Bakan uses the concept of “doom machine” (example of paper mill) to explain why corporations are successful in destroying world they operate in. The concept means that corporations' dynamic “does not take into account the concerns of flesh-and-blood human” and that “ in our search for wealth and for prosperity, we create a thing that's going to destroy us” (Monk pg71)
The author also uses the concept of "corporation as a pschopath" which means that corporations are ego-centric, irresponsible or refuse to accept responsibility, have asocial tendencies, and they will do anything to satifsy their goal which is to maximize profit at all costs regardless what harm it may cause.
The author assums that many, if not all, corporations make harmfull decisions that will eventually destroy the world, and at the same time will destroy the corporatins themselves. I think that Joel Bakan's assmumptions are that all corporations do not care about the environment they operate in, that they would pollute everything to maximize profit, that the only guideline corporations use in making a decision is a cost-benefit analysis, and that eventhough corporations are made of individuals who would not want to harm other people together they would kill other people if it maximizes the profit. The author takes for granted that all corporations do not care, and that if they pretend they care, it is because they want to maximize the profit, and that if they comply with the law it is beause it would cost more not to obey the law, the author takes for granted that all decisions made by corporations are based solely on cost-benefit analysis not on ethical or moral codes or guidelines. The author assumes that corporations eventhought they are made up of individuals with ethical codes they do not use them in making decisions regarding profit.
Therefore the author is asking why they make such decisions, why they only consider profits that can be made in near future but do not consider their future existance. The author asks how corporations make such decisions that in long run will destroy human beings, environment and corporations themselves. Joel Bakan is asking why people as a corporation harm other people and themselves.
As an example, the author gives Monk's story. (Monk is one of America's most important and influential businessmen, he worries about what is going on in modern corporations.) Monk was staying in a motel in a small town. He was shocked when he discovered that paper mill is polluting the river in that town. Monks says that he knew everyone there, the mayor, the mill employees and owners, and he also knew that no one wanted the river to be polluted and yet it was being polluted every night. (pg71) Therefore, why if no one wanted it to be polluted they were still polluting it? The question is why corporations make such decisions that harm other human beings. If there is no person in a given corporation who would want to harm others, why as a corporation they not only harm people but even kill them. What is the difference between murdering someone by using a firearm or a knife and murdering someone by letting him drive unsafe vehicle or drink polluted water or eat poisoned food. Who assigns the difference and who lets those murders happen everyday around the world. The question is why corporations are not prevented from doing harm, and why they decide to harm others in the first place.
To back up the issues raised in "The corporation" Joel Bakan uses a lot of data, information, and facts regarding corporations and the legal breaches that they did. Two most important informations include data used by GM in calculation of cost-benefit analysis of improving products safety; and General Electric's major legal breaches including many contaminations of the environment and the amount that they had to pay between 1990 and 2001 for those legal breaches.
GM in deciding whether to improve car's safety calculated how much it would cost them. Therefore they calculated how many accidents would happen on US highways, how many fatalities it would cause, and how much it would cost the company in lawsuits and other expenditures, mainly meaning the cost of a fatality. The calculation was as follows: 500fatalities x 200,000 per fatality / 41,000,000 = $2.4 per automobile. To make the car safer, it would cost company $8.59 per car. Therefore, it was cheaper not to improve vehicles because GM would save $6.19 per car in production.
Armstrong and her children, that had second- and third degree burns resulting from a rear-end accident in 1993 due to the fire caused by unsafe positioning of the gas tank in GM Malibu, were awarded $1.2 billion.(pg63)
Two significant orders for GE to pay was £2 billion for asbestos cleanup and related pollution, and $95 million in damages for contamination from dumping of industrial chemicals. (pg75-78) The total GE had to pay for contamination of the environment alone, between 1990 and 2001 was approximatelly $3 000 106 million (over $3 billion); total for violations of safety rules at nuclear fuel plant, for design flow in nuclear plants, for illegal sal of fighter jets, and for overcharging on defense contracts was $300 million. GE was also ordered 14 times to clean up contamination of drinking water (ground water, river, water supply) and soil. The assumptin is that General Electric makes huge amounts of profit, because GE is able to exist on the market even though it was ordered to pay over $3 billion puls the cost of cleaning up contamination. The broader assumption, based on GE example, is that corporations make huge amounts of profit at the cost of environment and human lives and they continue to do so even though they are ordered to pay millions or billions of dollars in fines.
Given the information regarding corporations' actions and the impact they have on developing countries, on societies, on environment we all live in, and on individuals, who should care the most and why should we care at all. Joel Bakan is trying to make the reader think about the reality we live in, about what is really going on in the world, about bigger picture than only one's family, job, or friends. I think that in Joel Bakan's opinion everyone should care about what he says, everyone should care aout future generations, and future of this planet, therefore everyone should take an action in order to make this world a better place. If we take his line of reasoning and accept his arguments it would mean that we should stand against the big corporations and their exploitation of people and environment. We should not agree with their actions and should do something to stop those big corporations destroying the world. We as people and customers have lots of power, however we are lazy to use our collective power to stop those corporations in their harming actions, instead we prefer to pay less for products eventhough we know that those products were made by child labouer. If we agree with Bakan's arguments it means that we say no to corporations and to their exloitation of people and environment not to business in itslef, we do not stand against the business but against those corporations that are overtaking the world.
However if we do not belive in Joel Bakan's arguments it means that we think that those actions which harm individuals, societies, and environment are perfectly fine, it means that we agree with the line of reasoning that profit should be maximized at all costs and that there is no ethical or moral obligation towards third paries, externalities, regarding their safety or well being. It means that even if corporatins pollute environtment to the degree that all livable species die it is all right as long as the cost of cleaning up and lawsuits is lower that the profit margin or savings made by that pollution.
The conclusion is that corporations use cost-benefit analysis in making decisions regarding producing any product and its safety. In making such decisions corporations assign value to human lives, human injuries, polluted environment and any possible lawsuits. If the amount of legal actions is lower than making a product safer, they will not improve the product. The conclusion is that corporations do not care whether the product will harm any human being or will pollute the environment as long as that product brings profits to the company. The conclusion is that corporations behave as psychopaths and as 'doom machines', and in their pursuit of profit will destroy everything. The most harmful decision will be carried on as long as the profit margin is increased by that decision. The conclusion is that corporations in destroying the evironment finally will destroy themselves.
In this chapter, and in the whole book, the author does a good job with showing different points of view, different aspects of decision making porces, and different impacts on different groups of shareholders. The author gives examples of what are the impacts of the decision on the company, on the individuals, on the employees, and on the customers. Bakan does not show only one point of view, he shows major points of view. By showing different points of view the author asks whether a certain point of view could be totally right or wrong, or whether there needs to be a mix of approaches in order for corporations to operate properly. The author writes about facts and theories of others, giving a reader free hand to make his/her own opinion regarding the topic which in this case are externalities. Eventhough, the author gives a free hand in forming own opinion regarding the topic throughout the chapter; at the end the author clearly states his point of view. Joel Bakan says that he disapproves what is happening to the world because of corporations and lack of regulations regarding sweatshops and externalities. It is clearly understood that he is against big corporations and their exploitation of people and environment.
The whole chapter is about externalities, exploitation of people in developing countries, and pollution of the environment. Nonetheless the whole book shows two sides of corporations, one is making profit and the other is doing harm whether to environment or to people. I think that this book would make everyone think about the path that the world is going through and the future that is coming. I think that every reader of this book regardless who she/he is, after finishing the book stops for a second and thinks whether the things that are happening around us are right or wrong. The sad conclusion; however, is that many readers would say "yeah, it's wrong, but what can I do? I'm just a regular citizen". I think that it would be a good idea to actually include some kind of guidelines regarding what people can do to stop those corporations in harming societies and environment.
Questions:
- Corporations can be thought to be socially constructed (constructed by people); therefore, why people agree to illegal actions of corporations and how social construction can be helpful in changing corporations?
- In doing cost-benefit analysis should corporations include legal or moral obligations towards the society and the results externalities can have, or should they just obligate the legal responsibility towards their stock holders and maximize the profit?
1. I posted this question because I think it is an interesting question because if we agree that corporations are socially constructed, meaning constructed by people, why those people agree with illegal actions of corporatins. What I mean by this is that all people somehow depend on the corporaions and in some degree are harmed by coroprations, regardless whether a person is an employee, a customer, a third person, or a CEO, all people are harmed. For example if corporations pollute the environment not only the enviromnetnt is harmed but all people that depend on the environment are harmed. For instance, maybe the CEO of that corporation is not swimming in the water polluted by them but maybe another CEO has a cottage next to the lake or river that was polluted by that company.
I am asking how social construction can be helpful in changing the way the corporations are operating, if some people created those harmful corporations how other people can change the way they work.People created corporations and people let them do harm but how those people can now stop corporations in doing harm.
2. My second question is somehow connected to the first one. My point is that if corporations should have only legal obligations towards their stockholders what happens if those stockholders are harmed by the corporation. Shouldn't the corporations include moral obligations towards their stockholders?
We all know that corporations have a legal obligation towards stockholders to make profit but how we should reason if that stockholder buys defected product produced by this company and harms himslef. For instance, the case of Armstrong whose car exploted becase of deliberatly unsafe positioning of the gas tank, what happens if Armstrong was also a stockholder of GM or maybe a manager at one of the GM's plants? How it would work then?
If we argue that moral obligations and legal obligations are equally important towards stockholders, the answer would be easier regarding whether the corporations should be morally responsible towards the societies. My point is that if corporations should be morally responsible towards their stockholders they would not launch unsafe products because there would be a possibility that one of the stockholders could buy it. Therefore, if corporations would keep in mind their stockholders safety they would not pollute the environment as much, or they would not sell unsafe products. Furthermore, other people would be safe, because all corporations have stockholders, and if those corporations would have a moral obligations not to harm their stockholders they would not harm other people either, simply by not letting unsafe products go on the market or by not polluting the environment the stockholders live in.
References:
All references are from the book by Joel Bakan " The Corporation, the pathological pursuit of profit and power” page numbers are indicated in the text next to the citation.
