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Comments About The Corporation

Naomi Klein & Michael Moore both wrong!

by Hogeye Bill


May 2, 2005

The popular documentary film The Corporation is a critique of modern multinational corporations from the progressive authoritarian viewpoint. The film criticizes the corporation as an institution, and also criticizes certain particular outlaw corporations for their specific practices. It also touches on government/corporate collusion, especially in less-developed countries.

The film begins with historical background of the corporation as a legal entity. The filmmakers stress the legal fiction that a corporation is a person. This part of the film came off as childish – making fun of the technical legal term "person" by equivocating it with the colloquial meaning. It was interesting and informative to learn how the 14th amendment fit into the legal history. But all in all, the film didn't give any logical reason to oppose "personhood" for collectives in general or corporations in particular. My impression is that the filmmakers wanted to play on the word "person," when their real beef was with limited liability. In the film, a "corporate person" is presented as nothing more or less than an association with limited liability.

The next part of the film describes some alleged costs of corporations. Generally, these are called "externalities" by economists – third party effects. The flaw in the criticism is that it is overbroad – it applies not only to corporations, but to all individuals and associations. All economic actors seek to gain goods and lose bads. Litterers are people who shove costs on others. So the fact of externalities is not a criticism of the corporation qua institution, but of human nature.

The checklist detailing the personality of a corporation is masterful propaganda but fails the critical thinking test. The basic argument is: Since there exist corporations that have done action X, then action X is typical of corporations in general. Here's an analogous argument. Pol Pot was a human, and he was a brutal mass-murderer. Ted Bundy was a human, and he was a cannibal kidnapper. Charles Manson is a human, and he's a murder cult leader. thereforee the typical human is criminally insane. Of course, there are a handful of fallacies here, beginning with "hasty generalization" and "cherry-picking." You can't (validly) take "worst cases" and make a conclusion about the typical, or, as in this case, about the corporation as an institution. As Chomsky warned in the film, you need to make a distinction between the institution and a particular individual member. Instead, the film fallaciously concluded, "the institutional embodiment of laissez-faire capitalism fully meets the diagnostic criteria of a psychopath."

The film points out that, while the bodyless corporate ghost may be a psychopath, the people working in the corporation may be fine individuals. They compare the corporation to Frankenstein's monster, out of hand even to its creators. Again, the filmmakers paint with too broad a brush. The same criticism can be made of all large organizations and bureaucracies, whether for-profit on non-profit. Certainly it applies all too well to government, and government agencies. So again, this isn't really a criticism of corporations in particular, but of all human organizations to the extent they become bloated.

The filmmakers bemoan the fact that powerful individuals can't control the corporation at their discretion. (They seem to assume this would be for the better.) Again, this applies to most human organizations this side of dictatorship, so is too broad to be relevant. Also, for many if not most organizations, it's probably a good thing that someone can't easily hijack the operation.

Several clips in the film harped on the difference between labor cost and retail price. They say something like "this widget costs 3 cents in labor, but is sold retail for $20" or some such. Is this long-discredited medieval notion of "just price" supposed to convince today's critical thinker? The filmmakers apparently think so, and in view of most people's dismal economic ignorance, they may be right. While right-wing ethnocentricity entails believing that American Democracy can be transplanted to any culture instantly, left-wing ethnocentricity entails believing that American living standards can be transplanted to any culture instantly. Earth to lefties: Without Nike those kids would starve or sell sex – not go to a pretty suburban school.

Now I appreciate good propaganda as much as the next guy, but one clip in The Corporation I consider below the belt – too sleazy even for my taste. I nearly laughed out loud when I heard it. (I don't have the transcript, so I'll take it from the online Synopsis:)

"And all the professed concerns about the environment do not spare Ken Saro Wiwa and eight other activists from being hanged for opposing Shell's environmental practices in the Niger Delta."

Talk about a smear! The Nigerian government sells out its resources to Shell, plunders its people to pay off debt, outlaws demonstrations, brutally suppresses its people, hangs four guys, and the film blames it not the Nigerian State who perpetrates all this, nor even the World Bank loan sharks, but Shell? Do they really expect watchers to fall for this? Needless to say, the filmmakers notion of moral culpability is warped.

Even bad events often have traces of good. To spin this existential fact as a criticism of corporations takes great propaganda skill. But we critical thinkers know that gold going up after the 9/11 killings is irrelevant to evaluating the corporate institution. The clip with Colton Brown the commodities trader is nothing more than a thinly disguised "guilt by association" trick.

The next part of the film, titled "Planet Inc.", deals with private ownership. The filmmaker's contention is that some things should be "sacred," thereforee not subject to private ownership. (But apparently ownership by the State is just fine.) The filmmakers have no rationale for the "sacred entities" claim, nor any guide in determining what is sacred in their religion. This may or may not be good religion, but let's turn to science and philosophy.

The purpose of property is to solve the scarcity problem – the existential phenomena that people's desires exceed the supply of goodies available. When something is so common and cheap that everyone can have all that they want for free, then there is no need for property. E.g. In hunter-gatherer days when the population density of humans was that of bears, there was plenty of land to hunt and forage on for everybody. Land therefore, was not private property. However, in most aboriginal cultures, hunting weapons and tools were private property. These items are economically scarce, and it's better socially to agree to conventions about "yours" and "mine" than have continuous fights. During the agricultural revolution, land became private property, since arable land became scarce as the population grew.

The film's attempt at a history of property rights ignores the basic issue – scarcity – and leaves the erroneous impression that private property is a decreed status bestowed by State. No – property precedes State, and occurs outside the auspices of State. Up until the last 500 years or so, property was generally defined by polycentric and/or traditional law – "discovered" law rather than "decreed" law – at least in Western Civilization. Historically, State-defined property, indeed State legal systems in general, are a recent phenomena.

The film pulls a fast one on the viewer here. It quotes a guy (Joe Badaracco?) who says, essentially, that virtually everything should be owned. Then they go into a clip about the song "Happy Birthday to You" being copyrighted. This is deceptive since Joe was most likely talking about tangible property, not intellectual property (IP). The issue of IP is a separate issue; including it in a discussion about corporations confuses things. Suffice it to say that many ardent pro-capitalists oppose IP, on the grounds that the intangibles covered are not economically scarce. (I.e. if one person sings "Happy Birthday," that does not preclude anyone else from singing it. No scarcity, ergo it's not property.)

The funniest part of the film to me was just after the narrator talked about how terrible private property was and how good the commons works. The very next shot was of a factory spouting dirty smoke into the air! So much for how well the commons works. Are the filmmakers aware of how they visually demolished their previous point? Let me more properly formulate my criticism: The filmmakers showed complete ignorance of the relationship of private property to externalities. Commons lets everyone shove the costs onto everyone else – the well-known tragedy of the commons. When something is privatized, then the costs tend to be internalized. An owner has an interest in maintaining his property's value, so he has an incentive to prevent dumping, and to seek compensation if someone does dump. In short, the best way to prevent externalities affecting something is to make it private property. Conversely, the best way to spoil and trash something is to make it commons.

There's a distinct flavor of government solipotence in this part of the film, not to mention authoritarianism. They observe that "governments have, in the past, drawn protective boundaries against corporate exploitation," but don't mention the drawbacks of leaving the decisions to political rulers rather than the people, through voluntary conventions and processes.

The "Perception Management" part of the film was basically a diatribe against freedom of speech. If it were non-profit organizations or benevolent associations shown communicating their message and vision, this would be obvious to most viewers. The disturbing implication is that the filmmakers wouldn't mind at all if the government curtailed free speech of people in certain unpopular types of voluntary associations.

The film looks next at the relationship between modern States and corporations – the two dominant institutions of our time. The film's progressive authoritarian stance shows through here. A democratic welfare-warfare State is portrayed as a benevolent entity corrupted by those evil corporations. The welfare-warfare State is so benevolent that they don't even call it "the State," opting instead for the sugary term "Democracy."

After a couple of "case studies" (a 1930's coup conspiracy theory and IBM's trade with Nazi Germany) the film returns to something relevant, the claim that corporations buy laws, favors and privilege from rulers. I think they are right on the mark here. So long as there is power to be bought, big, established special interests will buy it. But, true to form, the filmmakers "overlook" that this applies to all special interests, big established unions, big environment, and big government employee lobbies in addition to big established corporations. Nor do they point out that the vast majority of corporations are not cronies of the rulers.

The film winds up on a positive note. In El Alto, Bolivia, where the State sold the water rights out from under the people and passed laws forbidding people to collect rainwater(!), the filmmakers report that the water has gone back to the people. Upon investigation, this claim turns out to be false, since the water was to revert to State ownership, not to the people at all. The situation in India had a happier ending: The local farmers, led by Dr. Vandana Shiva, simply ignored the Indian State's (and RiceTek's) erroneous property claims and saved their own seed, as farmers have been doing for centuries. They just did it – exercised their freedom of action – much like Gandhi did with salt. Voluntary social action – no State necessary. That warms an anarchist's heart!

After reading this, it may surprise the reader to know that I don't like corporations. Furthermore, I believe that in a free market, that is laissez-faire – without any government intervention, corporations as we know them would be a rather minor economic player. There are gross inefficiencies in large organizations. There are more human and more efficient ways to produce things. Unfortunately, much of the film caters to anti-capitalist dogma and long-refuted economic myths, leaving a serious institutional analysis of the corporate entity for a future effort.


Hogeye Bill is a freelance anarchist PT. He is a chess master and a songwriter purportedly living in Ozarkia or Guanacaste.


This article first appeared on Anti-State.com, with ensuing discussion in the forum.

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