What Is the Role of the Corporation in Society?


A challenging piece of reporting forces us to consider some uncomfortable questions

Apple’s new headquarters, its back turned to society, eternally staring at itself.

Once the most celebrated American companies of all time, Eastman Kodak built the town of Rochester, New York. It also built the lives of its employees, which numbered in the hundreds of thousands at the peak of Kodak’s power (for a look at the company today, read NewCo Shift’s interview with its new CEO).

But as digital took over photography (and Apple began its journey toward becoming the next iconic American company), Kodak faltered. Tens of thousands lost their livelihood. And along the way, the social fabric Kodak built — a corporate commitment to investing in its employees, in the dignity of work, and in a steady, middle class culture — faltered as well.

In a groundbreaking piece of long form reporting, the New York Times compares the lives of two women separated by time and massive shifts in corporate culture. Both worked as janitors — one at Kodak thirty five years ago, the other at Apple today. The difference between their career paths, and the role their corporations play in their lives, is stark and damning.

The Kodak janitor had a full time job with benefits, including support for education, vacation, and a culture that looked after its own. She went on to become a senior executive in the IT industry. The Apple janitor works for a corporate outsourcing firm that promises cost savings to its corporate client. She can’t afford to take a vacation or take the time to improve her lot in life. And Apple has no vested interest in helping her do so.

This shift from what some call “corporate paternalism” to contract outsourcing is in fact one of the many short-sighted outcomes of corporate America’s addiction to profits at all costs. Since the 1980s, the dominant philosophy in major business schools has been that of Milton Friedman, who famously said “There is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits.”

But Freidman has been misunderstood over the past few decades: the noted economist was never a proponent of short term thinking over long term value creation. And failing to provide an upward path to its most vulnerable employees is, in fact, a massive failure of American society.

What Kodak created was a culture where a janitor, forklift operator, or security guard could build a productive life for herself and the many others she touched. What Apple and most of corporate American are building now is, in effect, a system of indentured servitude with no hands extended upwards. That’s an abdication of social responsibility. Business can and should do better than that.

The Tech Backlash Is Back

Might the Democrats’ road back to power be routed through the heart of tech’s oligarchy? That’s the supposition of this Washington Post piece, which reports a growing movement to contain the reach of companies like Google, Amazon, Apple, and Facebook. Tracing the movement’s philosophical roots to Hilary Clinton’s failed campaign, the article notes how big tech built a political firewall during the Obama administration, but is now vulnerable to new antitrust sentiments. However, as many have pointed out, our current system of anti-trust never considered an oligarchy which gives most of its services away for free, obviating traditional interpretations of consumer harm. If Democrats are truly going to win on this issue, they’ll first have to redefine it, and that’s not an easy task.

Nor Is Competing With Google, Facebook, and Amazon

Verizon’s Tim Armstrong made the media rounds this past week, giving both Recode and the Wall St. Journal interviews about his plan to build Oath, the telco’s media unit, into something more than the sum of its parts (Yahoo! and AOL). Can the former Google executive outmaneuver his former employer? The jury’s out, but this is going to be a lot harder than it might sound, folks. Armstrong’s interviews were light on details, but one thing is certain: The key is how the company leverages its data assets — and that’s one place that is aching for a rethink. An interesting and related story: Verizon just rolled out a new, opt-in loyalty program that asks its customers for data in exchange for rewards.

Developing Stories Worth Watching…


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