Critical Analysis of the Arguments against Corporate Power as Presented in Joel Bakans Book - Essay Example

Critical analysis of the arguments against corporate power as presented in Joel Bakan’s book ‘The Corporation’ Introduction Corporations across the globe are believed to have an entitlement to a unique sense of corporate powers that have been presented by the state and which are not enjoyed by the natural persons in the respective countries. The granting and exercising of such powers has been considered as the basis upon which several proposals relating to legislative activity and government regulations have been made (Gonzalez, 2001). By living in an autonomous society, there are numerous instances in which propositions and oppositions towards corporate power have been identified, and one such instance is as presented by Joel Bakan in his most famous book, The Corporation. In an ideal sense, Bakan has sought, through substantiated arguments and concrete reasoning to show why corporate power may not be a liking of many people. However, I find some of the reasoning presented by Bakan for disliking corporations as not being substantiated considering the societal benefits derived from such organizations. As such, I shall seek, in this study, to provide a critical analysis into these arguments against corporate power as presented by Bakan and evaluate the effects of the same on corporations’ progress. As a result, my analysis will provide the direct opposite benefits of having corporations operate in the society today, against the negative position held by Bakan in his book. Additionally, I shall seek to confine my comments on the highlights presented towards health and safety matters. Critical Analysis First, the analogy as presented by Bakan is that of a brilliantly debated account of the pathological pursuit of power and profits by a corporation, and in it, he chiefly argues that even though a corporation is a product of legal procedures, it functions like a psychopathic person. As such, it would be extremely hard to curtail its actions given that if left unchecked, some of these actions may be destructive; hence, lead to scandals or even societal degradations. However, to refute this claim, I would evidently note that corporations are not only driven by power and profit pursuit objectives but, by other corporate objectives too. For instance, corporations have in time been known to engage in activities that enhance societal welfare such as sponsoring sporting activities, engaging in tree planting exercises and other environmental conservation activities, awarding of top performers in several perspectives nationally and internationally and even offering scholarships to outstanding individuals to further their education. This is a strong suggestion that corporations do not only mind about their profitability at the expense of that of the society; but, instead, they support the society in order to further their objectives of profitability. In the book’s introductory part, the author defends his stand by noting that corporations as legal institutions only relentlessly pursue, without exception to harmful consequences to society, their own self-interest (Bakan, 2004). This discernment led to the perceptions as addressed in each of the subsequent six chapters of the text. Predominantly, the book is informed by themes such as the implications of the pathologic character and power of corporations over the society and the measures that can be taken to mitigate the society from the ‘corporate power’. In reality, many positions have been taken to fight off the production decisions made by firms. My view of corporations to this regard would not be as those that seek their self-interest only. While industrial corporations discharge harmful materials into the environment in the form of waste, such disposals have been under strict guidelines from the respective government agencies and departments. Therefore, the continued engagements in such, if any, would be at the laxity of the respective governments to enforce the specified legislation. Subsequently, such corporations are usually taxed, according to the Kyoto protocol, whenever they make such disposals. Bakan’s other argument against corporate power is that corporations have led to the creation of imperatives that have legal and structural implications on the society; hence, calling for a need to curtail the same. For instance, he notes that the nature and manner in which corporations are formed and protected or shielded by the law in itself allows them to engage in degrading practices such as pollution/environmental damage, payment of low wages to their workers, especially in the third world countries, corporate crimes and oppression of masses for their own interest. However, while this aspect may seem to be true to a certain degree, corporations are these days subjected to the ever mounting pressures from workers’ unions to ensure that they obey employment laws in relation to their engagement with their employees. As such, it would be extremely hard to find corporations oppressing employees when unions have their rights protected. In addition to the above concept, the management of corporations being faced with the harsh economic realities and crises experienced in the world today, may be justified to cut on pays to employees, retrench some employees, and engage in corporate activities that would ensure the return of investment capital to the respective shareholders. This is because shareholders too need to feel the value of their investments; hence, the need to apply measures that would ensure gains and not losses in the respective firms. According to Bakan (2004), the corporations mount the argument that they have the powers to sue and that they are seeking after their goal of profit attainment. In actual sense, this might show that most executives in the corporations have no social welfare objectives as a part of their objectives; that executives are insensitive to societal needs and only concentrate on their profit making objectives. This concept is supported by the statement made by Bakan over the rise of corporations to dominance in the first chapter; that at the conception of corporations in the late 16th Century, politicians and businessmen, were suspicious of it given that it was perceived as one that would easily wield ground for corruption and scandals in the society. To them, the unique design of separation of ownership from the management, and as supported by Adams Smith in the book, The Wealth of Nations, profusion and negligence would ultimately arise out of how corporations were organized (Boggs, 2000). On the contrary, I would not think of this in the manner suggested by Bakan given that the power to sue and be autonomous is given by the same government that outcry the insensitivity of the corporations. In addition to the theme presented by Bakan here of corporations not only sticking to their legally defined mandate of economic gratification but, also diverge into matters communal, the option to engage in communal activities should be on a voluntary basis since corporations are formed with the intent to create wealth for the owners. Bakan’s idea here is to try and portray corporations as ‘gluttonous’ but, the reality is that corporations are not selfish in their operations as they contribute to societal growth and development through the payment of taxes. In some countries, a standard rate of 30% is levied as taxes upon the revenue of corporations thus, showing that corporations only mind about their economic gratification. Therefore, it would be inconsequential to regard corporations as having neglected the societal demands when in actual sense they contribute through payment of taxes and other levies charged at the times of their incorporation. Subsequently, the author presents another argument against corporate power by noting that there has been much abdication by the governments in the exercising of their controls over the corporations. Despite the blemished nature of the character of corporations, Bakan argues that governments have still gone ahead to free the corporations from legal constraints by deregulations and granting of much greater power to corporations over the society through the acts of privatizations. This, in essence, is not a factual concept because failing to deregulate corporations will result in many unnecessary bureaucratic procedures that would hinder and curtail the operations of corporations. Besides, corporations have not been reported to have misused the power granted to them legally; hence, it is not the privatization of corporations that has led to the disharmony witnessed in the society currently. Furthermore, by corporations being privatized, they separate themselves and their operations from radical and unwarranted procedures that define most government owned parastatals. It is also untrue to reason as Bakan does when he notes that corporations appearing as huge behemoths are threatening to overwhelm the available social institutions and government structures through their sense of corporate powers; the fact would be that corporations instead help to build up these social institutions through the strengthening of their structures and provision of technical management support in the form of consultancy services. Therefore, corporations have not in any moment acted immorally and appeared uncaring under the concept of ultra vires (Millstein, & Katsh, 2003). Corporations, as well through the leverage of their freedoms and powers have curtailed economic development in certain instances by applying their amassed capital to gain economic prowess; hence, being able to command the economic policies developed by the government. In most countries, corporations are known to have mainly contributed to the rise in annual GDP rates based on the economic activities of exports and imports the corporations engage in with other corporations around the world. Additionally, the establishments of corporations especially the multi-national corporations have enhanced skills transfer from one country to another with an executive’s skills benefiting the resident country in which he operates. Such skills have proven handy to the government in matters of economic analysis, tax analysis, and understanding of international business relations. The setting up of more corporations in the world has enhanced the business operation conditions for other business ventures that are locally owned given that the big corporations have in most instances partnered with the local business thus, enhanced their growth prospects and that of the respective countries. However, this is in disparity to the argument as presented by Bakan that corporations have become dangerous to the governments given that most governments are now competing amongst themselves through the provision of business friendly policies to corporations so as to attract new investments without regard as to whether the policies of such corporations are congruent to that of the government and local industries. I would also not agree to Bakan’s idea that corporations nowadays govern societies because the same are still subjected to regulations by respective states in which they operate. Essentially, the engagement of corporations in corporate social responsibility activities should not be taken as them having taken over from the governments the running of state affairs. Ideally, the corporations are just but complimenting that which is already being done by the government and other organizations such as the non-governmental organizations. The engagement in corporate social responsibility programs in itself should sufficiently show that corporations are not misusing the corporate power legally bestowed upon them (Bakan, 2004). Consequently, Bakan develops another logical argument against corporate power by referring to the uptake of corporate social responsibilities as call boxes that offer promises that cannot last. Thus, the good that a corporation will do to the society is to only make it more profound and benefit more than the society. However, the engagement in corporate social responsibilities is a clear indication that regardless of how benevolent a corporation becomes and how socially responsible it turns to be, it ultimate goal is not only to achieve its own interests. Therefore, this goes against the argument presented by Bakan that corporations robs the same society that sustains them in the particular market they are based. It is also possible to regard corporations as externalizing machines based on the corporate powers that they have, reasoning largely fronted by Bakan. However, corporations have in the engagement with society built concerns for the moral obligations of the society; hence, they have in frequent times acted upon immoral engagements by their executives through appropriate disciplinary measures. Therefore, this offers explanations that corporations are not bent towards destroying societal values (Conill, Luetge & Schönwälder-Kuntze, 2008). Presented in another way, the argument given by Bakan against the corporate power revolves around the application of the cost-benefit analysis by corporations. According to the argument presented, a case example that is used in elaborating the thriving of modern corporate power is considered to be related to the creation of limited liability concept. For instance, Bakan points out that the development of the railways in the United States created the need for more capital hence, the pooling of resources into a limited liability corporation. This brings out a striking effect of the passage of statutes and laws that failed to restrict the conduct of corporations in relation to rationality and morality. Therefore, according to Bakan, corporations are more concerned with benefits than costs. However, corporations are also known to have spent hugely and still spend hugely in supporting communal programs that does not add any monetary value to them at all; thus, invalidating the argument on cost-benefit analysis as presented by Bakan. Contrary to the Bakan’s argument, the operation of corporations as limited liability organizations only preserves to cushion the investors from financial shocks that may result from liquidation of such a corporation. This is because the assets of an investor separately invested into the corporation will not be touched or used to repay any debts owed by the corporation upon its dissolution. Embedded in this exploration is the idea that the existence of limited liability corporations has led to rise to prominence of the corporations (Conill et al, 2008). Conclusion In conclusion, this study has extremely sought to offer critical analysis in relation to the engagement of corporations to the entire society. It has come out clearly that while there are instances when corporations through their management have sought after fulfillment of self- interests, the same cannot be disputed based on the benefits that the society has, as well, derived from the corporations. I would not utterly condemn corporation because they have to meet their objectives of profit-making since without it, they would as well be out of business. However, the benefits derived from corporations are diverse and will entail economic, social and political sustenance techniques that can be applied by individuals and government agencies to further their policies. Therefore, it would be inconsequential to generalize corporations as power driven to achieve their profit-making objectives only. As has been shown in the critique presented above, organizations have diverse objectives and the negative perceptions held by the public towards them are only but, to sideline them as ventures for corruption (Millstein, & Katsh, 2003). References Bakan, J. (2004). The corporation: The pathological pursuit of profit and power. New York: Free Press. Boggs, C. (2000). The end of politics: Corporate power and the decline of the public sphere. New York: Guilford Press. Conill, S. J., Luetge, C., & Schönwälder-Kuntze, T. (2008). Corporate citizenship, contractarianism and ethical theory: On philosophical foundations of business ethics. Farnham, England: Ashgate Pub. Co. Gonzalez, G. A. (2001). Corporate power and the environment: The political economy of U.S. environmental policy. Lanham, Md. [u.a.: Rowman & Littlefield Publishers. Millstein, I. M., & Katsh, S. M. (2003). The limits of corporate power: Existing constraints on the exercise of corporate discretion. Washington, D.C: Beard Books. Read More