BRIGHT B. SIMONS, MAY 27, 2006
Images of Kenneth Lay and Jeffrey Skilling, the founder and former CEO respectively of the defunct energy trading giant Enron, being led away from the courthouse after their conviction May 25 in a groundbreaking trial, brought it home to us all how much the sand beneath the feet of corporations is shifting.
The Enron Building
©2005 Hong Eun-taek
The idea of the modern corporate giant probably dates back over a century to U.S. Steel, which formed through a merger of Andrew Carnegie’s steel holdings and the operations of the Federal Steel Company to became the first conglomerate to cross the $1 billion mark in terms of capitalization.
Since then giant corporations have trod the earth as the third member of the social trinity, bridging the government and the people, and often enduring all the slings and arrows those two are capable of hurling during moments of confrontation within the body politic, while slowly amassing their own projectiles to assert territorial dominance.
The early history of U.S. Steel could hardly have portended anything but conformity to this pattern. Having defeated a strike in the very year it was formed, it had barely a decade of respite before the government, armed with a brand new weapon, antitrust legislation, descended with the wrath of Zeus and began strenuous attempts to break up the corporation over fears of monopoly. U.S. Steel survived this, but just barely. Big business was put on serious notice, and it has been on notice ever since.
In succeeding decades, the battle lines between government, corporations, and civil society continued to shift and every now and then brought the three competing behemoths close to an apocalyptic showdown. In those countries that went the Marxist route, the outcome of the struggle seemed moot. But since the vast majority of countries chose not to, the stage was set for a sustained debate about the role of a counterbalancing force to government and organized society. Frequently called upon to clarify its loyalties, big business navigated the tricky ground of self-interest with occasional brilliance and much orchestrated good luck.
Notwithstanding their shrewd ability to intertwine themselves so effectively with capitalist society that any call for their suppression sounded like a plea for self-amputation, corporations tripped too often than could be deemed safe considering their position.
The memoirs of Albert Speer, Hitler’s factory master, detail the complicity of German corporations in the Nazi genocidal wartime effort. But a more curious and altogether weirder fact is the cooperation between American household names in the automotive industry such as Ford and General Motors and their German counterparts leading to the formation of still extant major players such as Opel during the early years of the Third Reich. Fascinatingly, until the United States itself entered the war some American conglomerates were all too happy to benefit from the Nazi’s motorization program, one that was ultimately founded on repressive practices such as forced labor. This, despite the fact that it was clear American finance was funding the Nazi war machine against America’s allies in Europe. Historians Reinhold Billstein, Karola Fings, Anita Kugler, and Nicholas Sevis have extensively documented the dastardly arrangements underpinning that shameful big money conspiracy.
Such seeming abject moral insensitivity of corporations has been in evidence even in situations where corporations have not been the direct cause of human suffering. The chemical accident at the Union Carbide plant in Bhopal, India, in which thousands perished in 1984, as well as reports in the last decade that Nike turned a blind eye to child labor in the factories of some of its foreign subcontractors are all cases in point. The underlying theme is that businesses have shown no willingness to mitigate the plight of its unintended or indirect victims.
However, the narrative has evolved somewhat. Whereas once it had been a case of moral competition between the three primary stakeholders in the social polity, these days the accusation is more often one of the government colluding with business to undermine the interests of the citizenry. Of course, we include small and some medium scale businesses in the category of “citizenry.” Thus, the charge is essentially the same whether the case is one of big retail firms driving away from city centers small convenience stores or HMOs in the United States giving short shrift to low income patients. Government is deemed to be in cahoots with big business.
There are instances, however, when the situation is much more overt. Such as the recent episode involving Google doing the Chinese government’s bidding to censor its services to mainland China as part of a comprehensive undertaking to undercut its Chinese rival, Baidu. Or Nestlé’s supposed collusion with African state bureaucracies to promote the use of formula milk at the expense of breastfeeding.
What was always puzzling about the standard narrative of anti-corporatism, however, was how the attitude of begrudging business any real sense of social power could ever be reconciled with the insistence that it assume more responsibility even for events over which its direct control is limited.
On the one hand, how can we berate companies for riding roughshod over the wishes and sensitivities of local people and yet condemn Google for choosing to comply with local legislation? After all, local companies in China readily abide by government regulations. Why should Google be treated differently if it wishes to operate in China? Should the same society that condemns the slow pace at which the professional environment is changing for women in Africa also have the conviction to denounce Nestlé for catering to a trend in which more working mothers in West Africa choose to prioritize career over motherhood?
It seems as if when we asked corporations to become good citizens we had not prepared ourselves well enough for the implication, which is that like all citizens, good or bad, they can only join the rest of us in collective decision taking to determine what values we as a society wish to exhort. If it is the wish of international civil society to champion the cause of free speech in China then it should begin by making that firm and clear avowal first and foremost to the Chinese government, rather than yelp and yap from the sidelines at minor players like Google.
Perhaps in recognition of such sentiments the art of monitoring the deeds of corporations is fast evolving into a new level of sophistication.
We are in a new age of citizen activism. Empowered by the Internet and dissolving national boundaries, activists are organizing into powerful fronts and diversifying the means of struggle. Cold-war-era tactics that were seriously constrained by ideology have unraveled and made way for a new approach based simultaneously on localization and globalization. Even more striking, citizen activists no longer walk about shouting themselves hoarse. They conduct sharp, focused investigations that reveal what direct actions can precipitate immediate effects.
However, their tactics differ from ’80s-style commando dissent, as favored by organizations like Greenpeace. Lobbying has been scaled up in terms of method of delivery, orientation, and punch. No longer are elected representatives approached with ”special pleas” to curtail undesired conduct on the part of business; skilled maneuvering allows these representatives to be served with carefully worded ultimatums backed by electoral realities. Furthermore, the participants are not drawn exclusively from the ranks of the usual suspect, liberal-progressive movements. Shareholder activists in Europe for instance are being joined by pro-business conservative politicians such as Dr. Christoph Blocher, head of the Swiss Federal Department of Justice and one of the leading intellectual proponents of democratic capitalism.
Indeed the growing mainstreaming of the new activism is driving the ”old ways” to a rapid obsolescence. When animal rights activists sent seemingly threatening letters to non-institutional owners of stock in GlaxoSmithKline this month, their approach was condemned by no less a person than the sitting prime minister of Britain. A few years ago, such widespread denunciation most definitely would have been unforthcoming. The animal rights movement in the United Kingdom was once so powerful and dreaded, for the tactics it adopted, that when it begun targeting Huntingdon Life Sciences in 1999 the animal testing firm nearly went bankrupt. Oracle hurriedly unloaded its stock in the company while Barclays was forced to sever financial links. Their steam apparently has run out.
As the new activism finds its roots, we are curious to know what causes it will choose to adopt and how the fusion of localization and globalization will yield results. But already there have been developments that may be direct offshoots of this novel way of scrutinizing business.
The General Synod of the Anglican Church has voted to disinvest all its stock in Caterpillar, the American manufacturer of construction equipment, accusing it of supplying wreckers to Israel used in the destruction of Palestinian homes. This is despite the Church’s own Ethical Investment Advisory Group’s position that the decision has no roots in business morality, since Caterpillar can not reasonably be expected to regulate the uses to which its machinery, even if custom-made, are put.
Coca-Cola has been banned or is in the process of being banned from twenty campuses in the United Kingdom and the United States; and 130 other campuses across the globe are gearing up to follow suit. This follows an international campaign launched by the Colombian National Union of Food Industry Workers (SINALTRAINAL, its Spanish acronym), which claims Coca-Cola is complicit in the killing of union executives in Colombia. Coca-Cola dismisses the charge arguing that official investigations have not indicted anyone remotely connected with the company.
And rumors are swirling around the more clued-in blogs that activists may soon begin targeting L’Oréal because Nestlé owns a 26-percent stake in the cosmetics company. Nestlé is the United Kingdom’s most boycotted company.
So, it is amply evident that the new approach of targeted action, while less noisy and therefore less headline grabbing, can be very effective and direct.
What is yet to be made clear is whether it is any more productive than the old boisterous, barrier-crashing, tear-gas-defying version.
In the wider scheme of things, while paying due attention to the immediacy of particular events or issues, we ought perhaps to be cautious when we set out on activities that demonize the very essence of large-scale enterprise. After all, the record of corporations in delivering results in our collective efforts to surmount some of the gravest and most intractable challenges facing humanity has been consistently better than either government or civil society. One can easily think of Samsung of Korea or Tata of India as corporate dynasties whose unrelenting entrepreneurialism has led to miraculous national prosperity in recent times. There are many other enterprises whose growth is a tribute to genuine material progress, and often enough improvements in social standards in the vicinities of their operations, rather than a testimony to greed.
Also, we sometimes exaggerate some of the worst sins of corporations. After persistent inquiry, it has now been established that the Union Carbide disaster was caused by sabotage and not by criminal corporate negligence. In a recent BBC debate between Eric Schlosser, avowed fast-food critic, and Steve Easterbrook, chief executive of McDonald’s U.K., it emerged that despite widespread charges that McDonald’s encouraged cruelty to animals, no evidence has actually been found, beyond general discomfort about herding and slaughtering animals that can only be dispelled by the onset of a vegetarian society. In fact, the Royal Society for the Prevention of Cruelty to Animals (the United Kingdom’s chief animal welfare agency) actually presented an award to McDonald’s recently in recognition of the company’s efforts to improve upon the quality of its meat delivery systems.
So, just as we allow government to reform itself from within, with only steady but restrained pressure from the populace, so should we also allow business room for internal re-evaluation and regeneration. This is evident in the growth of a new business franchise: the development and selling of corporate social responsibility packages. This may not itself amount to a genuine watershed in business-society relations (read Christian Aid’s critical report, “Behind the mask. The real face of corporate social responsibility.”) but at least it does imply a clear recognition on the part of the corporate world that the rules of the game are changing.
Last time I heard, according to accounting firm Price Waterhouse Coopers, the new industry was worth several hundreds of millions of dollars and growing. Bet that didn’t surprise you: business after all will always be business.