[The argument that corporations have historically been a force for
good—and can be again—is wishful thinking.]
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PORTSIDE CULTURE

THE MYTH OF THE SOCIALLY CONSCIOUS CORPORATION  
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Meagan Day
January 27, 2023
The New Republic
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_ The argument that corporations have historically been a force for
good—and can be again—is wishful thinking. _

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_For Profit: A History of Corporations_
William Magnuson
Basic Books
ISBN-13 9781541601574

Between 1927 and 1931, the number of suicides in Detroit rose
fivefold. The cause was unmistakable: The stock market crash of 1929
had hit the auto industry hard, stimulating widespread unemployment in
Motor City. In 1932 the _Detroit Times _estimated
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accounting for dependents, nearly 700,000 people were directly
affected by unemployment—almost half the population of the city.
Suicide often came on the heels
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starvation.

Of the city’s unemployed, over one-third were known as “Ford
cases,” meaning they’d been laid off by the Ford Motor Company.
“The average man won’t really do a day’s work unless he is
caught and cannot get out of it,” the company’s founder, Henry
Ford, told an Ohio newspaper in 1931, as the Great Depression
deepened. “There is plenty of work to do if people would do it.”
His words contradicted reality: Here were tens of thousands of his own
former employees totally immiserated, as “caught” as could be and
desperate for work, but there were no jobs for them.

In March 1932, they put Ford’s words to the test. Between 3,000 and
5,000 people assembled to march to Ford’s River Rouge plant, where
they intended to demand the reinstatement of all laid-off workers. As
they proceeded on foot to the factory, the Detroit police responded
with tear gas. Some marchers hurled rocks. The city police, joined by
Ford’s private security forces, opened fire. Harry Bennett, head of
the Ford Motor Company Service Department, personally shot his
revolver into the crowd from the back of a car before being knocked
unconscious. By day’s end, four marchers were dead, with a fifth
fated to succumb to his injuries. No officers were killed. At the
slain marchers’ funeral, their coffins were displayed together
beneath a banner that read “Ford Gave Bullets for Bread.”

Our economy revolves around private profit-seeking enterprises. In the
United States most goods and services are provided by corporations,
and most people get the money to afford them from corporate employers.
Corporations’ pervasiveness makes it seem natural and inevitable
that we delegate the task of organizing society to meet people’s
basic needs to them—rather than to non-profit-seeking entities,
such as government departments or cooperative firms.

In truth the arrangement is specific to our time and place, and is
hardly inevitable. It also has a fatal flaw, which is that
corporations constantly renounce their responsibility to fulfill human
needs when their profits are on the line. In moments of economic
stress or upheaval, as the “Ford cases” discovered, what was
supposedly a cooperative arrangement is revealed as a competitive one:
Either people will survive or the corporation will.

The bloody episode that came to be known as the Ford Hunger March
receives a passing mention in William Magnuson’s new book, _For
Profit: A History of Corporations_
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Wall Street lawyer turned law professor, Magnuson argues that
corporations have historically been a force for good in society, and
can be again. He’s ambivalent about Ford’s overall legacy and is
rightly critical of Ford’s lifelong opposition to labor unions. But
Magnuson admires Ford’s attitude on the need to harmonize the
corporate pursuit of profit with the common good, exemplified by
Ford’s statement that “if people would go into business with the
idea that they are going to serve the public and their employees as
well as themselves, they would be assured of success from the
start.”
Magnuson’s argument is a difficult one to make at a moment when
popular faith in corporations is flagging. In 1985, 24 percent of
Americans said they had 
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little to no confidence
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corporations. Today, that figure stands at 41 percent, as corporations
make little effort to hide their exploitation of workers, disregard of
democratic principles, and careless destruction of the natural world.
Magnuson acknowledges these and other abuses of corporate power, but
he views the behavior of the contemporary corporation as a departure
from the original corporate mission. We can rightly criticize the
modern corporation, in other words, but we shouldn’t throw the baby
out with the bathwater.

“We have lost sight of the true spirit of corporate enterprise,”
Magnuson writes. “We have elevated profit-seeking from a means to an
end to an end in itself.” This is the author’s contention in a
nutshell: Corporations have always been motivated by profit, but where
that pursuit once improved society it now threatens to destroy it. To
solve our most urgent problems, we must restore corporate
conscientiousness, the sense of obligation to meet social needs via
profit-making that once characterized private enterprise.

_For Profit _traces the evolution of the corporation from ancient
Rome to the present day, devoting each chapter to an individual firm
that best illustrates one aspect of that complex history. The chapters
are entertaining and richly detailed historical accounts, and they
also serve as allegories for Magnuson’s story about corporations’
abandonment of their founding purpose. Take the book’s narration of
the rise and fall of the British East India Company, which was founded
in 1600 to help England take advantage of the spice trade in the East
Indies. “At the time, corporations could only be created by
petitioning the crown,” Magnuson observes. “It was not a right to
form a corporation; it was a privilege.” In exchange for the
privilege, chartered corporations were expected to integrate their
pursuit of profit with their assumed responsibility to advance the
nation’s interests. The British East India Company was created to
“contribute to the greatness of England” and even brandished the
English flag on its corporate seal.

The company’s original purpose was to increase the overall wealth of
the nation by establishing an English trade presence across the globe.
To that end, the enrichment of individual investors was a mere
inducement, and an effective one at that. But as the company grew, in
Magnuson’s telling, it abandoned its original civic mission and
“began to treat the British government more like a trading partner,
to be bought off, ignored, or actively undercut, than like a
sovereign.” At home, it engaged in insider trading, stock
manipulation, bribery, and other abuses of economic power. Abroad the
corporation’s profit-motivated crimes ranged from slave trading to
grain hoarding, the latter of which resulted in a famine that killed
somewhere between two and 10 million Bengalis.

In Magnuson’s view, the British East India Company, like
corporations in general, started off with the proper balance of profit
seeking and public-spiritedness and eventually lost its way. But
leaving aside the question of whether enriching one particular nation
is really a “common good” aspiration to begin with, there’s also
no indication that the corporation’s early activities redounded to
the benefit of the average English person. The seventeenth century was
a time of violent dispossession in England, as empowered landlords
confiscated and privatized common lands, entrenching capitalism on the
island, from whence it spread across the globe. The wealth the British
East India Company brought to England largely circulated within and
fortified the emergent domestic capitalist class—the same class that
transformed self-sustaining peasant farmers into landless vagabonds
and exploited industrial workers at home, and subjected vast numbers
of people
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displacement, famine, slavery, and genocide abroad.

The British East India Company’s original charter may have gestured
at a nobler purpose, but it never really had one. Indeed regardless of
their rhetoric, there is little in history to support any suggestion
that corporations were once less inclined to cruelty in practice.
Corporations have always sacrificed people at the altar of profit when
advantageous, from the 1781 Zong massacre
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the Atlantic Ocean to the 1928 banana massacre
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Colombia to the 2013 garment factory collapse
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Bangladesh; from profiting off the grueling labor
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and children in Victorian English workhouses to leasing convicts
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an effective continuation of slavery after the American Civil War;
from Shell and Exxon hiding evidence
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climate change to Purdue Pharma flooding
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U.S. with addictive opiates, to Coca-Cola partners hiring far-right
militias
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murder union activists.

It’s hard to find the baby in bathwater that deep. If anything,
corporations have had centuries to prove they can bear the primary
responsibility for providing what people need without at the same time
engaging in graft, malfeasance, exploitation, or outright acts of
terror. They haven’t been able to pull it off.

Magnuson ends _For Profit _with a list of ground rules for
civic-minded corporations: Don’t undermine democracy, don’t
deceive shareholders, do take care of workers and the planet, resist
the urge to establish monopolies, reject high-risk short-termism to
avoid endangering the economy, and so on. He wavers in his faith that
corporations will abide by these guidelines on their own, stating
plainly that if corporations can’t play nice then governments are
well within their rights to compel them to—a welcome perspective in
an era of wanton deregulation.

Where Magnuson errs is that corporations are not just disinclined to
follow these rules but are structurally incentivized to break them.
Profit-making is the corporation’s obligation, and the primary
methods of fulfilling it all have anti-social effects: suppressing
labor costs and undermining attempts at worker organization, lobbying
to decrease taxes and environmental regulations, finding new market
niches in the form of privatization, generating and exploiting
psychological insecurities via advertising, opportunistically hiking
prices in emergency situations, subverting democracy when it threatens
to produce reform administrations that will obstruct any of these
efforts, and so on. Any attempt at society-wide corporate reform will
run up against the fact that markets compel corporations to behave in
ways that are harmful to society. High-minded executives can try to
fight it, but they’re fighting a losing battle.

There have indeed been moments in the history of capitalism when the
corporate agenda has intersected with the social agenda, such as in
the relatively broad institution of family-sustaining wages in
mid-twentieth-century America, when a strong post–World War II
economy organized along Fordist lines intersected with a strong union
movement. But ultimately the project of ensuring human well-being and
the project of profit maximization are distinct, even when they
overlap. And when they inevitably diverge, any prudently managed
corporation will choose itself. It has no choice: It must continue to
generate profit at increasing speed and volume or risk succumbing to
its competition and ceasing to exist. Henry Ford knew it, or else he
would have given the marchers their jobs back in the spirit of public
service.

Private enterprises often accomplish impressive feats in the process
of maximizing profits, but at no time in history have they worked
their miracles without also exploiting workers, undermining democracy,
and ransacking the natural world. What we need now are other
organizational forms—forms that might accomplish impressive and
socially advantageous feats because they’re tasked with doing so,
and not as an anticipated by-product of the pursuit of profit.

We already have institutions, from government departments to
worker-owned cooperatives, that do not exist to generate profit and do
not automatically encourage socially damaging activity. We should
devote our efforts to expanding their role, while shrinking the role
of profit-seeking corporations. Capitalist innovation has given us
smartphones and supermarkets, but it has yet to yield an economy that
exists to support human flourishing rather than to gobble up human
labor and purchasing power no matter the social cost. A world where
the hungry receive bread, not bullets—that’s the kind of
innovation we need.
 

Meagan Day is an editor at Jacobin magazine and a writer whose work
has been published in _The New York Times_, _The Guardian_, _Vox_, and
elsewhere.

 
 

* capitalism
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* The socially conscious corporation
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* charity
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* History of capitalism
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