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By Skip Spitzer
There are signs that public awareness about corporate impacts on society is rising. A 1999 industry-sponsored global survey warned that citizens in general feel that protecting the environment and the health and safety of employees are more important corporate responsibilities than making a profit. In the U.S., a 2000 Business Week/Harris poll noted with some alarm that 40% "agree" and 32% "somewhat agree" that "business has gained too much power over too many aspects of American life." Likewise, there are indications that progressive movements around the world are increasingly focusing on the role of the corporation, even among liberal groups for which this is new terrain.
As the corporate role in occupational, public health and other problems receives scrutiny, it is essential to recognize that it is not sufficient to identify specific acts of malfeasance or influence, or even to campaign to address them. A more comprehensive and systemic framework for understanding the role of corporations requires consideration of corporate power and its effects as endemic features of national socio-economic systems and the rapidly integrating global order. The present contribution offers such a perspective, highlighting the need for systemic change and providing a useful picture of the "structure of harm" -- the underlying social structures (or institutional arrangements) that produce social and environmental problems, and undermine reform. It also presents implications for researchers, policy-makers, activists and others trying to address environmental and occupational health problems, particularly with regard to integrating efforts to address immediate impacts with those for longer-term, systemic change.
The need for systemic change
Many contemporary social movements are characterized by efforts to resolve particular problems as quickly as possible.[4] This is, of course, often a direct response to immediate harm or inequality, frequently life-threatening or environmentally catastrophic. It is also a reasonable approach given limited power and capacity.
Relatively near-term, issue-focused public action generally focuses on:
* Educating the public to raise awareness about an issue
* Changing consumer behavior to influence market dynamics (e.g., to eliminate a product or type of production, promote alternatives or reduce consumption generally)
* Pressuring corporations or other private actors to cease, clean up or provide compensation for a harmful practice
* Pressuring government for a socially just or environmentally sound policy or other action
* Developing alternatives (e.g., organic farms, local food systems, Community Supported Agriculture programs, micro-lending, communities based on popular principles)
These responses are frequently successful, sometimes achieving extraordinary improvements in economic welfare, democratic participation, environmental safeguards, and racial, gender and other rights. Pesticide reformers, for example, have achieved bans, restrictions, stronger enforcement, worker protections, reporting systems, research on and use of alternatives, development and growth of organics, international agreements and more. The Stockholm Convention on Persistent Organic Pollutants (POPs), for example, protects human health and the environment by requiring governments to eliminate or reduce the release of certain toxic chemicals that persist in the environment, travel widely and accumulate in the fatty tissue of living organisms.
Nonetheless, near-term, issue-focused reform efforts are typically frustrated (and in many cases rendered futile) by the dynamism of entrenched power, in several important ways. First, change efforts regularly face an extraordinary range of built-in hurdles in the form of governmental and corporate misinformation, legal action, surveillance, etc.; lack of funding; public apathy, ignorance and preoccupation; media bias and lack of attention; and the like.
Second, even where public action is successful, at least four kinds of systemic dynamics commonly prevent fundamental change:
1. Shifts in production. Curtailing one harm often results in increases in another. For example, the banning of DDT in the U.S. led to broad adoption of chlorpyrifos.
2. Innovation. New, risk-posing technologies are continually commercialized. For instance, genetically engineered crops pose serious new problems, including: novel health risks, irreversible genetic contamination, harm to wildlife, corporate control of seeds through new intellectual property rights, biopiracy[8] and threats to organic agriculture.
3. Co-optation. Alternative approaches are undermined and co-opted. For example, the extraordinary growth of the organic foods sector has led to the growing problem of "industrial organics." Through growth and acquisitions, U.S.-based Horizon Organics, for example, now controls 70% of the U.S. organic retail dairy market and is fully owned by Dean Foods, one of the top 25 food giants globally.
4. Limited accommodation. Problems that are least challenging to the economic order may change (e.g., leaded gasoline), whereas there is little response on more threatening issues (e.g., carbon dioxide emissions).
Finally, systemic dynamics may simply overwhelm reform efforts through the amount of harm they produce. In the U.S., for example, about 85,000 chemicals are registered for use -- most with no or inadequate testing -- with 2,000-3,000 new substances registered every year. The harms and risks of industrial chemicals alone are staggering, yet there is an astonishing array of other social and ecological problems: environmental wounds (like global warming, ozone depletion and species extinction), small producer hardship (loss of family farms, for example), undemocratic institutions (such as money-distorted political systems and the World Trade Organization), militarism and intervention (from Iraq to Haiti), social ills (like homelessness, hunger, poverty, crime and discrimination) and violation of human and animal rights, among many other issues. Is it possible to catch up? How significant are irreparable impacts? At what point do change efforts become too little too late?
Many of those who experience these frustrations recognize that underlying causes and barriers to change must ultimately be addressed. One common reconciliation of the tension between near-term action and underlying causes is the idea that, over time, progress on specific issues will achieve systemic change. This approach is reflected, for example, in sustainable agriculture movement slogans such as "Changing the world one farm at a time." Some "green" businesses are based on this idea or have adopted it in their advertising, such as California- based Give Something Back business products, which is "Saving the world one paperclip at a time." In fact multinationals and others committed to the status quo promote this idea: for example, partnering with low-income housing builder Habitat for Humanity, Dow Chemical declared that it is "changing lives one home at a time." The efforts behind the "one at a time" concept are often significant. Yet incrementalism, in the sense of cumulative successes fundamentally transforming societies, ignores the actual nature of underlying social structures.
The structure of harm
What then are the underlying causes of harm that must be addressed? Many explanations of the cause of harm overlook that societies are integrated systems of institutionalized and organized patterns of behavior, values and beliefs. That is, while factors such as lack of awareness, greed, money, technology, dangerous Prime Ministers and uncaring corporations may be intermediate causes of harm, it is important to look at the functioning of a given society as a whole, or what we might call the "structure of harm."
The literature addressing the fundamental nature of modern societies and the global system is vast. The intent here is not to survey this field or provide a new totalizing theory, but rather to identify basic structural features of harmful societies, drawing primarily on the case of the United States. These characteristics are somewhat generalizable to other advanced market economies of the global North, parts of the global South, and the world system. They are a good starting point for conceptualizing the structures of harm at the root of contemporary social and ecological crises.
Corporations are a central aspect of social life
In 1787, fewer than 40 corporations operated in the United States. As late as 1920, there were approximately 314,000. In 2003, there were more than four million. Corporations now account for about 74% of all U.S. production. This means that the core economic decisions (what, how and how much to produce, using what resources) are largely in corporate hands. Through work and consumption, virtually everyone is profoundly affected by corporations. Corporations are also powerful social actors, affecting virtually every other aspect of social life. Corporations largely ignore social and environmental costs
Corporations are compelled to maximize profit or shareholder value or face elimination by competitors. In the U.S., officers and managers who do not work to maximize shareholder value are in fact subject to legal action for violating fiduciary obligations to act in the best interest of the corporation.
Focusing first and foremost on profitability means that decisions are explicitly based on consideration of a firm's own costs and revenues, while costs and benefits to society (or "externalities") such as pollution or use of recycled materials, are largely ignored. Modern microeconomic theory specifically prescribes this: to maximize profit, individual firms should keep producing units of a product until the unit (or marginal) revenue earned is just equal to the firm's cost to produce it. Even decisions to spend on community development, charity and other "corporate responsibility" programs are generally treated as "investments" and limited to projects for which there is a "business case."
Reagan Administration economist Robert Monks described it this way: "The corporation... became something of an externalizing machine, in the same way that a shark is a killing machine -- no malevolence, no intentional harm, just something designed with sublime efficiency for self-preservation, which it accomplishes without any capacity to factor in the consequences to others." If corporations had to take into account external costs and benefits to society, they would make radically different production decisions.
Competition creates economic concentration
Competition between firms striving to maximize profit leads some corporations to get bigger than others. Through growth and expansion, mergers, acquisitions and other consolidation within and across sectors, many corporations have become extremely large and many industries are now dominated by relatively few producers. Some corporations dominate in multiple industries. For example, the top six agrochemical producers control about 65% of U.S. pesticide market and four of them are leaders in transgenic seeds. Overall, just 1% of businesses control 80% of U.S. private sector production.
Concentration leads to remarkable economic and social power. It also undermines the market. While bigger firms may achieve economies of scale, markets retain their self-regulating capacity only when there are many buyers and sellers (such that no one firm can influence prices), few barriers for new firms to enter and other competitive features.
Competition drives harmful models of production
Competition at the top of concentrated industries continually leads to rapid development and broad adoption of far-reaching new technologies and production practices. For example, agribusiness giants have dramatically transformed agriculture in just the last 50-60 years.
Today food is produced on large-scale, machine- and chemical-intensive farms specializing in single animal products or hybrid high-yield crops -- one part of a segmented system involving inputs (such as seeds), farms, storage, processing, distribution, food manufacture and marketing, insurance and lending. Industrial farming deeply disrupts ecologically-based processes of plant cultivation and animal husbandry, by preventing beneficial crop interactions and complimentary relationships between plant cultivation and husbandry (e.g., on-farm manure used for fertilization), limiting fertility- enhancing crop rotations, creating uniform targets for pests, and undermining beneficial soil organisms, pollinators and natural pest predators. These conditions require the use of synthetic fertilizers and pesticides that further erode soil fertility, kill beneficial insects and accelerate the development of pest resistance, creating a systemic cycle of increasing reliance on such chemicals. Other impacts include: soil depletion; loss of arable land; energy use; impacts on wildlife; air and water pollution; ozone depletion; global warming; loss of genetic diversity; unhealthy food products; farmworker abuse and poverty; transgenic seeds; loss of farmer independence; farm failure; and breakdown of rural communities.
Within such models of production, dominant corporations use their ability to influence markets for special advantage over competitors, suppliers, labor and consumers. For example, consolidation in the agricultural inputs sector allows providers like pesticide manufacturers to set artificially high prices for goods and services growers need. Likewise, concentration in commodity markets has led to artificially low farm-gate prices for what growers sell. This is one of the reasons farmers are losing their farms. While technology providers like pesticide companies market their products as solutions for low profit, technology adoption by businesses in competitive industries (such as farming) provides little lasting benefit. Production may increase, but as a new technology is broadly adopted, overall growth of supply reduces prices, eliminating the new technology's economic benefit.
The general trend of innovation in production has been technologies and practices which greatly increase the use of natural resources and energy (resulting in vast resource depletion and environmental waste impacts), substitute technology in place of human labor and push the limits of regulation. Cases where regulatory frameworks may at best catch up to technology already in commercial use or development include food irradiation, genetically engineered crops, synthetic biology, nanotechnology, wireless telephone communications and the commercialization of outer space for communications, thrill rides, tourism and other services.
Growth is imperative, yet unsustainable
Free market economies require perpetual economic growth. Sustained periods without real positive growth are characterized as recessions or depressions. They are marked by decreased business activity, increased unemployment and bankruptcies, lower incomes and demand for goods, and other aspects of economic crisis.
Arguably, the continual growth needed to keep market economies stable, particularly on a global scale, is fundamentally at odds with environmental well-being. A continuous average growth of just 3% annually would mean that worldwide industrial production would double every 25 years -- clearly an unsustainable rate. Agricultural expansion alone is projected over the next 50 years to cause unprecedented ecosystem degradation and species extinctions.
Corporations wield extraordinary social power
As we have seen, corporations maintain decisive economic power. Yet they also exercise wide political and other social influence. In fact, in the U.S., a variety of court cases have endowed corporations with rights as "persons" under law. Numerous laws, policies and international agreements have also granted corporations rights unavailable to individuals.
It is important to note that many business leaders think about this influence not just in terms of government policy (such as subsidies, infrastructure, tax breaks, privatization and deregulation), but on the level of social structure. During the late Industrial Revolution in the U.S., to take a stark early example, industrialists faced a severe crisis of under-consumption, with factories producing more goods than the public wanted or could afford. One banker, investor and government advisor warned: "We have learned to create wealth...[but] we have not learned to keep that wealth from choking us." To bolster consumption, industrialists engaged in broad "social planning," undermining immigrant and working class values of thrift and self-reliance based on insights from the developing field of social psychology (in which one pioneer declared "It is now possible to control and regiment the masses according to our will without their knowing it"). Through advertising, industry explicitly set about to instill personal dissatisfaction and fear of social censure among the public, based on insights such as "My idea of myself is rather my own idea of my neighbor's view of me". These social change efforts gave rise to modern advertising, public relations and contemporary mass-consumer culture.
Today, systemic analysis and planning takes place in exclusive clubs, private forums, think tanks, casual encounters and other settings. One such venue is the long-standing, all-male Bohemian Club annual gathering, in which George W. Bush, Henry Kissinger, the Chairman of Dow Chemical and other corporate and political elites were recent participants.
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