This is a difficult book to review. Not because it is poorly written, far from it, it is well written and easy to read. But rather because it is a book of three parts. The first part, where he analyses the source of the problem is well written and researched. The middle and last part are unfortunately much poorer.
In the opening third of the book Joel Bakan describes the genesis of corporations. How the development of ‘limited liability’ and the amalgamation of capital permitted large scale projects, often withe the public good in mind. Though many of the early changes were recognised, at the time, as dangerous (as they were seen as potentially interfering with the freedom of the market) with the risks of promoting rent-seeking behaviour diluting the power of shareholders. He noted Adam Smith’s concerns that “negligence and profusion” would result from the development of corporations and recorded other concerns at the time that limited liability would “enable persons to embark in trade with a limited chance of loss, but with an unlimited chance of gain” encouraging “a system of vicious and improvident speculation“.
The regulatory changes that were necessary for the development of corporate capitalism are well described and referenced. The risks were also well recognised and described. The fact that most of these risks have come to fruition is clearly demonstrated. So far so good. The book is a useful text with valuable information and insights. Then the book changes and deteriorates.
The middle portion takes the theme of the corporation having ‘personhood’. This portion concerns the negative social and environmental impacts of corporate activity and the corporation acting as a “externalizing machine” as it transfers the costs and negative impact of its activities onto others. While the examples given are valuable and well researched it quickly changes to viewing coroporations as “psychopathic personalities”. At this point we drop into psychobabble which does not lead us much further forward. We are in a circular loop that ‘bad things are done by bad people’ and, in as much as corporations can be thought of as persons, then ‘corporations doing bad things mean they are bad people’ or “psychopaths“.
The final portion, which looks at possible solutions, is the most lacking. While he recognised how corporations have used regulations to ensure close links to government, to benefit from rents from government agencies, and to protect their capital from free competition he simple proposes more, but different, regulations to control the situation. He does not seem to be aware of alternative strategies which may promote commerce and free markets. He hopes bigger, more powerful, nation states (taking more areas under public control) will counter the worst excesses of crony capitalism. Though he himself noted “Without the state, the corporation is nothing. Literally nothing” he did not take the logical steps in questioning how to weaken and reduce the state’s role in all of this.
I suppose we could excuse some of the latter limitations as the book was written in 2004 before the global crash which saw nation states rushing to prop up their banks and financial institutions with public money. Large financial organisations, once again, made sure that states sheltered them from the free market. Banks being deemed “too big to fail” were bailed out by taxpayers proving George Bernard Shaw right when he described the situation as ‘socialism for the rich and capitalism for the poor’