When you look into the Bureaucracy, the Bureaucracy looks into you

Following in the tradition of such brave lefty "documentaries" as Bowling for Columbine and Super Size Me comes The Corporation, which concludes that if the corporation is a person, it would be a psychopath: singularly self-interested, irresponsible, harmful to others, manipulative, grandiose, unremorseful and completely lacking in empathy, all because its one and only concern is to maximize profits for its shareholders.

If only. Far from being insane, the single-minded pursuit of profits is sorely lacking in the business world, as Milton Friedman long ago observed, in his now-famous article, The Social Responsibilty of Business is to Increase Its Profits.

The Economist writes, in its review of the film,

Although the moviemakers claim ownership of the company-as-psychopath idea, it predates them by a century, and rightfully belongs, in its full form, to Max Weber, the German sociologist. For Weber, the key form of social organisation defining the modern age was bureaucracy. Bureaucracies have flourished because their efficient and rational division and application of labour is powerful. But a cost attends this power. As cogs in a larger, purposeful machine, people become alienated from the traditional morals that guide human relationships as they pursue the goal of the collective organisation. There is, in Weber's famous phrase, a ?parcelling-out of the soul?.

For Weber, the greater potential tyranny lay not with the economic bureaucracies of capitalism, but the state bureaucracies of socialism. The psychopathic national socialism of Nazi Germany, communism of Stalinist Soviet rule and fascism of imperial Japan (whose oppressive bureaucratic machinery has survived well into the modern era) surely bear Weber out. Infinitely more powerful than firms and far less accountable for its actions, the modern state has the capacity to behave even in evolved western democracies as a more dangerous psychopath than any corporation can ever hope to become: witness the environmental destruction wreaked by Japan's construction ministry.

The makers of ?The Corporation? counter that the state was not the subject of their film. Fair point. But they have done more than produce a thought-provoking account of the firm. Their film also invites its audience to weigh up the benefits of privatisation versus public ownership. It dwells on the familiar problem of the corporate corruption of politics and regulatory agencies that weakens public oversight of privately owned firms charged with delivering public goods. But that is only half the story. The film has nothing to say about the immense damage that can also flow from state ownership. Instead, there is a misty-eyed alignment of the state with the public interest. Run that one past the people of, say, North Korea.

Dammit, I really need to start subscribing to The Economist.

[Hat tip to Zimran Ahmed of Winterspeak.com]

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I think a film called "The

I think a film called "The State" should be produced, but I won't hold my breath.

To make sane and rational

To make sane and rational decisions, a market actor must operate on undistorted information. The market actor must fully internalize all the costs and risks of its activity, as well as all the benefits.

The primary purpose of the state, on the other hand, is to externalize the costs of certain firms on the taxpayer or consumer, and protect those firms from unfettered market competition.

The sociopathic behavior of large corporations, therefore, derives from their ability to act through a state so as to make sociopathic behavior profitable.