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How Corporations Became Culturally Dysfunctional and Why Simple Solutions Won't Fix Them







How Corporations Became Culturally
Dysfunctional and Why Simple Solutions
Won't Fix Them

How Corporations Became Culturally
Dysfunctional and Why Simple Solutions
Won't Fix Them
03/30/2005 06:16 PM

corporationThe Idea: We've already been told that corporations are psychopathic. There's evidence they are also culturally dysfunctional, an inappropriate construct to do what they were designed to do, or could do. But because they're part of a complex system, there are no easy or imminent fixes.

Joel Bakan's book (and film, which will be shown on the CBC next week BTW) The Corporation, argues that corporations have evolved into psychopathic entities. But their reputation is not just one of anti-social behaviour. Corporations are also seen by many as lumbering, inflexible, un-innovative creatures. I thought it might be worth exploring why this is so.

Recently I've been studying and writing about the difference between complicated systems (those that lend themselves to cause-and-effect analysis) and complex systems (where there are so many variables the best you can do is look for meaningful patterns and correlations). Corporations were initially designed as a 'shell' that would allow a group of workers to collectively raise capital, add and delete members easily, and, later, to protect workers who were associated with partners who engaged in criminal, negligent or fraudulent activities from liability for those partners' actions. The concept of 'shareholding' met these requirements. The interests of shareholders, initially the workers in the organization, were subordinated to the interests of creditors -- the worker-shareholders 'shared' what was left after the corporation's debts were paid.

Several consequences of 'shareholdings' were probably unanticipated. Some worker-shareholders could easily be given more shares than others, to reflect a greater time or financial commitment to the enterprise. And some workers, and even managers, could simply be treated as another class of creditor -- paid a fixed return on their 'investment' of time in the organization, but given no 'shares' in the profits at all. And if some investors were willing to take the risks, they could be given shares in return for a cash infusion in the company, even if they played no active role in the corporation at all. And since they were inessential to the operations of the company, why not allow these passive shareholders to use these shares as collateral for loans, or even trade their shares with others, creating a kind of 'stock market' that would allow the rich gentry with lots of money they could afford to lose, to gamble with each other on which of these passive shareholdings would pay 'dividends' and which would be useful only as wallpaper?

The rest, as they say, is history. Corporations are no longer run for the well-being of their workers, but to maximize the profits paid to their mostly-absentee shareholders. Many corporations have no workers at all -- they are merely 'holding companies' that own shares of other corporations. Shareholders feel no responsibility to the workers, the people who generate the value of the shares, and whose wages are increasingly unconnected to the value they produce, as the value is all paid out to the shareholders.

What has emerged as a result is hierarchy. Managers are hired by the shareholders to employ as few workers as possible and pay those workers as little as possible, and to provide the fewest and most inexpensive benefits and facilities possible, so that more of the profits are left for the shareholders. Managers are therefore remunerated in inverse proportion to the well-being of the workers and the communities in which they live. Disparity between the well-being of workers and that of shareholders grows without limit, with managers as the 'middle-men' to ensure that this happens and to keep workers in line. The physical slavery of early civilization, enforced by warlords and feudal fiefs, is hence replaced by economic wage-slavery, enforced by management. Not surprisingly, workers who might have otherwise been motivated to work hard out of self-interest now seek ways to do the least work possible for their wages, and counter the force of shareholders with their own self-organized bodies, unions. The education system is enlisted to convince workers not born into the privileged elite that if they work hard they too can become managers, and the hierarchy is made more multi-leveled to provide the illusion of 'progress' towards that goal. If the corporation is large enough this fraud can be perpetrated almost indefinitely, as workers spend a lifetime chasing the carrots up increasingly steep (and increasingly handsomely rewarded) steps of the ladder towards management. And some workers can even be given a token number of shares in the company, to bamboozle them into believeing that they are also real shareholders in the organization.

In each industry, the largest corporations, while still feigning competitiveness, merge, acquire and otherwise band together in oligopolies, acting in the best interests of shareholders to eliminate real competition so that upstarts who share the rewards of their labour more equitably with workers and with customers can gain no foothold in the market. Advertising is introduced to provide the illusion of real choice and competition.

As we all know, however, pyramid schemes are unsustainable, and this one is no exception. Given enough time, workers begin to realize that the cost of living is rising faster than their wages and that their standard of living is actually falling while that of shareholders is rising astronomically. Financial corporations, seeing an opportunity to push the crumbling pyramid a bit further, start offering huge amounts of credit to workers (using deceptive advertising to understate the cost of this credit), so that workers can 'afford' to buy ever more of the overpriced crap the corporations are producing. Corporations turn to outsourcing and offshoring in the endless quest to reduce costs so that shareholders' wealth can keep rising even though the market is saturated and debt levels are sky-high. Governments and media are bought by the now obscenely-wealthy shareholders and paid to parrot the fraud and hype of 'free' trade, 'free' markets and globalization, to even further deregulate, subsidize and undertax corporations, and to pass laws so that that corporations cannot be sued by workers but workers can be sued by corporations. If the growth stumbles, the stock market, which is now a Ponzi scheme that demands endless double-digit annual profit increases, will collapse, taking the whole economic house of cards built up around it with it.

The result is that today corporations are huge, anti-democratic, unconcerned about (or even averse to) the well-being of employees and the health of the environment, market-distorting and addicted to growth. In short, they are culturally dysfunctional -- working at odds with the best interests of people.

Note that there was no conspiracy here, no master plan to make the lowly medieval corporation designed to allow workers to raise capital funds collectively into today's Frankenstein monster. It has been an evolution, an emergence set in motion by unexpected consequences of the creation of the useful concept of shareholdings, and then affected over centuries by thousands of social, political, economic and cultural events and behaviours, from divine right to the New Deal, from the 19th-century error in US law that gave American and then all corporations the rights of personhood, to the end of physical slavery, the dislocation of labour in the world wars, the emancipation of women and the beginnings of the Two-Income Trap.

In other words, cultural evolution is a complex system, and to the extent it gives rise to dysfunctional entities like the modern corporation we cannot expect simplistic solutions (e.g. "rein in corporate power" and "put people before profit"), as desirable as such solutions may look in theory, to work in the real world. The reason they won't work is not because 'they' have all the money and power, it's because we, the workers, as integral parts of the evolution that has given rise (usually peacefully, with the worker massacres of the robber barons and Great Depression riots being notable exceptions) to the emergence of the modern corporation, are complicit in that evolution. It couldn't have happened without us.

Complex systems, we learn from history, cannot be changed quickly or simply. The anti-corporatist, anti-globalization movement has demonstrated that. There is no panacea in legislation, new economy movements, or rioting in the streets. The effects of complex systems are not simply 'problems' that can be 'solved'. Only if and when enough of us, as individual actors in this system, change our behaviours in such a way that collectively we begin to change the dynamics of the system, will those changes ripple through to the way corporations behave and the impact they have on our lives and our well-being. Barring a crisis on the scale of the Great Depression, those individual behaviour changes are unlikely to come soon, to be coordinated or even to be subject to coordinated effort. The end of slavery and the emancipation of women and the approval of the Kyoto Accord (and, as I described in yesterday's post, the end of capital punishment in Europe and Canada but not in the US) were the emergents of millions of unpredictable and individual changes in perception brought about by millions of individual events.

There is good news and bad news here. The good news is that, while we are responsible for the emergence of the modern dysfunctional corporation (and all the other endemic social, political, environmental and economic ills of our time and culture), we should not feel guilty about it. Organization and activism are extremely unlikely to change these things, because they are evolutions of complex systems, not simple cause-and-effect 'problems'. Just becoming aware of these things and understanding the need for change and acting individually with modest changes in our behaviour (mostly things readers of this blog have probably already done) is really all you can do, and the effect of us individually changing our behaviours could, in time, precipitate positive change to the whole system. The whole of a complex system is nothing more, or less, than the sum of the parts. You just have to let go of the illusion that anyone is (or even could be) in control and enjoy the ride. If you'll pardon the mixed metaphor, when we reach the tipping point, the earth will move.

The bad news is that it's futile to try to speed up the process. There's a reason your instincts probably told you that getting out the vote for Kerry was a worthwhile effort (it almost worked -- the tipping point was close), but protesting against globalization was not. There's a reason your instincts might have told you not to even bother voting for Kerry -- when it's time, it's time. People change slowly. That's our nature. Unfortunately, that means that with our impact on this planet being so massive and accelerating at such a phenomenal rate, it is increasingly unlikely that we can change direction quickly enough to avert catastrophe.

So my new paradox is this: The more I learn about 'complex thinking' the happier I am about just blogging and talking and spreading ideas and information as my part to make the world a better place, and the less guilt-ridden I am about not doing more to 'save the world' -- and the less hopeful I am that it will save itself in time.




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Canada has an enviable record of providing universal, quality health care at a reasonable price for the last half a century. But, as in every other country, our health care system is facing several strains:
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  • Disproportionally high usage of the health care system by Canada's exploding immigrant population
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The answer of US-worshipping Canadian neocons is two-tier health care. Why, cries John Tory, the new leader of the hapless Ontario Conservative party, shouldn't Canadians have "choice" in their health care services? This is classic conservative re-framing of public debate. "Choice" in health care means choice for those who can afford it, which means doctors who want to make obscene amounts of money (including many of the best ones) would work for the higher-paying private-tier system and the rest of us would be stuck with long waits and second-class service, just like we face in every other private sector of the economy.

Fortunately, and to the chagrin of the Canadian neocons, the vast majority of Canadian's aren't buying this Orwellian deceit. Recent polls say support for a public, single-class health care system is as high as ever.

So what's a civilized country to do to deal with the three great challenges of 21st century health care bulleted above? I recently listened to a talk show featuring the federal Minister of Health, discussing how these problems should be solved. Caller after caller said the same two things:
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  2. There needs to be a massive shift in the health care system from treatment to preventative care.
When the moderator asked the Minister whether he had learned anything from these recurring messages, he 'summarized' the discussion by saying that better measurement systems were needed to ensure hospitals were operating as efficiently as possible, and that the government was looking into ways to do public-private partnerships without allowing competition or giving up control over pricing and access. The interviewer was incredulous: Had the Minister not heard the two messages that the public had been bombarding him with for the past hour? Of course these things would be considered, he replied, but the first priority was to find ways to increase access without increasing cost. His deafness to these two obvious solutions to the malaise of the system was astonishing.

What one listener of this talk show said about neoncons' true motivation for wanting two-tier health care was also telling: "The reason rich politicians want a two class system is that they're embarrassed to have to wait in line for health services the same as 'ordinary' Canadians, when their US business colleagues can jump the queue so easily and have their company write off the extra cost as a business expense. They're also embarrassed that, to jump the queue, they have to fly to the US and pay out of their own pocket". So in fact there is a choice for the very rich to jump the queue: Pay for treatment in the private US system.

Is Canada's health care system the best in the world? Far from it. Health care in Canada's cities is much better than in rural areas. The bureaucracy in much of the system (notably the blood collection system and the 'walk-in' clinics) is suffocating, and needlessly so. And because of its zeal to protect jobs in the system, Canada, which ranks first in the world in per-capita patents of medical technology, ranks forty-first in the world in the use of modern medical technology in its hospitals (MRI equipment is as scarce as gold, for example).

But it's still an excellent system, and one that a two-class health care system won't improve, at least for 95% of the population. If only the politicians and bureaucrats only had the intelligence and vision to listen to the Wisdom of Crowds and make the two changes (more paraprofessional/self-care, and more prevention instead of treatment) that the public is already starting to make themselves, our system would be the best in the world.

Oh -- a word about prescription drug costs: You may have heard that many Americans come up to Canada to buy prescription drugs much cheaper than they can buy them in the US. Now, US municipal and state governments are fighting for the right to buy their drugs from Canada, too (and Kerry wants them to have this right). The funny thing is, the companies selling them are essentially all the same companies, since the Canadian pharmaceutical industry is dominated by the same handful of global corporations as the US industry. Why do these companies charge more in the US than the rest of the world for the same drugs? Not, as the neocons and the pharma industry are telling Americans, because Canadian drugs are inferior (perhaps, it is implied, dangerously so) -- they are the identical drugs. They sell them for higher prices in the US because they can. Drug companies charge as much as the market will bear, and in the bloated US health care system where if you have enough money you can buy anything, the market will bear a lot. In the rest of the world money available for drugs is much less, so to sell their products pharma companies lower prices by 30, 50, even 70%, and still make a good margin. This is a case where globalization threatens to backfire on some of the corporations that most benefit from it. Couldn't happen to a nice bunch of guys.

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While conventional wisdom is that venture capital moves in a sheep-like herd, all investing in similar "hot" space, not all deals fit those criteria. The latest venture capital study of VC investments in 2003 tur ned up a number of investments that are considered "odd", in that they're certainly not in areas where you see VCs shoving each other aside to get in on the deal. This includes the makers of "hybrid" metal/wood baseball bats and a company that makes energy efficient traffic lights, with security cameras hidden inside. Of course, if you look at the numbers of these deals, they all tend to be pretty small bets, so you have to wonder if there's something more to the deal. The article also doesn't identify who the VC was who invested in these deals - and my guess is that they're not done by any of the bigger name VCs, but rather smaller niche market VCs.

E-Government Motivation


E-Government Motivation 01/06/2005 09:12 AM
line56 Jan 6 2005 1:58PM GMT

Ken Brown's Motivation, Release 1.2


Ken Brown's Motivation, Release 1.2 05/21/2004 05:24 PM
On 20 May 2004, I posted a statement refuting the claim of Ken Brown, President of the Alexis de Tocqueville Institution, that Linus Torvalds didn't write Linux. My statement was mentioned on Slashdot, Groklaw, and many other Internet news sites. This attention resulted in over 150,000 requests to our server in less than a day, which is still standing despite yesterday being a national holiday with no one there to stand next to it saying "You can do it. You can do it." Kudos to Sun Microsystems and the folks who built Apache. My statement was mirrored all over the Internet, so the number of true hits to it is probably a substantial multiple of that. There were also quite a few comments at Slashdot, Groklaw, and other sites, many of them about me. I had never engaged in remote multishrink psychoanalysis on this scale before, so it was a fascinating experience.

The Motivation Behind Social Security
Reform


The Motivation Behind Social Security
Reform
02/05/2005 09:47 PM
Tonight's State of the Union address by the president focused in part on Social Security. Many are asking why the sudden interest in a system that seems to be working just fine. Isn't the president taking big political risks for nothing by doing this? In fact there are serious problems that are compelling the administration to take immediate action on Social Security funding.

Programmer Has Lost All Motivation to
Work!


Programmer Has Lost All Motivation to
Work!
06/21/2004 10:10 PM
"...day after day he just stares and stares at the computer monitor doing nothing except typing in a few keystrokes every 10 minutes or so just so I think he is working...Can anyone recommend some motivation techniques to inspire him to work hard like he used to?"

Musicians Making Lots Of Money, Money,
Money...


Musicians Making Lots Of Money, Money,
Money...
09/03/2004 02:40 PM
Jeremiah writes "Amidst the public ballyhoo about how rampant P2P piracy is costing the music business its very life (gasp! NO!), BMI announced it collected a record level of revenue and royalty payout to its artist members. From their press release: "BMI has reported revenues of $673 million for the 2004 fiscal year, an increase of nearly $43 million, 6.8% over the prior year. Royalties of more than $573 million were distributed to our songwriters, composers and music publishers, an increase of $40 million or 7.5% from the previous year, and the most ever paid by an American PRO." Another interesting tidbit: "During the period 1995-2004, BMI had an average annual revenue growth rate of 9%..." If I read this right, BMI has been reporting solid growth over the last nine years, which makes me question the industry's claims about P2P. Either P2P ate into their growth (not mentioned), they found a way to cope with it (plausible), or it may actually help music sales. Whatever. Reminds me a bit of a spec I did for a life-insurance company's radio ad: Money , Money, Money (mp3 file)."

50 YEARS AGO, THIS WOULD'VE BEEN
MOTIVATION FOR PEOPLE TO SHAPE UP


50 YEARS AGO, THIS WOULD'VE BEEN
MOTIVATION FOR PEOPLE TO SHAPE UP
01/06/2004 06:48 AM
sperm counts have dropped a third .. a British study .. dropped by 29% .. Yahoo! News

story.news.yahoo.com/news?tmpl=story&u=/afp/20040105/hl_afp/bri tain_health_sperm_040105105306
track this site | 5 links


Business Link for London surveys
entrepreneurial motivation


Business Link for London surveys
entrepreneurial motivation
02/17/2004 04:11 AM
PublicTechnology.net Feb 17 2004 8:07AM GMT

High-tech training tools add muscle to
motivation


High-tech training tools add muscle to
motivation
09/18/2004 04:07 AM
Seattle Times Sep 18 2004 8:27AM GMT

Q4 Adds Motivation For Cingular To Buy
Rival AT&T Wireless (Investor's
Business Daily)


Q4 Adds Motivation For Cingular To Buy
Rival AT&T Wireless (Investor's
Business Daily)
01/23/2004 02:19 PM
Investor's Business Daily - AT&T Wireless (NYSE:AWE - News) and would-be buyer Cingular Wireless both turned in weak fourth-quarter results, upping speculation that No. 1 U.S. wireless firm Verizon Wireless will report strong growth next week.

Motivation Books Etc.com Answers the
Call!4.9 Million Injured Workers Want
Information! We are not just about
Worker Compensation anymore!


Motivation Books Etc.com Answers the
Call!4.9 Million Injured Workers Want
Information! We are not just about
Worker Compensation anymore!
05/31/2004 02:00 PM
Information-Information... That is all we have heard since our doors open back last year. People are screaming they want information...We done it and it is available! [PRWEB May 22, 2004]

Sun: Chasing Microsoft


Sun: Chasing Microsoft 12/04/2003 05:57 PM
ZDNet Dec 4 2003 4:24PM ET

Chasing Karl


Chasing Karl 10/30/2003 01:42 PM
Wonderful system of government. Fake democracy, fake elections, fake political system surrounded by humbug and greedy lawyers. This allows business to get on with its tasks, buying candidates, a bribe here, a bribe there. An interview with Karl Marx.

"Chasing Liberty"


"Chasing Liberty" 01/10/2004 03:54 AM
Mandy Moore plays a presidential daughter itching for freedom. Why won't Hollywood give the talented Moore a little bit of her own?

FBI chasing pirates


FBI chasing pirates 04/22/2004 08:00 PM
globetechnology.com Apr 23 2004 0:41AM GMT

The Cops Are Chasing Me in a WHAT?
(Reuters)


The Cops Are Chasing Me in a WHAT?
(Reuters)
05/14/2004 09:23 AM
Reuters - If you are thinking about speeding on Italian highways this year, think twice. You might find yourself being chased by a Lamborghini.

Chasing Cellular's Clouds Away


Chasing Cellular's Clouds Away 01/16/2004 11:32 AM
Providers now offer more plans, more phones and more coverage. But one goal remains elusive: more satisfaction.

There's a Gaggle Chasing Google


There's a Gaggle Chasing Google 01/16/2004 10:58 AM
Google may be king of the search-engine world right now, but advances in technology and some strategic maneuvering by Yahoo and Microsoft mean there is formidable competition nipping at the company's heels. By Amit Asaravala.

Just Say No to Google Algorithm Chasing


Just Say No to Google Algorithm Chasing 12/07/2003 07:33 PM
By Jill Whalen - 12/8/2003. So I guess the thing on everyone's mind is Google's major change in algorithm. Many of you have written ...

Chasing Elk Part of Airport Manager's
Job (AP)


Chasing Elk Part of Airport Manager's
Job (AP)
01/23/2004 02:22 PM
AP - Gary Cox jumps into his pickup and rushes along the runway, honking his horn to scare the elk out of the path of incoming planes.

CyberGuard Chasing Secure Computer


CyberGuard Chasing Secure Computer 07/12/2004 12:15 PM
TheStreet.com Jul 12 2004 3:31PM GMT

Chasing Microsoft's silver foxes


Chasing Microsoft's silver foxes 12/06/2003 04:30 PM
“These three machines need to stay on Windows 98 because … .” Anybody heard that before? Even companies with medium-sized user loads often have combinations of platform and software that make it temporarily impossible to upgrade to a modern operating system wholesale. That means you’re stuck supporting OSes such as Windows 98, Windows ME, Windows NT Workstation, and even Windows 95. What’s worse, you’re not only supporting these platforms on their own; you’re supporting them as they try and interact with Windows 2000, Active Directory, and the Internet. All this without formal support from Microsoft. What’s a geek to do?

Wild Boar Seen Chasing Man in Poland
(AP)


Wild Boar Seen Chasing Man in Poland
(AP)
01/06/2005 03:19 PM
AP - A man escaped unscathed after a boar chased him around a hospital parking lot in southwestern Poland, the hospital spokesman said Thursday.

Storm Chasing on Wall Street


Storm Chasing on Wall Street 09/19/2004 03:24 PM
Long before Hurricane Ivan made landfall, a special breed of money managers was carefully tracking its development.

Chasing pirates of the silver screen


Chasing pirates of the silver screen 04/19/2005 09:28 AM
globetechnology.com Apr 19 2005 1:37PM GMT

Money 2005: Microsoft Unveils Simplified
Approach to Financial Management and
Helps People Make Sense of Their Money


Money 2005: Microsoft Unveils Simplified
Approach to Financial Management and
Helps People Make Sense of Their Money
09/21/2004 08:41 AM
Marking the largest development effort for Microsoft(R) Money since the personal finance software was launched 13 years ago, Microsoft Corp. (Nasdaq: MSFT) today announced Microsoft Money 2005 Premium, Deluxe, Standard and Small Business. Completely rebuilt to simplify daily financial tasks, Money 2005 is designed to answer the growing number of consumer requests for a simple solution that addresses the three primary areas of financial concern: tracking account balances, monitoring spending and paying bills. Consumers today have less time than ever to spend managing their finances, which has contributed to the number of American households banking online -- due to its convenience and efficiency -- reaching nearly 33 million.(1) Money 2005 builds on this trend by helping people access all their accounts in one place and providing automated tools that reduce or eliminate the manual entry required by traditional personal finance software.

Logitech's novelty mice chasing kids


Logitech's novelty mice chasing kids 08/28/2004 02:31 AM
globetechnology.com Aug 28 2004 6:09AM GMT

'The Book Nobody Read': Chasing
Copernicus


'The Book Nobody Read': Chasing
Copernicus
07/18/2004 02:21 AM
Owen Gingerich, an astrophysicist and historian of science, describes his quest to find all surviving copies of the original two editions of Copernicus' book.

Intel Chasing Networked Home Concept


Intel Chasing Networked Home Concept 02/18/2004 01:17 PM
Intel has a number of ideas for wirelessly sharing data among devices like TVs and computers in the home: It demonstrated a concept PC that runs on Microsoft's Media Center version of XP. The PC connects to a TV, can share content wirelessly, and can be controlled by a remote control instead of a keyboard. Intel is also working on a couple of new chips including Grantsdale, which includes integrated graphics, support for dual monitors and DDR2 memory. Intel is also working on a chip it's calling Alderwood which will let PCs act as access points....

Chasing Glimpses of a Past (Los Angeles
Times)


Chasing Glimpses of a Past (Los Angeles
Times)
08/28/2004 05:55 AM
Los Angeles Times - KUNSAN, South Korea — The clerk in the police station gives a quizzical look to the young woman in the short green sundress. She has Korean features, but something about her manner and even the sweep of her ponytail is distinctly American.

How Corporations Became Culturally Dysfunctional and Why Simple Solutions Won't Fix Them

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