| William B. Wolf, Professor Emeritus Cornell University Ithaca, New York and 7884 South Scatchet Head Road Clinton, Washington 98236-9768 Phone: (360) 579-8261 |
This paper has been prepared for a unique symposium sponsored by the Barnard Society. At the symposium various individuals have been selected to act as alter egos of a number of outstanding thinkers. In their assigned roles each person has been asked to discuss David Korten's book, When Corporations Rule The World (Berrett-Koehler Publishers, Inc., 1995). I was flattered to be chosen as the alter ego of Chester I. Barnard. After all, Chester I. Barnard was one of the premier management theorists of this century. Moreover, he was a renaissance man whose intellectual capacities were recognized by political scientists, philosophers, economists, behavioral scientists, journalists, politicians, etc. One Harvard Professor viewed Barnard's powers of analysis and synthesis as being so sweeping that he classified Barnard's gift with that of da Vinci and St. Thomas. (Letter from Mrs. Maria Rogers to Chester I. Barnard, November 9, 1950) In a similar vein the editors of Fortune Magazine observed: "Chester I. Barnard possibly possesses the most capacious intellect of any business executive in the U.S." (Fortune Magazine, June 1948, p. 188)
After reflecting on my assignment, I came to the conclusion that it would be presumptuous of me to attempt to be Chester's alter ego. I may be a summa cum laude in economics from the University of California at Berkeley, but in no way do I have the breadth of knowledge, the wide experience, nor the wisdom to qualify as Chester's alter ego. What I do have is probably the world's best collection of Barnard's correspondence and writings. Hence, what I have done is draw from Chester's own writings and comments, statements which can be applied to what Korten has written. In some cases I am able to do this with direct quotations from Chester's own works. In other instances I have had to paraphrase what he said. Where I have directly quoted Chester bold type will be used. Where I have paraphrased him I will use italics, and where I have to explain Korten's position, or make statements derived from my knowledge of Barnard, I will use 11-point CentSchbook BT font (i.e., the same font used in this paragraph). Throughout I have written this paper using the first person - the assumption is that it is Chester I. Barnard commenting on Korten's book.
The subject I (Chester I. Barnard) have been asked to discuss calls evidently for a critical and dispassionate examination of the limitations and faults of some popular beliefs and the efficacy of some highly regarded institutions underlying the operation of our society.... Such an examination, however much needed, is nevertheless difficult because of the powerful sentiments and convictions which these issues stimulate. Hence, at the outset I wish to present my perspective. I was born into the democratic faith and nurtured in the representative and republican institutions which arose from it. Those conditions which necessarily accompany democratic methods - such as high degrees of freedom of action and speech, some absolute civil rights of individuals, and certain kinds of social equality - are to me so fundamentally desirable that I would, if necessary, endure much bad government and make substantial material sacrifices to retain them for myself and family....
Because of these beliefs I undertake gladly the task assigned; for it seems to me that our democracy in its broadest sense is not in danger of the power of other general systems of government, but of its own abuses, its blind worship of hopes and ideals unrelated to the facts of its own experience, its self-consuming lack of restraint in its greed for false application, its complacent love of the flattery of those who praise its faults and know not of whereof they speak. The more gladly also because I believe the principle of democracy expresses an effort to superpose upon the unconscious and instinctive adaptations of men to men, so indispensable, an intelligence in cooperation secured from formal intellectual operations. The essential processes of democracy have now come to be applied more widely than ever. It would be a pity beyond all others if through abuse and disregard of right proportions we should fall back again upon the myth of the Great Hero and the fiction of the Absolute State in order that we might survive. (Barnard, 1939, pp. 24-25)
Korten starts his book with a prologue explaining some of his background and how he came to write his book. He describes his formative years as being shaped by growing up in Longview, Washington. He attended Stanford University where he majored in psychology and earned an MBA in international business. Also at Stanford he obtained a Ph.D. in organization theory.
During the Vietnam War Korten was a staff officer in the U.S. Air Force. After that he spent five and one half years as a faculty member of the Harvard School of Business. While at Harvard he served for three years as the Harvard advisor to the Nicaragua-based Central American Management Institute (INCAE). From Harvard, Korten went to the Philippines where he worked for Ford Foundation and later he worked in Southeast Asia as a senior advisor on development management to the U. S. Agency for International Development. He states that he gradually reached the conclusion that "the conventional development espoused by most conservatives and even liberals is a leading cause of - not the solution to - a rapidly and potentially fatal human crisis of global proportions." (Korten, 1995, p. 3) On the basis of his experiences, Korten developed "the deep conviction that real development cannot be purchased with foreign aid monies. Development depends on people's ability to gain control of and use effectively the real resources of the localities, ... to meet their own needs." (Korten, 1995, p. 5) The point I wish to emphasize is that Korten has both an experiential and academic background which has helped him understand some of the problems of developing societies.
However, Korten's book focuses on global issues rather than developing societies. In it he devotes much of the content to transformation of global institutions. Korten explains this apparent paradox by saying: "I am among those who seek to transform the global to empower the local". (Korten, 1995, p. 6)
On the whole I find that Korten has written a very provocative book. His goal is to arouse the people of the world and to get them "to join in a movement to transform the system". (Korten, 1995, p. 10) What I liked about his approach is that he urges the reader to make his/her own decision about the state of our global society. He states:
Please read what follows actively and critically. Bring your own perspective and insights to bear. Question. Challenge. Consider the implications for the way you want to live your life. Discuss it with friends. Tell them where you agree, where you disagree, what new insights you gained, where you find it incomplete. Get their thoughts. Explore new avenues together. Take the conversation to new level. And act. (Korten, 1995, p. 10)
I definitely approve of this advice. However, I would add the caveat that many individuals have difficulty recognizing and understanding what they encounter. I suppose it takes a certain and perhaps an unusual, course of experience, and a somewhat philosophic trend of mind to make sense out of the contradictions and confusions of life. Most people most of the time seem to get along pretty well by disregarding the contradictions, and by assuming for the time being that many things are true which are not. (Letter from Barnard to John Romanition, June 8, 1937) Another serious problem related to what Korten proposes is the fact that the global society is a vast system composed of many lesser systems and sub-systems. This poses difficulties relative to the concept of causality.
Some years ago I first became dimly aware of radical differences in the ways of thinking as between two kinds of situations; one, where simple cause and effect or what I now call linear reasoning is sufficient and effective; and, two, the reasoning applicable to systems consisting of a number of interdependent variables. Pareto in his Mind and Society discusses this subject, saying that the only logic applicable to systems of many interdependent variables is that of sets of differential equations. There is no purely verbal description of such systems that can be adequate. Never the less, it is not possible to apply mathematics to the description of such systems unless the variable elements composing them can be measured and this is rarely the case. Consequently, the understanding of such systems has to be a matter of judgment almost aesthetic in character and this feeling for the situation to the extent it is attempted to be expressed in words has to be translated into simple cause and effect reasoning or into terms of strategic factors. Such translation is always defective, frequently misleading and not too seldom completely erroneous in practical consequence. It involves the error of misplaced concreteness, to use Whitehead's term, or the fallacy of "other things being equal". (Barnard, 1947, p. 68)
Unfortunately, much of what Korten discusses falls into the area of aesthetic judgment. True he has done an excellent job of mustering up facts and anecdotes, and he seems to understand the inherent difficulty of understanding causality in complex system. For example he states: "We have become accustomed to dealing with complex issues in fragmented bits and pieces. Yet we live in a complex world in which nearly every aspect of our lives is connected in some way with every other aspect." (Korten, 1995, p. 11) He concludes that we must develop a capacity for whole-systems thought and action. The difficulties of "whole system action" are overwhelming. I am concerned about the impact of some of his suggestions in that he needs to carry his analysis further. He seems to forget that if one is about to take a specific action to solve a problem he had better be sure he knows what the side effects are going to be. Now every good executive is conscious of that all the time: if I do this which I'd like to do, I'll accomplish this result: but in the course of doing it I will produce these other circumstances which may be very much more troublesome and more important. (Wolf, 1973, p. 32)
The caveats stated above apply to any plan to change a social system. My position is that one must be aware of them and hence must attempt a rigorous analysis of the side effects and subtle impacts of any proposed action. With that as background I want to turn to the position that Korten takes.
As I interpret Korten, his goal is to transform society by what he labels as an "Ecological Revolution". This revolution calls us "to reclaim our political power and rediscover our spirituality to create societies that nurture our ability and desire to embrace the joyful experience of living to its fullest". (Korten, 1995, p. 14) At various places in the book I get the image of the goals of the Ecological Revolution as a society where corporations take a long term view of their activities and where "the firm ... is committed to investing in the future; providing employees with secure, well-paying jobs; paying a fair share of local taxes; paying into a fully funded retirement trust fund; managing environmental resources responsibly; and other wise managing for the long-term human interest. Such companies are a valuable community asset, and in a healthy economy, they pay their shareholders solid and reliable - but not extravagant -dividends over the long term." (Korten, 1995, p. 207)
To achieve the global system which Korten desires, the countries of the world would be encouraged to: "make significant investments to achieve a high level of adult literacy and basic education, carry out radical land reform to create a thriving rural economy based on small farm production, and support the development of rural industries that produce things needed by small farm families." (Korten, 1995, p. 169) "These would become the foundation of larger industries. Moreover, these industries would be equity-led, not export-led. Only after the countries had developed broad-based domestic economies would they become major exporters in the international economy".
What Korten hopes for is a melding of the market forces of the money economy with the community forces of the social economy. He envisions the market economy as composed primarily, though not exclusively, of family enterprises, small-scale co-ops, worker owned firms, and neighborhoods and municipal corporations. (Korten, 1995, p. 312) The individuals living in Korten's ideal world would "invest themselves in loving relationships, being good friends and neighbors, living by ethical principles, and developing and engaging their abilities in ways that contribute to the life of the community". (Korten, 1995, p. 266)
Korten builds his case for the Ecological Revolution by citing the negative aspects of our present national and global systems. From reading his book one can't escape the fact that numerous things are occurring which violate our values. For example, money, not the human condition, is the main measure of progress; people are losing or have been denied their human rights; monopoly power has been accumulated by a number of organizations and they have been able to exercise that power without accountability to the people; the public has been indoctrinated with myths and propaganda which distort what is happening in the world, the distribution of the world's wealth has been changing so that the rich have a larger percentage, free trade and the increasing power of global corporations are contributing to the decline of the global system, etc. What Korten suggests is that the fundamental problem is the system itself. It allows monopoly power to be accumulated and used without accountability. It emphasizes money at the expense of human and social values. Most of all, it encourages corporations to follow practices and influence politics in a manner which can ultimately lead to the destruction of our society.
In summary, Korten develops his case for the Ecological Revolution by describing the pathology in our global and national systems. There are other areas which he might have used to build even a stronger indictment. Two which I wish he had included are the structure of our government, and the international impact of organized crime. However, he certainly provides enough data to arouse the ire of most normal people.
The outcome of Korten's suggestions for the ideal world would be: economic systems composed of locally rooted, self reliant economies creating in each locality the political, economic and cultural spaces within which its people are able to find their own paths to the future that are consistent with their distinctive aspirations, history, culture and ecosystems." (Korten, 1995, p. 269) Korten summarizes this as follows: "Our Challenge is to create a global system that is biased toward the small, the local, the cooperative, the resource-conserving, and the long-term-one that empowers people to create a good living in balance with nature. The goal is not to wall each community off from the world but rather to create zones of local accountability and responsibility within which people can reclaim the power that is rightly theirs to manage their economies in the common interest". (Korten, 1995, p. 270)
Korten believes that this ideal will be achieved through awareness of the fact that we all will develop a global consciousness recognizing that we share the same planet. (Korten, 1995, p. 270) I wish that I shared Korten's assumption. My reflection on the history of our world indicates that there has always been warfare and strife centering on property ownership and ideology.
My major problem with Korten's ideas is not that I reject them or find them unworthy of serious analysis. Rather I feel he lacks a holistic sense of the world we live in. His book reminds me of the time John Foster Dulles, the U.S. Secretary of State, asked me to attend the meeting of the Commission on Durable Peace sponsored by the National Council of Churches. Dulles asked me to attend that meeting, which I did, formally as a delegate of the YMCA, at Cleveland. ... I was not an advocate of peace. What he wanted me to come there for was that we needed some people to get their feet on the ground. That's why I went. (Wolf, 1973, p. 12) On two or three occasions I pointed out that the attitude of theological people was unrealistic. They didn't know what they were talking about when they were talking about the economic system or the business system or the social system... I said to an Episcopalian bishop, "I listened to this discussion, and you're talking about a world I don't know anything about. I live in this world that you are talking about, but it isn't at all like what you say it is." (Wolf, 1973, p. 40) As a result of my comments, the Council undertook a number of studies of the American social system.
In a way, reading Korten's book gives me the same feeling. However, I am not contesting his facts; what I am really saying is that there is a lot more to it. Furthermore, I have doubts about our ability to achieve Korten's utopian society. I believe my position is well stated in a letter I wrote to Professor William F. Whyte when he was teaching at the University of Chicago. In it I stated:
In connection with my work in the atomic bomb area I have had occasion several times to emphasize a distinction between pessimism and defeatism. I have been extremely pessimistic about the possibilities of international control of atomic energy production and have emphasized that a very thorough going pessimism was almost essential to the development of the possibility of control. On the other hand, I cannot accept the defeatist's position because I have more than once seen occur what seemed impossible. That, in fact, occurred in connection with the State Department report on control. It seemed to me at first impossible that we could agree on such a report, extremely unlikely that a report would be accepted if written, and even more unlikely that Mr. Baruch would adopt it, - but these things all happened.
It seems to me extremely unlikely that human beings can control the evolution of their society. This does not mean that what men deliberately do will not affect that evolution, but that the effects will be different than desired and many effects will be completely unforseen. Is it not evident that we have very little understanding of complex social phenomena even after occurrence? The SSRC (Social Science Research Council) recently published a study by historiographers who for a laboratory case had examined the histories of the Civil War. Some are single cause histories but differ widely as to what the cause was. Others are multicausal and some are none causal treatments. In scientific terms the number of mutually dependent variables both social and physical, is so large that there is no mathematical method of handling them assuming that they were quantified. Most of them are not and probably most of them have not been discriminated. You recall Pareto's statement that the determination of prices in a small community with a limited number of products required a market to solve the problem. Despite this situation, great intellectual confusion is inherent in the fact that it is convenient and effective in most of the ordinary affairs of living to employ single cause reasoning, in fact, that is about all we can do. Someone needs to do a job on the conditions that determine the practical limitations of such reasoning. (Letter from Chester I. Barnard to Professor William F. Whyte of August 28, 1946)
I should add that for years I have been concerned about the validity and applicability of various economic theories. At one time I expressed my feelings in a letter to L. J. Henderson. In it I said: I have been reading extensively in the literature of economic theory much more critically than I ever have before. Much of it makes so little sense to me that I wonder whether it is I who have lost my mind. The almost complete disregard of common experience and the very widespread proclivity for building broad generalizations on highly selected and usually limiting cases is disconcerting to say the least. (Letter of July 11, 1940 from Chester I. Barnard to Lawrence J. Henderson) Despite my distrust of a great deal of economic theory, I am convinced that a free market system of distribution is essential if we are to live in a democracy. However, it is also essential that we attempt to control and limit monopoly. Korten has focused on the evils of monopoly power, but has not effectively suggested means of positive social control. His Ecological Revolution implies a global system of small societies where individuals have political freedom to have a voice in their own destiny. What is lacking is analysis of the implications of such a world order. I have fears that it will result in a strong move toward tribalism and conflict among tribes.
Korten recognizes that there are political aspects of the problem. He provides principles and goals but fails to come to grips with the strategy for obtaining them. I believe that Korten's suggestions focus on the symptoms rather than the strategic factors which are of major significance; thus I wish to make my own suggestion. I believe the starting place for controlling monopoly power is by a structural change in our national legislature. I do not have faith in the present approach that limiting campaign financing will insure that special interests are prevented from having undo influence. We need to go farther than just regulating financing of elections and placing limitations on lobbyists. We need to make a fundamental change in the constituencies of our congressmen. Let me explain:
The diffusion and suppression of responsibility characteristic of American political and governmental practice has its legislative counterpart in the system of representation employed and in the bicameral legislature. In the case of the federal government the constitutional restrictions on Congress and the exclusively parochial nature of congressional representation are calculated to put a premium upon obstruction and dissent, and to minimize representation of the national interest as whole.
The only public officials having legislative responsibility who are elected by the vote of all the people are the President and Vice President, and they are the only ones with responsibility for and to the country as a whole. Individual Congressmen may, it is true, be informed as well as primarily concerned in matters affecting the entire country. When, however, a broader or longer view is contrary to the immediate and local views, the Congressman is subject to condemnation and defeat in the only basis for his official existence - the congressional district or the state election; and political opponents are not reluctant to make the most of local misunderstanding or prejudice. The possibility not only checks or paralyzes sustained congressional advocacy of fundamentally important constructive measures, but also puts a premium upon plausible but specious and superficial obstruction of the national administration to obtain popularity at national expense, as has occurred in matters affecting the State Department and the Atomic Energy Commission. It also defeats party responsibility, for no Congressman is bound by party pledges or promises as against his own electorate. Within limits the vetoing of national proposals as inconsistent with local interests is desirable; but such vetoing is most undesirable when it is the product of irresponsibility for the welfare of the nation as a whole.
A reasonable balance of the positive and negative considerations in national legislation might be secured if twenty to thirty percent of the Senate and of the House were elected at large from the country as a whole (for four-year terms at presidential elections). This electoral arrangement would provide a substantial group of men who owed a moral as well as technical political responsibility to the entire nation or to the electoral majority -a group which could speak with more authority and with fewer inhibitions than present Congressmen. The results would, I think be as follows:
In brief, Korten's .. book is written in straight forward English, with the courage to state personal estimates and speculative views in concrete terms. The test is not whether one agrees with the main thesis or disagrees with numerous special solutions of detailed problems, but whether the book comprehensively sets forth the nature of an important general problem to a large extent hitherto neglected. I think it does. (Ibid., p. 146)