16 September 2005

If Corporations are Obsolete, What is Their (Reversal) Successor?

Our so-called modern corporations (and governments, and universities which I consider corporation-equivalents) are artefacts of the mechanical age. They were designed in an environmental ground of factory mechanization, peaked in effectiveness and efficiency during the early part of the 20th century, and then headed towards “extension beyond the limit of their potential” – in other words, towards reversal into a new form, with the current one being obsolesced. The evidence is unmistakeable: rampant corruption and theft of capital for personal benefit rather than concentration of capital for the benefit of the shareholders; gross inefficiencies in production, service and the flow of information; the rational, hierarchical organization of functions resulting in a reduced ability to perform those very functions compared to the prior looser organization; power and control being the overriding objective rather than enhancing shareholder wealth (which in itself is a problematic objective, but I’m being nominal for the time being, not critical).

There may be all sorts of rationalizations for “what went right and what went wrong” (to quote a current corporate leader of a once-great nation) in any given situation, for any given corporation. Fixing the particular dysfunctional circumstances may prevent the same thing from happening again, but this approach is akin to always fighting the last war – something the U.S., for example, is pretty good at. The problem is that adversaries, be they military or hierarchically systemic, never fight the last war, or even the last battle: they invent the next one. Corporate managers are forever playing figure catch-up, because of their inability to perceive the fundamental tectonic changes in the ground. Consequently, all sorts of bizarre things crop up as the now obsolescent corporate structure fights desperately to retain its past glory, its diminished ability to produce wealth (as society’s understanding of sustainable wealth has become more enlightened), and its now-impotent drive for control above all else.

A series of posts on boingboing regarding TiVo and intellectual property highlights a relatively miniscule consequence of what I perceive as the corporate structure’s last hurrah. In the first post, TiVo owners report that their PVR device would not allow them to retain recordings of the animated television programs King of the Hill, and The Simpsons. By transmitting a “protected bit” through the TiVo system, content owners unilaterally restricted viewers from retaining recordings beyond a pre-set period. The owners feel that their intellectual property rights are being violated. However, the content owners, aided and abetted by TiVo are in fact breaking the law in the United States, as the Copyright Act (upheld by the Supreme Court in the famous “Betamax decision”) permits home copying of broadcast material, and sharing for non-commercial purposes. (If I make a recording, I can hand it to you.) In Canada, our Supreme Court actually said that this is a user right (as opposed to a defence). In their apparent zeal to foil the so-called pirates, the content owners technologically defy the law of the land.

On the second front, that international bastion of the content industry’s vested interests, the World Intellectual Property Organization, “is once again considering adding "webcasting" to the upcoming Broadcast Treaty. This would allow a webcaster (anyone who sends you audiovisual material over the Internet) to have a 50 year monopoly over what you do with the material you receive from him -- even if he's sending you Creative Commons-licensed work, GPL'ed Flash animations, or stuff that's in the public domain. It would also make it illegal to break any DRM used in connection with webcasting.” What this means is that an independent content creator, like you or I, could post something to the web under Creative Commons, and a re-webcaster could take it, offer it on a streaming server, and automatically acquire a unique intellectual property right in the work. Now if that sort of hijacking of rights isn’t piracy, I don’t know what is, and it is proposed, supported and will be perpetrated by the same people who are screaming piracy today.

Both of these illustrate the lengths to which vested interests will go to retain control, power, and financial monopoly, now that the mechanistic ground of their business has shifted. It is not only greed that drives them, although my friend Wade Rowland makes a strong case for this perspective. Corporations perceive that a change has happened, and they are fighting and clawing for their survival, even if it means defying the law, common sense, business sense, or threatening the survival for the rest of us.

In response to an outrageous propaganda campaign by an obsolescent government agency, namely the US Patent and Trademark Office, that supports these corporate interests in contravention of their mandate, Wendy Seltzer offers appropriate interpretations and understanding of the USPTO’s distortion of the law. It makes for fun and thought-provoking (not to mention creation-provoking) reading.

The obsolescence of the modern corporation, and its reversal into a new emergent form, is the matter of my current research. Developing theory that “predicts” the future of corporation by anticipating the present is the objective.
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1 comment:

Harold Jarche said...


This is a subject that is of singular interest to me. What will the shape of new business? We know that old model is obsolete, and I'd be interested in your views on the drivers that will shape new business structures.

I would like to see something like Dave Pollard's Natural Enterprise or systems based on Natural Capitalism, but that me be too optimistic.