Date posted: 23/03/2018 6 min read

Machiavelli Inc: Are corporations psychopaths?

Corporations are legal, but it’s hard to consider them moral. A philosopher asks whether they should be thought of as psychopaths.

In Brief

  • Measured against moral people, many corporations seem like psychopaths.
  • Prudent corporations that care about their profits take ethics into consideration and adjust their practices as necessary.
  • Even if corporations don’t have full moral agency, people do. People can condemn corporations for unethical practices.

By Tim Dean.

Psychopaths – those extremely rare people such as US serial killer Ted Bundy – are fascinating. On one hand they’re typically intelligent, personable, disinhibited and have an aura of confidence that many find alluring. But they differ from the rest of the population in one key dimension: They lack empathy and feelings of guilt and remorse. 

That seemingly minor emotional quirk has a surprisingly dramatic impact on the way they behave, often leading to anti-social behaviour and running them afoul of the law. In fact, psychopaths are about 25 times more likely to serve prison time than non-psychopaths. 

This doesn’t mean psychopaths are entirely incapable of moral reasoning. Multiple studies have found that psychopaths are particularly adept at certain types of moral thinking, particularly those that balance the consequences of actions. So where we might experience revulsion at intentionally killing one person to save the lives of several others, psychopaths are far more likely to dispassionately favour the needs of the many over the needs of the few. It turns out psychopaths make the best utilitarians.

The other thing psychopaths are skilled at is pretending to be good. Even without experiencing genuine empathy, they can behave in seemingly altruistic ways. However, on closer examination, they only do so when they believe they have something to gain. They might help someone only because they expect future reciprocation, or work to build trust so that they can exploit it down the track. It turns out that psychopaths also make great Machiavellians, often cleverly negotiating Game of Thrones-style political environments.

This is why we tend to think of psychopaths as being morally deficient. When judging someone’s moral character, we look beyond their actions to determine their intentions and how they feel. If they’re found to be cold and self-serving, we judge them harshly, even if the outcome of their actions appears to be good. 

Corporate character

Now consider a corporation. Even though it is composed of many people, it’s legally considered to be a person too. This is a necessary legal concept to allow corporations to do things such as own property, open bank accounts and buy and sell goods in their own right.

Yet we also relate to corporations as if they are singular entities, rather than agglomerations of workers. Sometimes we even anthropomorphise the corporation – we treat it like a person.

Research by Princeton psychologist Susan Fiske shows we employ the same psychological mechanisms to judge a corporation’s ‘personality’, its ‘intentions’ and ‘values’, which we use to judge other people. This is why you might catch yourself ‘hating’ your phone company, ‘liking’ your bank or wondering if your health insurance company has your best interests at heart.

But when we use that psychological machinery to judge a corporation’s moral character, it can start looking a lot like a psychopath, as law professor Joel Bakan argued in his book and film The Corporation.

Related: Is taxation ethical and fair?

When is it ethical to levy a tax and what are the ethics of seeking to minimise, let alone trying to avoid, your tax obligations?

For a start, corporations feel no empathy, guilt or remorse. And many corporations are explicitly established to generate a profit, so we know they primarily serve interests other than ours. One might suspect that many of the altruistic acts committed by corporations are primarily motivated by a desire to cultivate a positive image with their customers.

What, then, do we make of a corporation that does things we consider bad, even if they’re legal – such as selling a product it knows is both addictive and deadly; retrenching loyal staff and outsourcing to countries with far lower labour standards; or cutting costs by lowering safety rules to the absolute minimum that the law allows? What does it even mean to believe that a corporation can be morally responsible?

Right now there’s talk of regulating the culture of the Big 4 banks, particularly following serious ethical and legal failings by the Commonwealth Bank of Australia. Energy companies and the corporations that finance them are being criticised for hastening climate change that could affect millions of lives. And multinational corporations are being condemned for profit-shifting and dodging tax liabilities. So this is far from an armchair concern; it has real effects on how we expect corporations to behave.

Mr and Ms Corporate

One approach is to just swallow the corporations-as-people analogy whole and treat them as fully fledged moral persons. After all, if morality governs the actions of rational beings and if corporations effectively act as rational beings, then it seems like morality ought to govern the actions of corporations. 

In the words of American philosopher Peter French, who championed this idea in the 1970s, “corporations can be full-fledged moral persons and have whatever privileges, rights and duties as are, in the normal course of affairs, accorded to moral persons”. So when a corporation pollutes, it’s a bad corporation and deserves to be punished, just as if an individual miscreant rolled a barrel of toxic waste into a waterway. 

It’s a tempting view, and one that has been embraced by many. But it does tend to creak a bit when put under pressure. After all, if corporations are to be judged in the same way as people, perhaps many of them really are psychopathic, and we’d be wise to cross the road to safety when we pass one of their stores or branches. 

The analogy with ‘real’ moral persons also breaks down pretty quickly. For one thing, corporations have no right to life. We can write a corporation into existence by creating a charter, but we rarely see protestors call us monsters when we decide to ‘kill’ it by dissolving the corporation entirely. 

And while it makes some sense to say a corporation has interests, values and goals, it makes less sense to say it has thoughts, feelings or that it ‘cares’ about any of these interests, values or goals. As Australian philosopher R. E. E win has written: “Corporations, unlike the people who run them, have no emotional life. Corporations operate at the level of reason and requirement, but they do not get angry at being mistreated, they are not sickened by tales of the squalor in which some people have to live, and, generally, they simply do not have the emotional life required of a being that is to care about things as things must be cared about if one is to possess a virtue.”

...if corporations are to be judged in the same way as people, perhaps many of them really are psychopathic, and we’d be wise to cross the road to safety when we pass one of their stores or branches

This is why some people consider corporations to be moral actors only in a limited sense, with rights and duties that extend only as far as their legal obligations, but no further. 

Then again, lying isn’t illegal. Neither is being rude, cheating on your partner, or leaving the pub before it’s your turn to buy a round. There are many more acts that are legal yet immoral. So you have to think about whether you’re happy with the idea that corporations are bound in their behaviour only by the strictures of the law.

Some have been very happy with that arrangement. Milton Friedman famously argued that businesses have no social obligations beyond the maximising of profits for their shareholders. In his 1962 book Capitalism and Freedom, he wrote: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” So it’s a big no-no for executives to go off on ethical crusades that put a dent in profits.

That said, the weakness in this argument is the same weakness that exists in many of Friedman’s arguments: It’s predicated on the idea that ethics is about maximising our ability to satisfy our desires and that an open market is the optimal way to do so, thus free markets are inherently ethical. That’s a fairly contestable claim.

Machiavelli Inc.

Even if corporations don’t have full moral agency, people do. And people work for corporations, write their charters, fill executive chairs and own their shares. These people are moral agents and they can influence the corporation from within, such as by embracing the triple bottom line accounting framework.

People also interact with corporations, conduct business with them, buy their products and seek their services. Even if our psychology inclines us to view corporations as moral agents, and that view turns out to be problematic, it doesn’t necessarily change how we should interact with them. We can still choose to reject one corporation and do business with a competitor if we prefer its values. We can condemn corporations for polluting the environment or engaging in unethical labour practices.

Corporations that care about their own profits are prudent to take these things into consideration and adjust their practices (or charter) as necessary. We probably shouldn’t fool ourselves into thinking that all corporations engaging in charity work or promoting environmental sustainability are doing it out of pure magnanimity. But it might be worth politely ignoring their intentions if the outcomes are to our liking. 

So as long as corporations act rationally and in accordance with the law, and we can choose to interact with the ones that reflect our own values, maybe it doesn’t matter if corporations are a little like psychopaths, cold Machiavellians chasing their own self-interest. Corporations aren’t people. So perhaps we should judge them for what they really are, rather than what our psychology tells us they are.

Related: Corporate tax wins for ATO

Corporate giants now accept that shifting millions in profits to havens such as Bermuda is “not right”, says ATO chief Chris Jordan.

Tim Dean is a Sydney-based philosopher and writer. He has a PhD in ethics from the University of New South Wales and is an honorary associate at the University of Sydney.

Pictured: Portrait of Italian diplomat Niccolò Machiavelli (1469-1527) who wrote The Prince, a handbook for unscrupulous politicians that inspired the term “Machiavellian”.