September 1, 2011

The Eminently Real Free Market (XXXI): Sketchy Stories (19): Corporations as “Psychopaths”

More rash language, propped up by biased sources, from Mr. Ferrara.
As it was in the 18th and 19th centuries, so it is today, even if the location has shifted: the wages that wage-slaves all over the world receive in transnational corporate gulags are hardly the result of “free” bargaining in a “free” market, but rather are dictated by employers to paupers who—as Austrians themselves admit—have no other means of survival.  And there are still wage-slaves toiling in the garment factories of New York and Los Angeles, “back now, with a vengeance,” and operating outside the law. (22. Emphasis in the original.)
Since the pre-Constantine Church “operated outside the law,” it is hard to determine Mr. Ferrara’s purpose in highlighting the legal status of the market transactions of which he disapproves.
And since Mr. Ferrara never defines either “slavery” or “wages,” we are left to guess what he means by “wage-slavery” and “wage-slaves.” We have at least indicated in outline our own view of wage determination.
One looks in vain in TCATL for the names of Austrians who “admit” that a pauper has no other means of survival except to work in a “transnational corporate gulag” at wages “dictated” by employers.
Whatever the objective reality intended by those words, that is certainly not a fair construction of the Austro-libertarian analysis of labor in countries in which capitalists from other countries have invested.
What Austro-libertarians acknowledge is that everyone’s range of choices is limited—a straightforward deduction from the undeniable truth that virtually all resources, including time, are scarce. In typical propagandistic fashion, however, Mr. Ferrara dips that recognition into the vat of his overheated, tendentious prose.
It may happen, of course, that one’s range of choices is restricted because one has been the victim of aggression—that is, the initiation of physical force. Mr. Ferrara has not, however, even with the help of his unionist and social democratic literary sources, made out any such case. Let’s look at one of them.
The reference note appended to the above-quoted sentences cites a book by Joel Bakan, a psychologist-cum-lawyer-cum-professor, a rather chilling combination of talents. Its title, as Mr. Ferrara cites it, is The Corporation. Now, he had just cited the subtitle along with the title of John Medaille’s book (see an earlier post), but for some reason he elected to omit the rather provocatively Ferrara-esque subtitle of Mr. Bakan’s: The Pathological Pursuit of Profit and Power.
You see, Mr. Bakan believes he has found the secret of the corporation: criminal psychopathology (if not sociopathology). Blithely moving from the legal definition of “person” to a psychological one, he abuses his psychology training by treating the corporation as a collective psychological patient, and then diagnoses the latter as irresponsible, manipulative, grandiose, reckless, remorseless, and superficial. Just what Mr. Ferrara ordered for his assault on capitalism.
Mr. Bakan’s imputation of criminal responsibility to the corporation is a case of the fallacy of misplaced concreteness—on  steroids, if you will pardon the slang. From the standpoint of the methodological individualism favored by Austro-libertarians, the collectivist notion of “corporate psychopathology” makes no more sense than does “corporate social responsibility,” which locution unfortunately enjoys wide currency  in our culture.
But neither should it make any sense to any mind informed by Catholic anthropology. Limited liability ought to obtain on earth, as it obtains in heaven. It may be, according to Catholic doctrine, that every individual human being, excepting Mary, comes into the world deprived of sanctifying grace—that deprivation being the essence of what has traditionally been called “original sin”—but that is not to be understood as a form of “collective guilt.”* Catholic theology teaches that Jews were and are no more “collectively guilty” of murdering Christ than Germans under Hitler were of Jews (Daniel Goldhagen to the contrary notwithstanding).
In the case of Mr. Bakan’s oversized pamphlet, we seem to have a case of one propagandist finding polemical use for another’s. It is certainly hard to find peer-reviewed commentary on this academic’s work. (We’re still looking.) Even Simon Fraser University Professor Gary Teeple, no fan of capitalism, has reservations about Bakan’s brand of corporation-bashing propaganda.
Perhaps that’s because The Corporation, along with the award-winning companion video of the same name, was intended for public consumption in the first place, a springboard for influencing “public policy.” (It nicely complements the National Labor Committee’s Zone for Slavery, which we took note of here.)
According to Mr. Ferrara, Mr. Bakan documents on the pages cited (73-75)
systematic violation of labor laws by sweatshop** entrepreneurs paying one or two dollars an hour to tens of thousands of workers, “many of them illegal, and thus powerless, immigrants.” (330 n. 33)
Mr. Bakan has merely listed various liabilities that certain corporations have been threatened with or suffered—legal suits that have been brought against them in courts of law—due to noncompliance with “labor laws.” The rhetorical force of his insinuated “indictment,” however, depends logically on one’s rational and ethical assessment of those edicts. For Mr. Bakan, if not also for Mr. Ferrara—those laws enjoy sacrosanct status, courtesy of democracy's mystique.
From our alternative perspective one must ascertain, on a case-by-case basis,  whether any aggression (as defined above) occurred—not whether someone failed to reach a bureaucratically assigned numerical goal. 
As for instances of genuine aggressionthe possibility of its occurrence no Austro-libertarian deniesthe network of peaceful co-operators called the free market can solve the problem posed by violent non-cooperators not only at a lower cost, but also at a higher quality than what passes for "defense services" as provided by the state.
Neither Mr. Bakan nor Mr. Ferrara distinguishes between the corporation as an expression of the free market and the anti-market political temptations to which particular corporation executives have succumbed, including seizing control of the state.*** Corporations, as Murray Rothbard reminds us:
. . . are free associations of individuals pooling their capital. On the purely free market, such men would simply announce to their creditors that their liability is limited to the capital specifically invested in the corporation, and that beyond this their personal funds are not liable for debts, as they would be under a partnership arrangement. It then rests with the sellers and lenders to this corporation to decide whether or not they will  transact business with it. If they do, then they proceed at their own risk. Thus, the government does not grant corporations a privilege of limited liability; anything announced and freely contracted for in advance is a right of a free individual, not a special privilege. It is not necessary that governments grant charters to corporations.
Power & Market, Chapter 3, “Triangular Intervention,” R. “Policy toward Monopoly.”
The state is, according to Austro-libertarians, the original natural outlaw. It has no resources it did not acquire by aggression. It is the ring of power that is too tempting for many of the wealthy to ignore. They must have it, wear it, and use it.
Unfortunately, the libido dominandi, for which state power is a virtually irresistible near occasion of sin, deforms the ring-bearer. To ensure the redemption of the monopoly- and privilege-seeking corporation, therefore, the state and its false promises must be destroyed.
As one might surmise, however, Mr. Bakan is no anarchist. He regards the democratic state as the source of hope. Its wars, its lies, its psychopathic behavior get off Scott-free.

* Some sources have been conveniently collected here:
Our dogma does not attribute to the children of Adam any properly so-called responsibility for the act of their father, nor do we say that original sin is voluntary in the strict sense of the word. It is true that, considered as a “moral deformity,” “a separation from god,” as “the death of the soul,” original sin is a real sin which deprives the soul of sanctifying grace. It has the same claim to be a sin as has habitual sin, which is the state in which an adult is placed by a grave and personal fault, the “stain” which St. Thomas defines as “the privation of grace” (I-II:109:7; III:87:2, ad 3), and it is from this point of view that baptism, putting an end to the privation of grace, “takes away all that is really and properly sin,” for concupiscence which remains “is not really and properly sin,” although its transmission was equally voluntary (Council of Trent, Sess. V, can. v.). Considered precisely as voluntary, original sin is only the shadow of sin properly so-called. According to St. Thomas (In II Sent., dist. xxv, Q. i, a. 2, ad 2um), it is not called sin in the same sense, but only in an analogous sense.
The Catholic Encyclopedia, New Advent, Original Sin.
** No scare-quote marks punctuate Mr. Ferrara’s use of this loaded term. For an exorcism of this particular anti-market bogeyman, see Thomas J. DiLorenzo, “How ‘Sweatshops’ Help the Poor,” Mises Daily, November 9, 2006.
*** Mr. Bakan refers to the corporatist, virtually fascist “Swope Plan” (named after its author, General Electric’s Gerard Swope) to overthrow the government of the United States in the early ‘30s of the last century (The Corporation, 19, 171 n. 34). Free market-oriented libertarians have been drawing upon this episode for their analysis of the state for decades. See our brief essay from last year, “Antony Sutton’s Inconvenient Research: A Neglected Libertarian Resource,” July 15, 2010.