Corporate Power in Joel Bakans The Corporation - Book Report/Review Example

Book Review – Joel Bakan’s “The Corporation” Book Review – Joel Bakan’s “The Corporation” Abstract Corporations around the world are being incorporated to maximise the wealth to their shareholders and to safeguard the interest of the various stakeholders. Thus, profit maximisation is the sole and core aim of the corporations functioning all around the world. In accomplishing their core objectives, they actively engaged in damaging the environment, indulging in trafficking of child laborers, exploiting the child laborers from the third-world countries, lobbying with the politicians to circumvent and bend the laws and regulations in their favour. Joel Bakan’s famous book “The Corporation” vividly visualizes these negative demeanors of the corporations and suggests the ways and means to have tighter control over them, mainly to make them to engage in more corporate social responsibility activities. This research essay reviews the above book and details the Bakan’s important critiques and suggestions to make the corporations around the world to be law-abiding citizens. Book Review – Joel Bakan’s “The Corporation” Joel Bakan’s book “ the Corporation “ is a book about the corporate form of business , it salient features as of today , the manner it functions and the impact it has on people and also deals with the so-called corporate social responsibility, and it brings to the front core about various corporate frauds and malpractices together its insulting demeanor. Joel Bakan argues that corporations are facilitated by law to work for their interests than that for others, thereby exploiting others without least respect for moral turpitude or legal frameworks. The so-called doctrine Corporate Social Responsibility (CSR) in the majority of the cases functions to camouflage its true identity or color thereby discarding public interest and enriching self-interest. Bakan is of the opinion that corporations which function as institution , which have the self-drafted mandate to work for its own self-interest and hence , these corporations are nothing but pathological organization, and they are now regarded as the most dangerous organization toothed with extraordinary powers through laws. In Chapter 1, Bakan is of the view that recent corporate scandals like Enron, WorldCom, Tyco, Satyam, etc. is not a new phenomenon, but it existed from the inception of corporate form of business. People now started to concern about the mammoth size of multinational companies, and the authority that these companies veil on the gullible public which has made a concomitant demand of introducing harsher regulations to control and manage these corporations. Bakan argues that by treating the corporations as the legal or juristic person, the governments have permitted the corporations to wield their authority and power on the society thereby making the society and the shareholders powerless against the authority that epitomizes the modern corporations. (Bakan, 2014. p.Ch 1). In Chapter 2, discusses how the big companies around the world in the guise of corporate social responsibility working against the interest of public, mainly to maximise their profits. (Bakan, 2014, p. Ch 2). In Chapter 3, Bakan discuses about the economic notion of externalities ( the impacts of business transactions on third parties) and laments that the attitude of corporations to externalize their costs is the root cause of the variety of globe’s environmental and social issues. He offers interesting illustrations how cost-benefit analysis is being employed in the automobile industry where safety of the car owners is disregarded, employing sweatshop labour force in the clothing industries in Bangladesh, Pakistan, Sub-Saharan African regions, mainly to maximize their revenues at the cost of exploitation of child laborers, the constant disrespect of safety and environmental regulations by the oil & gas industry like BP, Exxon through oil spills. Bakan also refers a case law namely “Dodge v Ford Motor Co where the court condemned the attitude of Ford, who wanted to go for the further expansion of his automobile unit, which would cut down the prices of the cars to the advantages of the consumers and also would foster more employment opportunities to the society. However, the court condemned the action of Ford by holding that Ford had disregarded the main aim of a business is to maximise the revenues for its shareholders. Thus, Bakan argues that corporate law obliges the company’s management to work for the interest of its various stakeholders to the segregation of all the other social considerations. (Bakan, 2014, p.Ch 3). In Chapter 4, Bakan discusses about how companies around the world engaged in constant lobbying to ease the laws that restrict their activities. In 1934, the majority of the corporations in USA did not like the President Roosevelt’s New Deal program. It was found by a Congressional Committee that there was adequate corroboration of a conspiracy to overthrow President Roosevelt. It was alleged that the plot included envoys of USA’s giant corporations like Goodyear Tyre, JPMorgan and DuPont. Bakan discuses about how big corporations are engaged in the lobbying with the government and getting success in introducing deregulations in their favour. (Bakan, 2014, p.Ch 4). Bakan criticizes that corporations cannot be and should not be equal partners with a government. He cites that no one would recommend that individual citizen should police themselves and criminal laws against theft, murder and assault are not needed since citizens are socially accountable. However, in case of corporations, unlike for the gullible citizens, how government can relax the laws so as to allow them to govern themselves. This shows that the politicians are acting as a trump card for the corporations and also demonstrates that corporations will go to any extent to bend the laws and regulations to suit their needs. (Bakan, 2014, p.Ch 4). In 5th chapter, Bakan vehemently criticizes how at present all the economic activities are being carried over under the corporate structure and even public sphere is slowly yielding to corporate’s misuse, mainly through outsourcing activities and through privatization. Even the education sector is not exempted and is being exploited by the corporate sector as many of the education institutions are being managed by big corporations. Bakan criticizes the dogma of privatization which attempts to abuse of undue advantage for the public good and criticizing it that foots upon a deformed notion of human nature. He also condemns the attitude of modern corporations as it vigorously engaged in commercialization of the society pointing out the corporation’s advertising strategies to maneuver kids, their inclusion of public space and a perception of a world influenced by deceptive marketing. (Bakan, 2014, p.Ch 5). In sixth chapter, Bakan vehemently argues against deregulations carried on in favour of corporations and insists the immediate need for larger government control over the activities of the corporations around the world. The notion of shareholder’s democracy, corporate social responsibility and consumer democracy has been demonstrated to be poor alternatives of governmental control over these corporations. (Bakan, 2014, p.Ch 6). Bakan explains that replicate decisions unleashed by the governmental institutions (as opposed to corporation) are to mirror the citizen’s conscience and to cherish the public interest. Despite the fact that costs are incurred due to laws and advantages are being reaped by their extinction, with the help of deregulation, these analogues’ costs will seem to incur elsewhere. Laws and regulations are enacted to compel corporations to internalize their cost, as they would automatically externalize onto their background or environment. Further, Bakan is of the opinion that in today’s world, corporations are not too vibrant to fall under the governmental supervision, since there is no reduction of measures in the governmental authority, but only it has been reallocated. Bakan cites the notions of the American Legal Realist and recalls that there subsists bargaining authority only, since the government’s safeguard initiatives of the property rights have been bargained. Bakan criticizes that while the function of the government is safeguarding its citizens from the big corporations has been sharply increased while the safeguarding of the corporations by the government from their own citizens has been abnormally increased. It is to be recalled that in Chapter 3, Bakan criticizes about the cost-benefit approach adopted by the corporations where he identifies that the issue is not the cost-benefit analysis but the way in which the big corporations employ these cost-benefit analyses in giving utmost care to the public safety or in adhering with the regulations and laws. However, it is to be reminded that as Bakan has written this book well before the present economic crisis and now, many of the corporations and bank’s toxic assets have been transferred to state department, and this highlights how corporations and banks are being protected by the governments at the cost of gullible public tax money. and this highlights how corporations are wielding their influences over the government. Though state’s intervention is not considered as evil always, but in case of corporations, which are functioning only to maximise their profit, and in such cases, it has to be justified whether the state intervention is an opt measure or not. Bakan is of the view that corporations around the world are toothed with extra-ordinary authority as they are free to abuse anything, everything and anyone to maximise their revenues, and for them, citizens and consumers are just creatures of materialistic wishes and centered with the self-interest. No doubt, these developments may demonstrate to be more perilous as any fundamentalism that history has witnessed. Thus , according to Bakan , for in a world where anyone or everything can be exploited , manipulated or owned for material gains by corporations , a day will come where people might revolt against such omnipresent authority of corporations as what was witnessed as in French Revolution, the October Revolution, the American Revolution ,the Cuban and the Iranian Revolution. Bakan is of the opinion considering the influence on the governments, their disregard to the environmental safeguards, and their madness to maximise their revenues, corporation could be termed as psychopath. Thus, corporations around the world turned to be a medium through which their representatives could cause irreparable loss to society as the manner in which the corporations are incorporated and safeguarded by the laws. Bakan argues that corporations are the root cause of various forms of evils unleashed against the mother Earth. The harms range from employing child labour and exploiting them by paying low wages in the underdeveloped nations, by trafficking child labour and toiling them in the coffee estates of Costa Rica , damage to the environment like infamous Exxon oil and BP oil spill, subjugating the masses , engaging in the skew of corporate frauds , and so on. Bakan also chides how the so-called dominant corporations have been undermining the democratic process, mainly through strong lobbying and making liberal donations to political parties to influence them. Bakan also has heavily come against pernicious marketing tactics perused by these corporations thereby cheating gullible consumers. Thus, these insidious activities have to be stopped by making these corporations more accountable for their actions. In actual parlance, as per Abraham Lincoln, democracy is the government of the people, by the people, for the people. However, in today’s world, the maxim has changed to democracy is the government of the corporations, by the corporations and for the corporations. Hence, Bakan advocates a mixture of reforms that he thinks will revert back the balance of authority to the people from that of corporations. In his book, Bakan raises his legitimate worries with the manner how our society is being administered. He raises the question to readers, whether we should eliminate the corporate form of business and whether a state should increase or decrease its control over it. Bakan insists refurbishment of the corporation’s original objectives which is to serve the interest of the public and urges for reinstatement of governmental democratic authority over the corporation form of business. Bakan insists that the realistic, concrete and pragmatic reforms are the need of the hour to cleanse the corporate forms of business. Bakan recommends that it is our duty to safeguard the public sphere from being exploited up by the corporations around the world and to introduce a strict regime of external regulating laws of corporations. Thus, Bakan is of the view that corporations are not reformable, but, if citizens work together, we can keep the corporations at a safer distance. Bakan also suggests that the part and the role played by the worker’s unions in supervising and controlling the demeanor of corporations are to be safeguarded and improved. Further, the nations around the world should come close in transforming the practices and ideologies of international institutions like World Bank, International Monetary Fund, and World Trade Organisation thereby keeping them away from the market protestantism. It is suggested that there remains persistence vagueness in corporate laws, which connotes that the corporate managers are authorised by the law to maximise the revenue for their corporation and hence, maximisation of stakeholder’s interest is the main objective which the corporate laws wanted to achieve the same. As the wordings and drafting of corporate laws are with full of ambiguity, and in real life, the courts will never meddle in the internal affairs or day-to-day management of the company affairs. If corporations around the world act recklessly, the real culprit for the same is the respective governments and their so-called pro-corporate laws. References Bakan, J. (2014). The Corporation. London: Constable & Robinson Ltd. Read More