March 2, 2009

Corporations and Evolution

The collapse of the US economy in 2008 was expected. The worldwide consequences were a little suprising. At the deepest level, the worldwide recession is an expression of human intergroup connectivity. Stock market pundits will emphasize loss of investor confidence, mob pyschology and the cyclic activity of markets.

While governments of different colors, shapes and sizes have met to deal with the economic crisis, only one idea emerged as a solution - spend more of the money you don't have. If you rely on common sense, spending money you don't have will only deepen a debt crisis. Ask anyone who has maxed out their credit card limit.

There is a deep human tendency to avoid understanding the details of any problem and to wish for rescue by a divine authority. The realist knows that inside the idea of spending more and increasing deficits there is no alchemy at work, no magic transformation. Cynical realists have said that the spending strategy is an intervention by desperate politicians (and their more desperate advisors) who know they won't return after the next election if they seek real solutions to societal problems that cannot be resolved easily or quickly.

The real need is to transform citizens of planet earth from selfish consumers to responsible custodians of the natural world. A smart person knows that humans do not need more cars, more bad food, more drugs, more rules and regulations; they need a new approach to healthy, sustainable living that will work now and for centuries to come.

I wanted to share some basic principles from my book Group Dynamics. Here is a brief section on the real nature corporations:

"One way to epitomize the 20th century is to describe the emergence of corporations as a dominant form of social organization. The corporation turned out to be an efficient way to organize, administer and build industrial capability. As corporations enlarged and became wealthy, countries became wealthy and were transformed. The emergent legal definitions of incorporation submerged the rights and duties of individuals and advanced the protection and privileges of small groups who were legally incorporated. In the best case, a corporation values its workers and its customers and develops win-win strategies so that everyone benefits – the corporation posts profits, the workers enjoy stable employment and the customers are satisfied with the goods and services they receive.

Corporations depend on rules to regulate their employees and more rules to govern their interaction with customers. While there is an ethos of customer service in retail organizations, enlarging corporations become less friendly, less personal and less civil, leaving customers with problems they cannot solve, complaints that will not be addressed, and helpful suggestions that will not be heard.

The internal dynamics of corporations reveal all the tendencies of human nature, somewhat tamed by the discipline required to remain more or less efficient and legal. The alpha members of corporate society would tend to be ruthless dictators if they were not constrained from many directions. The growth of rules and regulations has paralleled corporate growth.

You could argue that some balance had been achieved but events at the beginning of the 21st century are relentlessly adverse and quite different from the conditions in the 20th century when corporations grew larger and wealthier consuming and polluting with little or no restraint.

You could also argue that governments are not always competent nor constructively motivated. Civil service organizations grow to resemble corporations. You cannot rely on the wisdom and morality of government agencies. Regulation alone will not achieve benevolent corporations. Knowing that humans routinely lose their sense of responsibility and morality when they sign up as members of a large group, you are not surprised when you learn of the depredations of corporations.

The current question is can large corporations evolve into more responsible and ethically motivated organizations? Balkan and others have argued that corporations are sociopathic since their prime interest is making money and the end justifies the means: “A corporation is inherently amoral, callous and deceitful; it breaches social and legal standards to get its way; it does not suffer from guilt, yet it can mimic the human qualities of empathy, caring and altruism.”

An ideal solution is to transform people who manage and work for corporations into good citizens who have a strong sense of fair play and will do no harm to others.
A new legal definition of corporations would seek to balance the profit motive with social responsibility. Corporate executives need to be accountable not just to their shareholders, but also to customers, workers and neighbors. Government and corporations provide similar opportunities for executives to divert wealth into their own bank accounts and to favor family, friends and allies with monetary and other rewards.

Competition is the force of natural selection. Many have argued that competition in the market place keeps bad corporations from surviving. Competition has been a driving force for technological innovation and corporate efficiency. In the best case, bad products tend to disappear since consumers search for better and cheaper products. Confusion arises when cheaper is not better. The drive to win over competitors by marketing cheaper products has produced profound dislocations of people, money and corporate activities.

Corporations do not remain loyal to their workers or the communities that supported them. They move manufacturing to developing countries. Corporations use every means to keep labor costs low. They exploit poor and uneducated workers in countries that do not protect their workers. Mass migrations of unskilled workers are another feature of the 21st century that will grow beyond any definition of national boundaries. Some of the poor worker migration is legally organized. Most the migration is illegal, spontaneous and disorganized. Humans have always migrated. They deplete the resources in one area and then move to the next.