The modern corporation: centre of power in the technosphere

There is a black hole in climate research, ecological economics and Earth system models: The corporation. Of course, corporations are recognized as actors, but what happens inside the corporation is normally not included in the macro-scale perspective that most Earth sciences research in the broadest sense adopts. Even when critics claim that the ‘anthropocene’ should be better labelled the ‘capitalocene’, they wouldn’t dig deeper into the internal functionings of corporations, and mostly, if at all, target the decision makers on top or the shareholders aka ‘Wall Street’. That means, we simply blackbox the core actor of the modern economy in our research. The scene is changing, however, since economics and management research increasingly shift their perspectives on the corporation, emphasizing the role of ‘purposes’ and commitment to goals that are being shared by all stakeholders of a corporation, especially the employees. As one of the intellectual protagonists of that shift explains, Rebecca Henderson, this is the key to meeting the challenge of climate change. Just think of employees who, as parents, face their kids joining ‘Fridays for Future’ and embarrassing questions about their responsibility on the job. If companies redefine their purposes in the context of climate change, the economic challenges might be manageable. Government action and civil society is not enough: The real power is here, in the corporation.

There are many reasons for this neglect of the role of corporations even in economics, and I want to highlight one specifically that has been lucidly scrutinized by the political philosopher Elizabeth Anderson. Perhaps the central paradox of capitalism, defining itself as ‘free enterprise system’ or ‘free market economy’, is that the regime of work in corporations is illiberal and authoritarian far beyond what the mere task fulfilment in the labour contract would need to specify. Many aspects of work are deeply intrusive in private lives, at least indirectly (for example, we must bear the burden of long commuting hours without being paid for it, which also externalizes the costs of polluting); one reason why corporations are ‘black boxes’ is that we are prohibited to freely give information about internal matters to the public. As Anderson explains in much detail, corporations are a form of private government (and not just management), yet without any channel of democratic control. Economists simply assume that a free labour market implies that we are free to choose the place where we want to work, and that this imposes constraints on corporate power vis-à-vis employees. Since the early days of the industrial revolution, we know that this is mere ideological camouflage.

This simple fact is essential to understand the way how economy and technosphere relate to each other, and less what happens on the level of markets. Many historians have pointed to the deep interaction between technological change and organization of firms during the Industrial Revolution, literally morphing workers into parts of the industrial machinery. This was not just a technological necessity but contributed to increasing the power asymmetry between capitalists and workers. Such effects of technological change as mediated by social and political conflicts of interests occur again and again, with the gig economy today just another manifestation. In a nutshell, liberal societies never developed workable solutions in managing these interactions between power and technology, because most people thought that these must be found on the level of politics and institutional design of the economy. Probably this was just a strategic move to keep the real core of power intact, the authoritarian corporation.

I believe that this is why we continue to experience strange contradictions between what is publicly announced as responsible policies and what is manifest in corporate decisions, with so called ‘Corporate Social Responsibility’ only superficially suggesting a reconciliation. The very construct of the corporation blocks the formation and expression of our free human agency in redirecting technosphere evolution to the greater good of the planet. What is the solution? Two pivots.

First, as argued in a previous post, we need radical institutional change in creating universal basic income which liberates us from the necessity to take part in the labour market. This does not mean that I recommend everybody to stop working in the formal sector. The simple point is, once the outside options for dependent employees change, this paves the way for rebalancing power within the corporation and for developing forms of genuine cooperation for a shared purpose. In other words, UBI would effectively even incentivize people to engage personally in corporations who would otherwise avoid that, currently resulting in an assortative matching between people and organizational types, such as corporations versus NGOs.

Second, and related, these ways are often labelled ‘industrial democracy’, and most economists see severe tensions with principles of clear assignments of property rights, responsibility and powers of control. This is a complex field, and I cannot detail my own solution here, which I have developed elsewhere (for example, in my book on Hegel co-authored with Ivan Boldyrev). In line with some of the ideas promoted by Rebecca Henderson and others, the solution is that we must take the public interest conception of the corporation more seriously, which was emphasized by many economists in the early period of capitalism, beginning with Adam Smith. That means, corporations (different from private enterprises with full personal liability of the owner) should only gain their special legal status if they pursue a public interest (that’s not as demanding as it sounds: for example, developing pharmaceutical products is in the public interest). There must be clear rules (as with NGOs) how public interest is defined. This eminent role of public interest would directly reflect on the internal operations, especially the relationship with employees. Every employee would not just be obliged to fulfill the stipulations of the labour contract, but must also consider the public interest in her and his decisions and actions as an autonomous responsible citizen. Every corporation would be compelled to develop organizational solutions to allow the expression of this autonomous political and ethical agency within the corporation. The labour contract would be a relation between free citizens, and not just fixing wages and delivery of performance.

I believe that in this institutional set up, we would not need to impose a certain model of industrial democracy on the corporation. The corporation would turn into a politico-economic entity right from the basics. Discovering constitutional solutions on the level of the individual corporation can be left to the creativity of people, and, after all, to market competition, since employees and customers would now scrutinize the corporations in public discourses and would shun those which fail to meet their promises. With such a radical institutional change, we would put another power structure at the centre of technosphere evolution, thereby recovering our human agency that has been severely curtailed by the unholy alliance of investor capitalism and technology that defines our economic system until today.

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