Corporations and the environment

Joel Bakan is an author, filmmaker, and a professor at the Peter A. Allard School of Law at the University of British Columbia, with a special interest in the role that large corporations play in our social and political lives. He is a former Rhodes Scholar and law clerk to Chief Justice Brian Dickson of the Supreme Court of Canada. He is perhaps best known for the movie which he wrote called The Corporation, which was released in 2003. The film received many favorable reviews and won 26 international awards. During the making of this documentary, Joel also wrote a book titled, The Corporation: The Pathological Pursuit of Profit and Power. Both the book and the movie focus on the large, multinational corporations, and are critical of their functioning and their societal and environmental impacts.
Coming from a family where both parents were psychologists and Joel himself studied psychology as an undergraduate, he came early to the conclusion that corporations are psychopathic. He based this on the realization that corporations need to be entirely self-interested, but other characteristics used to diagnose antisocial personality disorders (psychopathic personalities) were also present.1 Later, while in law school in the 1980s, Joel learned not only that the fundamental operating principle of the corporation is to always prioritize its own interests, but also that the law deems corporations to be persons, which gives them the same rights that people have.2
Following the release of the movie and the book, there was considerable discussion in the media about this and it certainly caught people’s attention. But in the mid-2000s, changes occurred in corporate messaging that Joel found alarming. He embarked on a second book, also accompanied by a movie. Both are titled: The New Corporation (the film’s subtitle is The Unfortunately Necessary Sequel), and were released in 2020. A telephone interview with Joel took place on March 16, 2023.
In his writing, Joel explains that corporations are profit-hungry because this is required by law. Corporate law and regulation includes “The Best Interest Principle,” which courts have interpreted to mean that corporations must by law maximize the wealth of the owners of the company: the shareholders. This is the raison d’être of the corporation.
If a Corporate Executive Officer breeches that principle, he or she is considered to be acting illegally, and could be sued by the shareholders.3 This puts any CEO of any publicly traded company in a position that he or she must protect the company’s profits and stockholders’ interests regardless of his or her own beliefs.4 This is viewed as necessary to protect the stockholders because they have no control over corporate operations. Unless the firm profits, they get nothing. The belief system within the corporate class holds that dealing with bad conduct on the part of corporations can be addressed not by changing corporate law, but with external governmental regulation, like labor, consumer or environmental protection statutes.5
But this means that in order to remain profitable corporations have to continue consuming resources while paying dividends to their shareholders. This is where we run into problems. Most significantly, everything we use is either grown or mined. This creates situations that are in conflict with the need for incessant production. Technological developments can ameliorate some of the negative environmental impacts but not forever. Meanwhile corporations will do everything they can to sustain their existence. They have an arsenal of strategies at their disposal to achieve their goals. One of these is to establish closer relations with politicians to ensure that political decisions are made in their favor.
Government regulation could keep some of the corporate excesses in check if they were enforced. But since the 1980s, a movement has been underway to align the interests of corporations and the wealthy elite with those who hold political power. In Ronald Reagan’s 1981 inaugural speech he acknowledged that there had been serious economic ills since the 1960s, but promised that they will go away because, “government is not the solution to our problem; government is the problem.”6 Clearly Reagan believed that the size of government needed to be reduced for the economy to flourish. The large, multinational corporations had no objections to that then or in the present. Their aim is to increase their freedom to conduct business in the most profitable way.
Reducing the size of government allows them that freedom because one of the results would be reduced oversight and fewer regulations. This is in line with the thinking of many prominent economists who believe that under these conditions the economy will flourish, everyone will profit, and all will be well. Beginning in the 1980s, large sums of so called “dark money” started flowing from wealthy elites and corporations to politicians, providing funding for pet projects or re-election campaigns. This strengthened the alliance between the worlds of government and business.
Then, in 2010, there was a significant and controversial Citizens United ruling that reversed century-old finance restrictions and enabled corporations and other outside groups to spend unlimited funds on elections. These developments leave us in a situation where all is not so well.
Joel writes that corporations have a long history of not addressing so called “externalities” such as polluting waterways by dumping industrial waste rather than disposing of it safely. Taking the well-being of the environment and social justice issues into account is usually not cost-effective. Corporations have effectively used a variety of tactics such as denial, misinformation campaigns, and active lobbying of politicians to avoid these additional costs. But what we are seeing more recently is a “new corporation movement” and the “dawn of a new age of corporate capitalism.”7
In the book as well as the movie Joel points out that since approximately 2005, corporations are casting themselves as good actors and cajoling governments to further free them from regulations that were designed to protect public interests. They now claim that they can be trusted to regulate themselves.8 They take credit for the various ways in which they take the environmental catastrophe seriously and talk about actively taking steps to ameliorate the damage. They are pushing for privatization of public services like schools and water systems, and justifying their actions by claiming to manage services better than governments.
Joel warns that as “governments further retreat from governing and thus representing citizens and protecting their rights, corporations take greater control, and we become a society that no longer has corporations but that is corporate.”9 Joel maintains that this is the reason, that “good” corporations are bad for democracy: they undermine government’s reason for existing, which is to represent the citizenry. Instead the emphasis shifts to the needs of the business world. Regardless of the intentions expressed by the corporations, their bottom line still needs to be profitability, and not the well-being of the public.
Corporations now tell us, that they can “do well by doing good.” To them this “doing well” refers to their financial bottom line, i.e. profits. If they can also do “good” for the benefit of the environment and people in a profitable way then that’s perfect. Then they can present themselves to politicians and the public as good actors.
During the telephone interview, Joel emphasized, with concern audible in his voice, “Right now, what we see is a democracy in crisis as our social conditions and the environment deteriorate.” He continues, “The corporate class tells us that, ‘we can solve these problems.’” However, Joel is convinced that the solution lies not with the corporations but rather with how well we are able to support and maintain a democratically structured society. Joel states that we must ask ourselves, “Are we progressive democrats, or do we follow the pied pipers of the corporation world?” He then makes another interesting comment that many people might not think about: “If you look at history, democracy is actually a recent and rare phenomenon that has only existed, at least during the modern era, for about a century. Most of history is characterized by authoritarianism in one form or another. Ideas of democracy, equality, and social justice are relatively tentative and vulnerable. We can’t take them for granted.”
Joel strongly believes that, “Social solidarity is needed for democracy to work. The message of our current version of capitalism – neoliberalism, as it is often described - is that, ‘You’re on your own.’ The result is that people are economically insecure, do not feel heard, feel misunderstood, and feel not represented. Under these conditions you cannot expect people to work together for the collective good, and democracy thus becomes precarious.”
Joel continues, ”Democracy cannot mean just voting every few years and doing nothing else in between. We need to gain a deeper understanding of what we mean by democracy – it needs to be more participatory. So what are the conditions that are needed to achieve this? Are the political institutions that we have enough?” Then he reiterates, “We can’t just have a political democracy; we need social justice and equality for democracy to work.”
He explains that the real nastiness we see in politics today is rooted in the growing divisions fostered by increasing inequality. Which relates back to corporations. Unfortunately, right now “the system is gamed by corporations. Washington, D.C. is full of corporate lobbyists, as are state capitals, and even local governments. The corporate class is way too close to the political class. Meanwhile the politicians inhabit a world from which regular people are excluded – they are not part of it.”
Joel believes that we are at a crossroads. “There are three routes that we can take. We can make democracy real with greater social justice, equality, and care about the environment. The second route is that we can continue in the same direction we are now going; i.e. corporate power increasing as democracy decreases. The third route is authoritarianism and right wing belief systems. The second and third routes are twinned because there is a conjoining of interests between right wing advocates of a minimal state and those who favor corporate control.”
Joel emphasizes that there can only be hope for a future for ourselves and future generations, when there is economic security and equality in a society. He continues, “The ideal of democracy must have a living sense of commonality and shared destiny. We all need to feel that we are a part of a community. But that is not possible when we are uncared for by society, unable or barely able to make ends meet, and lacking in hope. There can be no sense of common destiny when divisions are so stark.”
We need to take our citizenship seriously. We need to become engaged first and foremost to protect democracy, to support the ideas of social justice and equality, and to take care of the environment. In conclusion Joel comments, “Everyone has their own talents, and there are many places to work and to contribute. We need to put those to work and make the choices that are right to achieve those goals.”