Joel Bakan’s ‘The Corporation’

I’ve written before about how interesting I find the intersection between the legal structures that create a company, and the social impacts that those structures have. The Company by John Micklethwait and Adrian Woolridge was valuable in providing a historical context for the creation of companies, but it didn’t really go beyond that.

The Corporation: The pathological pursuit of profit and power by Joel Bakan doesn’t focus on the history, but tries to go a little beyond that, to questions of how companies (or corporations*) influence society.

For the most part though, it focuses on the central thesis – that companies (or corporations*) are a specific structure that leads directly to imposing costs on society. The quotes below are indicative of the broad sweep of his argument. It’s a fascinating read.

Joel Bakan, as a legal academic, has some credibility when he writes in this area. The book itself feels like it could have more depth, and there’s certainly room to extent more into questions of how corporations are structured internally, and how they interact with societies, beyond the basic question of imposing costs (or externalities).

But it’s an interesting read. A particularly fascinating point for me was reading about the ‘cocktail putsch‘: an abortive plot to undertake a coup against the New Deal, which may never have gotten very far, but is interesting even as a fanciful discussion.

Bakan concludes with a set of recommendations. He dithers between being idealistic and recommending marginal tweaks, and ultimately ends up being anemic, with the kind of recommendations that are so vague as to be able to encompass a thousand possibilities.

Overall, this one could have been better with more depth and theory, but it’s worth it, simply as an interesting discussion of what to my mind is an under-analysed area.

*Yes, there may be some technical legal differences between a company and a corporation that I’ve missed; they’re not important for the purposes of either of these books.


Businessmen and politicians had been suspicious of the corporation from the time it first emerged in the late sixteenth century. Unlike the prevailing partnership form, in which relatively small groups of men, bonded together by personal loyalties and mutual trust, pooled their resources to set up businesses they ran as well as owned, the corporation separated ownership from management- one group of people, directors and managers, ran the firm, while another group, shareholders, owned it. That unique design was believed by many to be a recipe for corruption and scandal. Adam Smith warned in The Wealth of Nations that because managers could not be trusted to steward “other people’s money,” “negligence and profusion” would inevitably result when businesses organized as corporations …

Stockholding could not become a truly attractive option for the general public until that risk [personal liability] was removed, which it soon was …

1,800 corporations were consolidated into 157 between 1898 and 1904. In less than a decade the U.S. economy had been transformed from one in which individually owned enterprises competed freely among themselves into one dominated by a relatively few huge corporations, each owned by many shareholders …

By the end of the nineteenth century, through a bizarre legal alchemy, courts had fully transformed the corporation into a “person”, with its own identity, separate from the flesh-and-blood people who were its owners and managers … The corporate person had taken the place, at least in law, of the real people who owned corporations … Gone was the centuries-old “grant theory”, which had conceived of corporations as instruments of government policy and as dependent upon government bodies to create them and enable them to function …

The “best interests of the corporation” principle, now a fixture in the corporate law of most countries, addresses Smith’s concern by compelling corporate decisions always to act in the best interests of the corporation, and hence its owners. The law forbids any other motivation for their actions, whether to assist workers, improve the environment, or help consumers save money … As corporate officials … stewards of other people’s money, they have no legal authority to pursue such goals as ends in themselves-only as means to serve the corporation’s own interests, which generally means to maximize the wealth of its shareholders. Corporate social responsibility is thus illegal-at least when it is genuine …

“The structure,” says Kernaghan, “the whole system, just drags everybody with it.” At the heart of that structure is a simple dynamic: a corporation “tends to be more profitable to the extent it can make other people pay the bills for its impact on society,” as businessman Robert Monks describes it. “There’s a terrible word that economists use for this called ‘externalities.'”

The corporation’s unique structure is largely to blame for the fact that illegalities are endemic in the corporate world. By design, the corporate form generally protects the human beings who own and run corporations from legal liability, leaving the corporation, a “person” with a psychopathic contempt for legal constraints, the main target of criminal prosecution …

There is little democracy in a system that relies on market forces and nongovernmental organizations to promote socially responsible behavior from corporations …


The Monopolists by Mary Pilon

For many years, Monopoly’s history was simple. Charles Darrow invented the game during the Great Depression, and the game was popularised by the Parker Brothers. It was a simple story that Horatio Alger might have loved.

Then, in the 1970s, Ralph Anspach invented Anti-Monopoly. Parker Brothers came after him. In the course of a long copyright battle that would threaten his health, his marriage, and his livelihood, the truth about the origins of Monopoly came tumbling out.

It starts with Lizzie Maggie, a remarkable writer, teacher, feminist and engineer. In 1903 she applied for a patent on The Landlord’s Game, a board game in which players moved around a board, acquiring property. Fascinatingly, it was a demonstration of Henry George’s ‘Georgism‘, a framework on taxation and control of resources, intended to show how without the right tax framework, a single player comes to bankrupt other players and control the resources.

She patented it, but doesn’t appear to have enforced her patent. From there, the game trickled out to other parts of the country. Until, in a moment so striking that it’s hard to resist the temptation to see it as a metaphor or synecdoche, Charles Darrow claimed that he had invented Monopoly, and cashed in on the lucrative wealth that flowed his way.

This is, essentially, the guts of the story that Mary Pilon tells in The Monopolists: Obsession, Fury, and the Scandal Behind the World’s Favorite Board GameBut even though you know the story, this is a book that’s still very worth reading.

Pilon tells the story well, and it’s a complex story. Lizzie Maggie is a fascinating and inspiring character, someone who believed passionately in justice throughout her life, and did so flamboyantly. Pilon tells the twists and turns of how the board game evolved through different iterations, trickling from one community to another.

She’s slightly less deft in telling the legal battles; at times it feels a little as though the material is being dragged out, rather than cutting to the chase. But it’s a testament to the research that she’s done, in digging through all the material, that she can tell the story so exhaustively and so well.

Where she struggles is where the trail goes cold, the points past which she can’t venture, travelling into the bowels of the patent office, or the corporate archives now held by Hasbro. It would be an even more compelling story if that information was available, but Pilon does well with what she has.

In some ways, it has interesting parallels to another story about claiming ownership of an invention, that features a twist at Harvard (Pilon tells how Dan Layman, another character in the story, sold a game called Finance based on a game he played at Harvard).

A final, fascinating set of twists is that after the courtcase that won Ralph Anspach the right to publish his Anti-Monopoly, there was a hurried set of legal changes pushed through Congress. I haven’t been able to find another reference online, but Pilon assures us that a specific exemption was included in the legislation to ensure that Anti-Monopoly wasn’t caught:

… Person ensured that Ralph’s right to sell Anti-Monopoly would still be protected under the new act in what became known as “the Anti-Monopoly amendment.”

The final, delightful twist is that now Ralph’s two sons run the company, and they’ve patented a particular set of mathematically calculated prices that equalise their game.


The object of the game was to bankrupt all opponents and be the last person standing by acquiring real estate and charging rent.


John Wanamaker was credited with having popularized the price tag–a Quaker concept that had originally taken hold in England. Both the Quakers and Wanamaker believed that haggling over prices with self-interested storekeepers did not lead to equal shopping opportunities, so fixed prices made everyone equal in the eyes of God.


It’s still unclear how Parker Brothers received approval for the Monopoly patent, given the two Landlord’s Game patents that had come before it. It’s also unclear how the patent was issued in an astonishingly fast four months. Typically, the U.S. Patent Office rejected applications that had strong similarities to ones that were already on file. And even when an application was approved, it took many months or even years to process.


Lizzie and George signed a deal. She received five hundred dollars. And no residuals.


The vast majority of Monopoly players had no clue that the game was a protest against capitalism, not an endorsement of it.


The Geneva Conventions allowed POWs to receive some letters and goods, including games, to help them pass the time. But relief groups such as the Red Cross did not want to risk their integrity as aid organizations by participating in smuggling activities, so the Allies set up fictitious relief agencies, such as the British Local Ladies Comfort Society and the Lancashire Penny Fund. The addresses of blitzed buildings were sometimes used as well …

It would be virtually impossible to know the scope of the Allies’ use of Monopoly boards or how many POWs were helped by the hidden maps and goods-if any at all. No sets explicitly used for this purpose have ever been found, a fact that gives some game historians pause.


Trademark lawyers use the term “genericide” to refer to product names that become so successful that they lose their trademark and become generic words adopted into the common language.


In some ways, the actions of Layman and Darrow had not been all that different. Both men had seen a popular game, played it, and marketed it. But Layman had never filed for a patent, and had never claimed to have invented the game. Darrow had.


When Hasbro purchased Parker Brothers in 1991, it’s likely that it also purchased a trove of George Parker’s diaries and neatly organized game library, which it has declined to make available to researchers for decades, as it declined my request to access them.


They say that writers suffers so that their readers don’t have to, but so do those dear souls who are close to writers, who empower, encourage, and rip apart story structures in the name of friendship and generosity.


It’s easy to assume in this age of research that if information doesn’t surface via Google search, then it must not exist at all … the reporting of this book was a humbling reminder of the infinite amount of knowledge still tucked away on dusty bookshelves, in attics, or in brains, yet to be documented and only woven together through sweat, obsession, and love of story, even regarding something as seemingly simple as board games. The Internet has yet to do its best work.



Articles: Political life and Facebook’s media dominance

I’ve come across a few interesting articles recently.

In Meanjin, Katherine Murphy reflects on the day-to-day experience of political life in ‘The political life is no life at all‘. I think her underlying thesis, that the day-to-day of politics in Australia’s Commonwealth Parliament is exhausting, and crowds out all but those individuals who are statistically anomalous in their ability to withstand stress (for better or worse) is correct. The essay casually back-hands the inability of the public service to respond to the demands of the Rudd PMO, but I think that’s a story worth unpacking a little more – Speechless – a Year in My Father’s Business is, I think, a good starting point for the other side of the story.

As per my continuing fascination with the intersection between politics and media, ‘This Country’s Democracy Has Fallen Apart — And It Played Out To Millions On Facebook‘ is an excellent piece of longform from Buzzfeed, who I think do a much better job than many outlets in focussing on where the media is right now (which is to say, Facebook, and Google to some extent). There’s a disconcerting sense in the piece of how decisions are made at vast removes from Cambodia, in offices where people haven’t bothered to think about how they will impact Cambodia, but that have an enormous impact there.


Articles: Democracy, Free Speech, and the Strange Brands in Your Instagram Feed

The Atlantic has an interesting piece by Alexis Madrigal on internet sales: ‘The Strange Brands in Your Instagram Feed’. It’s worth a read, purely as a peek into some of the less obvious mechanisms behind online shopping.

Wired has an interesting reflection by Zeynep Tufekci on free speech, and what that means in practice as technology shifts: ‘It’s the (Democracy Poisoning) Golden Age of Free Speech‘.

These books explain a lot of things

A while ago I read a book titled This Explains Everything: Deep, Beautiful, and Elegant Theories of How the World WorksEdited by John Brockman, it was a collection of responses from a range of thinkers on their favourite theories or ideas, that had significant explanatory power.

In a related way, I wanted to try and start a list here of books that I’ve read that I thought had interesting or important ideas, in understanding different aspects of people / society / the universe. I think explaining everything is a tall order, so this is just a list of books that I found interesting on a range of topics. In a way it’s also a useful list for me, of keeping track of books that I think cover or explain useful or interesting theories. Obviously, a mention here isn’t an endorsement of the book or the author, etc.

I’ll try to keep it updated as I come across other interesting pieces. But in the meantime, tell me what you think: What are the books that explain essential, profound or important ideas? What have I missed on this list?


It’s been years since I read it (and please be aware this isn’t an endorsement of the author), but reading The Blind Watchmaker by Richard Dawkins was a useful introduction to evolutionary theory. Interestingly enough, evolutionary theory is one of the ideas that cropped up quite frequently in This Explains Everything as a powerful idea.

James Gleick’s books on information theory (The information: A history, a theory, a flood) and chaos theory (Chaos: Making a new science) are fascinating, approachable introductions to very important branches of mathematics.

It’s been a long time since I read it, but I found a book on Popperian hypothesis testing and falsifiability useful (unfortunately I can’t remember the title).

Philosophy and ethics

There are a few books that I found interesting here – but it’s a complex area, and not one that I have a deep understanding of.

  • The Intentional Stance by Daniel Dennett was an interesting read; I think particularly in how to think about people and intentionality from a materialistic viewpoint. If I can paraphrase, Dennett essentially argues that intentionality is a model that we have of behaviour in the world, so that we conceptualise other people as agents, with goals and mental models.
  • Elbow Room by Daniel Dennett was also an interesting set of ideas, in how to reconcile a materialist viewpoint with questions about free will and ethical responsibility. Essentially, (if I can paraphrase many years after reading it), Dennett is arguing that traditional debates about free will and determinism define things in the wrong way; that if we think meaningfully about what free will means, we can have a useful form of free will, in a deterministic universe. Having said that, I think there is something to this webcomic sending up his approach – that it may feel a little too much like a glib redefinition.
  • Reason and Morality by Alan Gewirth was a difficult book. It took me several months to wade through, when I had the time to read in-depth. But I think meta-ethics is an interesting and important philosophical topic, and this is one of the more satisfying reads I’ve found. To very loosely paraphrase, Gewirth argued that for any agent that acts towards desired goals, there are implicit assumptions that, if logically carried to their conclusion, necessitate valuing the agency of others.
  • Beautiful souls by Eyal Press isn’t a particularly deep theoretical book. But I think it’s valuable to think about the factors that lead us to make courageous decisions, and for that reason this is well worth a read, as Press examines four ordinary people making courageous choices.



Perhaps because I read a bit of fiction, story-telling is one of those things that fascinates me. What makes a good story? Why do we find some stories gripping, and others dull?

  • Story by Robert McKee is an interesting read. It’s not foolproof, but it works to break down the key components of what McKee thinks makes for a good story: difficult choices and unexpected consequences.


There are a lot in this category – perhaps because I’ve been reading quite a few since the blog started, where as other categories I read more of before I was taking notes.

  • The Dance of Legislation by Eric Redman is a fascinating first-hand account of a set of power struggles involved in the passage of legislation. It’s useful as an insightful account of the role chance and relationships can play in day-to-day political outcomes.
  • Collapse by Jared Diamond and The Collapse of Complex Societies by Joseph Tainter both deal with how a society collapses. Diamond’s thesis rests on five key factors:  environmental damage, natural climate change, war, weakened allies, and the ways societies choose to respond to these pressures. It’s a compellingly detailed historical account that societies can collapse because of poor responses to external pressures. Tainter’s thesis centres around diminishing marginal returns to complexity.
  • The Master Switch by Tim Wu is an excellent account of how media empires rise and fall. It’s particularly valuable because it identifies cycles over time, rather than analysing a static moment. He argues that as new technologies emerge, the field is fragmented between many contenders, before it gradually merges into a smaller number of firms. Given that media can influence political outcomes, these cycles are important.
  • The Company by John Micklethwait and Adrian Woolridge is an excellent outline of something that’s so ubiquitous it’s almost invisible – when did companies emerge? They make the compelling case that the legal structure of a company has a significant influence in our society.
  • Democracy for realists: Why elections do not produce responsive government by Christopher Achen and Larry Bartels is an important read. They argue that our ideas of how democracies work are wrong, and set out a strong evidence base of how a range of voter behaviour theories are contradicted by particular pieces of evidence. It raises interesting and important questions.
  • The rise and decline of nations by Mancur Olson an analyses of why some nations succeed, and why others fail. He sheds powerful light by focussing on the relationships within a society, and how particular groups can have an incentive to take action that is detrimental to the society overall. Interestingly, it seems that since publication, his thesis has held up reasonably well.
  • Manufacturing consent by Edward Herman and Noam Chomsky is an interesting read, and one of the few pieces I’ve read that focuses on the structural relationships between media entities and government. Have you come across any other good ones?
  • Between the World and Me by Ta-Nehisi Coates is a powerful reflection on race in America.
  • The origins of political order by Francis Fukuyama is an impressive attempt to tell a unified, theoretically grounded story of how political frameworks emerge. I may not agree with all of his conclusions, but I wish there were more books tackling questions like this on this scale. He writes about the historical emergence of the state, the rule of law, and democratic accountability.
  • Economic Justice by Stephen Nathanson sets out, very simply, a set of ideas about how resources should be distributed in society. For all that it’s very simple, it’s actually quite useful: there’s real value in a clear, simple exposition of basic ideas.
  • While not explaining deep theories, I wanted to quickly mention both Neil Chenoweth’s Murdoch’s Pirates, and Jane Mayer’s Dark Money, because they’re both well researched pieces that set out in some detail the mechanics of how particular entities interact with the political / media system, in ways that aren’t always obvious.


Paper promises by Philip Coggan isn’t an excellent book, but it is a starting point on an interesting question – what is money? How does it function? Essentially, it’s a store of value, a unit of exchange, and a unit of measurement. But fundamentally, money works because we expect that we can trade it with other people for something. This is, on some level, obvious, but occasionally easy to forget.

Virtual Murdoch by Neil Chenoweth

Neil Chenoweth is one of the better Murdoch biographers out there. In part, that’s because he’s an excellent business journalist. Rather than trying to create a picture of a character, he hones in on the deals that have made Murdoch: mergers, acquisitions, and the like.

His book on a particular News Corp subsidiary, Murdoch’s Pirates, was at times overly complex and slightly baffling (to be fair, it’s a difficult topic). Virtual Murdoch is a similarly complex piece, in that it tracks Murdoch’s career from its very start until publication at the turn of the millennium. Perhaps because Murdoch as central character gives it something to hang from, the book feels a little more tightly knitted than Murdoch’s Pirates; it follows each stage of the deals and gambles (and Chenoweth very much presents them as gambles) that Murdoch has undertaken throughout his career.

In on instance, he outlines the leveraging the Murdoch was able to use to acquire an asset without losing equity control:

In 1985, under the US accounting standards News Corp had net assets of $166 million, which suggested Murdoch could only borrow about $175 million. He was raising new debt of $2.7 billion, fifteen times more than the banks’ lending limit allowed him. It was enough to induce cardiac failure in even his most hardened bankers. The only way that Murdoch could borrow more money was to increase his net assets, or shareholders’ equity. The easiest way to do this was to raise capital by issuing stock, as Turner eventually did with the cable companies. But it cost Turner control of his company. Murdoch was never going to allow that to happen.

Murdoch had two ways of getting around this bothersome lending restriction. First, his finance director Richard Sarazen argued that News Corps’ newspapers were worth far more than the modest values assigned to them in the group’s balance sheet. And to prove this point, he kept revaluing them … Between 1984 and 1987, Sarazen wrote up the mastheads of the group’s newspapers by $1.5 billion …

The revaluations solved half the debt-raising problem. Arthur Siskind and the legal team at Squadron Ellenoff solved the other half of the problem. Murdoch needed to raise $1.15 billion in junk money from Michael Milken to buy Metromedia. It was, as Siskind later told American Lawyer, ‘an extraordinarily complicated and very unusual financing’. Siskind’s twist was that instead of treating the loans as junk bonds, News would call it preferred stock. While in essence this would be a $1.15 billion loan, it would appear on the News Corp balance sheet as a stock issue. Because it was called a stock issue, it would be treated like an asset.

Later, Chenoweth summarises quite neatly a set of causally linked crises that he’s described:

Murdoch had never been able to afford his great move in 1985-86 to buy Twentieth Century Fox, the Metromedia television stations and to launch the Fox network. To pay for it, he moved his British newspapers to Wapping and triggered a year of violent industrial confrontation. The Wapping success produced a new debt problem that he tried to solve by taking over the Australian newspaper industry. When that plan went wrong he had been forced into a deal that left a crippling debt in a family company. Then, in the deals after Black Monday 1987, Murdoch flipped the problem back to News Corp. Cruden’s loan problem was now once again News Corporation’s lurking debt crisis.

Then documents some fascinating patterns in corporate accounts:

David DeVoe celebrated News Corp’s escape from the debt crisis with the accounting equivalent of a barrel roll. Sarazen had produced his party trick once in the News Corp accounts each year. DeVoe did it three times in the same set of accounts. Profit before abnormal items came in at $A391.391 million. Minority interests of $A70.070 million were subtracted to give a profit of $A321.321. The odds against three numbers repeating themselves like this were more than 100 million to one.

There’s a lot more in the book that’s worth reading, if you’re interested in media economics and finance. It is of course hard to know how seriously to take Chenoweth’s Kremlinology, given that he relies very much on secondary sources; but it’s an interesting read, and has experience at the AFR that gives him some credibility.

Oh, and if you’re interested in reading about the infamous ‘poison pill’, this is one of the better explainers I’ve found.