Global corporations: Can big be beautiful?
Thomas L. Friedman, The World is Flat: A Brief History of the Twenty-First Century. New York: Farrar, Straus and Giroux, 2005. 496 pp.
The passionate defence of the supremacy of markets made by one audience member at a Baylor University Christianity and Economics conference a few years ago, was over the top. Weighing into a technical debate with all the gravitas his pinstripe suit could muster, he argued on the "self-evident premise that everything any human person ever does is a consequence of rational choice theory." Since it wasn't self-evident to me, I questioned his assumption: "Are you suggesting that when you take the bread and wine of communion, you do so only because of a mental calculation and cost-benefit analysis?"
That exchange came to mind as I read Thomas Friedman's bestseller, The World is Flat. The anecdotes in this book are far more compelling than most of what is considered entertainment at an economics conference. As a New York Times and Pulitzer-Prize winning columnist, Friedman had access to innovators from around the world who provided him with interesting examples to transform an economic and political analysis into a provocative popular essay. But it's hardly the history of the twenty-first century promised by the title.
Friedman's basic thrust is that technology has conspired with political history to make "Beijing, Bangalore and Bethesda next-door neighbours." The impact of citizenship in this global village, he suggests, is creating a tension between the creative imagination represented by "11/9"—the fall of the Berlin Wall on November 9, 1989—and the destructive imagination represented by 9/11—the terrorist attack on the World Trade Center on September 11, 2001. The world has been divided into three basic groups: the flat world with access to technology, the "unflat" world which struggles for daily survival, and the "twilight zone between the two" who "have just enough information to know that the world is flattening around them and that they aren't really getting any of the benefits."
Friedman's warning to the United States is that while they have been preoccupied with internal issues such as dotcom bust, the attacks of 9/11 and the Enron scandal, they have not adequately understood or prepared themselves for the billions of "twilighters" in India, China, and the former Soviet Union whose collective momentum to join the flat world will prove unstoppable. While some twilighters are driven by the motivations of economic envy, others are utilizing the flat world tools to pursue ideological agendas. Either way, unless there is a focused and far-reaching response on the part of developed countries like the United States that involves everything from education, trade, and economic policy, the world order will inevitably be turned on its head in the years to come.
To summarize Friedman is not to do him justice. His clever writerly ways take the reader to places most of us have not been before. Like the call centers in Bangalore, India, that provide employment for 245,000 Indians, one of whom was busy providing superlative customer service for my wife in fixing our family Dell computer, while I was reading the book in the next room. And by the time Friedman had shown me the "revolutionary" implications of workflow software, open-sourcing, and supply-chaining—to name just three examples from his list of "ten forces that flattened the world"—each of which he explains in some detail, I was feeling the tensions that he proceeded to describe:
The flattening process relentlessly trims the fat out of business and life, but . . . fat is what gives life taste and texture. Fat is also what keeps us warm. Yes, the consumer in us wants Wal-Mart prices, with all the fat gone. But the employee in us wants a little fat left on the bone, the way Costco does it, so that it can offer health care to almost all its employees, rather than just less than half of them, as Wal-Mart does. But the shareholder in us wants Wal-Mart's profit margins, not Costco's. Yet the citizen in us wants Costco's benefits, rather than Wal-Mart's, because the difference ultimately may have to be paid by society. The consumer in me wants lower phone bills, but the human being in me also wants to speak to an operator when I call 411. Yes, the reader in me loves to surf the Net and read the bloggers, but the citizen in me also wishes that some of those bloggers had an editor, a middleman, to tell them to check some of their facts one more time before they pressed the Send button and told the whole world that something was wrong or unfair (220-221).
While being wowed for over 300 pages by the technological gadgetry that Friedman describes and trying to sort through whether I agreed with his analysis of their implications, I must confess to wondering whether Friedman was putting too many eggs in the technology basket. Thankfully, he anticipates the objection and at least appears to answer it directly:
I am a technological determinist! Guilty as charged. I believe that capabilities create intentions . . . The history of economic development teaches this over and over: If you can do it, you must do it, otherwise your competitors will—and as this book has tried to demonstrate, there is a whole new universe of things that companies, countries and individuals can and must do to thrive in a flat world (374).
However before my mind had time to compile the list of examples of things that were not entirely reshaped by technology, Friedman backs off of the absoluteness of his claim:
But while I am a technological determinist, I am not a historical determinist. There is absolutely no guarantee that everyone will use these new technologies, or the triple convergence, for the benefit of themselves, their countries, or humanity. These are just technologies. Using them does not make you modern, smart, moral, wise, fair or decent (374).
In Friedman's analysis of things, everything comes down to the unstoppable march of technology and progress. You can choose the join the army, and play the market game to get to the front, or you can choose to ignore the march and inevitably get trampled. While there is a debate that could be had between Friedman and the earnest economics conferee of a few years back, the difference doesn't much matter. In both of their worlds, our market choices end up being the ultimate determiners of our lives. Friedman is not blind to the far-reaching consequences of this position:
It affects everything—how communities and companies define themselves, where companies and communities stop and start, how individuals balance their different identities as consumers, employees, shareholders and citizens, and what role government has to play (201).
He goes on in considerable detail to highlight the nuance of many of these challenges, but the closest he comes to giving an answer is captured by the title of one of his chapters, "The Great Sorting Out." The invisible hand of the markets will decide all, and the only choice left for individuals are the terms on which they will join technology's inevitable march.
While the religious, ethnic, and ideological difference that mark some of the world's hotspots are acknowledged, in the end economics trumps it all:
No two countries that are both part of a major world supply chain like Dell's will ever fight a war against each other as long as they are both part of the same supply chain. Because people embedded in major global supply chains don't want to fight old-time wars anymore. They want to make just-in-time deliveries of goods and services—and enjoy the rising standards of living that come with that (421).
David Hazony, the editor of Azure, a Jewish journal of history, politics and philosophy, summarizes the problem with Friedman's analysis well:
Most Americans have become well aware of what Friedman does not recognize: that no matter how beneficial or fascinating the IT revolution may be, the history of the twenty-first century will not begin and end with Global Crossing and Geek Squads. Peace and politics, war and friendship, democracy and tyranny, poetry and song, love and commitment, parenting and virtue, morals and devotion and God himself—all these have yet to be digitized. For the most important things, our world, like a vintage record album, is still analog, still round (www.policyreview.org/aug05/hazony.html).
Engaging him is one way to put the question, "Can big be beautiful?" into its contemporary context.
Some of the historical arguments about corporations—their size and influence—have to do with their very construct. Creating the company as a legal person with a separate existence from the human persons that carry out responsibilities within the corporation raises questions of moral accountability. As faceless, impersonal corporations grow in size and economic power, the ability for individuals and society as a whole to make decisions regarding their own futures becomes more limited. Finding ways to maintain accountability and determine moral responsibility has remained an ongoing challenge, as the Enron, World-com, and sponsorship scandals that dominate Canadian political news these days provide evidence aplenty.
There are two other main lines of argument that have been advanced against big corporations. The first involves balance. The growth of governments has been necessary, some would argue, to counter-balance the growth of corporations. The problem with the bigness of corporations today is that they end up influencing and even dominating politics, and government simply has not kept up.
The second line of argument involves equality. If we strip Marx's argument down to a populist simplification, economics determines everything and the only way to prevent those who would end up owning more and abusing those who own less was for everyone to own everything equally. At least since Marx, efforts have been made to overcome market inequalities that surround the control of capital. In a capitalist system, capital trumps labour—so the argument goes—and the result is the exploitation of the middle and lower class, whether they live in underdeveloped countries, inner cities, or in suburbs and face the threat of losing their middle-class lifestyles as a result of free trade job loss.
A troika of undesirable consequences—unaccountability, imbalance, and inequality—provides the slogans and motivations for the anti-globalization protestors who invite themselves as sometimes rude guests at most public gatherings of capitalist elites. Of course, the cures that many of those on the left offer to counter the badness of bigness are really flip sides of the same coin. Trying to balance and create accountabilities for the bigness of corporations through big government has proven ineffective. The wreckage of social experiments built around eliminating inequality have convinced all but a few fringe extremists that interfering with the market doesn't provide the utopia it promises.
Lest there be any ambiguity, let me make clear that I share Friedman's appreciation for the good that markets can provide. Economic prosperity, even for many living in countries that are not part of the developed world, has been improved by the operation of free markets. Competition is not a zero-sum game. It serves as an impetus for creativity, innovation, and perseverance that has sparked many of the advances we take for granted today.
But appreciating the benefits derived from the operation of free markets in an economy is a step or three removed from accepting the thesis that markets ultimately shape societies and are the basic determinant of human existence. It would be silly to ignore the evidence around me that we live in a society which is market and consumer driven—idolatrously so, I would submit. I also know that were I to live in a part of the world where subsistence and survival were the daily rigour of each day, the market—in its most crude and elementary form—would seem similarly important. But admitting that something is important, and even dominant in a given society, is something different from admitting that it is ultimate. And that difference is more than a difference of semantics or theoretical precision. It is a difference that goes to the heart of how we experience life and view society.
The question addressed to us is not simply about markets, but rather about corporations and how they ideally function in markets. In asking "Can Big be Beautiful?" the implied argument in favour of things small is obvious. What about the local personalized service that one gets at "Joe's Hardware," but not at at a hardware chain store? What about the boutique shops providing a shopping experience entirely unlike that of the box stores? Is there nothing to be said for the local product that expresses the character and self-expression of our neighbours, as opposed to the mass-produced functional product sold indistinguishably around the world?
The problem with both of these approaches is that the determinant of beauty is not really size. Can big be beautiful? Absolutely! In some cases, only bigness is able to attract the capital to acquire the tools to do the job properly. Bigness can eliminate the inefficiencies relating to transaction costs. There are challenges to be met that are best taken on by big corporations, and when they do their job well, we do well to stand back and admire the beauty, not only of the products they create, but also the systems, efficiency, and expertise with which they have created it.
Similarly, small is beautiful too. The personalized product, the skill of the craftsman, the uniqueness of a building, the aroma of a bakery, the character and concern of an expert helping me solve a problem—these are not matched by the assembly line or rivalled by the corporation.
It has to do with what we understand by beauty. The only meaningful explanation that I can think of (and certainly to be preferred over the trite "beauty is in the eye of the beholder") is that beauty is that which gives us insight into the person and character of God. Creation is beautiful because it is a divine masterpiece. Human beings are beautiful because they are image-bearers of God. Work is beautiful because it demonstrates the talents which God has given humankind. Working together is beautiful because it gives us insight as to how the persons of the Trinity have worked together. Development and progress is beautiful because it discovers the potential which God has placed in Creation. Love is beautiful for it recognizes the divine image that is stamped on other human beings. There is beauty worthy of our admiration which, in the busyness of our lives, we usually take too little time to appreciate.
So, how does beauty relate to markets? Market proponents suggest that the market will sort out the beautiful from the ugly because people will be willing to pay for works of beauty. As long as people are willing to pay, there will always be such options available to consumers. It is rational choice theory at work that ensures as long as people are willing to pay for it, "small" options will continue to exist.
Friedman goes a step further. Chances are that a mass-produced item we used to associate with "big" was actually produced in someone's backyard or garage operation. Technology has eliminated the distinction between "small" and "big" so that an individual operator can "hide" behind the internet infrastructure and appear much bigger than he really is. The only market left for some big companies like IBM is to provide very personalized and specific applications that rely on the responsiveness and flexibility that we used to associate with "small." The distinction between big and small is becoming harder and harder to make.
At the heart of the debate is not really a discussion of big or small, or even markets or no-markets. It really is a question of where markets and technology fit into the larger framework of life. Human creativity will continue to make discoveries, create new technologies, and invent "new stuff" for humankind to enjoy. Is this all there is? Do we have to resign ourselves to trusting the market's invisible hand as our best hope of "sorting it out?"
Neither rational choice theory nor the market's invisible hand helps us get at the underlying questions of good and evil. The line between good and evil runs not between big and small companies but through the hearts of each of them, just as the brokenness of this world affects us all. Even in the most noble efforts, there are sometimes mixed motives. This true for one person and equally true for our work together, whether that be in a big or a small organization.
As a Christian, I take it one step further. I do not advocate a market system as being biblically mandated, but I do suggest that if it came to making principled arguments regarding how to organize an economy, it would be much easier making a biblical case on the "pro" side of markets than on the "con" side. And beyond the principle, there is a beauty that can be observed in a well-functioning market which deserves our admiration. Healthy corporations working in a market have organic lives of their own—they go through a natural cycle of growth and maturity, and like so many other organisms, it seems inevitable that they are either growing or dying, but that remaining at a certain level is a practical impossibility. Watching healthy corporations grow and provide an opportunity for gifts and talents to be cultivated and produce worthwhile goods and services is a beautiful thing.
The standard by which we judge economic activity is not first of all size, but rather how well it converts its inputs into useful outputs. A healthy economy is one that finds ways to utilize and value all of the resources available to it in a manner that produces the necessary goods and services with a minimum of waste. Our economic task is to steward the earth and its resources over which God has placed us (see Genesis 1:26-28, Genesis 2:15, Psalm 8, and Matthew 25:14-30). From this perspective, economic trends that move to involve more of the earth's peoples and their gifts and talents in meaningful economic activity are a good thing.
The predisposition to evaluate based on size over stewardship is not surprising. It's been part of the human condition since the Fall to want more than what we've been given. Whether it is the desperation for survival or the smugness created by plenty, there are spiritual dangers associated with counting what we have, or don't. Isn't that what the writer of Proverbs was getting at?
"Give me neither poverty nor riches;
feed me with the food that is needful for me,
lest I be full and deny you
and say, "Who is the LORD?"
or lest I be poor and steal
and profane the name of my God.
—Proverbs 30:8-9, ESV)
It is part of being human to participate in the economy, but that is not all there is to being human. We are workers and consumers, yes, but we are also lovers, worshippers, neighbours, and citizens, to name but a few. It is in the distortion of citizenship that the ugliness of big corporations often shows most clearly.
Friedman touches this when he notes that "it used to be said that as General Motors goes, so goes America. But today it would be said, 'As Dell goes, so goes Malaysia, Taiwan, China, Ireland, India." This brings us back to the early arguments against corporations. The very construct allows us to rationalize the separation of moral responsibility and decision-making from any one person. "Legalese," fiduciary responsibility, and contract compliance become the only checks on human behaviour.
Such checks at the best of times have their inefficiencies, But when they are diluted and hidden in the complexity of different norms and standards that exist in various countries, they provide an invitation temptation for the baser part of human existence to come to its full expression. For a list of specific examples, just read today's newspaper.
Can big be beautiful? Provisionally, the answer must be "Yes." That doesn't mean, of course, that they are always beautiful (there's ugliness to be found in small corporations as well). Big corporations are beautiful when they contribute to a fuller expression of human talents and abilities, when they give fair remuneration and benefits to employees and, still, realize profits for investors, and when they contribute the economies of scale and managerial organization that offer affordable products or services to customers. This beauty is only realized with human intentionality pursuing and unpacking it from the intentionality of Creation. And, finally, just as much of the beauty in a wilderness scene or in a cityscape is in the array of diversity and difference, so a corporation's beauty is part of a larger landscape of corporations of varying sizes and a wider society defined not by markets alone, but by human organizations and activities in all their diversity and rich difference.
Can "big" be beautiful? Yes. But a picture-perfect landscape isn't "flat."