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Corporate Culture:  Rotten to the Core

I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance of the laws of our country.

Thomas Jefferson, 1816

"Corporate ethics" is becoming as big an oxymoron as "military intelligence" or "compassionate conservatism."

Rob, letter to the LA Times, 7/8/02


Enron, WorldCom, etc.
The litany of corporate wrongdoers勇nron, WorldCom, etc.擁s too long to go into here. For a good summary see A Guide to Corporate Scandals.

These large-scale scandals are only the tip of the iceberg, of course. The everyday, unnoticed scandals are the real problem. Environmental and safety regulation violations, underfunded pension funds, offshore tax shelters, accounting manipulations, firings of long-time employees, grossly overpaid executives, sheep-like boards of directors...the list goes on and on.

We can't solve or even analyze the gross problems of capitalism here. What we can do is suggest the underlying cultural problem:

Capitalism is a cultural construct. As practiced in the West, it reflects the assumptions and biases of Western civilization. That makes it a multicultural issue.

We're seeing how our greedy, selfish belief system is manifesting itself in corporate crime and immorality. Such malfeasance has always existed, but Americans accepted it as "the cost of doing business." Now, as in the '60s, people are again questioning the underlying mindset.

What went wrong?
What's behind the recent wave of corporate failures? Neal Gabler explains in "Desperately Seeking Celebrity" (LA Times, 8/11/02):

[I]n the 1980s, a new virus of celebrity infected the country, one feature of which was the "celebritization" of wealth. In a society where celebrity was suddenly considered the most exalted state one could achieve, the rich discovered that a large fortune and an extravagant lifestyle would bring media attention謡itness that TV paragon of 1980s overindulgence, "Lifestyles of the Rich and Famous." Now that celebrity had become a source of power, previously obscure titans of industry, from Lee Iacocca to Donald Trump, began bidding for stardom, too. In fact, the business world practically demanded it.

This chase for recognition was the personal equivalent to botox economics葉he idea that a corporate balance sheet must look good rather than actually be good. In effect, CEOs needed that money, however they got it, or they would be marginalized. Corporate executives who displayed their wealth and lived grandly would get the magazine covers (and not just of the business magazines), the television profiles, the constant mentions on CNBC, the bestsellers advising other executives how to do it, the invitations to the corporate conclaves at which one rubbed shoulders with the other superstars of business and a place high on the list of the movers and shakers of America.

Moreover, this sort of stardom had economic value for the executives' companies. It made Rigas, Lay, Ebbers and the others players at the big corporate table and gave Enron, WorldCom, Adelphia et al. much greater visibility, though it also changed the traditional relationship between CEOs and their companies. Not so long ago executives served their companies. Now the companies served the executives. Or as Kozlowski was fond of saying, "Money is the only way to keep score."

This matters because it locates corporate corruption not in the rotten soul of some overzealous CEO but deep in the soul of modern American culture. That makes it much more difficult to extirpate. You can use the stick of criminal prosecution to bring offenders to justice, but it is likely to be of limited effectiveness when the business world itself, like the rest of society, continues to hold out the carrot of stardom. As much as Americans want corporate responsibility to reassert itself, to do so the country may need to change its own set of priorities that just a few months before their indictments had the media singing the praises of Kozlowski and Rigas.

Founding Fathers opposed corporations...
From The Railroad Barons Are Back -- And This Time They'll Finish the Job by Thom Hartmann:

As the father of the Constitution, President James Madison, wrote, "There is an evil which ought to be guarded against in the indefinite accumulation of property from the capacity of holding it in perpetuity by... corporations. The power of all corporations ought to be limited in this respect. The growing wealth acquired by them never fails to be a source of abuses." It's one of the reasons why the word "corporation" doesn't exist in the constitution -- they were to be chartered only by states, so local people could keep a close eye on them.

Early state laws (and, later, federal anti-trust laws) forbade corporations from owning other corporations, particularly in the media. In 1806, President Thomas Jefferson wrote, "Our liberty depends on the freedom of the press, and that cannot be limited without being lost." He was so strongly opposed to corporations owning other corporations or gaining monopolies of the media that, when the Constitution was submitted for ratification, he and Madison proposed an 11th Amendment to the Constitution that would "ban commercial monopolies." The Convention shot it down as unnecessary because state laws against corporate monopolies already existed.

But corporations grew, and began to flex their muscle. Politicians who believed in republican democracy were alarmed by the possibility of a new feudalism, a state run by and to the benefit of powerful private interests.

President Andrew Jackson, in a speech to Congress, said, "In this point of the case the question is distinctly presented whether the people of the United States are to govern through representatives chosen by their unbiased suffrages [votes] or whether the money and power of a great corporation are to be secretly exerted to influence their judgment and control their decisions."

And the president who followed him, Martin Van Buren, added in his annual address to Congress: "I am more than ever convinced of the dangers to which the free and unbiased exercise of political opinion -- the only sure foundation and safeguard of republican government -- would be exposed by any further increase of the already overgrown influence of corporate authorities."

Thom Hartmann is the author of "Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights" -- http://www.unequalprotection.com and http://www.thomhartmann.com. Permission is granted to reprint this article in print or web media, so long as this credit is attached.

...but Republicans enshrined them
From Partisan Politics: The G.O.P by Jack Forbes:

When the Republicans came to power, however, they became the vehicle for an unbridled capitalism, a capitalism accepting and even demanding that the federal and state governments provide monetary and legal support for the rise of a wealthy elite and for corporations. The GOP effectively controlled the levers of power for decades and thus became the target for every possible scheme to plunder the country's wealth and patrimony. But it also arose from Protestantism's tendency to exalt the successful, to see the rich man as being virtually anointed by divine favor, flashing back to the ideals of Calvinistic New England but also back to the class-dominated ranking systems of the European heritage.

As the years went by, the GOP retained its moral element, which often was corrupted into high-handed Christian attacks on "tribalism" and "heathenism;" and upon "foreigners" and Roman Catholic or Jewish big city populations. But the party was actually controlled by very aggressive capitalist elements which made it the most corrupt party in US history, between the 1860s and 1890s, and again in the 1920s. This strange combination of Protestant-based moralism with a controlling and often corrupt capitalism, has given the GOP its special flavor ever since.


Republican tremors

Sidney Blumenthal
6 -- 10 -- 2005

A toxic mix of money and power has sustained Republicans in the United States for a generation. Sidney Blumenthal exposes a corrupt system approaching legal nemesis.


For thirty years, beginning with the Nixon presidency, advanced under Reagan, stalled with the elder Bush, a new political economy struggled to be born. The idea was pure and simple: centralisation of power in the hands of the Republican Party would ensure that it never lost it again.

Under George W Bush, this new system reached its apotheosis. It is a radically novel social, political and economic formation that deserves study alongside capitalism and socialism. Neither Adam Smith nor Vladimir Lenin captures its essence, though it has far more elements of Leninist democratic-centralism than Smithian free markets. Some have referred to this model as crony capitalism; others compare the waste, extravagance and greed to the Gilded Age. Call it 21st-century Republicanism.

At its heart the system is plagued by corruption, an often unpleasant peripheral expense that greases its wheels. But now multiple scandals engulfing Republicans from the suspended majority leader in the House of Representatives, Tom DeLay, to super-lobbyist Jack Abramoff, to White House political overlord Karl Rove threaten to upend the system. Because it is organised by politics it can be undone by politics. Politics has been the greatest strength of Republicanism, but it has become its greatest vulnerability.

The party runs the state. Politics drives economics. Important party officials are also economic operators. They thrive off their connections and rise in the party apparatus as a result of their self-enrichment. The past three chairmen of the Republican National Committee have all been Washington lobbyists.

An oligarchy atop the party allocates favours. Behind the ideological slogans about the "free market" and "liberty," the oligarchy creates oligopolies. Businesses must pay to play. They must kick back contributions to the party, hire its key people and support its programme. Only if they give do they receive tax breaks, loosening of regulations and helpful treatment from government professionals.

Those professionals in the agencies and departments who insist on adhering to standards other than those imposed by the party are fired, demoted and blackballed. The oligarchy wars against these professionals to bend government purely into an instrument of oligopolies.

Corporations pay fixed costs in the form of legal graft to the party in order to suppress the market, drastically limiting competitive pressure. Then they collude to control prices, create cartels and reduce planning primarily to the political game. The larger consequences are of no concern whatsoever to the corporate players so long as they maintain access to the political players.

The sums every industry, from financial services to computers, spends on lobbying are staggering. Broadcast media firms spent $35.88 million in 2004 alone on lobbyists in Washington, according to the Center for Public Integrity. Telephone companies spent $71.97 million; cable and satellite TV corporations, $20.22 million. The drug industry during the same period shelled out $123 million to pay 1,291 lobbyists, 52% of them former government officials.

The results have been direct: the Food and Drug Administration has been reduced to a hollow shell, and Medicare can't negotiate lower drug costs with pharmaceutical companies. In the 2004 election cycle, the drug industry paid $87 million in campaign contributions for federal officials, 69% of them flowing to Republicans.

The Bush juggernaut

Whereas almost all lobbying before the Bush era was confined to Capitol Hill, now one in five lobbyists approaches the White House directly. Consider the success story of one Kirk Blalock, a former aide to Karl Rove as deputy director of the Office of Public Liaison, where he coordinated political links to the business community. Now, one year out of the White House, he's a senior partner in the lobbying firm of Fierce, Isakowitz & Blalock, boasting thirty-three major clients, twenty-two for whom he lobbies his former colleagues in the White House. Indeed, the Bush White House boasts twelve former lobbyists in responsible positions, from chief of staff Andrew Card (American Automobile Association Manufacturers) on down.

"The number of registered lobbyists in Washington has more than doubled since 2000 to more than 34,750," reports the Washington Post, "while the amount that lobbyists charge their new clients has increased by as much as 100 percent."

Macro- and micro-economic policies are subordinate to the circular alliance of oligarchy and oligopoly. Government expenditures have raced to the fastest pace of increase under Bush since President Lyndon Johnson's "great society". But the spending is not intended to prime the economic pump. Nor is it invested mainly in public goods such as infrastructure or schools; nor is it used to expand the standard of living of the middle and working classes, whose incomes and real wages are rapidly shrinking. Instead it is poured into military contracts and tax cuts heavily weighted to the very wealthiest, who do not in turn invest in productive capital.

As a result, the largest budget surplus in United States history has been transformed into the largest deficit, whose bonds are principally held by Asian banks, a shift that presages a strategic tilt of global power and long-term threat to national security. The illusion that as the post-cold-war unipolar power the US faces no countervailing forces is undermined by the administration's constantly draining deficits. Thus 21st century Republicanism reverses the policies that brought about the American century.

Under Ronald Reagan, the unanticipated consequences of supply-side economics instead of tax cuts fostering increased government revenues, they blew a black hole in the budget has under Bush been a conscious policy following the Reagan lesson. The reason is to apply fiscal pressure on government, making its regulations more pliable for manipulation in the interest of oligopoly and therefore the Republican political class. Just as macroeconomic policy is the plaything of politics, so is microeconomic policy. Environmental degradation, lowered public health and urban neglect are indifferent by-products.

The Republican system is fundamentally unstable. Bush has no economic policy other than Republicanism. As the economic currents run toward an indefinable reckoning, the ship of state drifts downstream.

In stable systems, individuals are replaceable parts. Republicanism as constructed under Bush is a juggernaut that cannot afford to scrape an iceberg.

The Native alternative
As always, Native cultures offer a fresh perspective on our cultural myopia. Even though most Native cultures were closer to socialism than capitalism, we could use some of their core values. These values are sorely lacking in our own culture.

WorldCom is only the tip of 糎orldCon'

Posted: July 26, 2002 -- 9:20am EST
by: Rebecca L. Adamson / Columnist / Indian Country Today

Does capitalism understand it any better now? The cultivation of bad business ethics is a poison pill, a destroyer of fortunes. Indian country can offer America some perspective on the culture of ethics that would restore trust to the stock market and corporate governance. But only if we can find leaders who know that our national business needs to go far beyond the mere reform of iniquities in the boardroom and the accounting house. This would mean, at a minimum, leaders who are not themselves the products of a corrupt business class.

Better regulations are worth something, as are stronger penalties for corporate crooks. But on top of all that, the whole corrupt process of business practice, corporate governance and investment valuation must change. The system we need is one that takes its cue from those effective Native economic principles based on commonwealth, civic purpose and fairness. It is an approach dependent on the culture, not on individual Indians or leaders who are no better or worse than others. But within Native culture, respect for all beings, all the resources of nature, has led to an abiding respect for others a respect that proved itself with a staying power of many centuries' duration. Stock trading, by contrast, began with the raiding parties of pirate ships that sailed under flags of state. And corporations have an even briefer history.

The time has come for Native economic principles to enter and inform the core curricula of all business education and financial literacy training, the core organizational documents that govern corporations, and the core standards that guide investment valuation. Absent a commitment to abiding respect for others, we have only the word of pirates.

More on corporate rottenness
"At some point the government is going to have to decide that rampant white-collar crime is worse, or at least equivalent, to conscienceless murder...."
Corporations:  No need to ask if they've been naughty or nice
Major General Smedley Butler:  "I was a racketeer, a gangster for capitalism."

Related links
Government gives, free markets take
America's culture wars (economic)
Right-wing extremists:  the enemy within
A shining city on a hill:  what Americans believe
America's cultural mindset

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