No Such Nonsense

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Wednesday, January 10, 2007

The Corporation: Too evil, or not evil enough?

In the past 10 years, much has been written about the evils of the profit motive and the basic immorality of the corporate quest for shareholder value. Many of my MBA profs would have agreed that the only reason for a corporation to exist is to generate profits for shareholders, though they differed on whether this was good, bad or indifferent for society. The small minority that argued for a socially responsible corporation were considered to be fiscally niave and, well, unrealistic.

Critics on the left scream that the Wal-Martization of the world is destructive and wrongheaded. Rather than blame consumers, who embraced Wal-mart and actively forsook those beloved mom-and-pop stores, or the mom-and-pop stores themselves for clearly not answering consumers needs as well as Home Depot, Best Buy and Wal-Mart could, anti-corporate folks have thrown all of the blame for the shift in the marketplace on the big, bad corporations. The corporations give us no choice but to shop there, they drive the little guy out of business with unfair practices, they exploit workers at home and abroad - all in pursuit of the profits for their fat-cat shareholders. That's the orthodoxy, and it is pervasive. Just check out Joel Bakan, Naomi Klein and the bloggerati. The global corporation is the devil, full stop.

But this article gives a slightly different perspective on the whole thing. Part of the argument is that corporations aren't in business for the enrichment of shareholders at all, but rather for the enrichment of their own senior managers. Watching Home Depot CEO Robert Nardelli walk away with a $210 million severence package after getting fired for poor performance may lend some credence to that argument. Yet the argument goes further still. Rather than being soulless entities deaf to the public good, corporations may actually be overly responsive to the demands of the left -the loudest and most demanding of the anti-corporate protestors. Do companies - like Macdonald's, Shell and Nike - actually bend over backwards, to the detriment of shareholders, to address the concerns of the vocal left and protect their brands? I'm not sure there is a lot of evidence of that. While I buy the first half of the argument - that corporations exist to enrich their managers - I'm not sure if I agree that the biggest brands have become tools of the left. The left wishes it were so.

Plus, I'm not willing to absolve the consumer in all this. Don't like what a company is doing? Stop buying their crap. Opposed to child labour? Well, then, suck it up and pay more for your products. But moaning about how the corporations exploit people and then supporting them for doing so? Now that's evil.


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