| Reviews / Comptes Rendus | Labour/Le Travail, 55

Reviews / Comptes Rendus

Joel Bakan, The Corporation — The Pathological Pursuit of Profit and Power (Toronto: Viking Canada 2004)

Harry Glasbeek, Wealth by Stealth — Corporate Crime, Corporate Law and the Perversion of Democracy (Toronto: Between the Lines 2002)

THESE TWO BOOKS are good companions. Glasbeek's book, while very rich in Canadian content and examples, is a much more academic and difficult read for the neophyte to corporate law and crime. Bakan's book reads more like a popularized version of Glasbeek's book, with predominantly American examples. He builds upon a series of interviews with leading economists and business people who explain the history, workings, and problems of corporations. Both authors discuss corporate influence, the corporate push to soften and avoid regulations, corporate deviance and crime, and challenging corporate rule.

Bakan and Glasbeek explain how corporations gained the right to be treated as legal "persons," giving them the same rights as any other citizen to free speech. Protected by law under the Charter of Rights and Freedoms in Canada, and the First Amendment in the US, corporations use this right to influence the government and the public. As persons, they have more say than unions which can be silenced by the government in various ways (i.e. denial of the right to strike). Corporations use various strategies (i.e. think-tanks, lobbying) to create a business friendly climate. This climate includes the softening or removal of regulations.

Glasbeek points out how corporations promote the "myth" that small businesses are the backbone of the Canadian economy. He debunks this myth, pointing out that the term "small business" can be applied to quite large businesses, with as many as 99 employees and "annual incomes of less than $25 million." (28) He explains that the Canadian economy is really dominated by giant firms — oligopolies and monopolies. "(A) few major economic actors in any one sector are close to being in full control of that sector." (36) These corporations lobby for the "small business" to create an empathetic political climate as a means of advancing an agenda that favours business over the interests of most Canadians. Governments rush to help "small business" through cheap financing, and "cutting red tape,"but Glasbeek reminds us that this means "cutting of safety and quality controls" that would protect workers, consumers, and the environment. (35) With the Westray mine, politicians keen to create jobs scrambled to secure risk-free financing for the mine owner. Even though government authorities documented occupational health and safety infractions, they turned a blind eye and did not enforce the regulations.

Glasbeek is critical of how corporations use public relations firms and "intellectual gatekeepers" to manipulate information, skew research findings in a particular way that favours corporations, and massage the truth. He lumps intellectuals into a group that he calls "corporate cheerleaders." This group includes Fortune 500 corporations, lobbyists, media, law firms, and universities who serve corporations. Intellectuals, Glasbeek argues, play a key role in influencing the government and public by either speaking on behalf of corporations, or doing research for them. Intellectuals too are complacent about the effects of corporate power, because they do not really feel its effects — they can say what they want because they have so little to say. Glasbeek, however, points to key academics and researchers who are blowing the whistle on the undue influence of corporations on scientific research and government policy-making (e.g. Nancy Olivieri, David Healey, and Health Canada scientists). Healey lost his position at the University of Toronto for speaking out, and as I write this book review, three Health Canada whistle-blowers have just been fired.

Corporations try to avoid regulations by promoting two key ideas: self-regulation and "corporate social responsibility." Both authors illustrate why these concepts are problematic. Milton Friedman, Nobel laureate and eminent economist, explains to Bakan that because of corporations' mandate to make profit, corporate social responsibility can only be tolerated "when it is insincere" — that is when it is treated as a means to make more money for shareholders. (32–34) Bakan uses the Enron fiasco to illustrate the wide gap between Enron's public commitment to "social responsibility"and its actual operations. Enron "collapsed under the weight of its executives' greed, hubris, and criminality." (58)

Bakan scoffs at the idea of corporate self-regulation. "No one would seriously suggest that individuals should regulate themselves, that laws against murder, assault and theft are unnecessary because people are socially responsible. Yet oddly, we are asked to believe that corporate persons — institutional psychopaths who lack any sense of moral conviction and who have the power and motivation to cause harm and devastation ... should be left free to govern themselves." (110)

Bakan reminds us that "regulations are designed to force corporations to internalize — i.e., pay for — costs that they would otherwise externalize onto society and the environment.... Deregulation is a form of dedemocratization ..."(149–150) Yet both Bakan and Glasbeek illustrate how governments trip over each other in a "race to the bottom," wooing corporations by removing or softening regulations, and censoring themselves from introducing new regulations to protect the public interest.

Both Glasbeek and Bakan concentrate on the harm that corporations do. Robert Monks, a businessman who helped reform and run many Fortune 500 companies, explains to Bakan that "the corporation ... is an externalizing machine, in the same way that a shark is a killing machine" and that this makes it "potentially very, very damaging to society." (20) In externalizing their costs, corporations harm others and the environment, with little regard for the effect of doing so. They are accountable only to their shareholders. Yet, as we've seen with recent scandals, even shareholders get hurt.

Both authors review the reasons for the tendency of corporations to habitually commit deviant acts. Glasbeek argues that large publicly traded corporations are prone to deviance because of their intricate organizational structure, which can lead to a lack of oversight especially in higher management. Corporations also commit deviant acts because they know that they will not suffer very serious consequences for their misdeeds. Corporate deviance is rarely criminalized, instead being redefined in ways that avoid stigma. The attitude in North American society is that corporations are risk-takers and their harmful acts, even when they cause injury and death, are morally neutral. Bakan and Glasbeek's review of the number of cases where no criminal charges were laid (even though the employers knew the harm that they were causing) is sobering. This sends a message that corporations will not be held accountable for the harm that they do — that they are beyond the law.

But the authors also trace the history of opposition to undemocratic corporate rule. Bakan provides historical accounts of constraints on corporate power such as full liability for shareholders, the outlawing of corporations, the revoking of corporate charters, and Roosevelt's New Deal during the 1930s, which introduced regulatory laws and more government control of large corporations and banks.

Glasbeek and Bakan discuss the growing backlash against globalization, neoliberal politics, deregulation, and privatization. As corporate scandals grow, so too does the anger towards corporations. Both authors evaluate suggestions for curbing corporations' powers and disciplining their wrongdoings. These suggestions include improving the regulatory system, strengthening political democracy (inside corporations as well), creating a robust public sphere, and challenging international neoliberalism.

Both Glasbeek and Bakan feel that there is a struggle in present-day society between two visions of the political economy that influence policy making: one that views economic development as a tool to provide for human needs, and the other that sees economic growth as an end in itself. This is a struggle between democracy and neoliberalism. Both authors feel an urgency to bring corporations under democratic control and to ensure that they serve the public interest. Glasbeek wants Canadians to realize that there are two governments: the permanent one made up of corporations and their "cheerleaders" and the provisional government that controls very little. He urges readers to expose corporations and to remove the structures that hide them from the financial and moral duties that ordinary Canadians have, and to humanize society.

Glasbeek's heart lies with the workers, and he promotes the idea of giving workers more say in corporate decision-making, as in Western European countries. He points to the German model of "industrial democracy" as an alternative model of corporate governance that places more emphasis on protecting and respecting workers.

For anyone interested in corporate influence, deviance, and crime, I highly recommend both books. For the neophyte, it is best to begin with Bakan, who provides a basic understanding of the corporation and legal jargon. Glasbeek provides a lot more breadth on these topics. While he focuses on Canada, he also weaves in a rich array of examples from Britain, Western Europe, and Australia. Glasbeek wears his heart on his sleeve. It is evident that he is truly concerned about occupational health and safety and that he has dealt with too many cases of injured and sick workers over the years. Both authors seek solutions to the current situation where there is too much harm to workers, consumers, and the environment.


Ella Haley Athabasca University

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