“The Corporation” by Joel Bakan

wp-1482403875580.jpgThis is a difficult book to review. Not because it is poorly written, far from it, it is well written and easy to read. But rather because it is a book of three parts. The first part, where he analyses the source of the problem is well written and researched. The middle and last part are unfortunately much poorer.

In the opening third of the book Joel Bakan describes the genesis of corporations. How the development of ‘limited liability’ and the amalgamation of capital permitted large scale projects, often withe the public good in mind. Though many of the early changes were recognised, at the time,  as dangerous (as they were seen as potentially interfering with the freedom of the market) with the risks of promoting rent-seeking behaviour  diluting the power of shareholders. He noted Adam Smith’s concerns that “negligence and profusion” would result from the development of corporations and recorded other concerns at the time that limited liability would “enable persons to embark in trade with a limited chance of loss, but with an unlimited chance of gain” encouraging “a system of vicious and improvident speculation“.

The regulatory changes that were necessary for the development of corporate capitalism are well described and referenced. The risks were also well recognised and described. The fact that most of these risks have come to fruition is clearly demonstrated. So far so good. The book is a useful text with valuable information and insights. Then the book changes and deteriorates.

The middle portion takes the theme of the corporation having ‘personhood’. This portion concerns the negative social and environmental impacts of corporate activity and the corporation acting as a “externalizing machine” as it transfers the costs and negative impact of its activities onto others. While the examples given are valuable and well researched it quickly changes to viewing coroporations as “psychopathic personalities”. At this point we drop into psychobabble  which does not lead us much further forward. We are in a circular loop that ‘bad things are done by bad people’ and, in as much as corporations can be thought of as persons,  then ‘corporations doing bad things mean they are bad people’ or “psychopaths“.

The final portion, which looks at possible solutions, is the most lacking. While he recognised how corporations have used regulations to ensure close links to government, to benefit from rents from government agencies, and to protect their capital from free competition he simple proposes more, but different, regulations to control the situation. He does not seem to be aware of alternative strategies which may  promote commerce and free markets. He hopes bigger, more powerful, nation states (taking more areas under public control) will counter the worst excesses of crony capitalism.  Though he himself noted “Without the state, the corporation is nothing. Literally nothing” he did not take the logical steps in questioning how to weaken and reduce the state’s role in all of this.

I suppose we could excuse some of the latter limitations as the book was written in 2004 before the global crash which saw nation states rushing to prop up their banks and financial institutions with public money. Large financial organisations, once again, made sure that states sheltered them from the free market. Banks being deemed “too big to fail” were bailed out by taxpayers proving George Bernard Shaw right when he described the situation as ‘socialism for the rich and capitalism for the poor’

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Volunteering : Why do we do it ?

Volunteering : Why do we do it ?

via Daily Prompt: Volunteer

When I moved to my present home, and shifted from an urban to a rural community, I became more aware of the role that volunteering played in my and my neighbours’ lives. It is not that there is any more or less volunteering in either site but rather that the structures of community organisations, and the role these play in day to day life, are much more visible in the rural setting. It is easier to see what is going on among a few people than it is amongst very large groups.

It is clear that many people volunteer regularly to provide services to our own community and for those further afield who are in need. Obviously, as this is volunteering, it is done with no thought of payment or recompense. Indeed, the cost to volunteers in terms of  time, money, and energy is often quite considerable.  For example, one neighbour drives daily to the old peoples’ home at her own expense and spends an hour talking to elderly people who might otherwise be lonely.

So why do we do this ? Some, of a religious bent, may do it as it is part of their way of practising their faith. Other may do it in recognition or thanks of previous help given. However, looking at my friends I’d suggest that most do it because they gain pleasure from helping others. In addition to pleasure it is also part of living, being a part of a community rather than a simple consumer of the benefits of society.

Every second week in our village hall committee we meet and spend hours organising events for the community and seeing to the logistics of running various societies which have their base in our society. When we meet and talk, when we interact and exchange ideas, when we choose form options for our society, we are in fact living. While we do this we are more than individual consumers, we are not solitary agents but social beings, and while we take part like this our lives become richer and fuller.

Possibly the most quoted sentence by Adam Smith  is this below :-

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

and many people think that this suggests that selfishness was the sole key to the organisation of capitalist societies. Many portray capitalism as incompatible with altruistic actions and see the  phrase “greed is good” as one which summarises a trading society.  Many libertarians do little to counter this image.

While it is true that self-interest guides the many voluntary trades that people make everyday which allow our society to develop and grow. It is these multiple interactions  which allow us to concentrate on what we are good at, to specialise and divide labour, and to create things that would otherwise be impossible. It is through all these voluntary transactions that the spontaneous order arises which makes up our society. Billions of individuals freely interacting with billions of others give rise to the order which is the society in which we live. While this requires that the individuals look after their own interests it works because we are human and there is another side to our nature.

Unfortunately the following quote, which is the first sentence of Adam Smith’s “The Theory of Moral Sentiments” is much less frequently quoted :-

“No matter how selfish we suppose man to be, there is obviously something in his nature that makes him interested in the fortunes of others and makes their happiness necessary to him, even if he derives nothing from it other than the pleasure of seeing it”

Adam Smith believed that innately we wish to help our fellow man. Indeed he believed that the pinnacle of moral development would be “To feel much for others and little for ourselves; to restrain our selfishness and exercise our benevolent affections, constitute the perfection of human nature”. He correctly recognised it was the combination of voluntary transactions, guided by self-interest, in association with an innate tendency to care for the welfare of others which allowed capitalism to thrive and develop.

It is this innate desire to help others alongside the gaining of pleasure by doing so that I see in my community here. I am aware that this is a universal aspect of human nature seen in people from all walks of life and in all areas of the globe. It doesn’t detract from the wealth creation of trading but rather augments it as it is the glue that creates the society in which we can pursue our dreams. I am sitting using a computer and social media to create this blog, this is just one example of the multitude of sites (Flickr, Youtube, Facebook,  Freecycle, Twitter, etc) where people create things (images, stories, songs, news, goods) simply to share with our fellows with no expectation of profit. It seems further evidence of our need to share and to give.

However, I do have some concerns that the last century has seen a change in how we view such activities as volunteering and charity. Alongside the growth of the welfare state it is possible that we have started to feel that we no longer need to undertake these activities.  Certainly the amount we give to charity has dropped from an average 10% of a middle class family’s income in  1895 to around 1% today. Friendly societies which used to provide much of the welfare that people received prior to the war when it was estimated that over three-quarters of the working population were registered with such a society were destroyed by the introduction of National Insurance. A model which was based on local planning, voluntary choice and democratic decisions when local people got together to form groups to look after themselves was swept away by Lloyd George’s changes. In their place, an unaccountable, impersonal and inefficient centrally organised state system took over.

The change to state organisation funded by taxation has had a further change which has an impact on charitable activities. As James Bartholomew said “People have changed from being team members in mutual support groups to being state dependants who feel no particular responsibility to act decently. “. It is important to feel that one is helping others, as said before it is an innate desire and part of what lifts us above other species of animal. When we organise our welfare services by taxation it removes us as individuals from the care of our neighbours. It becomes anonymous and faceless, it breaks the link between the two individuals helping each other. It removes our option to be compassionate and good as we can’t really think of ourselves as good when we have no choice over our actions.

We will always need to provide welfare for our societies and will always want to do so. We need to encourage voluntary arrangements which allow this to be done in a human, individual and engaged manner and we need to wrest welfare back from the state. We need to bring it back from the central state and back to local societies and the individuals amongst them

I think Dominic Frisby summarised this well in his “Life after the State” :-

“The giver goes unconsidered in the process of state care. Taxes are taken and that is it. But the giver too has needs. Sometimes the giver needs to be anonymous – sometimes he needs recognition. Sometimes he or she likes to be involved with the recipient in some way, sometimes not. The forced giving that is taxation destroys the satisfaction that altruistic people get from giving voluntarily. To share with others is part of humanity. In a world in which the government takes care of the poor and needy, compassion is removed from life. As a result, the state now has a monopoly on compassion! In fact it is even more bizarrely specific than that: the pro-welfare left wing has a monopoly on compassion. Anyone who doesn’t agree with the concept of a large, generous welfare state is deemed heartless and selfish.”


Volunteer


Wealth of Nations
Theory of Moral Sentiments
The Welfare State we are In
Life after the State
David Green, Working-class Patients and the Medical Establishment (Gower, 1985).