Martin Parker, Regular Blog Contributor and Professor of Organisation and Culture at the School, explains why management academics like him have an important role to play in the mitigation of corporate excesses
Corporations have a very bad reputation. Most ordinary people tend to assume they are gigantic profit making machines that trample on anyone standing in the way of the making of a quick buck, sociopaths that pollute and lie, conscience free actors that pursue a very narrowly defined set of interests. The corporate form, however, is also said to have played a role in creating immense wealth, employment and innovation. It is, after all, very difficult to imagine our lives without Apple Inc, The McDonalds Corporation, Marks & Spencer PLC and many, many others besides. So what are we to do with the corporation? This is the question which The Corporate Reform Collective, of which I am a contributing member, set out to address in its recently launched book Fighting Corporate Abuse: Beyond Predatory Capitalism.
From a legal-historical perspective, the first corporations were organisations very much like monasteries and universities. That is to say, they were organisations which were granted a special status by the monarch in order to ensure their existence would outlast that of a particular human individual. This status could be revoked, it could be transferred: it was often conditional and often temporary. During the last hundred and fifty years or so, corporations evolved from this relatively benign legal status, gaining all sorts of rights while evading all sorts of responsibilities along the way. In British law this is known as ‘limited liability’ for owners, a privilege which simultaneously grants the right of unlimited profit to shareholders.
Corporations are now very powerful, with many boasting revenue levels that dwarf those of smaller states. They have exploited the benefits of their economically and politically powerful positions in line with their own interests. This means that contemporary scandals about tax evasion, astronomical levels of executive pay, the offshoring of jobs, share price raising redundancy drives and environmental damage really come as little surprise. In our new book, a group of academics from Belfast, Bristol, Cardiff, Essex, Leicester and London call this situation into question. In keeping with a critical tradition of business and management research, our book documents a variety of cases of corporate irresponsibility. Beyond this, however, we also make a series of policy proposals, closing with a manifesto for a new corporate form.
Towards this end, national action for the reform of company law, particularly in terms of the duty to maximise long term value to all stakeholders, not just shareholders, we argue, is imperative. We also propose two tier supervisory boards, with mandated employee representation, as well as legally enforced caps on executive bonuses. What is more, we insist that it should be a lot easier to establish non-corporate forms of association: co-operatives, not-for-profits, partnerships, etc. Intervention is also required at the financial level and this is why we propose the introduction of a Robin Hood Tax, a conditional ban on granting recent share buyers voting rights and a rigorous separation of retail and speculative banking activities.
We also want to see internationally co-ordinated efforts to end tax avoidance by shutting the gaping holes in the tax system which allow Amazon, Starbucks, Vodafone and others to pay minimal taxation. No representation without taxation: these corporations benefit from the roads, hospitals and educated workers that taxpayers fund and so they should resource them also. Within the book we also underline the necessity of simplifying accounting rules and obliging disclosures concerning who corporations employ, where, and with what profit levels. This would also make owners legally responsible for subsidiaries, no longer able to claim that labour and/or environmental abuse is nothing to do with them.
The modern corporation is made by people, so it should be responsible to them. The frightening truth is that we have made monsters which have powers far exceeding those of ordinary human beings. It is a long time since a corporate charter was revoked: perhaps it is time to get back into the habit. If you want to discuss these proposals further, we will be launching our book at a fringe meeting of the Labour Party Conference in Manchester, with Austin Mitchell MP speaking. It takes place on the 23rd September from 12.30-2.30 in room G1 of Friends Meeting House, 6 Mount Street, M2 5NS. You can also respond here.