THE BIRTH OF THE CORPORATE MACHINE

“There are people you should be interviewing who are far more hopeful than me,” says Meg Wheatley, author of the paradigm-busting Leadership and the New Science. Her eyes narrow slightly and her short-cropped red hair seems to have a wired intensity as she gauges my response. Just a few minutes ago at the Shambhala Institute's Authentic Leadership conference, she was relaxed and smiling, riffing with the small group around her on the four karmas in Buddhism. Now, as I explain to her the topic of my inquiry, she looks almost forbiddingly stern. “I just think that the amount of change that is required to make businesses work from values that are truly sustainable—like community, health, caring, trust—is not possible within the existing machine. The whole system is so large and destructive.”

Her response goes to the heart of the matter—or perhaps I should say, to the lack of heart in the matter. The whole problem is the machine—not simply the grinding gears of a globalizing economic system but an entire way of thinking, or level of consciousness, that views everything in mechanistic terms. This mindset was the catalyst for the ingenious inventions of modernity, which catapulted a significant portion of humanity out of the superstition and poverty of the premodern world. The first scientists of the Western Enlightenment—geniuses like Newton, Descartes, and Bacon—studied nature to learn the workings of God, the ultimate watchmaker. Over time, God dropped out of the picture as the theory and practice of objective scientific inquiry drained the sacred from the material world, leading to the assumption that the entire physical world (ourselves included) is a soulless machine. Freed from thralldom to Church dogma, we human beings applied our God-given intelligence to creating in our own right. This liberated creativity was the oil in the engine of the Industrial Revolution. And the machine was the perfect metaphor for the age.

The creative explosion of modernity led to exploration on all fronts—and the capitalist corporation was born out of one thrust in that exploration. Many of us may recall from history class that the United States was settled by a corporation, the Massachusetts Bay Company, which was chartered by King Charles I in 1628 to colonize the New World. These commercial enterprises came about when the ruling monarch of the most aggressively trading nations—Holland, England, and Spain—granted a charter for a specific purpose and length of time to merchants who were seeking investors for global ventures that were too costly for them to finance themselves. Nation building and capitalism went hand in hand: in return for the charter, these companies expanded their governments' power through colonization, annexing resources (including slave labor) and markets in which to sell goods.

The corporation is the financial mechanism that built the modern world. Originally, these business entities served the public good—creating, for example, the railroad systems that made it possible to trade merchandise efficiently all over the world. Because corporations were granted a charter, over time they began to be recognized as legal entities in their own right—legal entities that could protect investors from any wrongdoing committed by the corporation. If these often-risky ventures went awry, neither the investors nor the business leaders could themselves be sued: their liability was limited to the money that they put in, which made investing in a corporation very attractive. However, it also made fraud very tempting. Even the first corporations were plagued by scandal, as unscrupulous “jobbers” (the great-great-great granddaddy of today's stockbrokers) sold shares in fake companies to naïve investors. Over the intervening centuries, as capitalism took off, its purpose changed from public good to the amassing of private wealth. The engine of capitalism, the business corporation, gathered a tremendous momentum and power in the nineteenth century—a time of enormous enterprise and social inequality.

The protection of shareholders' investment became the sole mandate of the corporation. In one legal case after another, the courts stood on the side of capital, ruling that the corporation's responsibility is almost exclusively to the shareholders who own it rather than to the employees who work within it or those outside who are affected by it. Now, with markets wired around the world, the pressures of stock buying and selling place a ceaseless demand on publicly traded corporations for short-term profits via dividends or higher stock prices. This legal mandate to earn profit for owners/shareholders is the reason so many corporations seek cheap labor overseas, abandoning the towns and communities where they were founded. Short-term profit drives large corporations to buy up small companies and inventions that “threaten” them with potentially costly change—and then do nothing with those inventions themselves. It's the reason British Petroleum, which is doing more environmentally than most in the oil industry, will inevitably bid to drill along Alaska's Arctic Slope, despite the fact that doing so will very likely destroy the wildlife and aboriginal culture living there. It's the reason Pfizer, which has substantial community service programs, invests little or nothing in attempting to cure simple diseases that kill millions worldwide, like malaria and tuberculosis, but will invest an enormous amount researching baldness because they can make a killing by selling its “cure” to the affluent.

Well-intentioned business leaders are actually prohibited by this legal mandate from being socially and morally responsible. Bob Hinkley, formerly a partner at the prestigious law firm of Skadden Arps, took a hiatus from his practice after recognizing the frightening truth of this. He describes the effect of the corporation with a simple but apt analogy: “If you put a whole bunch of children in a schoolyard, and don't restrict them in any way, it would work for a while, but then the bullies in the group would start to take over, and then you would need to have rules. In the 1850s, we started to introduce this new kind of person into the metaphorical schoolyard—the corporation, which is basically an entity in which a whole bunch of people get together backed by millions and sometimes billions worth of capital. They became the bully in the schoolyard.” Hinkley points out that at this point, corporations are capable of outmaneuvering the legal system: they have well-financed lobbying to create rules that they can live with; they can readily move to jurisdictions with looser laws. Sometimes, they aggressively flout the law, risking prosecution because they have enough money to engage in long drawn-out legal battles—and often they can even afford to lose. He likens today's corporation to Hal, the computer in 2001: A Space Odyssey, which placed its own survival above that of the crew and almost killed everyone on board before its plug was pulled. “It's like that,” Hinkley says with a short laugh. “They were programmed incorrectly. We've introduced this thing into our society that has no bounds on its pursuit of self-interest. It naturally looks for ways to make money. Sometimes it finds legal ways, but with no restrictions on its drive to make money other than what is in the law books, it often tries to achieve its goal in ways that harm the public interest.”

The corporation, writes Joel Bakan, author of The Corporation, is “an externalizing machine.” Corporations have never had to account for the damage that they cause to third parties—their workers, communities, the environment, consumers. In fact, there is a neat economic term for all of this: “externalities.” Externalities are figured into the cost-benefit analyses that all corporations use to make business decisions. Is it cheaper to replace faulty equipment or pay damages to workers who might be injured? Is it more profitable to violate environmental laws and risk a fine or to retool a plant to meet emissions standards? These choices often cause irreparable harm to human beings and society at large. Bakan writes, “Every cost [the corporation] can unload onto someone else is a benefit to itself, a direct route to profit.”

The logic of this economic machine seems staggeringly flawed: that if each individual person and corporation shamelessly pursues his, her, or its own self-interest, a positive outcome will be created for all. It's become more than clear that it doesn't work this way. But this logic is quintessentially modernist. Our modern mechanistic mindset created capitalism, the corporation, and our courts. However, it cannot deal with the level of complexity resulting from the global interconnectedness that it has been instrumental in constructing. Mechanistic thinking is notoriously reductive and rests on simple linear chains of cause and effect. Like any mechanical device, it processes in one direction, along one line of reasoning, oblivious to anything that gets in the way. As Peter Senge, author of the classic The Fifth Discipline and founding chair of the Society for Organizational Learning, tells me, “You can't approach a business as if it were a machine and expect it not to operate in blind, machine-like ways vis-à-vis the larger communities and living systems of which it's a part.”

But there is another way of seeing the corporation. Senge says, “You can see it as a machine for producing money, or you can see it as a human community.” How you think about your work and how you function, he observes, are very different depending on which view you hold. Toke Møller, of InterChange ApS, agrees: “We need to wake up to understand that the workplace is a human village. It's a living place. And as we are waking up to the understanding that we are one people living on the globe, we are in a shift between two paradigms.” However, the human village in Møller's new paradigm is different from the village of the premodern world. “The village has to come back,” says Møller, “but this time with consciousness”—conscious of itself as a living system.

So, is the work of the moment to transform the entire corporate machine into a collection of corporate villages? Yes, but . . . is Meg Wheatley's answer—and the “but” is a big one. “That's not my experience of how life works,” she says. “From a living systems perspective, once something has emerged, it's very hard to change it. The big system that has emerged needs to disintegrate.” Drawing on an example from the work of evolution biologist Elisabet Sahtouris, she explains: “When a caterpillar is beginning to transform, imaginal cells from the butterfly start to appear inside the caterpillar and the caterpillar's immune system destroys them. The first response of the system to the new work, to the new models, is to eat them alive because they are a threat. And this is when the caterpillar is in its most voracious state.” Wheatley's current efforts are focused on connecting the imaginal cells of the new paradigm so that “they don't get eaten but get connected so that we can grow, we can emerge into something much more powerful. When the caterpillar finally loses the battle, it turns into a goo—a complete mess—but it's that goo that nourishes the imaginal cells that then turn into the butterfly.”

Wheatley reasonably fears that this change will only come through massive destruction and suffering. “Years ago, I learned from Fritjof Capra, the physicist and writer, that we already know how to create very powerful models of sustainability,” she says emphatically. “I know that we already know how to create high-performance organizations. So the problem is not a lack of data. It's something much deeper and much more frightening, which is that we are either getting paralyzed by the paradigm that we're in or we just don't have enough energy, enough will or courage to say, 'Enough!'” Wheatley is right. It is deeper and more frightening, because the problem is our own level of consciousness. Without realizing it, most of us are caught up in the same mechanistic mindset that invented the modern corporation. That mindset has created our sense of separation from each other and from the living systems of which we are a part.

By and large, Wheatley is walking away from trying to change the machine itself. “It's not the time for revolutions,” Toke Møller agrees. “Now is not the moment to fight against the old. We need to step away from that which doesn't work and begin to create that which works—to enter into evolution.” Møller may be more accurate than he realizes. “Revolution” is a metaphor of the machine age with its wheels and engines, and “evolution” pertains only to natural systems. And we have to evolve our consciousness beyond the machine mind that created the modern world and our modern selves.

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