Portside

Between 1927 and 1931, the number of suicides in Detroit rose fivefold. The cause was unmistakable: The stock market crash of 1929 had hit the auto industry hard, stimulating widespread unemployment in Motor City. In 1932 the Detroit Times estimated that, accounting for dependents, nearly 700,000 people were directly affected by unemployment—almost half the population of the city. Suicide often came on the heels of starvation.

Of the city’s unemployed, over one-third were known as “Ford cases,” meaning they’d been laid off by the Ford Motor Company. “The average man won’t really do a day’s work unless he is caught and cannot get out of it,” the company’s founder, Henry Ford, told an Ohio newspaper in 1931, as the Great Depression deepened. “There is plenty of work to do if people would do it.” His words contradicted reality: Here were tens of thousands of his own former employees totally immiserated, as “caught” as could be and desperate for work, but there were no jobs for them.

In truth the arrangement is specific to our time and place, and is hardly inevitable. It also has a fatal flaw, which is that corporations constantly renounce their responsibility to fulfill human needs when their profits are on the line. In moments of economic stress or upheaval, as the “Ford cases” discovered, what was supposedly a cooperative arrangement is revealed as a competitive one: Either people will survive or the corporation will.

The company’s original purpose was to increase the overall wealth of the nation by establishing an English trade presence across the globe. To that end, the enrichment of individual investors was a mere inducement, and an effective one at that. But as the company grew, in Magnuson’s telling, it abandoned its original civic mission and “began to treat the British government more like a trading partner, to be bought off, ignored, or actively undercut, than like a sovereign.” At home, it engaged in insider trading, stock manipulation, bribery, and other abuses of economic power. Abroad the corporation’s profit-motivated crimes ranged from slave trading to grain hoarding, the latter of which resulted in a famine that killed somewhere between two and 10 million Bengalis.

In Magnuson’s view, the British East India Company, like corporations in general, started off with the proper balance of profit seeking and public-spiritedness and eventually lost its way. But leaving aside the question of whether enriching one particular nation is really a “common good” aspiration to begin with, there’s also no indication that the corporation’s early activities redounded to the benefit of the average English person. The seventeenth century was a time of violent dispossession in England, as empowered landlords confiscated and privatized common lands, entrenching capitalism on the island, from whence it spread across the globe. The wealth the British East India Company brought to England largely circulated within and fortified the emergent domestic capitalist class—the same class that transformed self-sustaining peasant farmers into landless vagabonds and exploited industrial workers at home, and subjected vast numbers of people to displacement, famine, slavery, and genocide abroad.

It’s hard to find the baby in bathwater that deep. If anything, corporations have had centuries to prove they can bear the primary responsibility for providing what people need without at the same time engaging in graft, malfeasance, exploitation, or outright acts of terror. They haven’t been able to pull it off.

Magnuson ends For Profit with a list of ground rules for civic-minded corporations: Don’t undermine democracy, don’t deceive shareholders, do take care of workers and the planet, resist the urge to establish monopolies, reject high-risk short-termism to avoid endangering the economy, and so on. He wavers in his faith that corporations will abide by these guidelines on their own, stating plainly that if corporations can’t play nice then governments are well within their rights to compel them to—a welcome perspective in an era of wanton deregulation.

Where Magnuson errs is that corporations are not just disinclined to follow these rules but are structurally incentivized to break them. Profit-making is the corporation’s obligation, and the primary methods of fulfilling it all have anti-social effects: suppressing labor costs and undermining attempts at worker organization, lobbying to decrease taxes and environmental regulations, finding new market niches in the form of privatization, generating and exploiting psychological insecurities via advertising, opportunistically hiking prices in emergency situations, subverting democracy when it threatens to produce reform administrations that will obstruct any of these efforts, and so on. Any attempt at society-wide corporate reform will run up against the fact that markets compel corporations to behave in ways that are harmful to society. High-minded executives can try to fight it, but they’re fighting a losing battle.

There have indeed been moments in the history of capitalism when the corporate agenda has intersected with the social agenda, such as in the relatively broad institution of family-sustaining wages in mid-twentieth-century America, when a strong post–World War II economy organized along Fordist lines intersected with a strong union movement. But ultimately the project of ensuring human well-being and the project of profit maximization are distinct, even when they overlap. And when they inevitably diverge, any prudently managed corporation will choose itself. It has no choice: It must continue to generate profit at increasing speed and volume or risk succumbing to its competition and ceasing to exist. Henry Ford knew it, or else he would have given the marchers their jobs back in the spirit of public service.

Private enterprises often accomplish impressive feats in the process of maximizing profits, but at no time in history have they worked their miracles without also exploiting workers, undermining democracy, and ransacking the natural world. What we need now are other organizational forms—forms that might accomplish impressive and socially advantageous feats because they’re tasked with doing so, and not as an anticipated by-product of the pursuit of profit.