Super-deluxe, Extra-special, Inc.
by Tom Sullivan
Avoiding responsibility is just what the corporate form was designed for, wasn't it? That's why corporations will always go to the mat to protect their special rights and privileges as super-citizens. Those include not to facing jail time for repeated criminal behavior. Petty crime? Three strikes and you're out. Corporate crime? Nobody's counting. Justice for corporate crime is a different ball game.
"Banks have been on a criminal wilding," Katrina vanden Heuvel writes, "allegedly laundering money for drug dealers, systematically defrauding homeowners on their mortgages, routinely committing perjury in courts and much more." Their companies pay fines, yet virtually no one in charge goes to jail. Isn't that special?
RJ Eskow ticks off a lengthy series of criminal behavior by large banking firms: Citigroup, JPMorgan Chase, Barclays, Royal Bank of Scotland, UBS Financial Services. All repeat offenders:
In an expanded version of a survey we first reported on in 2012, an updated study on behalf of law firm Labaton Sucharow found a deep-seated culture of immoral behavior among bankers in the United States and Great Britain. And it found that the situation was getting worse, not better, noting “a marked decline in ethics” since the first study was conducted.Two-thirds of voters surveyed believe the market is rigged by and for insiders. Eskow writes:
These voters are right – and they’re not alone. William Dudley, president of the Federal Reserve Bank of New York, spoke in 2013 of “deep-seated cultural and ethical failures” and “the apparent lack of respect for law, regulation and the public trust” in the culture of our biggest banks.
Dudley reached that conclusion in 2013, and the Labaton Sucharow study suggests that banker ethics have gotten worse since then.
Our banking system has a design problem, because its incentives are broken. Financialization is stifling the productive economy. And the systemic threat posed by our biggest banks has made them immune from real punishment.
Except, I would argue that the design problem is not isolated to banks. Corporate capitalism has metastasized. The banks have simply grown so big that their cancers are visible to the naked eye.
In London right now, an interactive play lets audience members have a go at making the choices corporate super-citizens usually get to make:
... In Zoe Svendsen’s play World Factory at the Young Vic, the audience becomes the cast. Sixteen teams sit around factory desks playing out a carefully constructed game that requires you to run a clothing factory in China. How to deal with a troublemaker? How to dupe the buyers from ethical retail brands? What to do about the ever-present problem of clients that do not pay? Because the choices are binary they are rarely palatable. But what shocked me – and has surprised the theatre – is the capacity of perfectly decent, liberal hipsters on London’s south bank to become ruthless capitalists when seated at the boardroom table.
It is not them. It is not just lax regulation or enforcement. It is the system. Paul Mason, economics editor of Channel 4 News, argues that capitalism is "a mode of regulation, not just of production." That is, it is an organized market system that merely looks spontaneous. Bank CEOs walk free after committing fraud on a global scale "because a company has limited liability status, created by parliament in 1855 after a political struggle." Because, I argue, we created corporations as privileged, jail-resistant, super-deluxe, extra-special citizens. That is the design problem. Why is it a surprise when they behave like spoiled children?
It is Philip Zimbardo's Stanford Prison Experiment writ large: "What happens when you put good people in an evil place?" Put college students in a mock prison, assign some the role of prisoners and others the (privileged) role of guards, and within days the "guards became abusive and the prisoners began to show signs of extreme stress and anxiety." What happens when you put ordinary people in a corporate environment – not for days, but for years – privileged with limited liability and with the economic imperatives and incentives of the capitalist model? As Eskow says, "Crooked bankers aren’t born. They’re made."
Paul Mason writes:
Our fascination with market forces blinds us to the fact that capitalism – as a state of being – is a set of conditions created and maintained by states. Today it is beset by strategic problems: debt-ridden, with sub-par growth and low productivity, it cannot unleash the true potential of the info-tech revolution because it cannot imagine what to do with the millions who would lose their jobs.
Because metastasized corporate capitalism does not care about anyone or anything beyond "expected future profits." The Great Recession proved that. The Trans-Pacific Partnership is about to prove it again. It is not in need of better regulation or a software patch, but a new operating system.
Marx believed capitalism contained the seeds of its own destruction. Well about now, corporate capitalism is looking pretty seedy.