In September 2002, I was asked by a group of inquiring, progressive law students to lead a discussion of “corporate responsibility”…Sponsored by the student chapter of the National Lawyers Guild, it was the kind of stimulating experience that the young generation infuses with energy. Each generation brings a moral, humane enthusiasm to the table that wipes away the jaded crusty viewpoints that have developed after years of disappointments, battles, and attacks. It is that very demand for moral humaneness that regenerates our movement, gives it direction and lays bare the profound corruption of the current corporate structure. It also is the foundation for a movement to change fundamentally the direction and morality of the multinational corporate/governmental system that now oppresses us.
In preparation for the discussion in September 2002, I wrote a paper that can now be labeled “Corporate Responsibility I”. As a result of the energy and analysis of these lively intellectual minds, I was compelled to write more to insure more clarity. The previous paper is available on request.
In the previous paper, the concept of “corporate responsibility” clearly represented an oxymoron. Corporations reject any responsibility to the environment, to democratic government, to consumers, and of course any responsibility whatsoever to its employees. The justification for such irresponsible behavior by these public institutions has been that the requirement of maximum profit created efficiency, which in the long run benefited everyone with more and cheaper products.
The theoretical basis for that rationalization is that the shareholders of the corporations would benefit. Under current schemes, that rationalization collapses almost as fast as Enron collapsed. In fact, the overwhelming weight of the evidence is that this market approach fails—it fails the environment obviously, it destroys workers lives and the communities they inhabit. When workers begin to build their community, establish relationships and make demands on the corporation whose wealth they created, the corporation either threatens to shut down and move or does move.
Because these multinational corporations have so much political power, the governments are never able to collect sufficient taxes to remedy the damage done by corporate commercial activity. In fact, these multinational corporations with their vast sums of money corrupt the democratic process. For instance, when consumers suffer injuries or receive defective products, the corporations are able to pass legislation that absolves them of all responsibility. And, it is the consumer that is the justification for the other corporate irresponsible activity.
These corporations are public institutions. They are given extensive legal privilege including the right to function as individuals without individual responsibility. Through the effort of thousands of workers, these public institutions accumulate huge sums of money. Contrary to classical economic theory, money is the repository of value and power. The hallmark of the political posturing of these public institutions is the demand to privatize; that is, to put the power to structure society in their hands. Importantly, turning over the right to organize society to multinational corporations is not giving power to private individuals. Instead, it turns over power to public institutions whose sole interest is commercial activity, not societal well-being.
By shrinking the power of government to control these multinational corporations, society creates numerous unintended consequences. In Resurgence, Issue #80, August 1, 1997, the discussion outlines one significant consequence:
“At the top, the mafias have abandoned the black bag for the computer, the machine gun in the violin case for stock portfolio in the briefcase. This shift from the blood-drenched fringe to polished boardroom has been facilitated by the global trend toward “economic liberalization” which has seen the downsizing of the state, the deregulation of international banking and trade, the privatization of state assets, etc. These conditions not only benefit transnational corporations and international banks which vigorously promote them, but also favor the growth of illicit activities and the internationalization of the criminal economy as well.”
As we shall see, deregulation necessarily means the promotion and support of a higher level of criminal activity. In fact, the difference between the so-called drug lord and the crooked executive officer is one only of semantics. The damage done by Kenneth Ley of Enron, of Bernie Ebbers of WorldCom, of Dennis Kozlowski of Tyco International is far, far greater than that of the drug lords. In fact, their methods are identical.
As devastating as this criticism of the multinational corporate system is, it nevertheless misses the most appalling result of the corporate market system. This system consistently rewards the most selfish, venal, mean, vicious, banal aspects of human character. It punishes compassionate concern for fellow human beings. Generosity and altruism are considered signs of weakness instead of strength of character. This country celebrated Gordon Gecko’s summarization of the corporate moral perspective that “Greed is Good.” Even this statement underestimates the cultural, moral bankruptcy of the multinational corporation. It is not just greed, but fraud, dissimulation and bribery that becomes a part of the multinational corporate culture.
The problem is not simply huge profits or even excessive profits. It is the demand for maximum profit. The pressure has always been to maximize profit regardless of the human cost. Even the concept of maximum profit has been corrupted. While capitalist apologists, mostly economists, continue to argue that the drive for maximum profit increases efficiency, creates new products and thereby makes wide scale distribution possible, this rationale is just that, a rationale. Under current circumstances, it has become a simple ruse.
Maximum profit inevitably changed from maximum profit to maximum personal gain. Particularly in relation to the crooked executive officers, maximum personal gain is not related to the production of a product or increased efficiency. Personal gain relates to the individual confiscation of publicly created wealth. The level of corruption within the multinational corporate system is monumental. In fact, corruption implies the perversion of something valid in the first place. The thievery we now see is merely the manifestation of the system, which is itself, corrupt.
A good example of how this system idolizes the thief is Michael Milkin. He is a convicted felon who stole billions of dollars; he paid a $500,000,000.00 fine and spent 3 to 4 years in jail. Now, he teaches in the “best” business schools of this country. He even has franchised his videos so they can be shown throughout the country, thereby expanding the extent of his influence. He is, in a word, celebrated by the business community.
It is, therefore, appropriate to characterize the current corporate system as nothing more than organized theft, which concentrates the collectively created wealth in the hands of fewer and fewer people. It not only moves value and power to the wealthiest but to the most corrupt. Nevertheless, apologists abound. The American Heritage is a right wing magazine and carried an article by John Steele Gordon entitled, “Enron is nothing new—and it’s always good for us.” The article is a breezy excuse for one of the worst scandals of recent times. Never strong on theory, capitalist apologists seldom answer who benefits from this corruption.
Such piracy never benefits the employees of multinational corporations. In the long run (the economists’ term), their productive work is confiscated. The employees work with no security and no protection unless they have a strong and effective union. Even with a strong union, plants are shut down and moved to nonunion locations, pensions are robbed, safety is ignored and unions are busted or corrupted.
United Air sought government loans and then was forced into bankruptcy. Opposition to government protection came from Continental Air, Northwest Air, and others who wanted United’s bankruptcy not for competitive advantage but instead to force a restructuring which will attack the power of the unions within the industry. Since United set the wage standard, its bankruptcy would allow other airlines to bust their unions. The crooked executive officers, however, would continue to collect their exorbitant salaries and hidden perks. Even Gordon concedes the following:
“The reputation of the accounting profession, indeed that of capitalism itself, is in a bad way these days for sometimes letting the need for a good number on the bottom line dictate the numbers above it, rather that the other way around. One of the great American accounting firms of the twentieth century, Arthur Anderson, is almost certainly at the end of its existence thanks to scandal after scandal. Enron, once the seventh largest company in the country as measured by gross revenue, has been found to be a tissue of accounting deceptions and has plunged into bankruptcy, wiping out much of the accumulated wealth of its investors and employees. WorldCom, the second largest long-distance provider and by far the largest carrier of Internet traffic, counted $7 Billion worth of routine maintenance expenses as capital investments, making the company seem profitable when it was not. Tyco’s chief executive, unchecked by a supine board of directors, turned that company into his personal piggy bank to buy real estate, paintings, and a now famous $6,000.00 shower curtain. Indictments have been handed up by the dozens, with many more, undoubtedly to follow.
What is going on? Listening to much of the public commentary and political pronouncements on this issue in recent months, one might think that the crisis of capitalism, so long predicted by its enemies, is at hand. It is not. This is capitalism. Gordon, Why Enron Always Happens and History Shows Its Always Good for Us, American Heritage (11/12/02 p.68 (emphasis in the original)
Gordon mentions indictments but the likelihood of actual or severe punishment is extremely unlikely. This is capitalism. After all, this is good for us. Instead of life sentences, we are looking a few jail terms and nothing more. It is important to note that the multinational corporations passed legislation to weaken generally accepted accounting principles and even then violated those restraints.
Even using generally accepted accounting principles, there is no liability or even accountability for environmental degradation. Of course, no corporation includes damage to consumers or workers as a part of accounting. Crooked executive officers were given magnanimous stock options to the detriment of the employees and shareholders. Now that they have been caught with their hand in the cookie jar, it will be used as a tax deduction. Basically, these corporations play a heads we win, tails you lose game and then brag about how clever they are when they won the bet.
“Everyone expects that corporate profits will plunge if a new international accounting rule forces companies to report as an expense the value of the stock options they grant. But a little-noticed provision of the proposed rule could produce the opposite effect—sharply higher profits—for some companies.
That anomaly comes from a thorny issue related to the tax windfall American companies receive when options are exercised. The companies receive a tax deduction equal to the profit realized by employees who exercise options. The rule proposed by the International Accounting Standards Board would let companies report higher profits in the year realized those benefits.
The tax savings can be substantial. It appears that Microsoft’s net income would have risen by billions in its 2000 fiscal year, rather than falling, had it been expensing options under the proposed international rule. That was at the height of the bubble, but even now, with a lot of old, cheap options still being exercised, Microsoft is saving a lot of money on taxes thanks to options.” NYT, 12/602, P.C. (Emphasis added)
In other words, even in trying to correct the corruption so inherent in the system, the multinational corporations use it to avoid their public duty to pay taxes. John Steele Gordon concedes that the fraud exhibited with Enron and Arthur Anderson is not simply an abhorrent aberration of capitalism, but rather is capitalism itself. However, either he does not realize the magnitude of the concession or just does not give a damn.
It is not just Enron and Arthur Anderson. It is WorldCom, Global Crossings, Adelphia Communications, Quest Communications International, Imclone, K Mart, Tyco International, Xerox, Reliance Insurance, Legion Insurance, and General Electric, etc., etc., etc. The NYT of 10/17/02 reports on page C1 through Joseph P. Traster:
“Stepping up efforts to recover money in the collapse of the Reliance Insurance Company, insurance regulators in Pennsylvania have turned their sights on the company’s auditor, Deloitte and Touche, one of the country’s largest accounting firms.
In a civil suit filed in a state court on Tuesday, Pennsylvania’s Insurance Department accused Deloitte and Touché and one of its actuaries, Jan A. Lommele, of inflating the insurer’s financial statements by $1 billion and filing misleading reports as Reliance’s executives were draining cash from the troubled insurer.
A result, the regulator’s said, was that it was more than a year before investors realized that Reliance, one of the country’s largest commercial insurers, was in trouble. The regulators seized control of Reliance on May 29, 2001, with hundreds of millions of dollars in claims on its books that it could not pay.
‘Risk factors and red flags were ignored by Deloitte’, the regulators said in the lawsuit. Instead, Deliotte and Lommele, in exchange for millions of dollars in fees, facilitated and prolonged Reliance’s ability to continue operating.’”
Gordon says this is good for “us”. But thousands of injured workers, dependent on Reliance payments, suffer extensively because of this fraud. It is not good for them. Nor is this fraud good for their families. The “us” appears to be only the richest in this country.
Compiled not by extensive academic research but rather by recent memory, the above list shows that fraud and corruption is endemic to and inherent in the system of capitalism. When one states that current capitalism is organized theft it sounds strident and extreme. That is only because we live under a controlled Republican media that bombards us with deceptive and deceitful propaganda to hide the depth of the corruption.
Even Martha Stewart, an American Icon, is a part of the effluent. A former broker, she is caught engaging in illegal insider trading. Her defense? She is doing what everyone else does. If that were a legal defense, then no pot smoker or dealer would ever be convicted. At least the pot participants give or get pleasure. Stewart is simply stealing large sums of money.
That is why the current system of capitalism is organized thievery. Through great laboring effort and creative energy, great wealth is created; but it is never used to benefit the people who created the wealth. In fact, it is given to most selfish, aggressively avaricious people in our society. They proceed to create a culture that celebrates the most venal among us.
As I have stated earlier:
“The New York Times of July 21, 2002 in discussion of market implosion stated: Seven Trillion Dollars Gone.
The money is not ‘gone’. It is withdrawn from pensions, IRAs, 401Ks which have been emptied. This so-called correction represents blatant theft, for which there is no corporate responsibility.
The entire privatization/deregulation movement was designed to make this sort of theft possible without legal responsibility. It represented a method whereby social capital created by millions of work hours could be taken with minimal risk. A government employee would be legally responsible and more importantly would be watched where a system of check and control would minimize the loss.” Corporation Responsibility I
Now that the Bush cabal has seized control of all branches of government, they intend to steal from social security:
“Some Republican strategists like former Representative Vin Weber of Minnesota, an influential lobbyist, argue that these victories showed that the public is ready for radical changes in Social Security and that Republicans should seize the day.” NYT 12/1/02 – News in Review p. 5
Privatization of social security in any form would be another $500,000,000,000.00 to the richest people in this country. If the reader of this pamphlet wonders why he/she has to work so hard for so little, has to put up with a dreary life when it could be better, has to search so long for the slightest pleasures, then only look to the richest people in this country. In fact, with a little organized effort directed at these people, we could gain $2 or $3 trillion to shut us up — we could sure use it.
But it is not simply about money. We first have to start with the principle that we create this wealth. Value and power are reflected in the money created. These multinational corporations are public institutions. These institutions are answerable to the public and to the governments which create them and allow them to function.
At the conference in September, 2002, one student expressed frustration at the feeling of impotence to change anything. The opposite is true. That is why so much money is spent with the media to convince the population that the system is working, even though it is a failure.
The level of corruption and fraud that permeates the current system makes the system fragile. That is why it was necessary for George II to steal the election rather than accept the principle of majority rule.
Our demand is for a united, democratic, moral society. We ask not simply that the rich give up some money so they can continue to promote the culture of consumerism. One crooked executive officer in the 1980’s popularized the phrase that the man who dies with the most toys wins. That phrase, by it self, exposes the moral bankruptcy of the current multinational corporate system of consumerism.
Our demand for a united, democratic, moral society imposes public responsibility on all public institutions. Public duty means putting the interests of all people before the narrow, selfish interests of the few. Any politician, who uses racism as a basis for success, will and must be rejected. This includes not only the blatant racism of Trent Lott but also the coded racism of George II. Whenever the interests of the richest among us are placed ahead of the interests of the whole populace, racism is an inevitable and necessary by-product. We reject the concept of dribble down economics. We demand a united support for all people.
A united populace demanding true morality would result in profound changes. The following demands, so minimal in extent, are impossible for the multinational corporations that control this country to defend:
1) Requiring the United States government to adhere to international law would immediately halt the attack on Iraq.
2) A repeal of George the Second’s plan to plunder the U. S. Treasury by giving billions of dollars to the richest people in the world is both moral and economically the best stimulus for the national economy.
3) The return to Kyoto to protect the environment is impossible for the Bush cabal because it is not good for business, but it is good for society.
4) Repeal of Taft-Hardley is necessary to protect working people at all levels.
5) A tax of 10% on the richest one percent specifically to rebuild the cities of this country is not only morally necessary, but also economically beneficial because it would create thousands of jobs.
6) Universal medical care available on demand for all people is a necessary part of a healthy public and again would be economically beneficial.
These are simple demands but this government, now totally controlled by multinational corporations, cannot address the validity of these demands. That is why the Republican Party attacks rather political discussions to win elections. The victories of the Republican Party were built on coded racist messages and the corrupt use of money. The outrages at Trent Lott who has always been a segregationist, is an example is how difficult it is for George II to contain the bigotry. The bankruptcy of the current establishment will result in collapse as dramatic and quick as that of the Enron Corporation. All we have to do is make the demands. These are, after all, simple demands. Demands that any just, democratic, moral society would recognize and accept. We now have the resources to answer these demands. All we have to do is to eliminate the crooks who are now in power.
Yours in Struggle,
Ronald D. Glotta
220 Bagley, Suite 808
Detroit MI 48226-1409
(313) 963-1320 (313) 963-1325/Fax
rglotta@glottaassociates.com