in 1982 a preliminary public offering of Body Shop stock was proposed on the London Stock Exchange. The business needed the money. After few more years of operation the company began to have troubles, in the 1990′s, and came under pressure from stockholders to amend its business model. External managers were appointed as the top hierarchy of the company and it was modernized to make it more competent. Roddick worked hard in response of the changes by working hard to go with the companies advanced values and programs. Roddick wanted the Body Shop to take a public position against the meeting, but the company leadership completely denied it. “Roddick then realized that her once maverick, eccentric, unusual Body Shop had become all too usual” Bakan stated, that she now sees the initial stock offering as a “pact with the devil”.( Schneller., 2005). The fundamental moral to this story is how no matter how altruistic the goals of the executive they must always ultimately surrender to the will of the corporation goals of rising shareholder value and the bottom line. It is not that all corporations are bad, for some it can be seen that their social responsibility is straight and honest, most often this is the case when social duty also come as good for the bottom line. An example is Toyota and their front heading of the drive to get more hybrid automobiles on the road, and success in manufacturing the technology to make that in real. Toyota serves to gain profit a bit higher from its usual revenue by selling hybrid automobiles and licensing the engineering techniques to other automakers, but spearheading such a new technology (just for the market position) is a great peril for a company, investing a huge amount of capital needed to support those targets. In 1916 the US Government showed a stronger support on the shaping the free and independent corporate body that were rising. Though Henry ford was very fortunate making hybrid vehicles, but on the other side he was a man of conscience, who chose to make a boundary of his profits and share the wealth with the stakeholders. He canceled the shareholders’ dividend at one point, by reducing prices to redirect the fund to customers. But one of the Ford’s shareholders objected in this issue. John Dodge planned to start his own business with the dividend earned from Ford stocks, and he took judicial help in order to get back his moment for the shareholder. Corporations were from that point forward, legally required to act in the best benefit of the profits of shareholders, and not for the good which means welfare for all. Likewise, in 1916, corporate investment on behalf of the atmosphere, human health and welfare, or human rights, was considered illegal in the US if it was not in the shareholders’ best interests financially. Since the days of and Henry Ford John Dodge, corporations have been legally compelled to be motivated exclusively by shareholder earnings. Bakan enlightened how the South Sea Company sold stock for a shady trading intention in nations where trading propositions are not granted, with company directors who had little knowledge about the countries in which they proposed to trade and it was obvious that the South Sea Company distorted. Profits were lost, lives were ruined, one of the company ’shareholder shot a director of that company to death, a devastating mishap vibrated the whole country on that that time. As an outcome, Parliament under a lot of compulsion passed the Bubble Act in 1720, the summary of the bill was banning it as a criminal offence if there is any transferable stock without legal authority. But this Bubble Act was revoked when a number of companies were finding it difficult to raise fund for the future development or production of a certain product. In 1825, the act was withdrawn by the government and the age of the corporate capitalism came into light. US states courted, and soon many nations competed, to attract big business. Each state or nation wanted the invasion of jobs and capital ventures which go with corporate growth. As a result of worldwide business competition, the General conformity on Tariffs and Trade was introduced in 1948 followed by the World Trade Organization was established in 1993. Through these trade organizations and agreements, business policies were relaxed across the borders to draw and accelerate international business activity. Corporations, which held no accountability for the general welfare but only for shareholders, rapidly carried their ignorance for public safety and welfare into the global field. Bakan came out with lot more examples. General Motors noticed that the best option to locate the gas tank to reduce the hazard of a fire in the event of a crash. He claims that this giant car company then calculated the price of compensate the victims and the cost of improving the plan, and a contrast of the two figures demonstrated that it was much more inexpensive for the shareholders to pay off the families of the deceased in litigation than to protect human life by positioning the gas tanks in a protected place. Bakan also explains that General Electric frequently pays compensations and pays off the clean-ups when caught challenging ecological laws, rather than complying with environmental and civic health necessities.  The book shows lists a lot more than 40 claimed major legal violation by General Electric in the last 10 years of the 20th Century. This list of suspected contravention, indicating the significance of corporate moral deficit, includes heavy acts such as: repeatedly and harshly defiling land and waterways; responsibility for airline catastrophes and unlawful sales of weapons abroad. He asserts that for corporations like General Motors and General Electric, “fulfillment with law, alike everything else is a matter of cost and benefits.” It is often more lucrative for shareholders if corporations endangers human life, appoint in fraud, and pay fines and agreements if they are caught, than it is to follow with laws. In fact, Pfizer makes a huge profit selling drugs that avoid baldness and improves male sexuality than it sells drugs that treat critical illnesses like malaria or tuberculosis; these fatal diseases became the cause of death in the developing world. This big amount of financial reality is enough to violate social responsibilities. Bakan blamed corporations of being psychopathic, where they are rarely self interested and unable to feel authentic concern for others in any circumstances. The corporation, like the psychopathic personality it is similar to, is planned to utilize others for profit.” In reference of Bakan, corporations have a ‘built-in compulsion’ to convey costs, and any concern for the environment or human safety quickly switches when big businesses faces the bottom line that is profits. The corporations unrestrained self-interest oppresses individuals, the public, and even the stakeholders and can be the cause of corporations to self-destruct, as per the current Wall Street scandals reveal. While corporate social responsibility in some examples does much good, it is often only a symbolic gesture, serving to facade the corporations true nature. Governments have renounced much of their management over the corporation, regardless of its flawed figure, by freeing it from legal constraints through non interference and by yielding it ever superior authority over society through its privatization. Even though the structural failings found in the corporation, Bakan trusts change is possible and draws a far-reaching program of concrete, realistic reforms through legal regulation and self-governing control. In The book, Bakan paints miserable scenery of the far-reaching ill-effects of corporate authority, including damage of the environment. He looks the capitalist nations as directed by short-sighted corporations acting in the financial benefit of the few. But we, as consumers, have choices. We are having governments that are responsible to the people, not to corporations. In the current reign of corporate power, regulations have been given a disrepute but regulations “are designed to force corporations to pay for – costs they would externalize onto society and the environment otherwise. Those regulations need to be reelected and enforced. In his notes, Corporations were created by government, and given authorities by government. Independent governments must choose to control these profit-making apparatus for the advantage of all, thereby avoiding corporations from utilizing the masses and polluting the environment for the short span profit of shareholders. In democratic nations, only people can make the change. At the end of the book First is develop the regulatory system; give government handful of authorities in order to control the corporation to defend citizens, next is reinforce political classlessness; elections process should be reinforced to the public and corporate management of political heads should be restricted, followed by creating a vigorous public globe, few institutions should be keep aloof from the latent vices of the capitalist system, and lastly, challenge international with the touch of liberal political views with economic growth; nations should work together to change the theories of international institutions such as the WTO and World Bank away from market fanatics. But all the theories the book has said is not every time believable. Bakan uses a number of attractive and affecting stories to project his case. The topic is much more important in the rise of somewhat present corporate scandals, and the alarming power of the corporation reaching worldwide. References Schneller. (2005). Review of The Corporation, by Joel Bakan. Retrieved from : http://blogcritics.org/review-of-the-corporation-by-joel/ . Bakan ,J. (No Date). THE CORPORATION: THE PATHOLOGICAL PURSUIT OF POWER. Retrieved from: http://www.thecorporation.com/?page_id=47 . Sheppard.S.(2012). Book Review (sort of): The Corporation by Joel Bakan.Retrieved from: http://labs.blogs.com/its_alive_in_the_lab/2012/05/book-review-sort-of-the-corporation-by-joel-bakan.html . James Randi Education Foundation.(2007).Book review: The Corporation, by Joel Bakan. Retrieved from : http://forums.randi.org/showthread.php?t=95986 . Roumeliotis, M. (2010). Joel Bakan’s, The Corporation – The Pathological Pursuit of Profit and Power. Free Press - Constable & Robinson, 2004, 2005. Retrieved from: http://www.u-picardie.fr/eastwest/fichiers/art90.pdf . NICHOLS, R. (2010). The Pros and Cons of Privatizing Government Functions. Retrieved from http://www.governing.com/topics/mgmt/pros-cons-privatizing-government-functions.html Davies, P. L. ( 2010). Introduction to Company Law. New York: Oxford University Press. BBC NEWS. (2011). What makes ads controversial? Retrieved from http://www.bbc.co.uk/news/magazine-13372751 Bakan, Joel. (2005). The Corporation: The Pathological Pursuit of Profit and Power. New York: Free Press. Read More