Just Curious

Corporation (2004)

Just watched a very interesting movie Coporation (2004) in a theater at 11th and E, downtown D.C.

It's a movie about the rise of the modern corporation and how it's power has penetrated into every single aspect of our lives. It is also what I would call a socioanalysis of an economic system known to the world as capitalism.

When you have commentators like tha anarchist Noam Chomsky, the left-liberal Howard Zinn and the arch-libertarian free-market champion Milton Friedman agreeing with each other, you know something interesting's going on.

So what exactly is a corporation? A corporation, by definition, is a legal person who, under the law, has a one-dimensional character. And that dimension is profit-maximization. Everything comes second. Milton Friedman was in his best when he stated that it is preposterous, undemocratic and perverse for corporations to try to act on "its" conscience, for ethical considerations, etc. are beyond the scope of their natural duties and their expertise. They are created to act in certain ways, and these certains ways must lead to profit maximization. End of the story.

The film also is a socioanalysis of capitalism, in the sense that it tries to dissect the character of this legal person called the corporation, and the consequences of it. The material consequence was kind of a repetition of what Robert Heilbroner had said in his An Inquiry into Human Prospect (1974) and Andre Gunder Frank's core-periphery dependency theory in his Capitalism and Underdevelopment in Latin America (1967). Basically, it pointed out how the world is sharply divided between the First World (core): the capitalist/imperialist nations, and the Third World (periphery). The development of the first world depends exactly on the underdevelopment of the third world, for the third world is no more than a market and raw-material provider for the first world, and the terms of trade is unequal...the scene in which thousands of Peruvians went to the streets, rioting and protesting against the privatization of RAIN WATER reminds me of the Algerian revolts at the end of the classical La Battaglia di Algeri (1965), a film about the blood-soaked liberation of the Algerian nation from French colonial rule.

Even more interesting is the film's psycho-analysis of the corporation and those who are affected by it. In this respect, it harks back to the Korsch-Gramsci-Lukacs thesis of false-consciousness; John Kenneth Galbraith's theory on demand manufacturing; and Penn's very own Edward S. Herman's theory on consent-manufacturing. Since the major media, regardless of whether it's Fox News or CNN, essentially share the same interests, they necessarily collude to provide information they want the rest of the world to know. It's not even like they're plotting this in a sinister way. No, these are great people, Rupert Murdoch and Rush Limbaugh are not monsters, they are simply spreading things you and I would spread as well should we be in their place. In this sense, both capitalist and non-capitalist (theoretically, we, as wage earners, are all proletarian) are mentally trapped in the"system."

Through carefully calculated advertisement and selective media coverage, corporations gradually create consumer demands. A good example would be ads that target young kids so that they can nag their parents to buy them a new toy. This is in fact a violation of the idea of free market, where every player is rational and makes rational choices. The most interesting debate regarding consumer supremacy kicks in at this juncture as well. When debating the virtues of the market, Austrian economist Ludwig von Mises claimed that the market is the best solution for the satisfaction of our wants, through its utilization of the price system. Maurice Dobb, a Marxian economist at Cambridge in response said, "Yeah, suppose the market really does a good job in doing so...nevertheless, who tells you that consumer satisfaction in a capitalist society really is of supreme importance? Who tells you that they really are making rational choices free of outside perversions?" This corresponds to Galbraith's contention that most demands are manufactured, and therefore trivial. The keypoint is the word "trivial." If I am brainwashed into doing something against my interest, should another person be entitled to stop me from making such irrational choice?

A even more terrifying prospect is the manufacturing of social norms and mores by the corporations. It is a question of conscience-creation. Through their control of major institutions, corporations are able to alter the course of higher learning. Every year, major corporations pour billions of money into think tanks and universities that would come up with studies that they appreciate,and scholars that they deem fit. Judge Frank Easterbrook of the Seventh Circuit is an interesting example. When he was Lee and Brenda Freeman Professor of Law at the University of Chicago, he wrote an article for the Michigan Law Review, in which he argued that if the cost of compliance to a law exceeds the profits of disobeying it, companies should simply refuse to obey a law, and count the fines, etc. as transaction costs. Whereas I do appreciate the rigorous scholarship of neo-Institutionalists like Richard A. Posner and Judge Easterbrook, one need not be terribly smart to see what they really mean when they say the objective of law is wealth maximization and efficiency promotion. When a scholar like Robert H. Bork argues that antitrust law underdimes the market's efficiency, he really means it undermines the Kaldor-Hicks efficiency of the system, instead of Paretian efficiency, and we all know what this really means. A legal rule is Pareto efficient if it makes at least one person better off, without making any other person worse off, whereas it is Kaldor-Hicks efficient if it could be made Pareto efficient by a side-payment. This side-payment will have to be paid by some player in the market. Thus, to sum it up, Pareto efficiency means everyone is better off, whereas Kaldor-Hicks efficiency implies that although everyone could be better off, someone is going to pay a price for it. Judge Bork, in his The Antitrust Dilemma (1977) apparently measures efficiency in the Kaldor-Hicks sense of the term.

Sometimes you also have conflicts between the creation of false-consciousness and the actual profit-making of corporations. Is Larry Flynt a bleeding heart liberal or is he an unscrupulous capitalist? In reality he really is the latter. A most ingenious and unscrupulous player in an unbridled free market. Nevertheless, supposedly pro-market pundits bash him and he proclaims himself to be a liberal. Why? Because in his case, his company, Hustler magazine, carries out only half of his natural function: profit maximization. It fails to generate norms and mores and false consciousness for the masses that together form the ideology of a capitalist society: namely, the Puritanic ethics.

How very interesting: I think both Friedman and Chomsky could finally agree on one thing: we live in an era where one-dimensional legal persons, known as the corporations, reigns supreme. The only determinant of social relations is that of a capitalist production relations. The only link I have with a convenience store clerk is not one between living human beings, but that between the banknote I have and the goods his store provide. Alienation anyone?

posted by James Chang @ 8:45 AM