Much ado about corporations (Part 2): Next steps

The release of The Corporation, a new award-winning film by the BC-based team of Jennifer Abbott, Mark Achbar, and Joel Bakan, is opening up dialogue on the legal structure of the corporation and its impact on our society.

While headlines about corporate governance scandals clog the financial papers, the film delves deeper into the structural components that they suggest make the corporate institution into psychopaths.

That is not to say that governance issues are trivial. As the Enron, WorldCom and other scandals illustrate, inadequate governance, accounting and transparency rules can have devastating impacts on individuals and communities. In fact, significant progress towards reigning in corporatism can be achieved through governance reforms.

Governance

Despite the diatribes of a few corporate zealots, there is no denying that the success of the neo-conservative campaign to deregulate and privatize our society. This, combined with the growth of trade agreements, has led to an enormous increase in the power of corporations in the last few decades.

The stock market frenzy in the 1980s and 1990s helped corporate officers and directors enrich themselves, while laying off workers and bilking shareholders. The unchecked power of these corporate elites insolates them from effective monitoring and accountability. Seldom are they held accountable for the social impacts of their decisions.

Despite a few high-profile prosecutions, conventional wisdom holds that the odds of being held accountable for corporate misbehavior are slim indeed.

For environmental, labour, community and indigenous activists, this has to change. We need to demand reforms that hold officers and directors accountable for their actions. This is the best way to limit corporate bad acts.

The good news is recent stock scandals, involving rampant conflicts of interests and spurious accounting practices (Enron, BRE-X, WorldCom, etc), have driven governments to finally tighten up accounting and disclosure requirements.

However, much more is needed. In Canada, corporations can still deduct their environmental fines as business expenses on their tax forms.

To offset this increasing power, screenwriter Bakan calls for more effective government regulation. He says: I do believe it’s time to reinvigorate the regulatory state, try to re-establish democratic control and accountability for corporations….”

Ironically one critic of the film, National Post columnist Gerald Owens, agrees and supports laws that make corporate elites responsible : “That is why I think the invention of the modern corporation – in the 1855 British statute – was an error, unjust in its principle. A company should have at least one flesh-and-blood partner who is fully answerable, fully suable.

While the favourable tax treatment corporations receive is only a minor focus of the film, it also received unexpected support from Owens: “If shareholders are to be sheltered from a company’s liabilities, if corporations and their owners are not one and the same, then let corporations pay tax on their profits, and shareholders pay tax on their dividends. But, being a hypocrite, I won’t campaign to get rid of Canada’s dividend tax credit.”

Progressive, environmental, labour and social activists – need to refocus our efforts. It is clear that attempts to stop individual bad acts of individual corporate or, like the Dutch boy’s attempts to fill the cracks with his fingers. Without resources, we don’t have enough fingers.

Instead, we need to focus on underlying structural issues that fundamentally reign in corporate power, such as:

  • Ending limited liability for shareholders;
  • Limiting corporationxEDs Charter rights;
  • Ensuring regulations require the full disclosure and accounting of all existing and potential liabilities; and
  • Amending tax laws to prevent deduction of fines, full taxation of all profits and change depreciation schedules to get rid of incentives that promote machinery to replace workers.

What is clear from the hoopla surrounding the film – and the visceral reaction by conservative zealots – is that there is a growing cross-section of Canadians that have real concerns about corporate power, and want to begin taking action to address their role. Dogwood Initiative will continue to work to bring people together to take action.

Comments are closed.

Send this to a friend