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August 14, 2004

The Corporation: Organization as psychopath

A few thoughts on Ezra's post at Pandagon, Movie review: The Corporation.

Ezra writes:

The thesis of the movie, which is inexplicably dropped as the film progresses, is that the corporation, since it's legally defined as an individual, can be psychologically understood as a psychopath. The methodology used to achieve this outcome, examples of the worst in corporate excess and evil-doing, is pretty flawed. It'd be like diagnosing the human race based on the horrors inflicted by our worst members.

Many astute viewers have voiced similar complaints, including A.O. Scott of the New York Times. There's a misunderstanding here. The Corporation is using "psychopath" in a narrow technical sense without explaining the difference between medical/psychiatric construct and the layman's understanding of the term. "Psychopath" has entered our language as a quasi-clinical epithet. To a layman, psychopath means something like "sicko", "bastard", "villain", or "monster."

Psychologists and psychiatrists apply the term much more narrowly. Here is an example of the professional use of the term "psychopath" taken from a recent issue of Psychiatric Times (fascinating article, BTW):

The killers' characteristics referred to as antisocial personality in the FBI report were as follows: sense of entitlement, unremorseful, apathetic to others, unconscionable, blameful of others, manipulative and conning, affectively cold, disparate understanding of behavior and socially acceptable behavior, disregardful of social obligations, nonconforming to social norms, irresponsible. These killers were not simply persistently antisocial individuals who met DSM-IV criteria for ASPD; they were psychopaths- remorseless predators who use charm, intimidation and, if necessary, impulsive and cold-blooded violence to attain their ends.[Emphasis added.]

The Corporation's thesis that corporations are psychopaths is neither a slur nor a conceit. It's a fact. Corporations are legal persons. Unfortunately, they are persons with "no souls to save, and no bodies to imprison."

A corporation exists to dissolve the responsibilities of the human beings who run it. Say the board of Acme Inc decides to pollute a river. If anyone has a problem with that, they'll have to sue Acme, not the 12 members of the board or the investors. Most individuals would be ashamed to be named in a pollution suit, a fact which might deter them from committing such a crime. Acme has no shame, though.

Jail is a great equalizer. The richer you are, the less a fine will harm you--but a year is still worth as much to a rich person as to a poor one. Unfortunately, you can't lock up an abstraction and the directors have little or no criminal liability. Fines become another cost of doing business. Of course, when pollution turns a profit, individuals divide the money.

Corporations are also legally required to put profit above every other good. A small business owner might decide that, on the whole, a 5% rate of return is plenty, even though she knows she could get 10% by raising prices and cutting jobs. It's her business, so she gets to decide how to balance profits against other values. By contrast, the Acme Board is required to make as big a profit is it possibly can, no matter what. For all its power, the directors aren't allowed to place jobs over profit, or sustainability over quarterly return. For that, they could be fired.

Normal human beings are enmeshed in a network of obligations and competing goods. We'd all like to make money, but we recognize that other people's rights and feelings matter, unlike psychopaths who feel entitled to do whatever they want.. If empathy and ethics aren't enough to keep us normals on the straight and narrow, we can be deterred by punishments ranging from social ostracism to death. Even human psychopaths can be deterred by the threat of punishment.

Corporations have the same rights as people, plus more lawyers, guns and money. Terrifyingly, they are also designed to be amoral, immortal, and insatiable. For example, corporations enjoy free speech, and property rights including the right to own own other corporations (ironic, that, considering the 14th Amendment established corporate personhood).

The Corporation's message is not simply that corporations do bad things. Nor is the movie about what terrible people corporate executives are. On the contrary, the movie goes out of its way to show how sympathetic and thoughtful corporate leaders can be. The point of the movie is that a legal fiction has unleashed a dangerous self-perpetuating entity which is designed to slip the bonds of individual human decency and personal responsibility. That's why corporations are literally psychopaths.

[Lightly copy edited 8/22/04.]


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Well put. Now, is it possible to change that model? Cetainly, closely held businesses, as you note, need not profit maximize. Nonprofits and "social ventures" and coops need not. Then you have to ask can these more idealistic orgs compete toe to toe with those firms unburdened by conscience, and whose outputs and costs of doing business are unburdened by the true costs of production, including the cost of cleanup? On average, you have to say no, unless consumers decide to reject lower prices and pay more to slow environmental degradation and other ills. But even if the Yuppies pay up for these green brands, how about the poor who have little choice?

A conundrum. Unless we work through re-making the laws governing corps and the regulatory structure, whereas in fact we are going the other way, catering to corps and providing them with favors and incentives to stay in onshore.

Drives you back to global governance, do you think?

I was so happy to have found this article. I am currently a student at Boston University and at the present time I am taking a class about White Collar Crime. My thoughts about the movie, The Corporation, which we must watch are exactly in line with what you have expressed. I used a similar analogy (you used the human race) and I used minority race to show that showing how some "bad apples" are used to paint a less than rosy picture. I agree the movie is incredibly flawed.

+1 journalism skill for referencing Warren Zevon effectively.

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