In a democracy, bounded by place and geography, we vote for constraints on capitalism and corporate activities so that everyone, on balance, can live a better life, a decent life.
We vote for things that enhance the commons and the long term prospects of our culture, like environmental protections, child labor laws, workplace safety, toxin labeling, mandatory education. These constraints increase short term costs and may either increase prices or decrease profits. Citizens in a democracy are willing to accept that tradeoff- because while they like to make money, they ALSO want a country with good infrastructure, vibrant culture, research that will benefit the long term health of the population, a level economic playing field, clean air and water, a way to take care of the people who fall through the cracks in the society, and opportunities to thrive in their life in other ways.
Corporations, however, only have one measure of success, as mandated by fiduciary duty to shareholders- to maximize profits within the constraints of the law. Impact investors may add “within the constraints of our values” to constraints of the law, but profit maximization is still the driver. (This is only one reason why corporations are not people and should not be considered as such. Even when corporations ‘do the right thing’ it’s usually directed at this motive- witness the recent FastCompany cover “why employee well being is good for profits”(!!!). How about employee well being is a moral and ethical human good, a human right, even?)
So when a corporation takes an opportunity to leave the body politic they are also breaking the social contract. They choose to jump ship on the constraints on capitalism voted on by a democratic society- one which has broader values to consider than profit alone.
For example, a corporation which moves its operations overseas for lower costs, whether through regulatory arbitrage on labor conditions, or environmental protections- is effectively saying- our profit matters more than your democracy. A corporation that minimizes its taxes says, we’re happy to make money from you, but not invest in the longterm good of the society.
Then when cheaply produced goods are moved back into the country at slave labor prices, and the consumption frenzy takes over, we move from a fair and just society that self sustains and is reasonable in its materialism, to one that is only about consumption, and not so much creation and production- people are at heart creators and producers, not only consumers. There is no dignity for the individual in this scenario.
When you have globalization, with all of its tentacles governing much of our lives on the one hand- and technology that is moving faster than government can adapt to its implications on the other, it feels like our democracy is indeed ineffectual in protecting the collective desires of the people to define the kind of society they would like to live in.
Democracy seems relatively powerless to stop the relentless march of banks and global corporations and their associated vested interests toward total world domination- governments are being run over or coopted by these forces. All of this “whither America” presidential politicking maybe moot. The global digital system and for-profit interests may have stolen democracy already.
It’s time for a redesign.
Post Script: Check out this piece coming out of Davos 2012, which opened tonight.