Corporate Wrongdoing and the Neutralizing of Society

Most corporate wrongdoing is not criminal but all of it is unethical. It is not criminal because our corporatized government has made it legal through legislative (e.g. loophole porous laws), administrative (e.g., reckless deregulation and war making), and judicial (e.g., corporate personhood) accommodations.

Being legal, of course, does not make the wrongdoing less consequential. Just the opposite is true, especially when undertaken hand in hand with government, as is the case since the end of WWII with endless covert and overt militarism that has killed countless human beings and devastated countries, not for the sake of protecting and spreading democracy but for the sake of the corpocracy. Our own society has suffered immensely as well. It is because of the corpocracy that among industrialized nations America ranks lowest on all important socioeconomic indicators (e.g., the highest poverty rate). As I have repeatedly said, America’s corpocracy is her own worst enemy.

Rarely are corporations prosecuted for their crimes or given more than token fines (and accepted as “the cost of doing business”) by our hands-off government, which is a big reason why there is so much recidivism among corporate scofflaws. An even bigger reason, but one that would be hotly denied by any corporation, is seven traditional corporate functions that aid and abet corporate wrongdoing by neutralizing or compromising society and thereby gaining tolerance of their wrongdoing. The seven are corporate counsel, marketing and sales, public relations, investor relations, philanthropy, ethics, and corporate social responsibility programs.

Of the seven corporate counsels probably need the least explanation. Corporations have stables of corporate lawyers primed to give advice on what contemplated wrongdoing will likely pass the bar, and when it does not, are armed with legal defense briefs. The PR people get into the act, explaining to the public that everything was kosher, unintentional, or unknowing.

Simply put the marketing and sales functions market and sell corporate products and services. And let’s face it, some of the products and services are not all that bad. Our new home many years ago was equipped with major kitchen appliances from a corporation that we didn’t know at the time was a rogue scofflaw. Very recently we had to replace two of the appliances. We opted for matching appliances from the rogue. I’m a bit ashamed of myself.

As I indicated, the PR function exists to burnish the corporate image and reputation and to rush to the rescue when the corporation stumbles into the slime light. I would guess about right now, for example, the PR people of Koch Industries are working double overtime. No matter how hard their PR people try, my negative opinion of Koch Industries will not change, but on the other hand, I have just looked at a long list of their household products sold in America. One of them is a favorite of mine. Do I no longer buy it?

Investor relations people tout investments in their corporations even though most are cash rich. Constantly trying to increase quarterly earnings is one of the pressures and temptations behind corporate wrongdoing. States initially in our history issued corporate charters that were very strict, but soon, in “a race to the bottom”, liberalized their charters to attract corporate headquartering. One of the consequences is that any chartered corporation gets limited liability, which means, in effect, that state legislators have given shareholders a moral waiver. It limits owner liability in cases of corporate wrongdoing only to the potential loss of their initial investments and does not extend to potential costs of the damage done. Investors are thus free to buy shares in corporations without having to worry about whether increased share value will be gained through corporate wrongdoing and its harmful consequences to individuals or to society at large.

Do you know what the biggest source of corporate “guilt gifts” is? It’s got to be a corporation’s philanthropy program. Take a look at any of the corporations fingered as among the top criminals of a particular year or decade and I bet you won’t find many if any that do not give away millions. Who gets these giveaways? Universities, for one; they might have to shut down some of their schools and/or professorial chairs without corporate funding. Business schools may graduate the biggest supply of corporate crooks. Can you imagine a school so beholden to corporate funding that it would target a rogue patron?

Corporate ethics programs are a big joke that doesn’t neutralize or fool anyone who knows they are primarily facades intended, if not to neutralize people, then to bamboozle them. But how many people know the real workings of corporate ethics programs? I know because I have studied them for years. Take ethics codes, for instance. They are nothing but paper ethics that help a criminal corporation and government contractor get a ”low culpability score” from the easily compromised and (corrupted) federal government, for Pete sakes! Having an ethics training program also lowers the score, but Socrates long ago said no one needed to teach us what ethics is and he was absolutely right. It’s a simple matter to know what’s ethical. It’s much less simple to want to behave ethically, especially when there are so many temptations and pressures to do business unethically.

Lastly, there are corporations’ corporate social responsibility programs. I can’t imagine any corporation worth its soiled salt that doesn’t have one. Corporate social responsibility, or CSR for short, refers to a firm’s accountability for its financial, social, and environmental performance. But CSR is mostly a sham. Corporations give CSR little more than lip service, seeing it as nothing more than an inexpensive propagandizing opportunity to neutralize society’s opposition. CSR, moreover, is a superfluous concept. A firm that is ethically responsible is socially responsible, ipso facto.

I predict that if the corpocracy is ever ended through sweeping political, legislative, judicial, and economic reforms corporations heavily dependent on government’s handouts and laissez-faire policies may very well flounder. To survive they will have to launch what I call a corporate “turn up” strategy that takes a completely different approach to the corporate functions reviewed and, more importantly, requires organizing and operating in a much more democratic way, all of which would give a big boost to the right kind of corporate performance.

Gary Brumback, PhD, is a retired psychologist and Fellow of both the American Psychological Association and the Association for Psychological Science. Read other articles by Gary.