Taming the Corporation

Yesterday I interviewed Rabbi Michael Lerner (see photo), founder of the Network of Spiritual Progressives. I’ll publish it in the October issue of Peace Magazine. One of his suggestions pertained to the harmful effects of corporate capitalism. The Network’s platform includes an amendment to the US constitution that would require big ones to be socially responsible. This change would require all corporations with an income over $50 million to renew their charter every ten years, subject to approval by a jury of ordinary citizens who would appraise the social responsibility of their previous record.

Not bad. I had suggested an alternative proposal myself: that every large corporation be required to appoint people to their board of directors drawn from panels chosen by a variety of stakeholders: environmental groups, their customers, their employees, and from other civil society organizations. Lerner claimed that these directors would be outvoted by directors representing the interests of stockholders.

Okay, I’d be satisfied with his approach – assuming that these juries would be open to lobbying by civil society organizations. Maybe his way is better. As he admits, this would not be a revolutionary change; it’s still not socialism. But then, I am not a socialist anyway. I see more good than bad in the effects of capitalism in the world. Yes, it encourages a crass materialism, but it does raise the standard of living wherever it is established, extending life expectancy, health, educational levels, and comfort. I think it’s pretty arrogant of people who have enough to curtail processes that are meeting the material needs of those in the world who live on $1 or $2 per day.

On the other hand, Lerner and my Leftist friends are right that corporations sometimes actually endanger the lives and well-being of people far beyond our borders. Some additional measures need to be developed to protect them, and generally to protect the environment and the allocation of resources to beneficial purposes. The Network’s proposal is a good approach, but there are others as well.

Last night I watched a fascinating TV show about a Canadian gold mining company that is beginning to destroy a village in a gorgeous mountainous region of Romania. The town has been on the skids for quite a while, with quite high unemployment, but it remains quaintly charming. The townspeople seem divided as to whether to accept the company’s offers to buy their houses to destroy them. Apparently if one single family holds out, they cannot be forced to leave and therefore the company will be unable to continue.

Gold has been mined in the area since Roman times, and there are miles of tunnels under the mountain which the Romans had dug and which remain a remarkable archaeological site. The current technology requires the use of cyanide, which would be poured into the valley to make a poisonous lake. To show the worst possible outcome of this, the documentary showed a spill elsewhere a decade or so ago when all fish and wildlife were poisoned by the cyanide, which then flowed on toward the Danube.

Despite the legal problems that remain unresolved, the mining company must feel that the project will be approved, for they are already destroying homes. Some of the former residents are happy about the opulent new houses they have been able to buy abroad, but others grieve and plan to have the graves of their dead relatives moved.

Yet the mining company could put on a pretty persuasive demonstration, claiming that the community would be more prosperous and even prettier than before. This is to be the largest gold mine in Europe and will gouge out a whole mountainside into stair-stepped layers of bulldozers. It’s hard to imagine that it won’t be left in ruins after the 17-year mining project. If they’d said it would last 100 years, the prosperity might seem attractive, but seventeen years is not long.

Now there are fights within families. Some will go, others will stay on and try to protect their community. I would stay on, I think. Actually, I would not want to live there at all, most likely, since I would be bored silly living in a rural area, but the place does have a charm that I would hate to see destroyed.

Is this a threat to the villagers’ “human rights”? I’m not sure, but I’ve been reading a Stratfor piece about a policy under development by the International Financial Corporation and the UN’s top expert on the relations between business and human rights. Harvard Professor John Ruggie. Kofi Annan had appointed Ruggie to assess the existing status of rules, norms, codes of conduct, and informal agreements on corporate responsibility regarding human rights and to recommend a clear set of rules.

As while back, the UN had already tried to develop ways of managing globalization in a positive way. In 2003 it developed a document called the “UN Norms,” which called for corporations to be considered nearly as responsible as states for the protection of human rights. However, many were dissatisfied with this. Some governments in particular did not like to have to lose jurisdictional ground to corporations, whereas corporations sometimes disliked having to become responsible for ensuring human rights in places where they lack control over the actions of governments.

Ruggie’s proposals have not been announced yet but it appears that he will change the balance again. He will say that governments are responsible for policing human rights abuses and curtailing the plans of corporations that seem harmful to human rights. According to Stratfor, this is actually a good move, since sometimes despotic leaders like to claim that they are powerless to stop corporate abuses, and these new international rules will call their bluff.

Stratfor claims that corporations cannot do as much damages as they would otherwise have done because human rights campaigners are on their cases and would raise a public outcry if, for example, the corporation took water that is needed by a local population during a drought. I don’t know whether that is true, but it’s encouraging to believe. To be sure, there is quite a growing movement to hold corporations accountable to stockholders. A week ago, the New York Times Magazine featured a story about a nun who goes to annual general meetings of Exxon, General Motors, and other big corporations and demands changes from the management. So far, Exxon has refused her demands for them to acknowledge and reform their plans regarding climate change.

So I am not convinced that Professor Ruggie’s proposals will have any teeth. He seems to think that his report’s rules will evolve into international norms, but I think enforcement mechanisms are required. So this is where Michael Lerner’s ideas could be useful. Give the juries these new standards of conduct and ask them to uphold them rigorously, withholding a corporation’s charter if it fails to comply.

What are the odds of this? Pretty damn low right now. But when the crunch occurs, public opinion may change and make it possible. There's hope.