"We need red blood cells to live, the same way a business needs profits to live, but the purpose of life is not to make red blood cells, the same way the purpose of business is not to exist to make profits." - R. Edward Freeman, author of Strategic Management: A Stakeholder Approach
Corporations don't breathe air, drink water or eat food, nor have demonstrated much regard for life. Yet they have great influence over creating the world we live in. This influence extends to governments, media, education and the rules, regulations and customs that shape the beliefs and behaviors of humanity.
As non-living fictitious entities, corporations have used their money, power and socio-economic-political influence to create a world that serves their interests - "A World for the Non-Living" - A world that rationalizes and perpetuates the destruction of life, health and beauty as well as the devastation of our biosphere in the name of increased profits and growth. Since the beginning of the industrial age in 1760, corporations have grown in influence and have consistently shown a pattern of elevating the economic imperative over the ethical imperative.
The corporation, as a form and structure, is relatively benign and provides a method for a collection of individuals to unify their efforts and capital to achieve a mission. Like a pot of stew, corporations are analogous to a container of boiling water. It has no flavor or character, but takes on the characteristics of the ingredients thrown into the pot. The corporate stew consists of such things as the mission, purpose, organizational structure, leadership, employees, policies, protocols, regulations, facilities and culture.
If a corporation is run by ethical, equitable, socially responsible and environmentally conscious management with a highly functional governance structure for eco-social benefit, and is supported by like-minded shareholders and customers, a corporation can do great good in the world. However, when a corporation, with the rights and powers of an immortal person, is controlled by greedy, corrupt and power hungry sociopaths whose management and shareholders rationalize the abandonment of qualitative and ethical considerations for profit and turn a blind eye to destruction, toxicity, injustice and suffering they cause, a corporation can become a dangerous and powerful enemy to humankind and the planet.
Just 150 years ago, the business corporation was a relatively insignificant institution. Today, corporations have become the dominant institution of business and impact practically everything on this planet from people, animals and plants to the quality and availability of water, food, energy and resources (e.g., fossil fuels, timber, metals, gems, chemicals) to transportation, housing, media, education, communications and the shaping our socio-economic-political system.
Prior to the 17th century, the first corporations were created as not-for-profit entities to build institutions, such as hospitals and universities, for the public good. They had constitutions detailing their duties overseen by the government. Straying outside the constitutional boundaries was punishable by law. Now corporations run the government and make the laws.
The world's first commercial corporation was the East India Company, set up by British merchant adventurers and granted the Royal Charter of Queen Elizabeth I in 1600. It shipped out gold and silver to Asia in return for spices, textiles and luxury goods. The East India Company expanded into a vast enterprise, conquering India with a total monopoly on trade and all the territorial powers of a government. At its height, it ruled over a fifth of the world's population with a private army of a quarter million.
In the 17th century, making money became a major focus for corporations. Their wealth was used to finance European colonial expansion by the imperial powers and maintain draconian control of trade, resources and territory in Asia, Africa, and the Americas.
Following the example of The East India Trading Company, over the past 400 years, corporations have conquered territories and brought in resources for the state, manipulating lawmakers and breaking laws put in place to constrain them, all the while gaining in power and privilege. History shows a repetitive cycle of corporations causing social and environmental destruction and violence. In the past, the state was forced to reign them back in through regulation. However, the gritty underbelly of regulation today generally benefits those who have the resources (e.g., money, political influence and lobbyists) to sponsor legislation and the army of lawyers and accountants required to comply with the regulatory overhead.
A substantial amount of today's regulatory environment is couched in public interest, but provides great economic benefits to large corporations that can afford the lobbying and sponsorship, while often causing significant damage to the public, entrepreneurs, small business and innovation. For example, a study by the Sunlight Foundation, which used tax data to correlate corporate investment in lobbying with decreases in taxes, found that between 2007 and 2009, Exxon Mobil, Verizon, GE, AT&T, Altria, Amgen, Northrop Grumman, and Boeing invested approximately $540 million into lobbying which resulted in aggregate tax reductions of approximately $11 billion.
As the world became increasingly industrialized, corporations gained influence and power and used it to manipulate the social, economic and political system, especially in the United States. In the 1886 case of Santa Clara County v. Southern Pac. R. Co., 118 U.S. 394 (1886), corporations were given a massive boost in their power by the U.S. Supreme Court, which recognized corporations as a "natural person" under the Fourteenth Amendment of the Constitution without argument on the point. The "ruling" relied upon to support "corporate personhood" occurred in the case headnote entered by the Court Reporter. This gave corporations not only equal constitutional rights to natural persons, but superior rights to natural persons due to corporate characteristics such as endless survivability, perpetual accumulation of wealth, and the ability to incorporate in jurisdictions with the most favorable laws, cheapest labor and lowest taxes.
The corporate agenda to control governments, the regulatory environment, the economic system and society, through their money, power, lobbying and psychological manipulation was openly articulated in the work Edward Bernays, who is often referred to as "the father of public relations." Combining the ideas of Gustave Le Bon and Wilfred Trotter on crowd psychology with the psychoanalytical ideas of his uncle, Sigmund Freud, and his propaganda techniques from World War I while working for the Woodrow Wilson administration, Bernays created a powerful campaign to influence mass behavior and create the culture of consumerism. He felt the manipulation of society was necessary to control the masses, who could not be trusted to make informed decisions. In his book "Propaganda," Bernays openly communicates the engineering of our beliefs and society:
"The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. ...We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. ...In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons...who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind."
Our government, monetary system and resources are now largely controlled by corporate interests. The largest corporations, although managed by people, are largely owned by other corporations. These corporate shareholders have historically required the board and management, under threat of being fired or sued, to take a profit-at-all-costs approach that ignores human life and happiness, the environment and social justice.
Despite the historical pattern of callous manipulation of society and destruction of the environment in pursuit for profits, we are seeing the emergence and adoption of a transformative corporate culture that is beginning to embrace triple bottom line (profits, people, planet) and ethical business practices. These companies are adopting corporate social responsibility practices, hiring sustainability officers and finding ways to improve supply chain and operational sustainability, providing fair wages as well as employee ownership, health and education programs. These companies are demonstrating that doing good for people and planet increases profits, productivity, efficiency and brand equity. Companies such as Google, Whole Foods, Patagonia, Container Store, Starbucks, Microsoft, Walt Disney and TOMS Shoes are but a few of top companies demonstrating that socially responsible practices are good for business.
We are also seeing the state and federal governments instituting laws to remove many of the obstacles for entrepreneurs and small businesses to raise money (e.g., JOBS Act), providing tax credits for renewable energy generation and energy efficient buildings, and instituting laws for Benefit Corporations that provide a "safe harbor" for boards and management who desire to balance social and environmental benefit with profit motives. There are now 28 states that have enacted Benefit Corporation legislation and another 12 states that have instituted but have not yet adopted the legislation.
Moreover, there is a rapidly growing market of conscious consumers that read labels and purchase products healthy and sustainable products from manufacturers and retailers that are socially responsible. This market is referred to as the Lifestyle of Health and Sustainability (LOHAS) market segment which is $355 billion in the United States and $546 billion worldwide. Moreover, there has been significant growth in socially responsible investing, which, according to Kiplinger, is estimated at $3.7 trillion.
Practically every area of our economy is ripe for transformation to become more sustainable, efficient and life affirming. I call this new economy, "The Regenerative Economy."
The "Regenerative Economy" affects just about every single business and call upon our society to engage in activities the cause the thriving of people and planet. According to Storm Cunningham, author of ReWealth!, "if we wish to keep growing economically, the basis of wealth must shift to renewing what we've already built, and on repairing the damage we've done to our natural resources. Such wealth creating activities - redevelopment, replenishment, and restoration - comprise rewealth. This represents a $2 trillion market."
The Regenerative Economy has the potential to be the largest economy in human history and provide the abundance to give all people pure water, nutritious food, safe shelter and clean energy while contributing to the healing of the planet's ecosystems, on which humans are dependent for their health, wealth and thriving.
There is hope that we can create a thriving, healthy and abundant world, but we have to do more than hope. We must take action to transform from the inside-out (personal change), ground-up (infrastructure, built environment and supply-chain) and top-down (government, corporations and regulatory environment).
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