LIVING ECONOMIES FOR A LIVING PLANET
Part II: Corporate Pathology and the Suicide Economy
David C. Korten
The defining agenda of the Era of Empire has centered on
unifying the planet's territory and resources under centralized institutions
with the power to impose order in the name of peace and prosperity. The dominant
institutions, including states and corporations, feature coercive hierarchies
able to maintain significant control over the behavior of hundreds of thousands,
even millions of people. Such institutions have contributed many benefits to
humanity, including many extraordinary advances in knowledge, technology,
communications, and organization. Far from bringing universal peace and
prosperity, however, the dark side of their legacy is a world of enormous
inequality, violence, repression, and environmental destruction.
Those who sit atop the resulting pyramids of power all too
often use their favored positions for personal gain at expense of those less
favored. It was true for the kings and emperors who ruled by divine right. It is
true for many of the political elites who hold power by electoral mandate. And
it is true for many corporate CEOs, as the Enron scandal revealed so
dramatically.
Over the past twenty years there has been an enormous shift in
power from the institutions of the state to global corporations with economic
resources far greater than those of most states and with a global reach that
places them beyond accountability to any persons, place, or public institution.
Through the processes of corporate globalization humanity is moving rapidly
toward Empire’s ultimate goal of unifying the world’s people under a unified
system of governance.
Proponents of corporate globalization hail this consolidation
as the ultimate victory of democracy and the market. Unfortunately, they
mistakenly equate the rule of money with democracy and central economic planning
by global mega-corporations with the playing out of market forces.
Far from a victory of democracy and the market, humanity has
fallen victim to a new variation on the age old theme of tyranny. The critical
difference is that the present tyranny lacks a human face. It is more
institutional than personal, an ominous victory of technology, culture, and
institutions over people and more generally of money over life. It is a system
of institutional power driven by financial markets and the profit imperatives of
publicly traded corporations that has taken on a life of its own — functioning
on autopilot beyond human control.
A money-centered culture interacts with the power of the
institutions of money in a self-reinforcing vicious cycle to maintain human
subservience to the system. Through their control of the modern mechanisms of
cultural reproduction (mass media, advertising, and education) the institutions
of money fabricate a materialistic, money-loving culture suited to their ends.
Financial power becomes cultural power, which becomes institutional power, which
becomes financial power, which becomes cultural power, which becomes....
Hired by Money to Grow
Money
Visit a corporate headquarters and you see people, buildings,
furnishings, and office equipment. By all appearances the people are running
things. An organization chart will show clear lines of authority leading to a
CEO who in turn reports to a board of directors. It is easy to think of a
corporation as a community of people. It is, however, a misleading
characterization precisely because in a publicly traded corporation the people
are all employees of the institutions paid to serve the institution at its
pleasure.
The publicly traded, limited liability corporation is more
accurately described as a pool of money with special legal rights and
protections dedicated to self-reproduction. The people, including the CEO and
directors can be dismissed without recourse. Only the money, which the corporate
officers are legally bound to serve, has rights. In theory it is the
shareholders whom management serves, however, since most shares are held in
trust by various institutional investors, the real shareholders are generally
invisible even to the corporate officers. Management’s real focus is on the
money, not the shareholders. In effect they are hired by money
to nurture its growth and reproduction even at the expense of life.
Powerful though global corporations may be, the ultimate
decision power in the suicide economy resides in the global financial markets.
Each day these markets facilitate the exchange of vast sums of electronic money
that exists only in computer memories. The money flows in response to purchase
and sale orders from money traders betting on movements in the numbers that
flash across their computer screens. It is the great cyberspace casino, the
ultimate computer game. Because they tend to act in concert with a kind of herd
mentality in response to fact, rumor, and shifting perceptions of what’s hot
and what isn’t the players are sometimes referred to as the electronic herd.
They live in a world of pure money that pays them for only one thing: using
money to make money for money.
In a mere instant the actions of the money traders may make
and break the fortunes of individuals, giant corporations, and powerful nations.
Their computer screens, however, tell them nothing of the consequences either
for nature or for the millions — even billions — of people whose lives their
decisions affect. The traders and their world are equally invisible to those who
bear the consequences of their decisions. The lives of those who live in the
living world are integrally linked to the lives of those in the money world, but
neither sees the connection. This mutual invisibility makes the institutional
tyranny of money the most dangerous of all tyrannies, for those who make the
decisions have no knowledge of the consequences of their actions and those who
bear the consequences cannot identify and confront an unknown and invisible
oppressor.
The more important consequences of this perverse system
include an unconscionable and growing concentration of wealth and power that
encourages wasteful extravagance on the part of the few while imposing
deprivation and servitude on billions of people and an accelerating depletion of
natural wealth it took our living planet billions of years to produce. Either of
these trends will seal the human fate if allowed to continue.
Institutional
Sociopaths
The publicly traded, limited liability corporation that is the
institutional centerpiece of the corporate global economy is by law and internal
structure a single purpose organization in the business of serving the demand of
financial markets for every increasing financial returns. Workers, customers,
politicians, and the general public are only means to this end. What ever
products and services the publicly traded corporation may provide are incidental
to its primary business purpose of making money. In short it is an economic
predator.
Human persons who behave in a similarly self-centered,
anti-social, and ultimately self-destructive way are called sociopaths and they
are commonly confined to prisons or mental institutions. Nature's closest
equivalent the publicly traded, limited liability is the cancer cell, which
inflicted persons will endure extremely painful and debilitating medical
treatments to eliminate from their bodies. In the suicide economy, cancer-like
corporate sociopaths are regularly rewarded with rising share prices and
multi-million dollar bonuses for their CEOs. Corporate officers suspected of
sacrificing share price to other concerns — such as workers,
community, or the environment — face a serious threat of
dismissal.
The Enron scandal provided a rare public window into the depth
of the corruption of the ruling institutions of the suicide economy. It is well
known to insiders that the fraud and misrepresentation revealed in the Enron
case, much of it perfectly legal under rules written by politicians on corporate
payrolls, is far from the exception. According to Business
Week (March 25, 2002), the Enron case exposed,
a mess that has been accumulating for
years — an alarming erosion in the honesty and reliability of financial
information about companies, data on which America’s markets depend. Companies
have played numbers games with increasing abandon — exaggerating profits,
understating debts, hiding costs — and indulgent auditors have O.K.’d it
all, for fear of losing juicy consulting contracts with their clients. Overblown
earnings inflated the bonuses of corporate insiders, many of whom reaped big
profits cashing in stock options ahead of earnings restatements. Meanwhile
investors were left clueless about what was really going on inside once-admired
outfits such as Enron.
It is not a wise system.
Four characteristics of the publicly
traded, limited liability corporation account for much of its sociopathic
behavior:
·
Unlimited Size. The largest global corporations
command more economic power than most countries. Of the hundred largest
economies in the world, fifty-one are economies internal to corporations. The
dominant trend is toward continued rapid growth in the size and power of
individual corporations through internal growth, mergers and acquisitions.
·
Centralized Authority. A corporation is among the
most authoritarian of human institutions. Its chief executive officer has the
authority to hire and fire people, open and close facilities, buy and sell other
companies, add or drop products, use corporate resources to shape public opinion
and public policies in ways of his choosing, and move operations around the
world — with virtually no recourse by the people and communities effected.
·
Absentee Ownership. The publicly traded corporation
institutionalizes an extreme form of absentee ownership. A major portion of the
ownership interests in most corporations are aggregated in professionally
managed investment funds. The real owners are unlikely to know even what
corporations they "own," let alone what devastation these corporation
may be causing in the name of shareholder interest. They know only the financial
returns produced by the managers of the portfolios in which they hold shares —
which they may track on a daily or quarterly basis. Yet by law, custom and
internal structure corporate management is accountable only to its
"owners" and is required to place their interests ahead of all other
interests in corporate decision making.
·
Limited Liability. The corporation's owners are
exempt from any liability beyond the value of their shares for the consequences
of actions taken by the corporation in their name, no matter how destructive or
illegal. Directors and managers face almost no risk of personal fine or
imprisonment for crimes committed by the corporations in their charge.
The institution of the publicly traded, limited liability
corporation is a legalized invitation to organized irresponsibility on a
breathtaking scale and it has no more acceptable place in a healthy community
than a cancer has in a healthy body.
High Cost of Hierarchy
Apologists for corporate greed and violence to life maintain
that this is simply nature’s way of perfecting genetic lines. Contrary to the
claims of such social Darwinists, competition and hierarchies of domination in
nature are sub-texts to the deeper the processes of cooperative
self-organization by which trillions of individual, self-directing living
organisms organize themselves into wholes with capacities far beyond the sum of
their parts. Healthy, mature living systems are models of frugality and
mutuality in which each organism and species takes only what it needs as the
system conserves and continuously recycles energy and materials to maximize the
life of the whole. Apparently, nature has learned that while competition and
dominator hierarchies have their place, they are on the whole inefficient and
wasteful of system resources — as the human institutions of
Empire and the suicide economy so dramatically demonstrate.
Competition among global corporations leads them to expend
hundreds of billions of dollars worth of society's scarce resources on marketing
and advertising in a battle for market share that contributes nothing to the
well-being or quality of life of society. Competition among nations leads to the
allocation of scarce resources to armaments, military troops, and wars that
destroy whole societies and devastate the environment.
Maintaining the bureaucratic hierarchies of corporations and
states requires an expensive organizational infrastructure of highly paid
managers, accountants, lawyers, and auditors — and all the
support staff and facilities they require — to no actual
productive end. Meanwhile more than a billion of the world's people live on
less than a dollar a day and lack the most basic necessities of life.
Victory often goes to the corporation with the largest
advertising budget or the state with the largest military. Corporations thus
direct ever more resources to advertising to expand market share to expand
advertising budgets to expand market share… Imperialistic states direct ever
more resources to military budgets to extend dominion over ever more territory,
resources, and people to expand military budgets…. Hierarchy grows, inequality
increases, and rulers become ever further removed from the realities of daily
life and the real world consequences of their decisions.
As power begets power and competition becomes more ruthless,
the appetites of the wealthy become more extravagant and the excluded become
more desperate. The growing gap erodes trust and institutional legitimacy, which
in turn compels an ever greater diversion of resources to security measures —
from car alarms and security guards to police and prisons. The planetary
life support system becomes over stressed and critical subsystems collapse.
Insulated from reality, power holding elites fail to realize the terrible truth
that the institutions of their power have become instruments of humanity's
suicidal self-destruction — that their beloved global capitalist economy is a suicide
economy.
* * *
Healthy living systems create new opportunities for life to
grow and flourish. The suicide economy grows money at life's expense.
Given the speed at which the suicide economy is eroding the
social and natural capital that is the foundation of human existence, humanity
may have no more than a twenty to thirty year window of opportunity to replace
the suicide economy of the Era of Empire with a planetary system of living
economies adapted to the reality of a finite living planet.
Natural ecosystems offer useful insights for those who engage
this challenge.
Back: Living
Economies Next: Natural
Succession
Revised March 24, 2002
[ Home ] [ Parent Page ] [ Part I: INTRODUCTION ] [ Part II: PATHOLOGY ] [ Part III: SUCCESSION ] [ Part IV: AWAKENING ] [ Part V: COMMUNITY ] [ Part VI: LIVING ] [ SUPPORTING ESSAYS ] [ DIALOGUE ]
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