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Corporate Good
I know, I know. This section is entitled "Corporate Harm". So why then am I starting this section with a posting entitled "Corporate Good"?
The reason is that I want to be clear that we People aren't completely insane. I mean, if you read the rest of the postings in this section, and if you more or less agree with the analysis of this section, you might wonder what we People were thinking in creating Corporations in the first place. Why would the People who came before us have created such deadly monsters?
As far as I can tell, the reason People created Corporations was to facilitate non-governmental collections of People to pursue projects that generate potential social benefits and social costs.
(Well, to be fully correct, it wasn't exactly "The People" who created corporations. Rather, it was a certain queen, 404 years ago next month. But that's getting ahead of ourselves.)
I know this is sort of a convoluted explanation for why Corporations were created. But the explanation may start to make sense when we pull it apart and look at its three key pieces: "facilitate", "non-governmental", and "social".
Let's start with the notion of "social" costs and benefits. These are in contrast with "personal" costs and benefits. If I head out for a walk in the Hindu Kush mountains of Afghanistan, the costs and benefits of doing so would be purely (or at least mostly) personal. The same would be true if you and went for a walk in those mountains. Most any benefits or costs arising from that would be solely between you and I.
But let's say that you and I decide, during our walk, to hunt down some Al Qaeda and "bring them to justice", or to put our hands to raising some poppies and selling the crop to the heroin industry. In either case, the benefits and costs of our project would include social ones. That is, the benefits and costs would go beyond you and I.
Next, there's the notion of "non-governmental" collections of people. Note that governments are collections of people too. In theory, governmental collections of people pursue projects only of a social nature. Moreover, they are supposed to pursue ones that maximize social benefits, while minimizing social costs.
Sometimes, circumstances exist in which it makes more sense for a non-governmental collection of people to pursue a social project, than for a governmental collection of people to do the same thing. Three such circumstances include lack of goverment manpower, lack of goverment competency, and political sensitivity.
For example, in the case where you and I decide to hunt down some Al Qaeda, that project might dovetail nicely with the current project of the U.S. government that, presumably, is presently pursuing the same end. Why might the U.S. government look favorably upon our project? The three reasons above could provide an answer. Given the U.S. has no military draft, and our armed forces are currently occupied with Iraq, the government may lack the manpower necessary for scouring the Hindu Kush. Moreover, maybe the U.S. government doesn't have and doesn't need many people -- like you and I after we've hiked those hills -- who know the Hindu Kush like the back of their hands (i.e. incompetency). Lastly, maybe the prospect of U.S.. government soldiers scouring the Hindu Kush en masse, crossing back and forth across the Afghani-Pakistani border, might generate undesirable political sensitivities with respect to the Pakistani government, not to mention the fragile Afghani government. So maybe the U.S. government would smile upon our little project.
Listen, if you and I got that far, we might as well gives ourselves a catchy title like "Warlords of the Hindu Kush" or something. Hey, don't laugh. Cheesy titles like that pay off big time in downstream merchandising opportunities. Use your imagination. Without even trying I can see an action figure, a video game. and a breakfast cereal somewhere in there.
But I digress. There's one more piece to this puzzle. That is the notion of "facilitating" our project. Chasing down Al Qaeda in the Hindu Kush would be no mere walk in the woods. This project would entail potentially large social benefits and non-trivial social costs. It would be rather convenient if, in exchange for generating these social benefits, we were "held harmless" by the U.S. government for any social costs potentially arising from our project.
Social costs might arise if, for example, in pursuing Al Qaeda, we seized some poppy fields along the way. Raised to "waste not, want not", we naturally might sell the poppy crop to the heroin industry. Some folks might be less than happy about that.
Or, for example, on the way to pursuing Al Qaeda, we might come across a village with young women. Being men with some measure of testosterone still percolating through us, we might, well, do what comes sort of naturally during wartime. Some folks might be less than happy about that.
In these cases, it would be highly convenient for us if the U.S. government "had our backs" on these human rights complaints. That is, if some people pressed the U.N. to bring us up on war crimes charges, it would be nice if the U.S. government threw its weight around a bit to keep that from happening.
At this point, you might be wondering what the preceding "Warlords of the Hindu Kush" allegory has to do with Corporations. This allegory serves to illustrate the origin of the modern incarnation of Corporations.
The above allegory resembles the "privateer" dynamic under Queen Elizabeth I of England in the late 1500s. Among the most famous of the English privateers was Francis Drake. This fellow led bands of non-governmental actors who generated social benefits and costs, and who were facilitated in doing so by the English government. Mr. Drake in particular was renown for helping save Elizabethan England during the Spanish Armada Crisis.
Less than a decade following the successful (for England) conclusion to the Spanish Armada, Queen Elizabeth chartered, on December 31, 1600, the first modern Corporation: The British East India Company. Like the privateers, this primordial Corporation comprised non-governmental actors who generated social benefits and costs, and who were facilitated in doing so by the English government. The projects of the British East India Company included ruling India and ruling the territory that later became known as "America."
So, put simply, the "good" of the Corporations is that they are one means for generating social benefits outside of government. Specifically, they are a particularly useful means for pursuing risky social benefits, the pursuit of which may generate social costs.
[posted: 11/28/04]<<Previous Next>>
