You could argue that those protesting against trans-Atlantic free trade agreements are die-hard socialists who prefer to keep Europe’s sclerotic status-quo and don’t want change.
Or you could wonder if they have a point. Their protest isn’t as much against the trade agreements per se, as against increasing dominance by big, multinational companies that have as much cash as a medium country’s GDP and so much power they sometimes bend governments to their will.
And while the free market is the best judge of character when it comes to multinationals, there comes a point when they get so big that their corporate cultures, if not carefully checked, risk harming the wider economy.
A very good recent paper on corporate culture by Andrew W. Lo highlights how similar to biological epidemics can the spreading of a bad culture be. The paper is appropriately called “The Gordon Gekko Effect: The Role of Culture in the Financial Industry”.
Michael Douglas, the actor playing the ruthless corporate raider, won an Oscar for his role in the 1987 Wall Street film.
“The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit,” Gekko says in the speech that is now quoted the world over, often shortened to just “greed is good”.
In his paper, Lo describes a biologically inspired model of corporate culture, in which the culture spreads like a disease (in the case of Wall Street, with Gekko as Patient Zero). The transmission of a corporate culture through a group (in the case of a corporation, its employees) will be affected by three factors: the group’s leadership, the group’s composition and the group’s environment.
Leadership corresponds to the primary source of an infection, composition is similar to a population at risk and the group’s environment shapes its response to the infection.
While leadership is important in making a corporation’s employees to behave in a way that ensures economic success, the same factors “also allow it to promote goals that lack a moral, ethical, legal, profitable, or even rational basis,” writes Lo.
Group composition will often change until it reaches the best fit for the company’s culture. Perhaps you have encountered situations in which highly intelligent and ethical employees left prestigious companies shortly after joining — they most likely were pushed out by something in the culture with which they could not agree.
“Employees with traits that more closely fit the corporate culture will do better in the corporation since they are already adapted to that particular environment. This leads to a feedback loop reinforcing the corporate culture’s values,” according to Lo.
This brings up an interesting dilemma: often, managers are encouraged to hire the employee who is the “best fit” for the company’s culture. However, if they want to benefit from an objective look at the company’s problems, perhaps they should hire the “worst fit”– and listen to their grievances.
When it comes to the environment, everybody, usually, prefers safety. So corporations, too, will adopt risk-adverse tactics if they can. But this in itself is not without risk.
“A corporate culture may defend itself so strongly that, despite almost everyone’s dissatisfaction with the status quo, the organization may find itself unable to change its norms of behaviour,” writes Lo.
Coming back to the protesters, they see that some of today’s corporations have become so big that they can easily infect the wider society with their culture. This would be OK if the proper checks and balances were in place, but there is a revolving door between regulators, business and politics, which means a lot of cross-pollination of values takes place.
While many of the big businesses behave in above-the-line manner, the recent scandals on both sides of the Atlantic show that there is still a lot of work to be done to improve corporate culture, disclosure and management responsibility.
Those marching on the streets against the trade deals protest against a lowering of standards, but also against allowing unelected businesses to shape the wider society. Perhaps reforming corporate culture should come before free trade.