THE DEATH OF THE CORPORATION?

DEATH OF THE CORPORATION?

James R. Fisher, Jr., Ph.D.
© October 2007

“The era of the free lunch has ended. The twentieth century, which began with such paternalistic control and obedience in America, has run amuck. Now nothing and no one is in control. Take corporate America. Any large company today is 20 to 30 divisions in search of a corporation. The pendulum of centralization-decentralization is more a yo-yo contest with no clear winners, only painfully confused losers. Trauma is written on the face of America enterprise.”

James R. Fisher, Jr., Work Without Managers: A View from the Trenches (1990).

“The bigger the organization, the more unavoidable is its morality and blind stupidity.”

Carl Jung

“Insanity is rare among individuals, but is common among the group.”

Friedrich Nietzsche

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Forty years ago John Kenneth Galbraith argued in “The New Industrial State” (1967) with his typical confidence that corporations were no longer limited to railroads, steel making and oil refining, but would embrace everything getting bigger and bigger with no end in sight.

Then the other day the UAW settled with General Motors after a strike of only 48 hours. The UAW, which is a corporate mirror image of GM, has been reduced from more than 400,000 members to 73,000, while GM, which once owned more than 50 percent of the American automotive business now has been reduced to 24 percent and declining. This is not a mirage but an inevitable trend.

The 1970 strike lasted two months during which the national unemployment rate rose to 5.5 percent and the Gross Domestic Product (GDP) for the quarter dropped from 2.5 to 1.4 percent. Of course, in 1970, GM was the nation’s largest corporation, hugely profitable, and did, as it desired. But in the last two years, GM lost $12 billion.

It was apparent 20 years ago when I was working for Honeywell Europe Ltd. out of Brussels that the compartmentalization with only a few knowing how all the pieces fit together, and therefore the ticket to their security and control, was unraveling. The corporation, which was always a myth, was dying.

As touched upon earlier, the UAW is a carbon copy of GM. “We are the architects of the future,” declared Walter Reuther, UAW president from 1946 until his death in the spring of 1970. He was echoing the sentiments of Charles Wilson, CEO of GM in the 1950s, who proclaimed, “As GM goes so goes the United States.” The combination of GM’s jazzy business model of planned obsolescence and the UAW contract demands for increasing entitlements led to inflation, massive job losses in the early 1980s, opened the door for Toyota and other non-U.S. companies. Corporate bigness was no longer better. It turns out that market competition punishes those firms whose costs are out of line with others. But the problem is not limited to profit and lost statements.

We have seen recent evidence of how corporate compartmentalization breaks down with the Iraq war with a bunch of renegade security brigands called “Black Water” performing as if in a Wild West show, only with real bullets.

The State Department, which is supposed to be Black Water’s ultimate authority, was seem mumbling incoherently before a congressional panel. Then of course there is Katrina and now Home Land Security and FEMA handled that. Corporate society is not a 300-pound guerilla, but an erector set of anomalous parts produced by a machine mentality.

Most interesting in this myth making is the Dow Jones Industrials. The press applauds the Dow Jones Industrials as a measure of the health of the economy, disregarding the plunging dollar and the sub prime real-estate fiasco. After all, what does a “breakthrough” to 14,000 mean to the fatigued legs of American economy? The answer is less than you might think. It reflects a global economy that still supports the American economy by frenzy if not frantic financial speculation on the stock market.

Small wonder casinos have become a barometer of the American psyche pox marking the land from coast-to-coast and border-to-border. The stock market is less of an investment than it is a gamble, like casinos. To bet big you have to be able to withstand big losses, as most bets don’t win.

Even the word “economy” is misleading. It creates the impression of a homogenous entity when it is only the daily sum of all economic transactions that take place. The irony is that most businesses in America do not have stocks. The “economy” might be hot in one section of the country and cold in another. People will think it is good if they have jobs; bad if they are laid off. Put another way, the economy, if it has any meaning at all, is always local.

Twenty years ago I wrote of an economic holocaust as corporate jackals swept down on Safeway Stores, Inc. with a hostile takeover with a “Leverage Buy Out” (LBO). More than 63,000 employees were cut loose through store closings with those still retained earning only one-third of their formal salary or hourly wage. Meanwhile, senior management, and Kohlberg Kravis Roberts & Co. (KKR), LBO specialists, earned millions. This quick kill corporate strategy became common fare. It continues today but no longer has the shock value, as it is now part of the pathology of normalcy.

It is so easy to misread our history. Corporate America believed the reason it became so big and powerful was not only because of its resources and resourcefulness, but because it was right, and our culture and products were right for the world. After all, we broke an entire ideology not with a nuclear bomb but by the sheer energy and brutality of economic numbers. We forced the Soviet Union to play our game and bankrupted it. We discovered we could invade a country without physically going into its territory. We could dictate unconditional terms without appearing anything other than a force for the good. Corporate capitalism has turned this game on its own people. It brings workers under control by giving them the illusion of freedom and choice while forcing them to adhere to its rigid principles, which can be resisted only at the cost of one’s career or job security. There is no Gestapo, no torture chamber. It’s perfect. We might call it “corporate lite.”

But it is in trouble and the evidence is everywhere. In fact, I’ve been writing about it for years, starting with the changing nature of the workforce, the changing nature of work, the changing seat of power from the privilege few in position power to the informed many in knowledge power, from the failure to buy or bribe productivity through entitlements, from the emergence of the Internet, from the failure of education and religion to escape the corporate net, and on and on.

The greatest talent of the corporation is the art of presentation. Truth, fact and reality are Play-doh in the hands of corporate CEOs. We’ve seen this dramatized with tobacco company executives appearing before a congressional committee stating emphatically that smoking was not addictive. Yet, corporate research, at the time, of which all were aware, definitively pointed to the fact that it was. We see it with pharmaceutical executives, the American Medical Association, and nearly every other corporate body you can think of, who have mastered the art of presentation to keep 300 million Americans in somnolent comfort.

Now, everything is globalization, which is another corporate myth. Global trading is no different than it every was, only accelerated as the world shrinks. People in one country have always traded with people in another. The Earth is, in fact, not flat although a clever globetrotting journalist, and multinational corporations, continue to peddle the myth. They believe they can turn Earth into one giant plantation owned and managed by them.

But their day is past. Corporate America, and its imitators, is bleeding the earth dry. We are living in the twilight of the Euro-American domination. This is not a new theme or an original thought. But the evidence continues to suggest that we will not wake up to understand the motivation of our enemies by simply calling them “evil.” It suggests that our enemies know us better than we know ourselves. They understand what has made our society sick – our demand for outstanding presentation and need to see ourselves as number one.

No society has ever been destroyed from without before it was first destroyed from within. Our enemies are often close to home in the guise of corporate do-gooders and not some vague amorphous ill-defined group that terrorizes us from afar. Yes, terrorists, too, do exist, but the terror at home is self-generating. It finds us going to seed through self-indulgence, luxurious living, and denial. You can paper over reality but you cannot change it, and what is real is what is happening to you in your community with or without your involvement right now. Everyone is a leader or no one is. If you believe otherwise, then you have probably come to accept the corporate myth as real.
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Dr. Fisher’s most recent book is A Look Back To See Ahead (AuthorHouse 2007).