The Toxicity of Public Multinational Corporations

If you live in the connected western world, their cloud of brand identities is in your face all the time. They are (most of) the airwaves. They are the chain stores. They produce most things you buy to eat (unless you buy local). Everything you say to someone which isn't directly into that person's ear is probably conveyed by them. We are immersed in a world largely controlled by corporations. When I say "corporations" I'm taking some license, but everyone knows what I mean. To be more precise, I'm referring to public, listed, usually multinational corporate entities. I think they're toxic, and unnecessary. The purpose of this post is to explain why.

First, let me make one thing clear: I know a lot of poeple, whom I respect, and who are "good people", who work for corporations. I don't hate corporations. Doing so would be irrational - they're not immoral, they're amoral. It's like saying "I hate earthquakes" - it expresses frustation with great forces, and such anthropromophism is commonly called "poetic license". No, I don't hate corporations, I just don't want to be forced to trust them, because they're inherently untrustworthy. Moreover, I don't think there's any reason for them to exist any more. Like the dinosaurs, their epoch is drawing to a close, and they're not going to go quietly. That's what the TPPA and TTIP are all about (but I digress).

It's in their nature

Here's an analogy: corporations are like snapping turtles. They can be cute-as-a-button and even cuddly (in an ugly duckling sort of way) when they're little. But they haven't got much weight behind them, and they're just trying to survive in a world where, let's face it, their own mum would probably eat them as a snack, given the opportunity.

Problem is, if they survive, they don't stay small and cuddly for long. They get big, and true to their nature, they're ruthlessly efficient at doing whatever it takes to survive. Snapping turtles don't seem to waste much energy on camaraderie.  In a pond that might've started with a lot of little snapping turtles, eventually, there's a pond with one very big snapping turtle, and the inconsequential little ones it lets hang around (possibly letting them fatten themselves up until their worth bothering to eat). Ultimately, they do what's in their nature. Their incentive in surviving is to protect their patch, and they've got formidable tools to keep their environment unthreatening (humans aside).

Gentle reader, I'm confident you can see where I'm going with this. Publicly listed corporations have but one incentive (under law in the US and in most other jurisdictions): to maximise shareholder value (i.e. profit).

Corporations are toxic because, although they are accorded the rights of people, they are not people. They have no empathy. They're mindless, ruthless entities who respond to their environment when they're small. When they get larger... they use their power to shape their environment for their own benefit. Rather than the sort of people one might be tempted to trust, quite a compelling case can be made that if corporations were, in fact, people, they'd be socipaths.

Exploitative business models

Once they reach a certain size, public multinational corporations start to rival nations in power and influence. Corporate apologists often ostensibly champion "the free market" when, in fact, they don't embrace competition, as one would find in a perfect market, they strive to eliminate it. The dearest goal of any corporation CEO with a future is to acquire - by whatever means - a monopoly to exploit.

Small up-and-coming corporations, like small snapping turtles, may exist in a competitive melieu. Their goals - building market share, might mean that their interests are well aligned with those of their customers... but that all changes when they are successful, and by whatever means (sometimes luck, sometimes fair tactics, sometimes below-the-belt skullduggery), they come to dominate their patch, like the lurking monster snapper.

Something interesting happens when a corporation has a monopoly. Often, their greatest competitor is their existing customer base. To maximise revenue, they have to exploit those customers - the ones who might previously have (rightly or wrongly) had actual affection for them. They turn on their traditional support base: They start charging monopoly rents. They invest in antifeatures (an apt term coined by Benjamin Mako Hill to mean "things that you pay for when buying a product that are intended to work against your interests") like planned obsolescence, and DRM (really Digital Restrictions Management, but corporations insist on calling it "Digital Rights Management") and absurd stuff like market segmentation by region coding.

With their exploited monopolies, they decouple value from revenue. They grow rapidly, like a star which enters its final "red giant" phase before it novas. They burn good will.

They behave rationally but dispassionately, without conscience. In accordance with their sole incentive, they maximise shareholder value by - wherever possible - internalising profit while externalising cost. In essence, they shit on the Commons, and force society to pick up after them. When governments attempt (usually in vain) to regulate them, they channel some of their surplus energy in being mercurial about things like paying taxes and adhering to labour laws or environmental regulations. And they start to lobby. That's when things turn really toxic. 

It turns out, in the US in particular, corporate lobbying is very successful, and profitable. Corporations get a 200:1 (that's 20,000% people) return on investment by lobbying US Congress. (Digression: Corporations gleefully (poetic license) exploit the dominant business model in US Congress: find a corporate benefactor, promise to look after their interests "on The Hill", take their money to finance your campaign, win your seat, make connections on The Hill, serve 2 terms, bow out and join a lobbying firm, increase salary by 100 times.) Corporations now fund the vast majority of all US presidential candidates' campaigns (Bernie Sanders appears to be bucking that trend - Lawrence Lessig provided a  compelling description of how corporations now control the US federal government via TED, turning the US democratic system into a farce).

Benito Mussolini is credited with saying that "Fascism should more appropriately be called corporatism because it is the merger of state and corporate power." That is what we have seen happen in the US. It is even worse in countries with less open systems of government and weaker traditions of political ethics. The way weather systems move towards areas of lower pressure, corporations move their cost centres to areas of lower regulation. Again, toxic (often literally) behaviour, from the point of view of our Commons.

Surplus to requirements

Corporations, in their modern form, seem to have emerged from the western world's colonial past. They created a means by which to

  • focus capital,
  • create a hierarchy of command modelled on military organisation,
  • enforce reliable supply chains,
  • create stable lines of communication,
  • create vectors to deliver to remote markets, and
  • and distribute profits to investors.

I would argue that, for all but a few inherently huge endeavours (like building things at scale out of steel) or massive works projects, the inexorable democratisation of specialised tools by the advent of general purpose computing devices of absurd power (like the laptop on which I'm composing this) and the Internet (the world's first ubiquitous, distributed,  digital copying machine, which permits us to innovate without permission, and interprets censorship as damage, around which it routes).

Rather than perpetuating those - now largely reviled - market responses to 19th and 20th century business environments, which arguably justified the emergence of corporations, the modern business environment has decoupled and commoditise nearly all of these elements. It has also vastly reduced the amount of capital required to undertake most if not all legitimate business (value created is greater than or equal to the value willingly exchanged).

I believe that today's multinational public corporations are powerful dinosaurs that exist on borrowed time. The ponds in which they built their empires are drying up (thanks to the destruction of our Commons by global warming, to which they have contributed, and from which they have benefitted the most!). The sooner we acknowledge their obsolescence, the sooner we - communities of actual people (not amoral entities given the rights of people without the empathy to use them responsibly) can start to rectify the damage - to our environment, institutions, society, culture - that corporations have done. I strongly believe that the damage wrought by corporations, by their very nature, far out weighs any benefit they can conceivably provide.

Disclosure: Among many other reptile species I know and love (I've always been a herpophile), I had pet baby snapping turtles as a kid. They're great, and benign! I did, however, let mine go in their native habitat well before they got to the "femur snapping" size.