Loyalty often goes to the dollars
A reality of the modern world, one taken for granted, is the existence of corporations and their effects on the economy, politics, the environment and society in general. Unlike partnerships, where groups combine their resources to create businesses, the group both owned and operated, the corporation, instead, separates ownership from operation: directors (CEOs) oversee business operations, while shareholders own it.
As legal entities, corporations depend for their existence and operation on government. But since the industrial revolution they have grown in number and power, and their dominance over the economy and society threaten government’s ability to control them.
Originally, those invested in a corporation were personally liable for the company’s debts. However, through legal legerdemain, corporations have transformed themselves into free and supposedly independent “persons.” And as corporations grew, they included hundreds of thousands of anonymous shareholders who cannot influence management decisions as individuals (unless they own a huge percentage of shares) and whose power is diluted since they cannot organize collectively. In effect, then, shareholders disappeared from holding responsible roles in the corporations they owned.
As corporations grew in size and power they acquired other corporations and soon became monopolies that controlled important segments of the economy to their own benefit and prosperity. Analysts typically saw the Great Depression as a result of such corporate greed and mismanagement, and public discontent and organized political dissent called for government protection. In 1934, the New Deal instituted reforms to restore economic health by curbing the irresponsible habits of the corporations, and eliminating sweat shops, child labor, monopolies, and setting labor protections and etc. Trade unions at first somewhat offset the power of corporations (and thus are seen as corporate enemies) but the economics of neoliberalism preached a limited role for government in favor of “free trade” that was supposedly governed by its own economic laws.
By the end of the 20th century, neoliberalism’s core values of government spending cuts, deregulation, and privatization were the orthodoxy of the corporate world and its political advocates in the GOP. And with the creation in 1992 of the World Trade Organization, the deregulatory agenda of corporate self-indulgence spread to international economics. Globalized corporations became so big and powerful, and exceeded the authority of a given country, that they could influence the economic and social policies of governments. Deregulation that protected workers, public interests and the environment, for example, got rolled back as a result of corporate propaganda complaining of “big government” (i.e., government regulation) and in championing corporations and their leaders as the patriarchs and saints of our economic system. Consequently, corporations effectively govern today’s economy, often in more direct ways than governments do — often causing harm in pursuit of selfish corporate ends that damage communities (e.g., Love Canal) and endanger the planet as a whole (e.g., climate change).
Damages caused to others by corporations are called “externalities” in economic jargon. “An externality,” according to neoliberalist economist Milton Friedman “is the effect of a transaction … on a third party who has not consented to or played any role in the carrying out of that transaction.” All the negative effects of corporate self-interest are regarded as externalities. While some externalities are useful (e.g., job creation and new products), others are at the root of the world’s social and environmental problems. A regulatory system protects consumers from unsafe products and sets legal limits on the exploitation of people. In theory, such irresponsible behavior is punished legally; but in reality compliance with the law is interpreted in terms of cost/benefit analysis. Thus fines (etc.) are simply viewed by the corporation as a cost of doing business. When anticipated profits outweigh regulative costs, negative externalities become a business decision for repeat offenders. In such decisions “business ethics” becomes a contradiction in terms, overruled by the profit motive and lacking any sense of the common good.
The depression of 2007 was due to the greed of leading corporate banks and mortgage companies. As a result, new government regulations were enacted to protect against a recurrence of the predictable corporate contempt for the effects of negative externalities on the public good. Yet with the Trump administration, these protections are quickly being rolled back in favor of corporate interests. And the highest echelons of government are now led by the very corporate leaders from Wall Street such regulations were intended to control!
Unaware voters are propagandized to believe that deregulation promotes new jobs but, in fact, regulations create jobs by which corporations protect their interests (e.g., anti-pollution controls). Lobbyists representing the corporate world dominate the legislative process. And now that corporations are seen as “people,” corporate money in huge sums goes to legislators who should be lobbying for their constituents on Main Street not in advancing corporate greed on Wall Street.
Thomas A. Regelski, Ph.D., is a emeritus distinguished professor at the State University of New York at Fredonia.