In September 2002, I was
asked by a group of inquiring, progressive law students to lead a discussion
of “corporate responsibility”…Sponsored by the student
chapter of the National Lawyers Guild, it was the kind of stimulating
experience that the young generation infuses with energy. Each generation
brings a moral, humane enthusiasm to the table that wipes away the jaded
crusty viewpoints that have developed after years of disappointments,
battles, and attacks. It is that very demand for moral humaneness that
regenerates our movement, gives it direction and lays bare the profound
corruption of the current corporate structure. It also is the foundation
for a movement to change fundamentally the direction and morality of
the multinational corporate/governmental system that now oppresses us.
In preparation for the discussion
in September 2002, I wrote a paper that can now be labeled “Corporate
Responsibility I”. As a result of the energy and analysis of these
lively intellectual minds, I was compelled to write more to insure more
clarity. The previous paper is available on request.
In the previous paper, the
concept of “corporate responsibility” clearly represented
an oxymoron. Corporations reject any responsibility to the environment,
to democratic government, to consumers, and of course any responsibility
whatsoever to its employees. The justification for such irresponsible
behavior by these public institutions has been that the requirement
of maximum profit created efficiency, which in the long run benefited
everyone with more and cheaper products.
The theoretical basis for
that rationalization is that the shareholders of the corporations would
benefit. Under current schemes, that rationalization collapses almost
as fast as Enron collapsed. In fact, the overwhelming weight of the
evidence is that this market approach fails—it fails the environment
obviously, it destroys workers lives and the communities they inhabit.
When workers begin to build their community, establish relationships
and make demands on the corporation whose wealth they created, the corporation
either threatens to shut down and move or does move.
Because these multinational
corporations have so much political power, the governments are never
able to collect sufficient taxes to remedy the damage done by corporate
commercial activity. In fact, these multinational corporations with
their vast sums of money corrupt the democratic process. For instance,
when consumers suffer injuries or receive defective products, the corporations
are able to pass legislation that absolves them of all responsibility.
And, it is the consumer that is the justification for the other corporate
irresponsible activity.
These corporations are public
institutions. They are given extensive legal privilege including the
right to function as individuals without individual responsibility.
Through the effort of thousands of workers, these public institutions
accumulate huge sums of money. Contrary to classical economic theory,
money is the repository of value and power. The hallmark of the political
posturing of these public institutions is the demand to privatize; that
is, to put the power to structure society in their hands. Importantly,
turning over the right to organize society to multinational corporations
is not giving power to private individuals. Instead, it turns over power
to public institutions whose sole interest is commercial activity, not
societal well-being.
By shrinking the power of
government to control these multinational corporations, society creates
numerous unintended consequences. In Resurgence, Issue #80, August 1,
1997, the discussion outlines one significant consequence:
“At the top, the
mafias have abandoned the black bag for the computer, the machine
gun in the violin case for stock portfolio in the briefcase. This
shift from the blood-drenched fringe to polished boardroom has been
facilitated by the global trend toward “economic liberalization”
which has seen the downsizing of the state, the deregulation of international
banking and trade, the privatization of state assets, etc. These conditions
not only benefit transnational corporations and international banks
which vigorously promote them, but also favor the growth of illicit
activities and the internationalization of the criminal economy as
well.”
As we shall see, deregulation
necessarily means the promotion and support of a higher level of criminal
activity. In fact, the difference between the so-called drug lord and
the crooked executive officer is one only of semantics. The damage done
by Kenneth Ley of Enron, of Bernie Ebbers of WorldCom, of Dennis Kozlowski
of Tyco International is far, far greater than that of the drug lords.
In fact, their methods are identical.
As devastating as this criticism
of the multinational corporate system is, it nevertheless misses the
most appalling result of the corporate market system. This system consistently
rewards the most selfish, venal, mean, vicious, banal aspects of human
character. It punishes compassionate concern for fellow human beings.
Generosity and altruism are considered signs of weakness instead of
strength of character. This country celebrated Gordon Gecko’s
summarization of the corporate moral perspective that “Greed is
Good.” Even this statement underestimates the cultural, moral
bankruptcy of the multinational corporation. It is not just greed, but
fraud, dissimulation and bribery that becomes a part of the multinational
corporate culture.
The problem is not simply
huge profits or even excessive profits. It is the demand for maximum
profit. The pressure has always been to maximize profit regardless of
the human cost. Even the concept of maximum profit has been corrupted.
While capitalist apologists, mostly economists, continue to argue that
the drive for maximum profit increases efficiency, creates new products
and thereby makes wide scale distribution possible, this rationale is
just that, a rationale. Under current circumstances, it has become a
simple ruse.
Maximum profit inevitably
changed from maximum profit to maximum personal gain. Particularly in
relation to the crooked executive officers, maximum personal gain is
not related to the production of a product or increased efficiency.
Personal gain relates to the individual confiscation of publicly created
wealth. The level of corruption within the multinational corporate system
is monumental. In fact, corruption implies the perversion of something
valid in the first place. The thievery we now see is merely the manifestation
of the system, which is itself, corrupt.
A good example of how this
system idolizes the thief is Michael Milkin. He is a convicted felon
who stole billions of dollars; he paid a $500,000,000.00 fine and spent
3 to 4 years in jail. Now, he teaches in the “best” business
schools of this country. He even has franchised his videos so they can
be shown throughout the country, thereby expanding the extent of his
influence. He is, in a word, celebrated by the business community.
It is, therefore, appropriate
to characterize the current corporate system as nothing more than organized
theft, which concentrates the collectively created wealth in the hands
of fewer and fewer people. It not only moves value and power to the
wealthiest but to the most corrupt. Nevertheless, apologists abound.
The American Heritage is a right wing magazine and carried an article
by John Steele Gordon entitled, “Enron is nothing new—and
it’s always good for us.” The article is a breezy excuse
for one of the worst scandals of recent times. Never strong on theory,
capitalist apologists seldom answer who benefits from this corruption.
Such piracy never benefits
the employees of multinational corporations. In the long run (the economists’
term), their productive work is confiscated. The employees work with
no security and no protection unless they have a strong and effective
union. Even with a strong union, plants are shut down and moved to nonunion
locations, pensions are robbed, safety is ignored and unions are busted
or corrupted.
United Air sought government
loans and then was forced into bankruptcy. Opposition to government
protection came from Continental Air, Northwest Air, and others who
wanted United’s bankruptcy not for competitive advantage but instead
to force a restructuring which will attack the power of the unions within
the industry. Since United set the wage standard, its bankruptcy would
allow other airlines to bust their unions. The crooked executive officers,
however, would continue to collect their exorbitant salaries and hidden
perks. Even Gordon concedes the following:
“The reputation of
the accounting profession, indeed that of capitalism itself, is in
a bad way these days for sometimes letting the need for a good number
on the bottom line dictate the numbers above it, rather that the other
way around. One of the great American accounting firms of the twentieth
century, Arthur Anderson, is almost certainly at the end of its existence
thanks to scandal after scandal. Enron, once the seventh largest company
in the country as measured by gross revenue, has been found to be
a tissue of accounting deceptions and has plunged into bankruptcy,
wiping out much of the accumulated wealth of its investors and employees.
WorldCom, the second largest long-distance provider and by far the
largest carrier of Internet traffic, counted $7 Billion worth of routine
maintenance expenses as capital investments, making the company seem
profitable when it was not. Tyco’s chief executive, unchecked
by a supine board of directors, turned that company into his personal
piggy bank to buy real estate, paintings, and a now famous $6,000.00
shower curtain. Indictments have been handed up by the dozens, with
many more, undoubtedly to follow.
What is going on? Listening
to much of the public commentary and political pronouncements on this
issue in recent months, one might think that the crisis of capitalism,
so long predicted by its enemies, is at hand. It is not. This is capitalism.
Gordon, Why Enron Always Happens and History Shows Its Always Good
for Us, American Heritage (11/12/02 p.68 (emphasis in the original)
Gordon mentions indictments
but the likelihood of actual or severe punishment is extremely unlikely.
This is capitalism. After all, this is good
for us. Instead of life sentences, we are looking a few jail terms and
nothing more. It is important to note that the multinational corporations
passed legislation to weaken generally accepted accounting principles
and even then violated those restraints.
Even using generally accepted
accounting principles, there is no liability or even accountability
for environmental degradation. Of course, no corporation includes damage
to consumers or workers as a part of accounting. Crooked executive officers
were given magnanimous stock options to the detriment of the employees
and shareholders. Now that they have been caught with their hand in
the cookie jar, it will be used as a tax deduction. Basically, these
corporations play a heads we win, tails you lose game and then brag
about how clever they are when they won the bet.
“Everyone expects
that corporate profits will plunge if a new international accounting
rule forces companies to report as an expense the value of the stock
options they grant. But a little-noticed provision of the proposed
rule could produce the opposite effect—sharply higher profits—for
some companies.
That anomaly comes from
a thorny issue related to the tax windfall American companies receive
when options are exercised. The companies receive a tax
deduction equal to the profit realized by employees who exercise options.
The rule proposed by the International Accounting Standards Board
would let companies report higher profits in the year realized those
benefits.
The tax savings can be substantial.
It appears that Microsoft’s net income would have risen by billions
in its 2000 fiscal year, rather than falling, had it been expensing
options under the proposed international rule. That was at the height
of the bubble, but even now, with a lot of old, cheap options still
being exercised, Microsoft is saving a lot of money on taxes thanks
to options.” NYT, 12/602, P.C. (Emphasis added)
In other words, even in trying
to correct the corruption so inherent in the system, the multinational
corporations use it to avoid their public duty to pay taxes. John Steele
Gordon concedes that the fraud exhibited with Enron and Arthur Anderson
is not simply an abhorrent aberration of capitalism, but rather is capitalism
itself. However, either he does not realize the magnitude of the concession
or just does not give a damn.
It is not just Enron and
Arthur Anderson. It is WorldCom, Global Crossings, Adelphia Communications,
Quest Communications International, Imclone, K Mart, Tyco International,
Xerox, Reliance Insurance, Legion Insurance, and General Electric, etc.,
etc., etc. The NYT of 10/17/02 reports on page C1 through Joseph P.
Traster:
“Stepping up efforts
to recover money in the collapse of the Reliance Insurance Company,
insurance regulators in Pennsylvania have turned their sights on the
company’s auditor, Deloitte and Touche, one of the country’s
largest accounting firms.
In a civil suit filed in
a state court on Tuesday, Pennsylvania’s Insurance Department
accused Deloitte and Touché and one of its actuaries, Jan A.
Lommele, of inflating the insurer’s financial statements by
$1 billion and filing misleading reports as Reliance’s executives
were draining cash from the troubled insurer.
A result, the regulator’s
said, was that it was more than a year before investors realized that
Reliance, one of the country’s largest commercial insurers,
was in trouble. The regulators seized control of Reliance on May 29,
2001, with hundreds of millions of dollars in claims on its books
that it could not pay.
‘Risk factors and
red flags were ignored by Deloitte’, the regulators said in
the lawsuit. Instead, Deliotte and Lommele, in exchange for millions
of dollars in fees, facilitated and prolonged Reliance’s ability
to continue operating.’”
Gordon says this is good
for “us”. But thousands of injured workers, dependent on
Reliance payments, suffer extensively because of this fraud. It is not
good for them. Nor is this fraud good for their families. The “us”
appears to be only the richest in this country.
Compiled not by extensive
academic research but rather by recent memory, the above list shows
that fraud and corruption is endemic to and inherent in the system of
capitalism. When one states that current capitalism is organized theft
it sounds strident and extreme. That is only because we live under a
controlled Republican media that bombards us with deceptive and deceitful
propaganda to hide the depth of the corruption.
Even Martha Stewart, an American
Icon, is a part of the effluent. A former broker, she is caught engaging
in illegal insider trading. Her defense? She is doing what everyone
else does. If that were a legal defense, then no pot smoker or dealer
would ever be convicted. At least the pot participants give or get pleasure.
Stewart is simply stealing large sums of money.
That is why the current system
of capitalism is organized thievery. Through great laboring effort and
creative energy, great wealth is created; but it is never used to benefit
the people who created the wealth. In fact, it is given to most selfish,
aggressively avaricious people in our society. They proceed to create
a culture that celebrates the most venal among us.
As I have stated earlier:
“The New York Times
of July 21, 2002 in discussion of market implosion stated: Seven
Trillion Dollars Gone.
The money is not ‘gone’.
It is withdrawn from pensions, IRAs, 401Ks which have been emptied.
This so-called correction represents blatant theft, for which there
is no corporate responsibility.
The entire privatization/deregulation
movement was designed to make this sort of theft possible without
legal responsibility. It represented a method whereby social capital
created by millions of work hours could be taken with minimal risk.
A government employee would be legally responsible and more importantly
would be watched where a system of check and control would minimize
the loss.” Corporation Responsibility I
Now that the Bush cabal has
seized control of all branches of government, they intend to steal from
social security:
“Some Republican
strategists like former Representative Vin Weber of Minnesota, an
influential lobbyist, argue that these victories showed that the public
is ready for radical changes in Social Security and that Republicans
should seize the day.” NYT 12/1/02 – News in Review p.
5
Privatization of social security
in any form would be another $500,000,000,000.00 to the richest people
in this country. If the reader of this pamphlet wonders why he/she has
to work so hard for so little, has to put up with a dreary life when
it could be better, has to search so long for the slightest pleasures,
then only look to the richest people in this country. In fact, with
a little organized effort directed at these people, we could gain $2
or $3 trillion to shut us up -- we could sure use it.
But it is not simply about
money. We first have to start with the principle that we create this
wealth. Value and power are reflected in the money created. These multinational
corporations are public institutions. These institutions are answerable
to the public and to the governments which create them and allow them
to function.
At the conference in September,
2002, one student expressed frustration at the feeling of impotence
to change anything. The opposite is true. That is why so much money
is spent with the media to convince the population that the system is
working, even though it is a failure.
The level of corruption and
fraud that permeates the current system makes the system fragile. That
is why it was necessary for George II to steal the election rather than
accept the principle of majority rule.
Our demand is for a united,
democratic, moral society. We ask not simply that the rich give up some
money so they can continue to promote the culture of consumerism. One
crooked executive officer in the 1980’s popularized the phrase
that the man who dies with the most toys wins.
That phrase, by it self, exposes the moral bankruptcy of the current
multinational corporate system of consumerism.
Our demand for a united,
democratic, moral society imposes public responsibility on all public
institutions. Public duty means putting the interests of all people
before the narrow, selfish interests of the few. Any politician, who
uses racism as a basis for success, will and must be rejected. This
includes not only the blatant racism of Trent Lott but also the coded
racism of George II. Whenever the interests of the richest among us
are placed ahead of the interests of the whole populace, racism is an
inevitable and necessary by-product. We reject the concept of dribble
down economics. We demand a united support for all people.
A united populace demanding
true morality would result in profound changes. The following demands,
so minimal in extent, are impossible for the multinational corporations
that control this country to defend:
1) Requiring the United
States government to adhere to international law would immediately
halt the attack on Iraq.
2) A repeal of George the Second’s plan to plunder the U. S.
Treasury by giving billions of dollars to the richest people in the
world is both moral and economically the best stimulus for the national
economy.
3) The return to Kyoto to protect the environment is impossible for
the Bush cabal because it is not good for business, but it is good
for society.
4) Repeal of Taft-Hardley is necessary to protect working people at
all levels.
5) A tax of 10% on the richest one percent specifically to rebuild
the cities of this country is not only morally necessary, but also
economically beneficial because it would create thousands of jobs.
6) Universal medical care available on demand for all people is a
necessary part of a healthy public and again would be economically
beneficial.
These are simple demands
but this government, now totally controlled by multinational corporations,
cannot address the validity of these demands. That is why the Republican
Party attacks rather political discussions to win elections. The victories
of the Republican Party were built on coded racist messages and the
corrupt use of money. The outrages at Trent Lott who has always been
a segregationist, is an example is how difficult it is for George II
to contain the bigotry. The bankruptcy of the current establishment
will result in collapse as dramatic and quick as that of the Enron Corporation.
All we have to do is make the demands. These are, after all, simple
demands. Demands that any just, democratic, moral society would recognize
and accept. We now have the resources to answer these demands. All we
have to do is to eliminate the crooks who are now in power.
Yours in Struggle,
Ronald D. Glotta
220 Bagley, Suite 808
Detroit MI 48226-1409
(313) 963-1320 (313) 963-1325/Fax
rglotta@glottaassociates.com
