The Corporation

Joel Bakan’s book takes a hard look at the nature of corporations, which he believes are each designed to seek “its own self-interest, regardless of the often harmful consequences it might cause to others” (2). Specifically he examines large “Anglo-American publicly traded business corporations” (3). Other nations model their corporations on the big ones, which has “important implications for the rest of the world” (3).

Corporations have “inauspicious beginnings” (5). They diverge from partnerships, where a small group of men together own and direct a firm, into a new form that “separated ownership from management” (6), which invites corruption. In 1690s London, “jobbers” sell phony stock to unsuspecting investors; most of these businesses fail. Adam Smith’s 1776 book The Wealth of Nations warns that managers of such entities “could not be trusted to steward ‘other people’s money’” (6).

The most notorious example is the South Sea Company, touted in 1710 as a way to get rich through an exclusive trade agreement with Spain. The agreement never comes to pass, and the company collapses: “Fortunes were lost, lives were ruined, one of the company’s directors, John Blunt, was shot by an angry shareholder, mobs crowded Westminster” (7). Directors are fined; some are imprisoned.