So I finally watched The Corporation (late to the party, I know), and got through it with the disappointed, slightly scrunched up face of someone who found it deeply flawed. I agreed with it in many aspects, including the solutions proffered at the end, to do with changing the incentives of corporations to be more in line with our ethical standards by way of protesting, changing the legal structure, and so on. I agreed as well with the many examples it pointed to of corporations doing some really ethically messed up stuff, and letting some equally messed up stuff get done without lifting an opposing incorporeal (pun sort of intended) finger. What I didn’t agree with were three of the basic assumptions seemingly used to get to the documentary’s conclusions:
- The corporation is (not just has some rights of, but should be equated with in at least some social sense) a person.
- If the corporation is a person, it is necessarily a psychopathic person.
- Because it is a psychopathic person, it is necessarily therefore (this link was not explained as such, but heavily implied to be causal) evil – and should be regulated as evil.
I take issue with all three of these, but – as many others have already pointed out the problems with the first, in my opinion to an adequate degree – I’ll focus on the latter two.
Fair warning, I know these are supposed to be short posts, but I’ve been bottling up this fairly contrary opinion during class as well, so I’m going to lay this out.
As an economist, I firmly believe that all people (with the very rare outlier that includes absolutely none of you who are reading this far-too-long comment) are at their core rational and self-interested. Self-interested meaning one who orders their preferences based on the benefit it confers to them. Rational meaning one who is able to logically order their preferences and act on them accordingly. If you buy something for yourself, you are making a choice based on the value your new product has to you outweighing that of the money you gave up for it. When you eat something, you’re doing it to fulfill your need to survive as well as your enjoyment. When you help someone else, you’re doing it because it makes you feel better.
Note, this can be rationalized in many ways. It can give you immediate gratification. It could make you feel better because you are fulfilling the person you see yourself to be, or want others to see you as. Most people help others because they feel empathy towards that person. This emotion aids in ordering most peoples’ preferences to in some way include altruism – helping them makes one feel less bad for them because they’re better off. The difference between a psychopath and someone more neuro-typical is that a psychopath lacks empathy.
Here’s the kicker – that doesn’t necessarily make a psychopath evil. Many psychopaths still help others for many reasons – for example knowing that a better public image would make their lives easier in the long term. All a lack of empathy does is change how their preferences are ordered by changing their incentives.
If we want to decide that corporations are psychopaths because they lack one of the many variables driving incentives, preferences, and therefore decision making, fine. That can be seen as technically not wrong. What it is, however, is lazy. You know what corporations are missing across the board that changes their incentives possibly even more? Bodies. The fact that the biggest form of criminal sanctions are useless against corporations because they physically cannot be incarcerated. The fact that no survival instinct means that a corporation’s life and death is only measured in terms of their net worth. Also, the fact that they’re legally obligated to put their short term benefit before all else (despite the fact that this shouldn’t need to be legally required as most rational self-interested decision makers – which corporations definitely are – would do that anyway, but should also feel free to put their long term profit/interests first, therefore also enabling more robustly ethical corporate decisions in the future).
If we want to accept the already dubious proposition that corporations are persons, saying that they necessarily have to be a psychopathic person is nowhere near the whole picture. The corporate “person” is – excuse my wording – a whole different animal.
This is important because if we see the corporation as, not an “evil” “psychopathic” “person”, but a rational decision maker whose incentives are based on self-interest, we can more easily see the solutions the documentary puts forward as flowing from this narrative. What does protesting do? It changes corporations’ incentive schemes to more greatly prefer public image in order to maximize their profit. What does having a more socially-minded board do for a corporation? It changes how corporations interpret the different paths to getting to their goal of maximizing profit, maybe by choosing some ethical decisions to bolster their public image. What are we doing when we’re changing the legal scheme around the structure of corporations? We’re directly imposing changes on how corporations can and will order their preferences.
My problem with The Corporation was that it abandoned this more cogent train of reasoning to the simpler and more emotional narrative of the corporation being the psychopathic person. What this served to do was to heavily emphasize the problems with the current corporate structure, and heavily de-emphasize its possible solutions. It is a lazy and inadequate approach to think about the corporation and we should regard it as such.
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