Sunday, September 22, 2019
Corporations Violate Reality
written 15 September 2019
published 22 September 2019
Unity perspective sees the world as whole. Any apparent division is a relative perspective, not an absolute truth. For example, ocean wave peaks are easily distinguished but the division between waves is arbitrary. In a connected world, every action has consequences everywhere, no matter what the original intention.
Unity is a metaphysical truth, which expresses on the physical level as ubiquitous interconnection. Weather patterns sweep around the globe, binding everyone in their path. Whatever goes down my sink winds up in the ocean, which has global circulation patterns, touching every continent. We live in a global economy, where food travels an average of 1500 miles. Despite racist dogma, all humans are the same under the skin, vulnerable to the same diseases and nutritional needs. A sick farm worker in Central American can infect a Washington DC lobbyist. The legal fiction of limited liability corporations intentionally denies this connection, institutionalizing irresponsibility. This passes for good business practice.
The limited liability corporation began in England in 1855. It was justified to promote investment by risk averse investors. From the beginning, there was concern it would encourage unsound business practices, called "moral hazard" today. Edward William Cox, a critic at the time, wrote: "He who acts through an agent should be responsible for his agent's acts, and that he who shares the profits of an enterprise ought also to be subject to its losses; that there is a moral obligation, which it is the duty of the laws of a civilized nation to enforce, to pay debts, perform contracts and make reparation for wrongs. Limited liability is founded on the opposite principle and permits a man to avail himself of acts if advantageous to him, and not to be responsible for them if they should be disadvantageous."
We live in a world far from those moral obligations. For almost a century, the Harvard Business School has taught future managers of the world that the only obligation of a corporation is maximization of fiscal return to shareholders and executives. In a radical change, the Business Round Table, a collection of corporate CEOs, announced last month that corporations should now deliver value to customers, employees, suppliers, and the larger community, in addition to shareholders. While this is a move in the right direction, it will be difficult to shift established business practices.
Avoiding moral and fiscal responsibility through bankruptcy has a long history in business. Around the world, mining companies take the profitable ore, then declare bankruptcy, leave toxic tailings and runoff. Coal extraction by mountain top removal devastates whole regions with impunity. An exhausted oil field is a lethal swamp, devoid of most life. In recent news, PG&E is striving to limit their responsibility for the destructive fires started by their equipment, after years of prioritizing shareholders and executives over maintenance and equipment upgrades. Perdue Pharma is planning to declare bankruptcy to avoid paying the expenses caused by the massive opioid epidemic they created, and the Sackler family, who made billions, have shifted wealth overseas to avoid liability.
When corporations take actions to maximize profit for a few, without being liable for the consequences of those actions, the burden shifts to the public, who neither profit nor direct the business. The fiction of limited liability doesn't eliminate costs, it distributes them, degrading the performance of the entire economy. Remediating some problems, like Superfund sites or reclamation of the former mill site in Fort Bragg, fall to governments using tax dollars. When problems are more widely dispersed, such as contaminated air, food, or water, the general public pays through higher health costs. There are global degradations which are barely acknowledged, let alone remediated, such as the growing plastic trash in our oceans, loss of species due to the anthropogenic sixth extinction, the obesity epidemic, the homeless epidemic, and, of course, climate change.
Our corporate dominated economy capitalizes profits, but socializes losses: a systematic grand theft from the entire society. Such kleptocracy is a cancerous form of socialism, taking from everyone and nourishing only a few. This irresponsible business activity should not be praised, but must instead be healed, before it sacrifices the entire planet on the altar of short term profit. A healthy economy, like a healthy body, nourishes all participants.