People who consider 'growing' a large corporation to be the pinnacle of life achievement will talk about the corporation as the centerpiece of not only American life, but of modern civilization. For most of us the corporation is just a semi-neutral fact of life. And for others just uttering the word 'corporation' calls up nostalgia for hippie protesters trying to 'stick it to the man.'
By the logic of political tennis, it's become a stock liberal thing to be unthinkingly anti-corporate and a stock conservative thing to be pro-corporate even when corporations violate key tenets of conservatism (like open market competition). I'm not very interested in this article in red-meat interest stories about corporations behaving badly (like the BP oil spill) or corporations defying expectations and doing something good for the world (corporate charities). I'm interested in a more fundamental question about the corporation: can it ever be a good thing?
I realize that technically a corporation can be two guys running a business out of their garage, but this obviously isn't what I'm talking about here. Since the amorphously defined 'small business' is a cheerleading occasion in our political discourse, let's not play word games here: you don't get to laud the 'small business,' then come back to me and say 'yeah, but don't hate on corporations; a corporation can be two guys operating out of a garage.' When I say 'corporation' here I mean a large-scale business association. I'm not using 'corporation' as a legal term, though I'm aware that it is one.
The questions, then, are whether large-scale business operations can be a good thing, and at what point is large too large. The second I'm not prepared to answer here. The first I have preliminary thoughts about.
In some ways the large corporation is a paradox. It's a business under one name (even, absurdly, when it becomes a conglomeration of large corporations doing things independently); but it's also a disconnected group of individuals over whom no one can possibly maintain realistic levels of accountability. Corporate CEOs command increasingly enormous salaries based on the premise that they're responsible for tens if not hundreds of thousands of employees. But a child could point out that it's just not possible for a single human being to actually take on that quantity of responsibility with any realistic expectation of oversight, accountability, or relevance in the lives of the vast majority of employees. And I get it; the point of the CEO and upper-level executives is to think about the 'big picture'; but really, what else could they think about? And what do they know about what the 'big picture' means when, like a giant mosaic, it's employed as millions of little-picture operations in the daily business of the corporation?
So the first thing about corporations that's arguably very bad is that the magnitude of responsibility that those at the top of corporations take on is, paradoxically, the very reason that these people have absolutely no realistic sense of responsibility whatsoever. It's easy to see this paradox in action. Just read the words of upper-level executives when some lower-level employee or far-flung appendage of the giant corporate association does something stupid that makes news. Remember when Mitt Romney was running for president and disavowing responsibility for the high-leverage destruction his firm was specializing in? Of course he disavowed responsibility. As an executive (chairman of the board, I think) he's part of a elite group of people who take it as a given that they should get paid hundreds of thousands to millions of dollars a year to do absolutely nothing. When he disavowed responsibility, he admitted then and there, unwittingly perhaps, that the job he was getting a six-figure salary to do was a sham, that he wasn't actually doing the job, that only an idiot or a madman would have the audacity to expect someone in his 'job' to do anything for their compensation, and that of course he had nothing to do with the mistakes his firm made, because he was only...CHAIRMAN OF THE BOARD. What kind of corporate executive actually TAKES REAL RESPONSIBILITY for what happens at the lower levels?
Yes, I'm sure you can point to all kinds of examples of CEOs being fired for what shareholders deem underperformance or enough of a scandal to harm the corporate image. This happens with university presidents, too. This scenario of accountability typically goes like this: "Bad, bad CEO! Take this $22.5 million severance, plus this $8.5 million in stock options, and this house in Malibu, and DON'T EVER COME BACK until next month when we meet in this lavish boardroom with the Chairman of the Board of Other Corp., which, we understand, is now you."
Ah yes, accountability in action.
The second inherent problem with corporations is that, like their CEOs and upper-level executives, they, too, defy their very justification for being. A corporation's reason for existing on such a large and in some cases monopolistic or oligopolistic scale is that the free market is a meritocracy. By the fallacy of petitio, a corporation argues for its existence no matter what the costs because its existence itself is evidence that it has outdone the competition.
The problem with this is that within themselves, corporations are fundamentally anti-meritocratic. The student in my class who writes the best essay gets an A; and when I catch a student in my class plagiarizing, they fail the assignment. That's meritocracy. The corporation, by contrast, is built on plagiarism. Lower-level people do work and receive money for it. Their work is taken by the next rung up the ladder and claimed for the merit of that group. The mid-levels' work is taken to the top and claimed for the merit of the executives. You could call it a pyramid scheme, but it's really more properly a sanctioned form of plagiarism. When I worked for a corporation, my work was presented to clients by someone else every week. In fact, much of my daily work as a consulting firm analyst involved teaching the results, methods, and context of the work I did to the upper-level executives of my firm so that they could present it to upper-level clients.
We can look at this in other ways besides what I call sanctioned plagiarism. You could say my work is part of a labor collective, that I don't own my work, but it goes toward the good of the collective (corporation). In this way, as an employee, I can't have the expectation of ownership of my work products; it's 'proprietary,' as we say in the biz. In this sense, then, you could say a corporation is fundamentally communistic. Not even socialistic, but communistic. The resources, including labor resources, are owned by the collective, and the bureaucratic head of this collective decides who does what with these resources,who gets credit for what, and what privileges each member of the collective accrues, independent of who does the work. Sure, even within a communist collective merit plays a limited role; but this is no meritocracy.
The second point, then, is that corporations claim a moral right of existence by the principles of meritocracy, but operationally corporations are anti-meritocratic.
I think that these problems are primarily problems of scale, and that the large-scale corporation, then, is inherently problematic because it necessarily outgrows its own principles and justifications, with often terrible results for employees, the economy, and virtually anyone but the Inner Circle.
Take, for example, the two (or let's say 22) guys (or employees) running a business out of their garage (or small warehouse). First, the person or persons in charge can feasibly be accountable to the actions of their employees. Second, this smaller scale creates the potential for employees to work with closer proximity to the end product and the profits that ensue (whereas the person in China making your iPhone has no reason but fear to do anything less than their best). Third, a smaller and more flexible employee base makes it easier for those at the top to properly evaluate and compensate those working below them, which gives meritocracy a fighting change in such a system, because such a system can be flatter in organizational structure (and remember, the people in China making your iPhone aren't really rewarded for doing better; only punished for doing worse). Finally, a smaller scale business has less need for the sanctioned plagiarism that is par for the course in corporate culture, I think largely because a very large scale necessitates hypercompartmentalization of labor and the imposition of structure for structure's sake.
Many of these thoughts are speculative, I acknowledge; and there are other insidious aspects of corporate culture that have to do with things other than scale. But the very fact of the large-scale corporation strikes me as inherently bad for the reasons above. Certainly I've waded into a much larger series of issues regarding corporate governance, and not simply the fact of the large-scale corporation itself; but it's also worth considering whether any massive association of human beings will choose to organize itself any other way, or without falling victim to the flaws I point out above.
A final question: if we wouldn't be cool with a communistic dictatorship running a country, a city, or even a township, because of the whole 'if men were angels' thing, why are we so OK with such a system running a massive corporation that employs as many people as reside in some cities and townships, and controls enough aspects of the lives of these people (what they do with most of their waking hours, health insurance, drug testing, internet footprint, maternity leave, etc. etc. etc.) that employing is akin to governance?
