This is the first in a series of articles analysing
corporate personhood and the standards to which we hold corporations. Since
Dartmouth v. Woodward in 1819, private corporations have been viewed as having
many of the same rights as you or I, prompting one to look at the state of
business around them and ask simply, what kind of person are you?
Before we
even embark on this journey, I want to make one thing abundantly clear. Let’s
dispel any concerns that this article is going to be nothing more than a rant
against western capitalism – I’m far too invested in the system to call for
something that brash. I’m an MBA and a management consultant, so at this point,
one can assume that my education and current business practices have
sufficiently brainwashed me. However, my mind as of late has been having a lot
of fun playing around with this metaphor and, hopefully like you, I’m curious
to see where some of these questions will lead as we hold businesses up to the
same scrutiny and judgement that we do normal people.
What Kind of Person Are you?
Like a ray
of sunlight breaking through the clouds after a long storm, a child is born.
However, this child is unlike those that immediately come to mind. 10 fingers
and 10 toes are no longer our top concern. Instead, we investigate the
management team, revenue forecasts, go-to-market strategy and operating
policies. This child is a corporation, and while they may not be flesh and
blood, in many ways, the moment that a business is registered and on the books,
they already have more rights than any normal new-born.
Just as
thousands of babies are born each day, so too are thousands of start-up
businesses. Some are brought into the world in rather deplorable conditions –
garages, basements, and pubs - but nearly all with a common goal: to grow and
thrive. In many ways, early start-up businesses are a lot like infants; they’re
a little awkward and clumsy, don’t fully understand the world around them, tend
to be a serious liability for their parents and initially, don’t do much other
than whine and crap themselves. However, when we play around with the corporate
person metaphor, some stark differences arise between the early days of a
business and the early days of a child. Some of these differences are laughable
and clever, but others are downright concerning.
If corporations are persons, then we should be
alarmed by the infant mortality rate (IMR).
Pending on
which statistic you choose to pull from your ass, startup failure rates are
quoted as anywhere from 25% in the first year, to around 50% within 5 years, or even up to 90% in the case of tech companies (hang
your heads in shame, you deplorable nerds). The exact number doesn’t matter, but what does is the fact that even
the countries with the highest IMRs in the world (Afghanistan: 12.2%, Mali: 10.9%,
Somalia: 10.4%)
still come nowhere near the morbidity rates of our little corporate people.
Looking to
literature on IMR, we see a number of consistent issues involving endogenous
factors (mainly biological in nature, affecting the foetus), however, also a
number of exogenous considerations (the surrounding environment). Crowding
& congestion correlates with a higher IMR do to the lowered sanitary
conditions and higher competition for basic resources. Nutrition is important,
both in quantity of nourishment and in the quality that the child receives.
Access to basic medicines can be crucial in times when an infant falls ill and
requires life-saving technology. Lastly, illegitimacy of birth can cause social
burdens on the mother and community, leading to neglect and poor health.
Again, if
we take the corporate metaphor to the extreme, we can assume the following
conclusions:
·
The
small business space is more congested than the highest density cities of India
·
We
are funding our start-ups with the equivalent nourishment of a minimal amount
of the worst infant formula money can buy, mixed with tainted pond water
·
Our
professional aides, start-up guides and business-helping technologies are on
par with medical advances from the Victorian era
·
Entrepreneurs
are fickle, deadbeat moms and dads that are nearly always starting new ventures
in the equivalent of broken homes
Should we
be holding our entrepreneurs to higher standards when it comes to the
management and development of small businesses? Alternatively (or
additionally), should our governments be working to improve the surrounding
environment for start-ups by providing greater access to funding, support and
guidance then is currently available? If corporations are persons, then we’re
neglecting our youth.
If corporations are persons, then why do we
trust infants with such large responsibility?
Let’s
assume for a moment that your small business does not become a statistic. You
survive the cull and manage to grow your infant into a baby. How many babies do
you know that own land? When was the last time you saw a three year old sue one
of its colleagues?
At the core
of these questions lies a harsh reality: we give young corporations far too
much power with far too little oversight. Once a business flourishes and grows
into an adult behemoth, we can trust them to understand and play by the rules
(… right?), however, in early days, why would we expect a young organization to
know everything about law, management or accounting? Many of these businesses
are still in developmental stages.
Therefore,
much like we pamper, train and restrain our young, why not put corporate
persons through the same rigorous education and slowly growing responsibility
regime? While I’ve typically been one who’s all for learning how to swim in the
deep end, looking back to our first question regarding how frequently start-ups
fail, there might be something to the concept of forced entrepreneurial
education and limited power in early business phases.
Why are parents held accountable for the
actions of their biological children, but not their corporate children?
Call me
crazy but the concept of limited liability seems completely bonkers. I know
that this entire series of articles is about how corporations are persons,
however, these organizations don’t actually have sentience themselves.
Therefore, when someone screws up, we can’t just blame the company; odds are
there was some significant human decision making involved that deserves a good
finger pointing or two.
If a young
child were to pick up a weapon and injure another person, we wound find the
parents guilty of negligence and improper oversight. So why is it that when
corporations pillage their way through society, we don’t point the finger at
their parents? Of course, in cases of extreme corporate malfeasance, we have
seen a number of white-collar criminals be brought down. However, in the
absence of massive personal wrong doing or illegal behaviour, we still have to
ask who takes the fall when a corporation screws up. Somebody designed that
part, somebody signed that contract, somebody authorized that product launch
and somebody screwed up.
At bare
minimum, if we’re not going to blame the parents, can we at least do a better
job of punishing the child? Where is our equivalent of corporate juvenile
detention and what would it look like to lock up a company for a few years?
