The on-going debate on the place of corporations
The Canadian documentary The Corporation (Achbar & Abbott 2003) dwells upon the role corporations have played in the society. Corporations are now associated with evil, illegal entities that focus on gaining profit at the expense of the community. People claim that corporations ceased the power long time ago and people can do nothing to resist.
However, it is important to remember that corporations were initially “a gift of people to serve the public good” as people gathered to fulfil certain tasks and their activities were strictly regulated (Achbar & Abbott 2003). The corporations are not a product of evil businessmen of the beginning of the twentieth century.
These entities (as they are now) are a result of regulatory deficiencies at a number of levels, i.e. corporate, national and international levels. The present paper is aimed at identifying the major regulatory deficiencies and revealing possible ways to diminish negative influence of corporations.
Major issues associated with corporations
To understand the reasons for the impact corporations have, it is necessary to briefly trace the development of these entities. Industrialisation is seen as the major factor that made the appearance of corporations possible (Bowman 2010). Researchers also note that the development of the military industry was another potent factor that contributed to the development of corporations (Achbar & Abbott 2003).
Mastrogiovanni (2009) notes that military conflicts have always brought huge sums of money to those involved in the military industry. However, the major turning point in the development of corporations as they are now was the enactment of the 14th Amendment. Researchers stress that the notion that corporations should be regarded as legal persons enabled these entities to operate with less restrictions (Achbar & Abbott 2003).
The corporation was a legal person that was able to buy and sell property. Therefore, corporations have gained more power since the 1930s. Importantly, the concept of the corporation has spread worldwide as the American economic model was transferred to European (as well as South American and Asian) countries after the World War II. Drucker (2009) claims that the development of corporations worldwide was inescapable as the collaboration between the countries was increasing.
The development of corporations is also associated with a variety of positive and negative externalities. These economic, political, social and environmental externalities have had predominantly negative effect on the development of communities and the image of corporations (Simpson 2007).
Corporations gained more power and violated more and more regulations. What is more, new regulations (which were favourable for corporations) have been introduced. These violations and new unfair regulations can be explained by regulatory deficiencies at the corporate, national and international levels.
Results of regulatory deficiencies at different levels
The corporate level
In the first place, it is necessary to consider regulatory deficiencies at the corporate level. The core goal of any corporation is gaining profit. It is noted that there is nothing bad in that as this is the basis of a capitalist society (Achbar & Abbott 2003). Therefore, corporations tend to focus on gaining profit rather than on being responsible in many respects.
The business world has always been highly competitive and contemporary corporations have to face lots of constraints. To remain competitive, corporations often try to reduce their expenses, and this often leads to violation of certain norms (Kurucz, Colbert & Wheeler 2008). Thus, corporations can reduce perks (or even wages) of employees, violate environmental regulations, etc.
The national level
However, corporate irresponsibility cannot be regarded as the major factor contributing to the spread of corporations and their empowerment. Admittedly, corporations violate regulations and they are corrupt. However, it is much more serious that corporations are barely ever punished. Governments of the USA and all European countries let corporations violate the rules.
For instance, the famous case of Cochabamba is an example of the symbiotic co-existence of a corporation and a government. Thus, SEMAPA, the organisation providing municipal water and sewage services, was privatised and soon sold to a corporation (Sánchez Gómez & Terhorst 2005). Olivera (2004) notes that the tender procedure was obscure and held with a variety of violations.
In this case, the government was corrupt and let a corporation take control over a community’s organisation. More so, the example of the Bolivian case also transcends on the international level which appears to be the major factor contributing to the negative influence of corporations.
The international level
SEMAPA was sold under the pressure as the World Bank had an impact on the Bolivian government. Notably, the organisation was sold to an American corporation. Therefore, that was not a case of a single country as it involved several states and an international organisation.
Obviously, international bodies have a great impact on governments. This single case can justify the argument that regulatory deficiencies at the international level have led to the development of corporations which are irresponsible in social, political, environmental, ethical and moral respects.
The most effective level in addressing the issues
At the same time, the great influence international bodies have now makes the international level the most effective in addressing the issues related to the negative impact of corporations’ irresponsible activities. Cordato (2007) argues that international regulations have been effective tools in many cases.
The contemporary globalised world is, to a certain extent, governed by international bodies. Therefore, these organisations are capable of diminishing negative effects of corporations’ activities. The history of corporations’ development shows that they used to be strictly governed. It is time to reintroduce such a practice.
Notably, some may state that the Cochabamba model can be successful in addressing the issues associated with corporations’ activities. It is necessary to note that the famous People’s Agreement of Cochabamba reflects major issues and outlines most important concept (People’s agreement 2010).
For instance, people of Cochabamba address the rest of the world and ask for responsibility and creation of responsible regulatory bodies. However, the situation in the region proves that a set of concepts is not enough as the government is still corrupt and ineffective. People are still suffering from the lack of resources.
Therefore, the manifestation should be brought to the fore and become the basis for the new legitimate document. The existing international bodies should start paying more attention to the activities of corporations. It is crucial to work out regulations which would make the corporations a union of people working for the community.
Conclusion
To sum up, it is possible to note that industrialisation was the major factor that contributed to the development of corporations. These entities have acquired considerable power and have often violated various regulations on the global scale. However, globalisation has brought a solution. International bodies have the necessary tools to diminish the corporations’ negative influence by introducing strict regulations and taking control over the corporations’ compliance to the new rules.
Reference list
Achbar, M & Abbott, J 2003, The corporation, Big Picture Media Corporation, Vancouver, Canada.
Bowman, S 2010, Modern corporation and American political thought: law power, and ideology, Penn State Press, University Park, PA.
Cordato, R 2007, Efficiency and externalities in an open-ended universe: a modern Austrian perspective, The Ludwig von Mises Institute, Auburn, AL.
Drucker, P 2009, Concept of the corporation, Transaction Publishers, Piscataway, NJ.
Kurucz, EC, Colbert, BA & Wheeler, D 2008, ‘The business case for corporate social responsibility’, in A Crane, A McWilliams, D Matten, J Moon & D Seigel (eds), The Osford handbook on corporate social responsibility, Oxford University Press, Oxford, pp. 83-112.
Mastrogiovanni, M 2009, ‘The business of war: understanding the military-industrial complex and how it’s still used today’, ESSAI, vol. 7. no. 33, pp. 106-108.
Olivera, O 2004, Cochabamba!: water war in Bolivia, South End Press, Cambridge, MA. People’s agreement of Cochabamba 2010. Web.
Sánchez Gómez, L & Terhorst, P 2005, ‘Cochabamba, Bolivia: public-collective partnership after the Water War’, in B Balanyá et al. (eds), Reclaiming public water-achievements, struggles, and visions from around the world, Transnational Institute and Corporate Observatory Europe, Porto Alegre, Brazil, pp. 121-130.
Simpson, BP 2007, ‘An economic, political, and philosophical analysis of externalities’, Reason Papers, vol. 29. no. 1, pp. 123-140.