Tuesday, December 07, 2004

Corporate Interest & Bhopal

It's been a few days since the 20th anniversary of Bhopal, and I think that it's worth taking a moment to look at "corporate responsibility".

In summary, in 1984 a large quantity of a still unknown poison gas was released from a Union Carbide plant in Bhopal, India. 20,000 people died from exposure, and 150,000+ more are disabled for life, requiring ongoing medical care. Union Carbide reached a negotiated settlement with the Indian Government for some $470 million ($23,500 per death), of which only one quarter has been paid to victims. Most Indians received only $300 - $500 each for life-long injuries--a payment that covers less than one year of medical treatment. Union Carbide has to this day not decontaminated the Bhopal site, resulting in ongoing contamination from groundwater and latent exposure. Union Carbide CEO Warren Anderson has been charged with manslaughter by the Indian government, but refuses to appear before an Indian court, and the US government refuses to extradite him.

Here is an excellent site with information on Bhopal:

In 2001, Dow Chemical purchased Union Carbide, with full understanding of the history of the company. Is anyone surprised that neither Dow Chemical or Union Carbide before them has refused to properly compensate and clean up Bhopal? Racism (In the words of a Union Carbide spokesman, "$500 is plenty good for an Indian") has certainly played a role, but it is the fundamental design of the corporate structure that has driven the actions of both Dow and Union Carbide. Recent events make this very explicit:

Just last week, in a live interview on BBC news, a Yes-Man member representing himself as a Dow Chemical spokesman Jude Finisterra ("Jude", patron saint of lost causes and "Finisterra", end of the earth) made a public apology for Dow's actions since assuming control of Union Carbide, and laid out a $12 billion plan to make right the situation. It took less than 2 hours for the farce to unravel and for BBC to issue a retraction, but in that time Dow Chemical stock lost 4.2% of its value.

I have often heard companies like Dow say that they "are dedicated to serving our customers", or that they "understand their responsibility to...". Unfortunately, the truth rarely comes out: Corporations are by their very nature dedicated and responsible to only one goal: increasing stock value to shareholders. The shareholder reaction to the false Dow announcement makes this very clear: they don't care if Dow does the right thing. They don't own shares in Dow for it to do the right thing. They own shares in Dow to make money. Period. Any claims of corporate responsibility extending beyond that simple goal are pure fantasy.

The corporation is a non-sentient structure. It doesn't fell good or bad about what it does. Even its human officers aren't really concerned with good or bad. By the very structural nature of the corporation, the humans behind the corporate front are only responsible for pleasing the shareholders. If responsibility for moral or just action exists at all, it lies squarely on the shoulders of the shareholder. Shareholders make their desires very clear indeed: they must choose between money and morality--the corporation cannot by its very structure make that decision for them.

The primary problem with regulating corporate action through a shareholder sense of morality is the very size of large corporations. Small corporations, with only a handful of shareholders (i.e. not publicly traded), can be effectively regulated by shareholder morality. But when there are thousands and thousands of shareholders with little personal affiliation or association with the corporation, it becomes very easy to think that "I don't even own 1/10 of 1%", or "It's just something that my mutual fund owns". From the standpoint of societal good, this is the core of the problem with the corporate structure: responsibility for the action of a corporation is diffused so thin among vast seas of shareholders that very, very few will choose to obey their sense of morality over their drive for profit.

The corporation is a structure that, like a virus, is very nearly alive. It has its own free will, a will that is every bit as much determined by its ontogeny as that of a human's free will. The problems caused by large corporations will, therefore, only be effectively solved by addressing this fundamental structure and ontogeny.

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