A Product of the System

Last night I watched a Frontline program on PBS about BP, the oil company responsible for the giant oil spill in the Gulf of Mexico and several other disasters.  The theme of the program was that BP is and was an irresponsible company because it put profits ahead of safety.  There is simply no doubt that this charge against BP is true.  BP put profits ahead of the safety of its workers and ahead of protection of the environment.  Fair enough.  BP was, and presumably is, a bad company.  A greedy company.  A company that values increasing return to shareholders above all else.

All that's true, and it's easy to take shots at BP; but there is a much bigger truth here that I haven't heard anyone talking about.  Frontline certainly didn't mention it in its piece on BP.  That truth is that BP's approach of putting profits over safety is not an isolated case.  It isn't an aberration.  BP isn't a deviation.  It is nothing more nor less than a typical and perfectly predictable product of the capitalist economic system as it is currently constituted in the United States and other so-called advanced economies.  American culture tells corporations that their purpose, their reason for existing, is to make profits, is to return value to the shareholders.  American law tells corporations and their officers and directors that their purpose, their reason for existing, is to return value to the shareholders.  American law allows shareholders under various circumstances to sue officers and directors who don't do a good enough job of returning value to them.  Corporations routinely replace management that doesn't do a good enough job of returning value to the shareholders.  American corporate culture and American corporate law embody the capitalist ethos that making money is the highest value in a particularly stark and un-nuanced way.  With us, making money is a corporation's reason for existing, essentially its only reason for existing.

It wasn't always thus.  The purpose of the corporate form of business is to allow investment in a way that limits the investors' liability to the amount of their investment.  Originally a corporate charter was granted by a legislature, and originally getting a corporate charter from a legislature required a showing that the purpose of the corporation was in some significant way in the public interest.  It could be and usually was in the public's economic interest, as when corporations were formed to build railroads; but the work of the corporation had in some significant way to benefit the public and not merely the investors and others involved in the operation of the corporation.  The corporation acting in the public interest was the trade-off for the limited liability that the charter gave the investors.  The public benefited from the work of the corporation and the investors benefited from limited liability.  That was the social bargain that justified the corporate form of business organization.

No more.  That ethos has been lost.  Today all that is required to create a corporation is the filing of papers and the paying of a fee to the state.  The corporate charter is automatically granted, and it is automatically renewed upon the filing annually of a minimal report with the state.  No showing of public interest is required.  Not only does a corporation not have to make a showing that it is operating in the public interest, it doesn't actually have to operate in the public interest.  That is no longer it's purpose.  It's purpose is to make money.  Period.  Investors still get limited liability.  The public is likely to get nothing--or worse.

The ethos of profit above all else that characterizes the current capitalist economic culture here and in many other places around the world inevitably produces companies like BP, companies that put profits above public safety, protection of the environment, or any other value that is truly in the public interest.  We can perhaps shut down BP, or force them to do a better job of complying with workplace safety and environmental protection laws.  We can perhaps strengthen those laws, although in the current political climate that is unlikely.  None of  that addresses the fundamental problem.  None of that will eliminate companies like BP.  The only thing that will eliminate companies like BP is a change in the culture and the law that says that a corporation's purpose is to maximize return to the shareholders.  The only thing that will eliminate companies like BP is a return to the economic ethos that says that profits are a value and limited liability is justifiable only when the operations of the company serve the public interest.  An ethos that says that managers of companies are fired not only when they fail to make money but also, and more so, when they do things that harm people and the environment, even if they make money doing it.

The only thing that will eliminate companies like BP is a fundamental change in the assumption behind the current capitalist economic system that making money is a value in itself.  Making money is not a value in itself.  Making money is a value only when it serves people.  Only when it truly serves people in a broad sense, in an authentic sense, not in the narrow, selfish sense of only making money for a few economically powerful people.  The ethical change that is required to eliminate companies like BP is a radical one.  It is one that I'm afraid not many people are willing to make, one that few people are even aware must be made.  Until we know it that the change is needed, and until we're prepared to make the change, we'll get what we ask for.  We'll get more BPs.  We'll get more companies that are just products of the system we refuse to change.  More workers will die as they did at BP's Texas City refinery when cost cutting led to an unreasonably unsafe work environment.  More habitat will be destroyed along with the livelihoods that depend on that habitat as they were in the Gulf when BP caused a massive discharge of oil that it had no idea how to stop.

Frontline accuses BP of engaging in cost cutting.  Of course BP engaged in cost cutting.  Cost cutting increases profits even when the cost cutting reduces worker and environmental safety, and the system tells BP that making profits is what it's all about.  We can and we should blame BP; but, much more than that, we should blame--and change--the system of which BP is merely a product.