The Corporation as a Fact of Life
The dominant role that corporations play in our lives makes them appear to us as a fact of life. Corporations now profit from providing most of the food that we eat, the clothes we wear, the communications systems we use, the films we watch, the music we listen to and so on. What corporations do well or badly fundamentally affects our chances of a healthy life. Corporations produce the chemicals that end up in the air we breathe and the water we drink, just as they produce the drugs that claim to keep us healthy and to prolong our lives. Corporations are central to virtually all systems of child-, social or health-care, criminal justice, education, energy and transport. The presence of corporations in every aspect of our lives is so overbearing that it makes it seem as if this presence is both normal and natural.
At the political level, it has become received wisdom for most governments around the world – whatever their formal political leaning – that the corporation is the single best way of organising the production and distribution of goods and services in the contemporary world. The corporation is a motor of efficiency, innovation, economic progress, and ultimately social good. On this dominant view, corporations are essentially benevolent institutions.
Of course, it would be impossible to deny that corporations can, too, generate destructive side-effects. But if corporations appear to act irresponsibly, or even illegally, it is argued widely in political circles that corporations and their senior managers must be empowered to reform themselves along more socially responsible lines. Only where ‘corporate social responsibility’ fails should governments step in to regulate (or enforce) the law in order to bring recalcitrant corporations into compliance. The dominant, unifying, principle in contemporary mainstream politics is that it is possible for corporations themselves to balance effectively economic progress with social welfare.
None of these claims withstand scrutiny. The problematic consequences of corporate activity are not merely side effects, marginal aberrations to be remedied through self-regulation or even law enforcement. The problems caused by corporations – which seriously threaten our lives and our planet – are enduring and necessary elements of corporate activity. Corporations lie, cheat, steal, injure and poison as part of their everyday routine. If this seems like a wild or even conspiratorial claim, it is not one that we make lightly. Let us take three brief illustrations, all related to deaths, the tip of the iceberg of corporate harms.
First, deaths associated from air pollution. The UK Committee on the Medical Effects of Air Pollution (COMEAP), looking at the effects of poor air quality effects at a population level, has estimated that 29,000 deaths every years are ‘brought forward’ by pollution, albeit this is thought to be a significant under-estimate. Other estimates are higher: the UK Parliament all-party Environmental Audit Committee concluded in 2010 that “[a]ir pollution probably causes more deaths than passive smoking, traffic accidents or obesity’, possibly “contributing to as many as 50,000 deaths per year”. Moreover those deaths are not equally distributed across communities, since in what the all-party Environmental Audit Committee calls “pollution hotspots”, some peoples’ lives are being cut short by as much as 9 years. Although it is virtually impossible to estimate precisely how much pollution is caused by corporate activity, as opposed, notably, to private car or fuel use, there is ample evidence to conclude that that most pollution is produced by commercial activity that corporations profit directly from.
Second, what is most commonly referred to as “food poisoning” is a major source of death and illness in the UK. According to the most recent report from the Chief Scientist, “Our best estimate suggests that there are around a million cases of foodborne illness in the UK each year, resulting in 20,000 hospital admissions and 500 deaths”. Even these estimates of food related illness are likely to understate the scale of the problem. More recently, Food Standards Agency sampling of chickens bought from large UK retail outlets and smaller independent stores and butchers between February 2014 and February 2015 found that 73% of chickens tested positive for the presence of campylobacter – that is, three-quarters contained a pathogen which is the major source of hospitalisation from food poisoning in the UK. Again, to be clear, these cases of food poisoning are directly linked to food businesses – mostly to large corporations in the retail sector.
Finally, there is now strong evidence that around 50,000 or so deaths per annum are related to working in Britain. Most of those deaths are caused by diseases that may take many years of illness before their victims die. While we know little about the vast majority of these deaths, we know for sure that they are overwhelmingly not the result of accidents, a term implying these were unforeseen, unpreventable, or usually both. Quite the contrary, they mostly are the effects of failures of employers to meet clear obligations in law to protect the health, safety and welfare of workers and members of the public. Again, the vast majority of people who are killed by working, are killed in the employment of private profit-making corporations.
These three examples provide clear indications that corporations produce harms which kill thousands annually – while they also routinely injure and generate significant levels of ill-health. Alongside the physical costs of corporate activity are significant economic costs, too – the bulk of which are borne by individuals (as losses of earnings to a family when someone is made ill by industrial activity) or are more widely socialised (for example as a burden on health or welfare services). Yet standard cost-accounting mechanisms reduces the value of death, injury, illness, immiseration and environmental degradation to mere externalities; that is, peripheral side effects of corporate activity, which remain absent from the balance sheets of costs and benefits of private economic activity. Thus corporations are only generally financially liable for only a proportion of the harmful costs of their activities. It is this principle that enables corporations to act, using Bakan’s term, as “externalising machines.”
But if we can estimate the scale of some harms, and if we can link these directly to corporate activity, the extent to which these are crimes is much more difficult to assess. Some of these harms are effectively legalized. Air pollution, for example, up to certain levels and for certain substances, is legal, notwithstanding the harms produced. Yet in cases of air pollution where there is clear evidence of illegalities on the part of private corporations, just as with food poisoning or deaths at work, the law is rarely used to punish those responsible. Corporate offending is effectively decriminalised.
On one hand, this is because regulators, at both national and local levels, are so under-resourced that they cannot do their job, while, in any case, they do not see themselves, nor have the mandate, to act as any kind of ‘police force’ for commerce. Equally significantly, the law itself provides corporations with a shield from liability for its crimes and harms. Thus: law constructs a formal impunity for corporations and its senior officers and owners; law effectively legalises many corporate harms; and the ways in which the law is effected provides a de facto state of decriminalisation where bodies of law are in fact violated as a result of corporate activities. Law, then, sits at the crux of the freedom and structural irresponsibility with which the corporation is endowed. These legal structures, created and under-pinned by states, constitute the main reason why corporate power can never be simply separated from state power; corporations are effectively empowered by law to commit crime.
Many social scientists have, over the past forty years with the emergence of both neo-liberalism and ‘globalisation’, erred in assuming that the rise of corporate power necessarily entails a diminution in state power. Typically, trends towards deregulation and privatisation in the developed world are cited as ‘proof’ of this ‘fact’. And yet, to the extent that many have been persuaded by this zero-sum analysis, it is at least in periods of social and economic crises that the real nature of the relationship between corporations and states is revealed. The bank bailouts that followed the so-called ‘credit crunch’ represented one of those moments of exposure. For here was a moment in which national governments intervened to save ‘private’ banks from the ravage of market forces, an intervention that is disavowed when jobs are threatened by offshoring production, or when meaningful curbs on executive pay are suggested. In the bank bail-out, the ‘invisible’ hand of the market began to look a little more like the very clearly visible hand of the state. It was a moment at which the illusion of the formal separation of power between states and corporations was shattered as governments around the globe scrambled to save finance capital.
In the UK alone, the immediate value of the bailout for the banks was £550 billion across 2008 and 2009. And this burden on all of us imposed by the banking bailouts is by no means limited to those sums initiated in the aftermath of the ‘crash’. As the New Economics Foundation has noted, ‘too big to fail’ banking subsidies exceeded £30 billion in both 2011 and 2012. Indeed, corporate subsidies are more common across all sectors of the economy than most of us realize. Numerous sectors such as the care sector, health and pharmaceuticals, private security, the arms industry, educational suppliers and publishers and so on would be tiny by comparison without government contracts and the role of the public sector in stimulating those markets. The construction industry enjoys remarkably high levels of public subsidy. UK train operators are completely dependent upon government subsidies. In virtually every area of criminal justice social policy, vast swathes of ‘service’ delivery has been handed over, usually in the name of greater efficiency, to private corporations operating in oligopolistic market sectors. Indeed, virtually all of the ‘private’ economy is subsidized in one way or another – adding up to massive, and increasing, levels of corporate welfare.
For us, then, it is the interdependence between states and corporations – in contrast to the dominant and prevalent claim that these entities exist in relations of antagonistic, external independence – that must be the starting point for understanding the production of corporate crime and harm. More specifically, the corporation is an essential part of the infrastructure of the modern capitalist state, albeit that its place and roles therein are constantly in flux. Rather than viewing power as somehow distributed in a zero-sum fashion between states or corporations, it is more accurate empirically and theoretically to understand the relationships between corporations and states as much more complex and often symbiotic.
Its relationship to the state – or, rather, the capitalist state – is also crucial for understanding that the corporation cannot effectively be held to account through criminal, administrative, regulatory nor company law. It needs to be replaced. Now, this is not to say law can achieve nothing. Legal reforms can mitigate some of the worst excesses of corporate power. For example, we would argue that in order to limit corporate welfare, the delivery of a range of services should be nationalised and taken out of the for-profit sector; and the governance of national and local government procurement should be changed to develop effective forms of contract compliance, excluding recidivist companies from tendering to undertake work. Moreover, via radical reform of company law, the ability of companies to externalise their social costs might be mitigated. Moreover, workers can be empowered by law to challenge corporate power: for example, firms with legally-protected, effective trade union safety reps and safety committees have half as many recorded injuries as those where these counter-vailing sources of power do not exist. Consumers and local communities might also be so empowered to challenge polluting corportions. And, in the realm of criminal law, we can still identify reforms which might radically undermine the legal protections which corporations currently enjoy – laws which pierce the corporate veil, for example, so that the relationships between the corporate entity and those who own and control it are exposed, and legal liability is not compartmentalised and minimised.
But these reforms are always going to be piecemeal and always precarious – so working for them must not prevent us thinking more imaginatively about demands for more lasting and fundamental social change.
Why Corporations must be Abolished
The corporation cannot be effectively reformed: not through corporate social responsibility, not through regulation, not through tinkering with structures, its functions or its functionaries. It is an essentially destructive, irresponsible phenomenon. It is its fundamentally destructive and anti-social nature that means the goal of corporate opposition must be the abolition of the corporation. Just as Thomas Mathiesen, the Norwegian criminologist, made a powerful case for prison abolitionism through placing the Prison On Trial, our book The Corporate Criminal places the corporation on trial.
In The Corporate Criminal, we challenge both the idea and the reality of the corporation. A starting point is the recognition that, although the corporation appears as a ‘natural’ and ever present entity, it is in fact a relatively short-lived historical construction, one entirely dependent upon state activity, continuously created and recreated through law, politics and ideology. We must imagine and struggle towards a world without the corporation. The corporation is not merely a threat to our lives in the ways that we indicate here, but in the long term, placing the trust of the future of the planet’s climate, or the future of food production or water distribution in the hands of the corporation, as is the case, is, literally, suicidal. And so, a challenge to the corporation is now more necessary than ever in order to save all human life. In making such a grand claim we do not dismiss more piecemeal reform strategies per se – via law, regulation, enforcement, political challenge – but such efforts need to be placed within and judged against the wider, demanding, yet compelling political goal of meaningfully challenging corporate power through dismantling the corporate form itself.
The Corporate Criminal: Why corporations must be abolished (Routdledge, 2015) by Steve Tombs and David Whyte.
Steve Tombs is Professor of Criminology at the Open University. He has a long-standing interest in the incidence, nature and regulation of corporate crime. He works closely with the Hazards movement in the UK, and is a Trustee and Board member of Inquest.
David Whyte is Professor of Socio-legal Studies at the University of Liverpool where he teaches and does research on the relationship between law, politics and corporate power. He works closely with Corporate Watch and is a member of the executive committee of the Institute of Employment Rights.