CT: The Corporation is a unique study of CSR and offers an interesting view of corporate nature. Was the initiative behind the project academic or personal?
JB: Probably a combination of both [academic and personal]. When I first became aware of the nature of the corporation I was surprised; it was at Oxford where I was studying law. The first time I looked at corporate law, I learned that there were two fundamental principles of corporate law. One, the corporation was treated as a person and I thought that was strange, almost bizarre. The second thing I found bizarre was the kind of personality the law gave the corporation. The principle that creates the personality [of the corporation] is the best interest principle. What it says is that every action that a director or manager of a corporation takes has to be justified as being in the best interest of the corporation, meaning of the shareholder. Everything the manager does has to be justified as serving either the short- or long-term interests of the shareholders. In effect, what the law does is state that the corporation always has to act in its own self-interest. The law has created this entity as a person and imbued it with a personality where it can only act in its own self-interest.
I had done psychology as an undergrad. In psychology, I learned that a person who can only act in his or her own self-interest is usually diagnosed as a psychopath or sociopath. That was kind of when the penny dropped intellectually for me. As well, I have been, personally and politically, of a more activist nature. I was attracted to law because I wanted to do something good for the world and work for justice, not drive a BMW. I suppose my personal inclinations have always been skeptical about any forms of concentrated power and the corporation has become that.
In the mid 1990s when I was working as a law professor at UBC, I realized that we were entering a new era in terms of corporate power largely because of the dynamics of globalization, de-regulation and privatization. I thought that it was interesting that the corporation was not just a sort of business entity making widgets and providing goods and services, it is really becoming a governing institution in the world and yet we know very little about it, as citizens. Lawyers, however, do know a lot about it. I thought it would be important to share what is almost a Masonic secret as to what the true nature of the institution is.
CT: Both the book and the movie were hugely successful. Were you surprised by the level of interest that it sparked and all of the attention they received.
JB: I was surprised, the book became a best seller in several countries and it’s been published into over 20 languages and the film has gone around the world. Looking at it from the time when I started the project, I would have never imagined this level of success.
I planned to write the book, originally, as an academic book and then I realized I wanted to speak to a broader audience because I thought the message was one I wanted to share with the public. So I started to write a popular book. It was shortly after that when I met Mark Akbar who I knew as a filmmaker, not personally, who had made a film “Manufacturing Consent” about Noam Chomsky and I admired that film a great deal. I met him at a social event and we began talking, I told him about the work I was doing and he said he wanted to make a film about the book. I said that I hadn’t started writing the book and he said that I should write the book while working on the movie with him and that’s what ended up happening.
CT: Did you find that process helpful at all in your writing?
JB: It was very complicated, very different. Film is a multi-sensorial medium. I was not a filmmaker (I am a film buff) so it was very interesting. I am interested in trying new things and I jumped write into this. But yes, it did help me with my writing. My background is in academia and what filmmaking helped me with was storytelling, which the book benefited from. But the film benefited from the kind of rigour and analysis that is normally associated with book writing. I really think the book and the film benefited from each other.
CT: The film effectively goes through a personality checklist that outlines the traits a psychopath normally possesses. You said that the nature you outlined of the corporation comes from the laws and who it has to serve and how it has to serve. Do you think that the nature of the corporation is related to the legal system or the economic system or are they all entangled?
JB: They are all entangled. Fundamentally, the corporation is a legal institution and is not like you or I. It was created by law and cannot exist outside its creation by the legal system. If a group of people get together and say they want to invest in a project, they are not a corporation. They become a corporation when they are registered by the government as a corporation and are given a charter by the state that says they can operate as a corporation. What that means is that a collective entity, a group of people or investors, is treated by the law as one entity and is given rights and obligations. Corporations are treated as artificial people and can own property, enter into contracts and function in the economy. Its shareholders and directors are given certain protections from liability, so it is a very elaborate legal edifice. Once it is created as a legal entity, it has to do things. There it becomes an economic entity.
CT: Your book and movie states that the problems the corporation creates, it creates for everything around it. Many people offer corporate social responsibility (CSR) as a solution to the problems created by the corporation. What impact can CSR have on preventing and managing problems created by corporations?
JB: CSR if you actually take it seriously and talk about it genuinely is illegal. It is illegal in the sense that if a manager or director says, “I am going to not drill a well in an area because it is environmentally sensitive even though drilling that well would be legal and to the great benefit of my shareholders,” that manager would be acting illegally. Because the laws compel managers to do whatever is necessary to serve shareholders’ interests. If a manger actually puts more weight on social interests than on shareholder interests that manager is acting illegally. If that manager says that they are putting weight on social interests as a strategy for serving shareholder interests, i.e. British Petroleum presents itself as an environmentally friendly company, that’s okay. For it to be legal, it must be strategic. My problem with it is that strategic CSR creates a genuine limit on how far it can be taken, that’s the limited promise [of CSR]. The peril of CSR is that increasingly people are coming to believe that CSR can be a substitute for public regulation and to me that is a very, very dangerous belief. The suggestion is that we can trust corporations to be responsible on their own, we don’t need governments any more and, therefore, we should de-regulate; there is a twinning of de-regulation with CSR and to me that’s dangerous.
CT: You said that de-regulation along with legal decisions were what got us to this point. What were some of the reasons for such drastic de-regulation in the market?
JB: I think that if you go back to the 1980s, the oil crisis back in the early 1970s and the kind of stagnating economies and high inflation that were around, it was the solution that was proposed by many economists, such as Nobel Prize winner Milton Friedman, President Ronald Regan, Prime Minster Margaret Thatcher and our own Brian Mulroney. The belief was that the state needed to get out of the economy insofar as the state as involved in trying to protect other values.
Neo-liberalism is the term usually used to describe that and that involved three fundamental policies, which are all related: privatization, de-regulation, and the liberalization of international trade. That trilogy of ideas has been entrenched in our political and economic thinking to the point where it is almost illegitimate to speak of more government involvement in the economy in order to protect other people from externalities. Neo-liberalism derives much of its support from the simple idea that it advocates limited government, that you have smaller government. That is a myth and a lie, you don’t have smaller government, you have government and the state shifting its power from one set of interests to another. You still have government and the state creating corporations, enforcing property rights and enforcing contract rights. You need a massive intrusion by the state to have a so-called free market. You can’t have a market without a legal system, without rights, courts and prisons to put people away for violating contracts and so forth. What neo-liberalism does, it says, we want to leave all of that, we want the state to be involved and protect the interest of property, but we don’t want it to protect the interests of workers, the environment or these things that get in the way of using property to make a profit. It is a myth to say that neo-liberalism is about the state getting out of the economy; it is about the state getting out of one thing that it has traditionally done and that is to protect the public interest.
CT: There is still continued support for de-regulation and programs that tout de-regulation, such as Atlantica. Do you think that people have enough of an awareness of the dangers of de-regulation? Do think the picture people have in their minds of de-regulation is an accurate one?
JB: No, I don’t think it is an accurate picture because they derive that picture from mainstream media. The large companies, the private broadcasters, are some of the leading champions of de-regulation [and] were one of the first industries to move towards self-regulation. The advertising industry that funds the broadcasting industry also was also one of the first to move to self-regulation. These are the industries that produce our information about de-regulation and they are strong champions of de-regulation. I’m not saying that media people sit in a room wringing their hands and writing conspiracies, I don’t believe that. I do believe that there is going to be some effect on the output if the process that goes into producing the news is driven by profit and an ideological commitment to de-regulation, I think you would be naïve to believe otherwise. So, people don’t have a sense of [de-regulation].
I think what many people believe, and its not their fault, is that corporations do have the ability to be socially responsible, therefore, they can be trusted, therefore, they don’t need to be heavily regulated and that regulation destroys economic value and that it is an illegitimate intrusion of the state into people’s lives. I think that package of ideas is what people believe when we talk about these issues.
CT: So many people rely on corporations and they, as an institution, have become so deeply ingrained into our society. It seems as though we can’t get rid of them, that we need to find a way to live with them. What do you think we can do to live with them?
JB: It’s a very difficult issue and I don’t think there is any kind of magic bullet. I do think that we have to realize that as we move towards a greater role of corporations in governing our society, we’re moving away from democracy. I think part of what we have to do in our own minds is realize that we are at a bit of a crossroads and we are at a point where something that most people value, democratic governance, is actually at risk. I think people need to reactivate themselves as democratic citizens and realize that the extent to which they get totally caught up in themselves as individual islands of consumption is a dangerous place to be and if we care about the kind of society that our children are going to be a part of we need to realize that the current direction we’re going is neither sustainable nor just nor good for us. I think that if people actually understand that, we can begin to forge solutions. I’m not a utopian thinker and I’m not a revolutionary thinker, what I think we need to do is take the institutions we have that are governed by the right principles and try to make them operate in accordance with those principles.
The principle that needs to be resurrected is the idea that it is the people’s, through their democratic representatives, responsibility and right to ensure that corporations act in ways that are more likely to serve the public interest. We’ve lost sight of that idea and that’s the fundamental idea underlying the public regulatory system and that system is not working well now and wasn’t working that well 20 years ago either. But rather than giving up on the idea of democratic sovereignty over the economy, I think we need to make that idea work. For me, morally and politically, that’s the right ideal. If we live in a democracy, then our civil society should be governed by democratic ideals.
CT: You said that with neo-liberalism came de-regulation, and that de-regulation resulted a shift in the government’s focus. Where do you think the government needs to shift its focus to fix the problems that have been created?
De-regulation is effectively a form of de-democratization. If the government says, we are no longer going to be concerned about something it is basically off loading and diminishing its responsibility and its sovereignty and, therefore, is diminishing our responsibilities and sovereignty as citizens because in a democracy governments represent us. De-regulation in shrinking the government’s role in trying to advance the public interest and is shrinking our role as citizens. So I think where things need to start is to breathe some life into regulatory structures that already exist. We have agencies and laws and we need to make them work. A fundamental part of making them work is to increase their independence from industry. Talking quite pragmatically there are several ways that can be done: campaign finance is an important area, lobbying is an important area, ensuring that agencies of government exist at arms length from the industries they regulate and insuring that agencies are properly staffed, that they can actually enforce the laws that are their responsibility to enforce. Those are practical and politically doable things that can be done to severe the influence that industry has over government.
CT: A lot of what you’re saying is that there are institutions that exist that can regulate, they just need some teeth. Many of the institution you spoke of were national institutions. How can national institutions regulate corporations that now have the ability and capital to transcend the nation-state?
JB: That’s the $64,000 question. In this day and age I don’t think we can operate only at the domestic level anymore. I think we need to think about regulation at an international level as well as the national level. There are institutions that exist, such as the International Labour Organization (ILO), that have good standards and no teeth at all. I think the same thing needs to happen at the international level that needs to happen at the domestic level; that is to make the ILO have the same kind of clout as the [World Trade Organization]. There is no reason that cannot be the case. Why should a country be able to get away with flagrant breaches of ILO standards while if there is a breach of WTO sanctions you’ll be hauled in front of a tribunal and there will be trade sanctions placed against you?
Kyoto is an attempt, as much as we can argue about whether it works, it does represent an attempt by countries to get together and cooperate on a global scale. We need to work at both ends, the state is sandwiched between political currents at the international level and political currents at the domestic level and we need to realize that. As involved citizens, we need to operate at both of those levels.
On February 14, Nova Scotia Premier Rodney MacDonald finally broke his silence on the education review panel’s report and recommendations. It was his first official statement on the matter since the report’s release on January 16 and it was long overdue. His statement came the day after his education minister, Karen Casey, met with John Harker, CBU President. 
