Chad Perrin: SOB

25 June 2008

Corporate Responsibility

Filed under: Liberty — apotheon @ 12:38

The corporation as a legal entity and an economic institution is a big chunk of what's wrong with the world. There are a lot of statements that could be made in support of that, a lot of arguments to be offered, but right now I'm just going to focus on one in particular: the problem of corporate responsibility.

In a sole proprietorship, the owner of the company is the ultimate sole determinant of company policy. He or she can make any decision about how the business should deal with matters of internal policy, marketing, product and service development, and conscientious coexistence with the rest of the world. The sole proprietor is the final arbiter of matters of conscience, and he or she must live with the decisions he or she makes. Period.

When a corporation is created, it becomes a legal entity in its own right. The "owners" become "shareholders", with stakes in the company's success. An executive is appointed the task of making the sorts of decisions that a sole proprietor would likely have made, and the shareholders do not simply sit around making such decisions themselves. Their decision-making power is mostly related to purchasing and sale of stock, and appointment of a Chief Executive Officer.

The CEO's job — his or her responsibility — is primarily to the success of the corporation as an investment of the shareholders' resources. He is legally beholden to such success. He has an ethical mandate to serve that end, and anything that stands in the way of that end is secondary at best. Period.

Shareholders are thus insulated from responsibility for the consequences of the corporation's policies, both personally and legally. They not only don't have a hand in the day to day decisions that might keep a sole proprietor up at night worrying about issues of right and wrong, but they shouldn't know — that's much of the point of having a corporation in the first place. They also have no direct legal worries about responsibility for the corporation's policies as defined and enacted by the CEO.

A common statement in online discussion in the last few years, in my experience, is that a CEO has a fiduciary responsibility to the shareholders. One of the more common formulations of that is "The corporation has a responsibility to the shareholders." This kind of statement is often immediately followed by a reminder that the law actually enforces this responsibility, and if a corporation's officers act in a manner inconsistent with trying to provide the greatest return on investment legally possible (even to the point of pushing the envelope of legality), they can be held accountable.

This sort of thing is usually brought up in defense of corporate policies in pursuit of market domination, such as the ruthless manner in which Microsoft seeks to shut others out of markets, crush potential competition through dirty tricks, and double-deal with its own customers. Bring up the way Steve Ballmer makes specious threats about software patents violated by software that existed before Microsoft did, and some chucklehead will point out the man's fiduciary responsibility to "protect the intellectual property of Microsoft in the interests of its shareholders". Never mind the obviously underhanded scare tactics and strongarm bullying. When faced with a situation like that, your choices are:

  1. Abide by the responsibilities you accepted when taking the job of CEO, but act in an otherwise unethical manner, because that unethical behavior isn't as legally actionable as failure in your fiduciary responsibility to your shareholders.

  2. Act in an otherwise ethical manner, but forsake your fiduciary responsibilities, which is not only unethical to some extent itself but also a great way to open yourself up to legal action.

  3. Take the high road, and resign, thus violating no ethical limits on your behavior at all.

Notice Ballmer is still CEO of Microsoft.

It's corporate law that creates this problem — and "corporate responsibility", for all its scapegoating value as an excuse, is the problem. It not only creates conflicts of interest and ethics, but also makes sure nobody really has to believe that he or she is to blame for any of the bad things that are done in a corporation's name. As long as they do what they're supposed to do as shareholders and/or officers of a corporation, they are doing "the right thing" by some measure; if the wrong thing ultimately gets done, it's not their fault. Really.

Even worse, that's true a lot of the time. It's entirely possible that everybody involved does the right thing, within the limited framework of their own role to play, but that it will all add up to some very wrong things being done. It's the sort of paradoxical case of both nobody and everybody being to blame that can only exist when elaborate mechanisms for separation of individuals from personal responsibility for their part in greater actions are put in place. In other words, it's the sort of situation where everyone being diligent and ethical to the best of their ability can lead to evil ends only because of the existence of that fictional entity, the "corporation".

Corporate responsibility applies to far more than just CEOs, of course. Every officer, every functionary, every low-level intern labors under the yoke of corporate responsibility, and contributes as cogs in the cold, juggernaut clockwork of the amoral corporation. All of this adds up to a tremendous, pervasive wrongness in the socioeconomic system within which we live — but is just one drop in the bucket of what's wrong with corporate law, and of how corporate economies interfere with the workings of a free market, an ethical criminal justice system, a political system of checks and balances, and myriad other influences on our way of life.

13 Comments

  1. [...] Chad Perrin: SOB » Corporate Responsibility We have met the enemy, and they are “we”. (tags: corporatism libertarianism) Tags: corporatism, dictionary, libertarianism, microsoft, poetry, reference, rhyme, tools, vista, xp [...]

    Pingback by links for 2008-06-26 -- Chip’s Quips — 26 June 2008 @ 01:33

  2. It's all about limited liability. A little know fact is that the corporation known as "government" does not have any authority over the People unless the people volunteer. They assume you have wittingly done this when you asked for a social security number. It's not viewed as a benefit, it's limited liability proffered and if you accept it you are duty bound to everything else this corp does, such as income tax and PATRIOT acts.

    The limited liability isn't just that you don't have to pay for your cat food after you retire, it includes "laws" that dictate what "rights" you have against your "employer." You give up the inalienable right to contract in exchange for the "government" intervening on your behalf as prescribed by "law."

    It's an immense fraud. There are no "officers" of government occupying any office created by any constitution. They are "employees" of an incorporated "government." A judge is not a judge, he's an administrative magistrate playing judge. The president is not president, he/she is the CEO of said corp. As a result one of the most important guarantees of your liberties is completely absent: separation of powers.

    I ran all this by the supreme court, in a tangential way, and they saw fit to call off the dogs. I know people don't want to believe it, but the "government" you see is actually the most successful criminal enterprise in the history of the planet.

    Comment by cat — 26 June 2008 @ 06:47

  3. [...] Chad Perrin: SOB » Corporate Responsibility We have met the enemy, and they are “we”. (tags: corporatism libertarianism) [...]

    Pingback by links for 2008-06-27 -- Chip’s Quips — 27 June 2008 @ 01:35

  4. Cat: I couldn't agree with you more, unfortunately most of has had a social security number asked for us by our parents.

    Comment by Joseph A Nagy Jr — 28 June 2008 @ 01:03

  5. Joseph, that is a matter of fraud. The closest excuse they can come up with is "well, you didn't cancel it when you came of age..." But they never reveal all terms and conditions, such as what does "I am a citizen of the United States" means on a driver license application.

    New York is notorious for being hard on people who try to skip out on jury duty. Many people try to make lame excuses and end up paying fines and serving anyway. Well, I got out clean. The sent me the form and it had one of those jurats on it, so I sent a letter asking them what they meant by "citizen of the United States." They sent back another form, this time I shot back specifically; is this a term of art, or a term of law. If law, where is it defined. I further stated if it was in a statute, then it didn't apply to me, because (we all know of course!) statutes are not law, unless of course one IS one of those statutorily defined "citizens." (there' a HUGE "catch 22" in there...) That status MUST be entirely voluntary, to be in accordance with their own 13th amendment. Notice New York is asking me if I am a citizen of the UNITED STATES!?

    Never heard back from them, that was years ago. But they assume if you are asking for a benefit (SS) you have "opted" in to the whole vile game. But again, no terms and conditions are given, such as you waive all access to article III judicial proceedings. (found in title 28) That, in a nutshell, is actionable fraud.

    They know the criminal game they are playing. Lawyers have subverted the entire system and turned it into nothing more than a money making machine. It sure ain't "government."

    Funny that Chad is D&D fan. I use that game as an example of how the law works. Sure, by their statutes, regulations, federal register etc there's this "income tax" thingy... but the first question is does any of that even apply to me? (no) When I'm explaining things in front of my white boards I tell listeners that it's a game of dungeons and dragons, and I sure have violated the rules thereof, but who says I can be compelled to play dungeons and dragons in the first place?

    If I can't do a thing to you, and you cannot do it to me, then nobody has any authority to gather collectively and do it to everybody or anybody.

    Really, government behaves no differently than if you suddenly got a letter in te mail stating you are in violation of rule 33(b) of the Mickey Mouse Club, and therefore owe a fine and risk imprisonment. I never joined any Mickey Mouse Club?!?? But people see officious stationery and fear sets in. You can easily tell them to stuff it. Just be ready to call bullshit on 'em, should they drag your butt into one of their fake courts. (again they assume you agreed there would be no judiciary... it was right there on the SSN contract.. didn't you see it?) riiiiight.

    I add is an infant competent to enter an agreement or contract? Gee, maybe our educational standards are higher than we think!

    What they ply is executive-branch "administrative law," which are really private, corporate bylaws, ("owned" by the BAR) in a venue in which you are presumed to have waived all inalienable rights.

    I'm editing a book on this subject atm.

    Check it out, there's all manner of "court decisions" in which a judge says if you want your rights you have to first know them, then fight-fight-fight to the death for them. One supreme court justice once said along the line of 'everybody sitting in a prison in America today volunteered their way in,' meaning DIDN'T know the operative presumption the lawyers have crafted for themselves.

    Comment by cat — 29 June 2008 @ 07:52

  6. Chad: I'll use the "preview" feature more diligently in future... 8-0

    Comment by cat — 29 June 2008 @ 07:56

  7. [...] Corporate responsibility lies with shareholder profits — not the actual quality of software. This means that any time the ability to generate revenue or reduce costs conflicts with secure coding goals, the secure coding goals are likely to suffer. Considering the value of good programmers who know how to write secure code, that means that severely limiting the money the human resources department is authorized to offer for new hire salaries is normal behavior, which in turn limits the ability to hire the best programmers. [...]

    Pingback by 10 security challenges facing closed source software | IT Security | TechRepublic.com — 19 August 2008 @ 01:58

  8. Corporate law is a complete and utter joke. The principles held by today's corporations is an insult to the working class who, in most cases, made these giants what they are today.

    Comment by Brett Dugan — 19 February 2009 @ 11:54

  9. [...] distributed completely changes that dynamic, as does the way the software industry (influenced by corporate culture, the environment engendered by strong copyright law, and other social and economic environmental [...]

    Pingback by Chad Perrin: SOB » Software design is not architecture. — 22 February 2009 @ 03:21

  10. [...] institutionalized, in some sense ethical, requirement for what amounts to sociopathic behavior (see Corporate Responsibility for more detail) as the most powerful entities in the economy. As an organization built around such [...]

    Pingback by Chad Perrin: SOB » We're asking the wrong questions. — 17 March 2009 @ 03:32

  11. I just came across this post because I have an interest in the legal responsibilities of corporate execs. After the Enron thing, it seemed that CEOs and other officers were being held more financially responsible for their role in reporting financial data. I've been talking with a criminal defense lawyer in Mesa, AZ, and it seems the issue is never black or white. There are laws and financial goals to think of at the same time. However, I always wondered how new rules of executive responsibility would play out in practice. I like what you said about how some of them will see their new duty as being in conflict with their goal to protect intellectual property in the interests of shareholders. This is not trivial, as the primary goals of a corporation are a real force weighing on the execs. I am thinking that, if an exec has to choose between being ethical and being responsible to shareholders, they are going err on the side of the signed check. And they didn't get where they are without learning to quickly prioritize to be more effective at reaching those goals.

    Comment by Lorrine — 15 June 2009 @ 02:02

  12. [...] short, Corporate Responsibility mandates that all decision makers and agents within public corporations must assume as their first [...]

    Pingback by Corporate ethics versus security ethics | IT Security | TechRepublic.com — 1 June 2010 @ 10:01

  13. [...] expect me to forget why there’s no such thing as a trusted brand? The intrinsic principles of corporate responsibility ensure that the moment sufficient market gains can be had to justify it to the board members, the [...]

    Pingback by Should Intel decide what software we can run? | IT Security | TechRepublic.com — 17 September 2010 @ 06:10

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