Joel Bakan: The Corporation as Psychopath

Photo by Nancy Bleck

Joel Bakan, eminent law professor, legal theorist, and author of The Corporation: The Pathological Pursuit of Profit and Power, spoke on September 29 in Laxson Auditorium as part of the On the Creek lecture series. Bakan is best known for his characterization of publicly traded corporations as psychopathic personalities. Corporations, required by law to promote and pursue their own interests above all others, “prey upon and exploit others without regard for legal rules or moral limits,” Bakan writes in The Corporation.

In a phone conversation on Sept. 27, Bakan said that his main purpose in writing the book and helping produce the documentary film by the same name was that he had a sense that corporations were becoming more powerful in the world and governing peoples’ lives in ways of which they had little knowledge. He wanted to give people easy access to information about the nature of the corporation. Bakan said that corporations have plenty of money to create positive images of themselves and that he wanted to provide balance and create public debate.

The book and the film became much larger than he ever anticipated. The film The Corporation won 25 international awards, including awards from the Documentary Film Festival in Amsterdam, the Toronto Film Festival, and Sundance. The film has been shown in more than 20 countries and was released in 300 theatres in the United States.

Bakan quotes Nobel laureate and eminent economist Milton Friedman as saying that the corporation has a moral imperative to make as much money as possible for its shareholders—a goal upheld by law. As early as 1916, American lawmakers insisted that charitable concerns must be sacrificed to the greater goal of making profit: paying his workers more than the going rate and rewarding customers with yearly price cuts, Henry Ford was taken to court by two of his major shareholders. The results of the case are detailed in Bakan’s book: “Profits belong to shareholders, they argued, and Ford had no right to give their money away to customers in the form of price reductions on automobiles. The judge agreed. He rebuked Ford for forgetting that a corporation’s primary purpose is to profit stockholders, not for the purpose of benefiting others.”

According to Bakan, the corporation’s psychopathic traits include irresponsibility (everyone else is put at risk to satisfy the corporate goal), manipulation, grandiosity (believing one is the best), superficiality (representing itself to the public in a way that is appealing but false), lack of empathy, and the inability to feel remorse. However, as Bakan observes in his book, such psychopathic behavior in the long run tends to bring on the corporation’s self-destruction, as in the case of Enron: “[A] paragon of social responsibility and corporate philanthropy … [it] collapsed under the weight of its executives’ greed, hubris, and criminality. Enron’s story shows just how wide a gap can exist between a company’s cleverly crafted do-gooder image and its actual operations.”

Further, Bakan argues, even the efforts of corporations toward social responsibility frequently amount to little more than a public relations façade, as any such efforts must continually be subjugated to the company’s market interests. He uses British Petroleum as an example of this dynamic. Although it has taken the lead in enviro-marketing and its CEO considers himself an environmentalist, the company cannot refrain from seeking to drill in the Arctic National Wildlife Refuge even if it might have very harmful environmental effects. “Basically, if [the CEO] refrains from drilling out of his environmental convictions even if drilling would be a benefit to the company and its shareholders, he’d be acting illegally. His shareholders could sue him for that,” Bakan said in an interview with Richard Eriksson in 2004.

Through deregulation and privatization, government has acted to free corporations from legal constraints and grant them ever-greater power. Bakan believes government must now exert greater democratic control over corporations in order that they might return to their original purpose of serving the public interest. He recommends four strategies toward reform: improving the government regulatory system to ensure that corporations respect the interests of citizens, communities, and the environment; strengthening political democracy by such means as phasing out corporate political donations and tightening restrictions imposed on lobbying; creating a robust public sphere in which people can debate how to protect various interests and groups from corporate exploitation; and working together as nations to change the ideologist practices of such international institutions as the World Trade Organization and World Bank. Overall, Bakan writes in The Corporation, “The corporation’s ideology reflects a narrow and distorted vision of what it is to be human … Corporate rule must be challenged in order to revive the values and practices it contradicts: democracy, social justice, equality, and compassion.

Bakan said that it is easy to be cynical when looking at the government’s ability to regulate corporations when it appears to be so completely in the corporate hold. He believes we should not give up, however, on the redemocratizing of government. “We need to regain control and demand that government work to serve the fundamental principles of democracy,” said Bakan.

—Amy Runge Gaffney with Kathleen McPartland