OpEd:
Rethinking the Corporate Structure
October 5, 2009 by Kyle BradyTags: America, Corporate America, Corporations, Politics, Profits
As required by the FTC, a Full Disclosure is available - this piece adheres to the Code of Ethics
Given the events of the last two years - where American citizens have lived through rising unemployment rates, massive layoffs, corporate profiteering, the near collapse of the financial system, home foreclosures, and more – the current climate is one on the brink of change. If there was ever a time to rethink and reinvent the financial, economic, and political entity known as a corporation, the time is now.
The corporation has its roots in America’s former colonial parent – The English Empire. After crossing the Atlantic Ocean to what would become the future’s economic focal point, it emerged in America during the late 1800’s in a form that would be recognizable to most, followed by mutation and growth that essentially produced the modern corporation by the late-1970’s/early-1980’s. Throughout the last three decades, corporations have not only seen greater freedoms, on the whole, and enjoyed political power previously unseen, but have achieved two important milestones that are extremely worrisome: the acceptance of the corporation as an individual legal entity, and record profit margins.
Modern corporations exist for one very singular purpose: to achieve profits for the benefit of their shareholders. There is no ethical component of a corporation’s structure, nor is there an obligation to act in a manner that the general public would appreciate – so long as profits are being attained, the corporation’s central legal obligation has been fulfilled. Granted, there have been regulatory measures taken in order to exercise more definitive control over the behavior of corporations, such as the recent Sarbanes-Oxley, but these have had limited effect and have been produced only in response to the catastrophic failures of self-regulation. Furthermore, modern corporations are given status as a legal entity, also called artificial personhood, that precludes most individuals involved from legal retribution for the actions of the corporation, as well as financial debts and obligations, so long as all applicable law has been followed.
It is these two aspects of modern corporations, singlemindedness and personhood, that have resulted in the catastrophes, scandals, and wrongdoing so often seen in relation to monolithic organizations: Enron’s fraud, the trading of mortgage derivatives that led to the housing boom and bust, outsourcing, Bank of America’s/Kenneth Lewis’ current scandal, the collapse of the American auto industry, and more. Even worse is that these traits are well recognized by analysts, pundits, and even regulatory boards as being the root cause of many problems associated with or caused by corporations, and yet nothing has been enacted.
The time has come, not for self-reflection, forgiveness, or introspection, but for action, in order to secure America’s future from both further corporate subservience and future economic catastrophes. The main issue that needs to be addressed is the psychopathic nature inherent in a corporation, which can be accomplished through different methods: expand the mandate of the corporation to emphasize ethical actions (such as fair compensation, future-minded behavior, and protecting employees), require new or reinvented investment techniques to be approved by the SEC before their usage, mandate a percentage of profits be donated without tax benefits, and remove any power to fund, finance, or influence regulation or legislation at any level, to name just a few.
After addressing the corporation’s singlemindness, however, the issue of personhood still remains. While the protection of shareholders, the Board of Directors, employees, and executives is important, to a degree, those who are given responsibility for the health and behavior of the corporation must be held accountable for their actions, and not just after a public scandal. By maintaining a separation between the debts and legal culpability of the organization and the individuals involved, an invitation is being given for its powerful figureheads to act in manners considerably less than ethical, where those at the top become more interested in personal gains and benefits than the actual health of the corporation they are tasked with running. Removing this division between the corporation and its management, however slightly, would be the first step in addressing this issue of elephantine proportions.
For the United States, and the Western World, to continue to allow corporations the freedom to act largely as they wish is inviting further disaster, pitting the fate of the entire world against the psychopathic, self-serving, singleminded, and largely corrupt status of the corporate entity. This is not capitalism vs. socialism, the destruction of the free market, about "liberal ideals", or any other pejorative attack on progressive ideas of reformation, but is simply a forward-thinking political maneuver of self-protection. In ages past, the Federal Government recognized the need for greater regulation of both markets and corporations, and the time has come once again for such action – deregulation helped cause the current disaster state, and only regulation will help prevent it from happening once again.
Kyle can be found on Twitter and MySpace, or reached via email.
