This comment is from Collin on the post “NYT Author of ‘Capitalists and Other Psychopaths’ Responds to GMP Critique”.
To be fair, there are many capitalists that ARE sociopaths. Also, I think the bigger problem is not that most directors are sociopaths, but corporations themselves ARE sociopaths. The problem is that corporations face no punishment. A corporation does not fear the repercussions of its actions. Because of the limited liability nature of corporations and the refusal by government to prosecute directors for criminal conduct taken under their watch, we have a situation where corporations operate, essentially, as complete sociopaths. I think the biggest problem is limited liability and a refusal to prosecute. The entire C-suite at BP should be in prison. Thousands of executives at banks, mortgage companies, hedge funds, and the like should be in prison. Goldman Sachs should not be forced to pay a paltry fine for committing fraud; the people overseeing the deal all the way up the chain should be in federal prison. They aren’t. There are no consequences for corporate misbehavior and that is the biggest problem.
I’m a capitalist too. I am with you 100% that capitalism can be a massive force for good. With that said, we have a system in place that encourages evil and punishes good. Pointing fingers at rich guys does not solve any problems, no, but demanding that they stop using their wealth to buy our government, purchase favorable legislation, and have government grow their fortunes at the expense of everyone else WILL help solve those and many other problems.
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photo by jakecaptive / flickr
About the Editors
Collin, you have hit on one of the real issues and so too has Tom.
You have argued that the corporation is a sociopath. I agree in terms of the impact that arises from what we call corporations, but my argument is that the corporation is an absolute myth. It does not exist. Some filings and registrations exist, which when in place normally cause the actual people in our world to agree that a corporation exists, but clearly they do not. If a virus killed every living person what would the corporations do? Clearly the answer is nothing because they only exist as an agreement among real people.
As corporations are getting larger and reaching the size of countries people walk through the door as a ‘Good Man’ or ‘Good Woman’ and become an employee who sees themselves as something less than the powerful being that they are. They subscribe to the myth that there is a corporation and at work their needs and those of the other people on the planet are played down relative to the need of the corporation to continue to create profit and growth in value.
Tom is arguing that bottom up people can create the right kind of capitalism. I agree with Tom, in the right circumstances they can. However I don’t believe Tom has appropriately acknowledged the drivers that dominate the system.
The capitalist system is based on capital. The capital demands a return. While some funds play at social responsibility and while there are a very few ethical investment houses, 99.999% of the world’s capital is moved around based on IRR and NPV. When the short term IRR and NPV is not there the funds sack the board or the board sacks the CEO or the shares get sold till these things happen and finally the mythical company employs people who are prepared to be a ‘toe-cutters’ and get the business back ‘on track’ as they define it with short term growth in profits.
I like Tom believe that organisations can do good in the world and make sometimes extraordinary profits with strategies that are in integrity with the world. I’ve worked in and with two corporations that operated at gold standard in terms of profit and were gold standard corporations in operating in integrity with the world.
Sometimes strategies in integrity can provide outstanding returns quickly, but sometimes short term pain is required to move an organisation out of an old unethical business (like fossil fuels) into new sustainable businesses. These latter changes require ethical capital that is willing to be patient.
Bottom up it is the responsibility of every single one of us not to believe the myth of the corporation, there is only the people involved and each of them has a responsibility to every stakeholder. It is our responsibility to be ready to resign, to stand up to the ‘toe-cutters’ when they want to cut the oil rig maintenance budget another step too far. The reality is that the fears that stop us from taking these stands are myths too. Our life is but a chapter in a picture bigger than we can imagine. From that bigger picture perspective nothing is more important than living our life in integrity.
I am a believer in something beyond capitalism and I believe that the Venus Project ( http://www.thevenusproject.com/ ) offers great value. Without money 90% of the world’s activity that is created through dysfunction goes away. We don’t need corporate lawyers because there is no money to argue over, we don’t need most criminal lawyers because most criminal activity is based in scarcity and money, we don’t need accountants, bankers, and the list goes on. Products can be designed to last a lifetime because we don’t need two year product cycles to ensure continuing sales and profit.
Until the ultimate economic collapse comes that is a mathematical certainty with fractional reserve lending and the perpetual growth of the money supply through interest, we are left with capitalism. I believe there is a way of operating within capitalism that can work. It is to make decisions based on value creation (net of harm) and to design strategy based on creating value in the world (as Colin has spoken of) and to design a business model that provides a fair return for the value created. If more people will look the issue of ‘net of harm’ in the eye and walk away from making profit that does harm then capitalism will produce better results than it does today.
That is where the big picture comes in, with education and reporting and governance that looks harm in the eye and that will not act in dysfunctional ways to justify continued profit and unethical returns to capital.
The problem is that corporations face no punishment.
Pretty much.
Its a weir that a person that steals $20 can go to prison but a CEO of a company that had hand in almost crashing a national economy not only gets away with no punishment but gets a free hand out to clean up their “mistakes”.
Crime pays, you just have to make sure that the crime you commit is big enough to keep you out of jail.