We have entered the age of the corporation. Every day, more and more, corporations are overtaking territory once held by the state. At a conference I attended last week on the role of public/private partnerships, this was explained as being due to the fact that the public/private divide is collapsing in light of the new, unique challenges we face today. Challenges arising from the unprecedented levels of interconnectedness, complexity, and scale of modern life. I want to take this opportunity to cry: BULLSHIT!
So much is wrong here and so much wrong was said at the conference ... where to start?
Reality
First, this idea that we are today dealing with unique challenges which call for the collapse of the public/private divide. This divide has ALWAYS been illusionary; a conscious choice for denial of reality. The division of public and private is a choice stemming from the choice for a capitalist economy. Who got a say in this choice? Well, I don't remember anyone ever asking me.
An illusionary wall between public and private has two useful functions for our capitalist society:
(1) A man's home remains his castle and business can be business
A public/private divide gives "private" acts a certain immunity. It gives private actors immunity. How? Well, it is not so long ago that what a man did in the private realm - in the home - was considered to be out of the reach of the law. Therefor, he could abuse his wife and his children freely. What else? When GM decided to move many its factories out of the US to Mexico, it knowingly caused approximately 50,000 of its employees to lose their jobs. GM in no way had to do this to ensure the life of the company, it wasn't for self preservation. No, GM was booking higher profits (19 billion dollars!) than ever before! But, it felt it could make even more by moving to Mexico, where labor was cheaper. The result of GM's action? Tens of thousands of people lining up for government-subsidized food, without which they would simply not eat, the abandonment of a whole city, 28,000 people kicked out of their homes, the list goes on and on. But GM cannot be held accountable for this ... no, this was a "private matter", business is business and apparently different rules apply there. Another example? Xe (the artist-formerly-known-as Blackwater) has impunity for many of the atrocities it committed in Iraq.
(2) We may live in a democracy a good 10% of the time!
This immunity is a result of the lack of democratic control over the private sector. While we all profess to live in a democracy and to love living in a democracy, it is clear that this democracy only exists in federal buildings and on the street. You may get to vote every two to four years on Proposition X or Proposition Y - but most of our day is spent in a workplace in which democracy is a dirty word. Employees don't get to vote on what hours they should work, who should get paid what, which holidays should be observed, what tools should be used, etc. As an employee, you do not have a right to freedom of speech, freedom of religion, a fair hearing, the right to bear arms. You have no rights and no say. Further, the private sector is completely unfettered by the will of the people at large regarding what they produce and how. The "market" does not work democratically, does not give one person one vote, but rather one dollar one vote. Those who have more dollars, get more votes.
Distorted Reality
This conference on public/private partnerships had a speaker, Colin Mayer, an Oxford professor who claimed that the cause of our current economic crisis is over-regulation. That this is obvious since the years proceeding the crisis were full of new attempts to regulate business. That the Glass-Steagall act's separation of investment banks from commercial banks was pointless and counter-productive and therefor that it was positive that it was repealed in 1999. I was astounded by this professor's logic. If over-regulation is to blame for the crisis how does one explain the fact that the combination of investment and commercial banks after de-regulation of the field was one of the main causes of the crisis? And was he now saying - with a straight face - that the Bush years brought us more regulation of the financial market?
This Professor Mayer gave a solution for the woes of over-regulation. Instead of regulation, we need to go back to the "trusting" times of the early 20th century. Everyone knows that was when the stock market was booming and everything was working like clockwork. There was no need for regulation, because businessman knew and trusted one another.
I think I must have become very distracting to the
panel at this point. My astonishment was
more than evident; my jaw dropped and my eyes were wide with disbelief. I looked to my left and to my right - was I the only one?! Was I the only one who understood what he was advocating? Colin Mayer, this Oxford professor, was advocating a return to the practices of the pre-Great Depression economy. Advocating a return to a time when workers were literally worked to death, when child labor was the rule, and when workers lived in ghettos and shanty towns. I asked around after his speech and apparently I was alone in this realization.Public/private partnerships
Those that say the public/private divide is collapsing are referring only to a shift in approach promoted by private companies in a way that serves their needs. It means three things: One, that private companies are allowed access to the huge public sector, are allowed to make profit off of public goods such as railroads, health care, education, and even development aid. Two, that the people are losing control over these sectors. The representative for the Dutch government at this conference admitted that often times politicians cannot understand the plans drawn up by the private sector in these partnerships. The private sector employs economic-speak and convoluted corporate structures to bedazzle and confuse the people's representatives. And three, that private corporations are gaining legislative powers as corporate codes of conduct and corporate social responsibility ideals gain ground. It is unfortunate, for democracy's sake, that these new legislative powers have zero democratic legitimacy, do not represent all stake holders, and include weak - if any - obligations to protect human rights.
Revisiting the ode to the corporation
I still find corporations amazing. They are proof of how much people can achieve together. But this power can only be used with legitimacy if corporations are run democratically and are held to the same human rights obligations we hold the former most powerful actor in society, the government.
Posts
The two brilliant things about the corporation are its malleability and the fact that it has a built-in self-destruct mechanism. The self-destruct mechanism comes from the fact that if a company no longer ceases to provide a useful service to people in society, it will not make money and it will cease to exist. Brilliant! People have been trying to built that mechanism into governments for millenia, but government regimes, on the other hand, tend to outlast their usefulness, and when the do finally fall they do so very slowly and with great suffering. The second brilliant thing about a company, is that it, unlike a human breing with inherent human rights, is a take-it-or-leave it affair. Government sets down the conditions under which it can exist, and if it doesn't want to follow those conditions which the public decides are proper, necessary and beneficial for society, then too bad. Humans have personality and inherent interests and desires, many of which are irrational and sociall undisireable from the perspective of other people. No such problem with companies.
ReplyDeleteUnfortunately, one will find that both properties are no longer a part of the modern U.S. company. This idea of "too big to fail" has dominated in both the Obama and Bush administrations, and five to six members of the Supreme Court seems to think that companies have inherent human rights.
This guy from Oxford sounds like he has been sleeping for the last year and half. It sounds as if he went to sleep sometime around July, 2007 just before the world financial order started going into a meltdown. This was when the notion of "efficient markets theory" was still riding high. This is a concept, promulgated by people like Milton Friedman, that private markets, which are made up of individual investors who are acting rationally for their own self interests, will also tend to act rationally and price assets and goods at a value which is most reasonable thus leading to (as Candide would say) the best of all possible worlds! Unfortunately, something went wrong along the way. People did not act rationally, bubbles formed. It is nothing new. One of the first bubble phenomenon happened in I believe the 17th Century in Holland, when tulips became absurdly overpriced. People were paying as much as the value of a home for a new breed of tulip bulb. Like that bubble, the asset bubbles of 2007 burst. What it has again shown, is that private market activity without the guiding hand of intelligent government regulation will ultimately lead to sorrow. For as Rob says, in his comment, "Humans have personality and inherent interests and desires, many of which are irrational and socially undisireable from the perspective of other people." And these desires enter into their investment and business decisions.
ReplyDelete