“Corporation, n.: an ingenious device for obtaining individual profit without individual responsibility.”
-Ambrose Bierce, The Devil’s Dictionary, 1911
The only thing shocking about the recent incident involving Volkswagen lying about the emissions of their so-called “clean diesel” vehicles is that people are shocked by it.
Or, perhaps, that people seem to believe that Volkswagen is the only company doing something like this.
The entire structure of the way corporations are built and expected to act in modern America, especially large MNCs, is to incentivize and reward this kind of behavior. And increasingly, the advent of major so-called “free trade” deals is designed to give those corporations supremacy over the laws they already blatantly ignore. Law is merely national, while corporations are forever and supreme. And once the law officially gives primacy to the corporation over the nation-state, there will be nothing left to check the nearly ubiquitous cheating, skimming, corner-cutting, lying, and outright fraud that pervades the corporate reality.
The problem, as many corporate apologists have observed, is that corporations are designed and their leaders feel obliged to uphold only one principle: profit. Which, of course, is the opposite of principle, because it’s merely a count of dollars at the end of the day, however and wherever they were acquired. And the larger problem, of course, is that there is only one way to punish a corporation: by taking away money. But not and never all of the money. Only some of the money. Corporate dissolution is not an option the nation-state has given itself to combat misbehavior, nor, realistically, are any sorts of individual punishment like prosecution for fraud. In a world where not one CEO, banker, or financial engineer has faced prosecution for a financial crisis that defrauded and impoverished millions of actual human beings, how could anyone sitting in a corporate office elsewhere even begin to fear personal disempowerment, impoverishment, or imprisonment for any act they choose?
This system means that literally all incentives and disincentives are calculated financial transactions. That is merely the business of business. Just as profits are expected to outrun expenditures (pushing down wages, prices for goods, health insurance premiums, taxes, and anything else the corporation may have to pay), they are also expected to outrun fines, fees, and other wrist-slaps administered by less profitable organizations. The question of whether to lie, cheat, steal, commit fraud, violate sanctions, or otherwise take an illegal advantage is merely referred to the bean-counters. Will this, on average, make us more money than it costs? If yes, proceed.
I don’t doubt that there is a corporation somewhere, or maybe even a few, that are not operating by this principle. The great problem with economics as a theory of life is that it totally overlooks the human element, mechanistically assigning the exact same set of motivations and priorities to every single individual person without fail, ignoring the multitudinous diversity of actual people and their lives. Of course some corporations are run by people who believe in the rule of law or ethical principles or even (God forbid!) morality. Of course fear of losses is not the only thing driving everyone in all of their decisions on any given day. The scary thing is that, increasingly, these voices of purported reason (or tradition?) are getting drowned out by actual statutes that say a corporation is singularly beholden to its shareholders and that their only priority must be profit. We are on the verge of the concept that corporate leaders have a fiduciary obligation to commit as much fraud, deceit, and trickery as can outrun the punishments for it and pad the bottom line. Otherwise, they will face the wrath of investors who can rightfully point across the street to Volkswagen or down the hall to this or that bank that wantonly fixed currency prices or traded with allegedly isolated Iran and say “see, they’re trying to get every advantage they can! What are you doing for me?”
Like police impunity, like the war crimes committed by US Presidents, the only possible antidote for this ever-escalating race to the bottom is accountability. People have to believe and internalize that there can be consequences for bad behavior to feel it’s not worth it. And right now the scales are so badly tipped in the direction of total impunity that it will actually take several high-profile examples of accountability to even begin to suggest to the corporate bean-counters that punishment (real punishment that’s not just a few million dollars) is a reasonable possibility to be taken into the calculus. We could dissolve Volkswagen, imprison its executives, strip all wealth from said executives, and garnish their wages for life, and most corporations would merely recalibrate to lying a little less than VW did. That said, this level of punishment is many scales of magnitude beyond what even the most hawkish prosecutor is considering or even has as a disposable tool. Volkswagen will live through this, just as BP survived the oil spill and Exxon its own, as Blackwater survived its war crimes and all the tobacco companies have persisted. The worst possible punishment is to have to rebrand, and that’s only the worst because it actually costs more than the fines incurred for wrongdoing.
Anger at Volkswagen misses the point. It has its purpose, since it marginally drives up the chance that this will be the rare time there are moderate levels of accountability instead of zero to none. But all that is mostly Titanic deck-chairs. The lifeboats are questioning the whole system that incentivizes and openly encourages this behavior, that makes monsters of men, that takes most of the smartest and best educated minds in our world and turns them into coal-shovelers on a runaway train of profit for profit’s sake. It doesn’t matter where that train is headed or how much coal costs in human, animal, or planetary terms. More coal! This train must move, ever onward, into oblivion, spewing toxicity in every direction.