A Little Story about Corporate Dominance and the Occupy Movement

Long illustration about corporate dominance

Of course not. The system is following the wrong goal. That's what is causing all those side effects. Let's take the time to analyze the problem using the above illustration as our starting point.

How can we solve the corporate dominance problem?

The Occupy Movement has made extraordinary gains. It has shifted attention from the Great Recession and a host of lesser issues to excessive income inequality, which is a far more important issue. But more than that, the movement has put its finger on a deep underlying trend: corporate dominance. The About page on OccupyWallStreet.org describes the problem this way:

Occupy Wall Street is... fighting back against the corrosive power of major banks and multinational corporations over the democratic process, and the role of Wall Street in creating an economic collapse that has caused the greatest recession in generations. The movement is inspired by popular uprisings in Egypt and Tunisia, and aims to fight back against the richest 1% of people that are writing the rules of an unfair global economy that is foreclosing on our future. (December 3, 2011)

The illustration above used arrows of influence and a single feedback loop to explain the source of this "corrosive power," why it has grown so strong, and its inevitable effects. This exposes the structure of the problem at the fundamental level. That's important, because unless movement members understand the root cause and the main feedback loops involved, we will be unable to devise a solution that works. We will instead fall back on more superficial solutions. As in the past, these will not work because they fail to resolve the root cause.

That root cause is what drives the Corporate Dominance loop to grow to incredible strength, until it reaches limits of some type. Loop growth is now bumping into its limits, which is why the movement appeared. It's an effort to draw attention to the real problem and solve it.

So what exactly is the main root cause?

First, let's remember that corporations are an artificial life form created by people to serve people. Corporations are a type of social agent. Other types of social agents are governments, clubs, religions, families, and political parties. An agent is any entity with a goal and the ability to pursue that goal. Social agents are the building blocks of social systems, so correct agent design is crucial.

Second, corporations have done society plenty of good. In fact corporations and their managers are basically good. It's their goals and the side effects of pursuing those goals that's not so good. If any hostility is to be directed, it should not be toward corporations but toward the fact they have the wrong goal. That was the key point of the systems thinking style illustration. As Upton Sinclair reminded us: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

Here's a hypothesis for the root cause of the undesirable side effects diagrammed above, as well as many more:

The main root cause is mutually exclusive goals between the corporate life form and Homo sapiens. Large for-profit corporations now dominate the planet. Their goal is maximization of short term profits. The goal of people is to optimize long term quality of life, for those living and their descendents. These goals are so incompatible they cannot both be achieved in the same system, as the above story illustrated. One life form will win and one will lose in the struggle for dominance.

Given this root cause, what solutions will work?

The facts of life in the corporate jungle are harsh. He who makes the most profits wins. The iron law of Survival of the Fittest cannot be changed. Any for-profit corporation in a competitive market who does anything but maximize profits will sooner or later be selected out of the system. They will whither and die. It's a system designed to produce highly competitive ruthless winners.

Given this basic fact:

1. Will repealing Citizens United in the US and similar actions in other nations solve the problem? No, because that does not resolve the root cause. Large for-profit corporations were already dominant and highly destructive (via side effects) before Citizens United. That decision was merely one more drip in the "drip by steady drip over time" that has tipped the system to favor corporations over people.

2. Will campaign finance reform solve the problem? No. That too does nothing to resolve the root cause. Campaign finance reform has been tried again and again. It's made a small difference. But then the corporate life form evolves to the new reality and continues its dominance tactics.

3. What about Corporate Social Responsibility (CSR) campaigns? Can that work? No again. CSR has influenced plenty of large for-profit corporations. But nearly all take up CSR only as a token gesture. They greenwash. They trumpet the little things they've done to help others because that's good for business. But behind that facade nothing has changed because their goal has not changed.

4. What about repealing corporate personhood? Won't that work? Not quite. It will help some and is a great start. But it would not change the way business managers choose between what's good for society and what's good for profits. The consequences of that decision are side effects like those listed above and on page 2.

Let's examine point 4 a little more. Corporations were causing detrimental side effects long before (in the US) they received personhood rights in the 1886 case of Santa Clara v. Southern Pacific, where "the Supreme Court ruled that the Fourteenth Amendment equal protection clause guarantees constitutional protections to corporations in addition to natural persons." Here's one example:

"I hope we shall ... crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country." ~ Thomas Jefferson, November 12, 1816

and here's another example:

"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . . corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed." ~ U.S. President Abraham Lincoln, November 21, 1864

Repealing corporate personhood would not change what Jefferson and Lincoln foresaw, because the corporate life form doesn't need personhood to "bid defiance to the laws of our country" and "prolong its reign." All it needs is money and the profit motive.

Here's another example:

"The real difficulty is with the vast wealth and power in the hands of the few and the unscrupulous who represent or control capital. Hundreds of laws of Congress and the state legislatures are in the interest of these men and against the interests of workingmen. These need to be exposed and repealed. All laws on corporations, on taxation, on trusts, wills, descent, and the like, need examination and extensive change. This is a government of the people, by the people, and for the people no longer. It is a government of corporations, by corporations, and for corporations." ~ President Rutherford Hayes, the eventual winner of the tainted 1876 US presidential election, which was settled by corporate dominated secret negotiations. Hayes wrote these words later in 1888.

Repealing corporate personhood will not solve the corporate dominance problem. To do that one must strike at the root.

Diagram of causal chainEven legally preventing corporations from doing all sorts of things (like lobbying and political donations) will make little difference, because their owners (the rich), their many employees, the news organizations they control, and the many writers, talk show "experts" and think tanks they sponsor can just do it for them. Solutions like the above are examples of superficial solutions. They attempt to resolve intermediate causes rather than the more difficult to find root causes.

Let's ask a few WHY questions about the above four popular solutions: (1) Why was the Citizens United case brought to court? (2) Why is there so much corporate money in politics? (3) Why are corporations socially irresponsible? (4) Why do corporations want personhood so strongly? The answer to all four questions is because that maximizes profits. The root cause of profit maximization is what caused all four of these intermediate causes.

So wouldn't it make sense to focus our efforts on the root cause? Shouldn't we take heed of what the author of Civil Disobedience, Henry David Thoreau, wrote in 1854?

Thoreau quote

How can we best resolve the root cause of the problem?

This is straightforward. If corporate and people goals are incompatible, then one or both goals must be changed until they are in agreement. Since democracy is of the people, by the people, and for the people, it makes little sense to compromise and change the goal of people.

Therefore the solution is to change the goal of the corporate life form to one that aligns with that of people. As long as the top goal of corporations remains unchanged, the system will behave about the same because the goal of the dominant agent in a social system determines the general behavior of the system. This brings us to what will be:

The New Corporate Goal

The goal of corporations is providing the goods and services needed to optimize quality of life for people in a socially, environmentally, and economically sustainable way.

There will be considerable change resistance from the corporate life form (and their chief ally, the rich) to changing their goal. But that too has a root cause that can be found and resolved, because knowledge is power.

Suppose we overcame change resistance and then resolved the root cause. What would the new system look like at a high level of systems thinking? Page Two offers a possible answer.


Here's the Politico editorial cartoon by Matt Wuerker that inspired our own illustration. It contains a single feedback loop.