Skip to content

From the archives

Carbon Copy

In equal balance justly weighed

Slouching toward Democracy

Where have all the wise men gone?

By Populist Demand

When urban and rural voters went separate ways

Devilish Charm

The public facades of private corporations

Pamela Divinsky

The New Corporation: How “Good” Companies Are Bad for Democracy

Joel Bakan

Allen Lane

240 pages, softcover, ebook, and audiobook

In his 2004 book, The Corporation: The Pathological Pursuit of Profit and Power, the law professor, writer, and filmmaker Joel Bakan painted corporations as psychopathic. There’s evidence that many of them took that indictment seriously.

Over the past fifteen years, publicly traded companies have developed purpose-driven initiatives, built more sustainable supply chains, reduced their carbon footprints, engineered recycled products, championed the rights of women and minorities, pioneered new sources of energy, and embedded life-cycle assessments into all they do. These commitments, along with numerous certification regimes, have generated new devices, services, and investment products, including ESG funds and social impact bonds.

But, Bakan warns in his latest book, The New Corporation, we should not be fooled. The modern corporation is “still a psychopath,” he writes, “just a more charming one now. And more dangerous because of that.” The “imperative to ‘do well,’ ” as Bakan puts it, may “yield benefits to society, but inevitably they are severely limited.” In mitigating the risks that come with negative perceptions, companies are now doing well by doing bad.

No matter how compelling their sustainability reports, CEO pronouncements, community investments, and social media campaigns, corporations are legally obligated to advance shareholders’ interests, which can never be fully aligned with the public interest. Of necessity, environmental and social initiatives are “defanged” within the larger business ­strategy — underfunded, under-resourced, and almost always sacrificed in the name of profit. Put another way, the new corporation is doing exactly what the smart psychopath would do: act as if it’s trustworthy and kind. Posing as a caring citizen, the typical multinational tries to convince us that it can help solve many of the social ills that impair our lives: inequality, employee mistreatment, exploitation, slavery, unsafe working conditions, mental health challenges. But, Bakan is quick to remind us, these are the very same ills that boardroom interests have been complicit in creating.

The New Corporation opens in Davos, where Bakan introduces us to an elite who’s who: Jamie Dimon of JPMorgan Chase, Tony Blair, Al Gore, Justin Trudeau. We meet Paul Polman, the former CEO of Unilever who has denounced quarterly results reporting and went on to found the Coalition for Inclusive Capitalism. We learn how Walmart has reduced its greenhouse gas emissions by 35 million metric tonnes, how McDonald’s uses 100 percent recycled-fibre-based packaging, how Apple powers its facilities with 96 percent renewable energy, and how Amazon’s Jeff Bezos has donated $100 million to food banks. But, as the Nobel laureate Joseph Stiglitz whispers to Bakan in “a shabby restaurant on the outskirts of town,” these are all examples of businesses “pretending that what’s good for them is good for us.”

Bakan is sharp when it comes to deception, and he cites Volkswagen as but one example: even as Forbes ranked the automaker among the top ten companies for corporate social responsibility in 2014, it was “enmeshed in a scandal of breathtaking scope.” VW eventually pleaded guilty “to charges of conspiracy to commit fraud, obstruction of justice and falsifying statements,” but such trickery is pervasive in many industries. “The sad truth,” Bakan writes, “is that over the last two decades, corporations have been on a crime spree, even while claiming they have become conscientious and caring.” While some giant companies promise solutions to modern problems through technology, their products tend to be devoid of human values. Those that have pioneered ride-hailing apps, for instance, have exploited and commodified labour.

With scalpel-like precision, Bakan dissects the tools that have been designed to monitor and regulate corporate behaviour, and he argues that the full panoply is flawed. Certification labels may be effective at encouraging “the idea of consumer power,” but they’re otherwise suspect. It’s simply too easy to game inspection, for one thing. It’s also meaningless to be accredited as a benefit corporation — or B Corp — because there is no monitoring, no enforcement, and no penalty for subsequent non-compliance. What’s more, Bakan argues, even the most progressive of us are powerless to drive material change. “Spiralling consumerism” is a problem the Davos elite recognizes, but it too is the creation of C‑suite ambitions and marketing. Despite growing pressure by consumers, corporations remain powerful and dangerous.

Corporate behaviour will change, Bakan concludes, only with dramatic legal and political action. Despite widespread political disaffection, he sees hope in a new crop of leaders, including Chokwe Lumumba, the mayor of Jackson, Mississippi, and Ada Colau, the mayor of Barcelona. These individuals have the courage to rehumanize how we do commerce and politics, while decentralized grassroots actions like Occupy and local experiments in participatory democracy also suggest the possibility of real change.

With The Corporation, Bakan helped initiate a rather vociferous industry of criticizing capitalism — one that has since detailed the ascendancy of surveillance and the myth of privacy, the wholesale monetization of all aspects of our lives, the demise of human values, and the general undermining of freedom and democracy. Many of these critiques are illuminating and full of difficult truths, but they usually fail to challenge the two foundational tenets of capitalism: that all human endeavour, even altruism, is motivated by self-interest and that all human activity can be explained in terms of supply and demand.

Capitalism endures because these reductive principles have become irrefutable truths. It’s why critiques of the system stay at the margins; they offer solutions that are limited to tweaking the rules and regulations. The game itself remains in place, and it continues being gamed.

We won’t find solutions in the foundational beliefs that created the problem. If we are interested in actual change that will respect individuals, guard choice, and democratize possibilities, we need to start with challenging the capitalist laws of human behaviour. We need to articulate an alternative explanatory model.

Bakan warns us not to be fooled by the duplicity or the charm of the corporation. But the truth of our condition is more complex and complicated than the villainy of one type of player. Individuals who work in big business do not wake up in the morning wanting to exploit, deceive, and destroy the public good. And in many ways corporations have been the source of progress and beauty — everything from modern menstruation products and birth control pills to paper clips and espresso makers.

Never trust a charming man, my sister told me years ago, because his charm is hiding something that will hurt you. Bakan is telling us the same thing about corporations. But they need us as much as we need them. It is time to take that mutuality seriously, and perhaps this is the unintended lesson The New Corporation offers

Pamela Divinsky is the founder of the Divinsky Group. She holds a PhD in economics and history from the University of Chicago.