Original subtitles

150 years ago

the business corporation

was a relatively insignificant institution.

Today it is all pervasive.

Like the church

the monarchy and the communist party

in other times and places

the corporation is today's dominant institution.

This documentary examines the nature

evolution impacts and possible futures

of the modern business corporation.

Initially given a narrow legal mandate

what has allowed today's corporation to achieve

such extraordinary power and influence over our lives?

We begin our inquiry as scandals threaten to trigger

a wide debate about the lack of public control

over big corporations.

I think there is an overhang over the market of distrust.

listen 95 percent or some percent

huge percentage

of the business community are honest

and unreveal all their assets

got compensation programs that are balanced.

But there are some bad apples...

the media debate about the basic operating principles

of the corporate world was quickly reduced

to a game of follow the leader.

I still happen to think the United States

is the greatest place in the world to invest.

We have some shake ups that are going on

because of a few bad apples.

Some people call me a bad apple

but I may be bruised but I still taste sweet.

Some people call me a bad apple

but I may be the sweetest apple on the tree.

These are not just a bunch of bad apples.

This is just a few bad apples.

This is not just a few bad apples.

You've gotta get rid of the bad apples

You can start with Tyco

Bad apples

We know all about WorldCom.

Bad apples

Xerox Corporation.

Bad apples

Arthur Anderson.

Bad apples

Enron obviously

bad apples.

K-mart Corporation

Bad apples

the fruit cart is getting a little more full.

I don�t think it's just a few apples unfortunately.

I think this is the worst crisis of confidence

in business.

What's wrong with this picture?

Can we not pick a better metaphor

to describe the dominant institution of our time?

Through the voices of CEOs whistle blowers

brokers gurus and spies

insiders and outsiders

we present the corporation as a paradox

an institution which creates great wealth

but causes enormous and often hidden harms.

I see the corporation as part of a jigsaw

in society as a whole

which if you remove it

the picture�s incomplete.

But equally if it's the only part

it's not going to work.

A sports team.

Some of us are blocking and tackling.

Some of us are running the ball

some of us are throwing the ball.

But we all have a common purpose

which is to succeed as an organization.

A corporations like a family unit.

People in a corporation work together for a common end

Like the telephone system

it reaches almost everywhere.

It's extraordinarily powerful it's pretty hard to avoid.

And it transforms the lives of people

I think on balance

for the better.

The eagle

soaring clear eyed competitive

prepared to strike but not a vulture.

Noble visionary majestic that people can believe in

and be inspired by

that creates such a lift that it soars.

I can see that being a good logo

for the principled company.

Okay guys enough bullshit.

Corporations are artificial creations.

You might say they�re monsters

trying to devour as much profit as possible

at anyone's expense.

I think of a whale.

A gentle big fish

which could swallow you in an instant.

Dr. Frankenstein's creation

has overwhelmed and overpowered him.

As the corporate form has done with us.

The word corporate gets attached in almost

you know in a pejorative sense to

and gets married with the word agenda.

And one hears a lot about the corporate agenda

as though it is evil

as though it is an agenda

which is trying to take over the world.

Personally l don't use the word "corporation "

I use the word business.

I will use the word use the word company.

I will use the words business community

cause I think that is a much fairer representation

than zeroing in on just this word corporation.

It's funny that I've taught in a business school

for as long as I have

without ever having been asked so pointedly

to say what I think a corporation is.

... it is one form of business ownership...?

It's a group of individuals working together to serve

a variety of objectives.

The principal one of which is earning large

growing sustained legal returns

for the people who own the business.

The modern corporation has grown out of the industrial age.

The industrial age began in 1712

with an Englishman named Thomas Newcomen

invented a steam driven pump to pump water

out of the English coalmine so the English coalminers

could get more coal to mine

rather than hauling buckets of water

out of the mine

It was all about productivity more coal per man hour.

That was the dawn of the industrial age.

And then it became more steel per man hour

more textiles per man hour

more automobiles per man hour

and today it's more chips per man hour

more gizmos per man hour.

The system is basically the same system

producing more sophisticated products today.

The dominant role of corporations in our lives

is essentially a product of roughly the past century.

Corporations were originally associations of people

who were chartered by a state

to perform some particular function.

Like a group of people want to build abridge

over the Charles River or something like that.

There were very few chartered corporations

in early United States history.

And the ones that existed had clear stipulations

in their state issued charters

how long they could operate

the amount of capitalization

what they made or did or maintained

a turnpike whatever was in their charter

and they didn't do anything else.

They didn't own or couldn't own another corporation.

Their shareholders were liable.

And so on.

In both law and the culture the corporation was considered

a subordinate entity that was a gift from the people

in order to serve the public good.

So you have that history

and we shouldn't be misled by it

it's not as if these were the halcyon days

when all corporations served the public trust

but there's a lot to learn from that.

The Civil War and the Industrial Revolution

created enormous growth in corporations.

And so there was an explosion of railroads

who got large federal subsidies of land.

Banking heavily manufacturing

And corporate lawyers a century and a half ago

realized that they needed more power to operate

And wanted to remove some of the constraints

that had historically been placed on the corporate form.

The 14th amendment was passed

at the end of the Civil War

to give equal rights to black people.

And therefore it said

No state can deprive any person of life

liberty or property without due process of law.

And that was intended to prevent the states

from taking away life liberty or property

from black people as they had done

for so much of our history.

And what happens is the corporations come into court

and corporation lawyers are very clever.

And they say

Oh you cant deprive a person of life

liberty or property.

We are a person.

A corporation is a person.

And so supreme court goes along with that.

And what was particularly grotesque about this was

that the 14th amendment was passed

to protect newly freed slaves.

So for instance between 1890 and 1910

there were 307 cases brought before the court

under the 14th amendment.

288 of these brought by corporations

19 by African Americans.

600000 people were killed to get rights for people

and then with strokes of the pen over the next 30years

judges applied those rights to capital and property

while stripping them from people.

Everybody makes a mistake once in a while

but I just cant be personally responsible.

That's one of the weaknesses of a partnership

isn't it Sid?

Well maybe you�d better incorporate the store.

Incorporate?!

Yes

Incorporating would give you the big advantage of

what you want right now limited liability.

You start with a group of people

who wanna invest their money in accompany.

Then these people apply for a charter as a corporation.

This government issues a charter to that corporation.

Now that corporation operates legally as an individual person

it is not a group of people

it is under the law a legal person.

Imperial Steel Incorporated has many of the legal rights

of a person.

It can buy and sell property...

It can borrow money.

It can sue in court and be sued.

It can carry on a business.

Imperial Steel

along with thousands of other legal persons

is a part of our daily living.

It is a member of our society.

Having acquired the legal rights and protections of a person

the question arises

What kind of person is the corporation?

Corporations were given the rights of immortal persons.

But then special kinds of persons

persons who had no moral conscience.

These are a special kind of persons

which are designed by law to be concerned

only for their stockholders.

And not say what are sometimes

called their stakeholders

like the community or the work force or whatever.

The great problems of having corporate citizens

is that they aren�t like the rest of us.

As Baron Thurlow in England is supposed to have said

They have no soul to save

and they have no body to incarcerate.

I believe the mistake that a lot of people make

when they think about corporations

is they think you know corporations are like us.

General Electric is a kind old man with lots of stories.

Nike young energetic.

Microsoft aggressive

McDonald's young outgoing enthusiastic

Monsanto immaculately dressed

Disney goofy.

The Body Shop um deceptive

very lovely.

Do you know what the body shop is?

Nope.

They have feelings they have politics

they have belief systems

they really only have one thing

the bottom line

How to make as much money as they can

in any given quarter.

That's it.

Of course they make a profit

and it's a good thing.

That's the incentive that makes capitalism work.

To give us more of the things that wanted.

That�s the incentive that other economic systems lack.

People accuse us of only paying attention

to the economic leg

because they think

that�s what a business persons mind set is

it's just money.

And it's not so

because we as business people

know that wanted to certainly address the environment

but also wanted to be seen as

constructive members of society.

There are companies that do good for the communities.

They produce services and goods

that are of value to all of us

that make our lives better

and that's a good thing.

The problem comes in in the profit motivation here

because these people

there�s no such thing as enough.

And I always counterpoint out

there�s no organization on this planet

that can neglect its economic foundation.

Even someone living under a banyan tree is dependent

on support from someone.

Economic leg has to be addressed by everyone.

It's not just a business issue.

But unlike someone under a banyan tree

all publicly traded corporations

has been structured

through a series of legal decisions

to have a peculiar and disturbing characteristic.

They are required by law

to place the financial interests of their owners

above competing interests.

In fact the corporation is legally bound

to put its bottom line ahead of everything else

even the public good.

That�s not a law of nature

that's a very specific decision.

In fact a judicial decision.

So they�re concerned only for the short term profit

of their stockholders who are very highly concentrated.

To whom do these companies owe loyalty?

What does loyalty mean?

Well it turns out that

that was a rather naive concept anyways

as corporations are always owed obligation

to themselves to get large and to get profitable.

In doing this

it tends to be more profitable to the extent

it can make other people pay for the bills

for its impact on society.

There's a terrible word that economists use for this

called externalities.

An externality is the effect of a transaction

between two individuals.

Third party who has not consented to

or played any role in the carrying out

of that transaction

And there are real problems in that area.

There�s no doubt about it.

Running a business is a tough proposition.

There are costs to be minimized at every turn

and at some point the corporation says

you know let somebody else deal with that.

Let's let somebody else supply the military power

to the middle east to protect the oil at its source.

Let's let somebody else build the roads that we can drive

these automobiles on.

Let's let somebody else have those problems

And that is where externalities come from

that notion of let somebody else deal with that.

I got all I can handle myself.

A corporation is an externalizing machine

in the same way that a shark is a killing machine.

Each one is designed in a very efficient way

to accomplish particular objectives.

In the achievement of those objectives

there isn�t any question of malevolence or of will.

The enterprise has within it

and the shark has within it

those characteristics that enable it to do that

for which it was designed.

The pressure is on the corporation

to deliver results now

and to externalize any cost

that this unwary or uncaring public

will allow it to eternalize.

To determine the kind of personality

that drives the corporation

to behave like an externalizing machine

we can analyze it

like a psychiatrist would a patient.

We can even formulate a diagnosis

on the basis of typical case histories of harm

that is inflicted on others

selected from a universe of corporate activity.

Well this is the office

of the national labour committee

here in the garment area of New York City.

It's a little bit dishevelled.

These are all from different campaigns.

To make this stuff concrete as possible

we purchased all of the products from the factories

that we're talking about.

This shirt sells for $ 14.99.

And the women who made this shirt got paid $ 0.03.

Liz Claiborne jackets made in El Salvador

The jackets are $ 178

and the workers were paid $ 0.74

for every jacket they made.

Alpine car stereos $ 0.31 an hour.

It's not just sneakers.

It's not just apparel.

It's everything.

We were in Honduras

and some workers they knew what kind of work we did

and they approached us and said

conditions in our factory are horrible.

Will you please meet with us.

And we said we would.

But you cant meet in the developing world

you cant walk up in a factory with your notebook

and workers come up and interview them.

I mean there's goons there�s spies

the military police

so you do everything in a clandestine manner.

We are about to start the meeting

and in walk three guys

very tough looking guys.

The company had found out about our meeting

and sent these spies.

Obviously we didn�t have the meeting.

But these young girls were really bright

And as they were leaving

away from the eyesight of the spies

they started to put their hands underneath the table.

And I put my hand under there

and they put into my hand their pay stubs.

So wed know who they were

what they were paid

and the labels that they made in the factory

so wed know who they worked for.

So I took my hand after everyone had left.

And in the palm of my hand

was the face was of Kathy Lee Gifford

And on the bottom of it was

A portion of the proceeds from the sale of this garment

would be donated to various children�s charities.

Very touching gets you right here.

Wal-Mart is telling you if you purchase these pants

and Kathy Lee is telling you

if you purchase these pants

you will be helping children.

The problem was

the people that handed us this label

were 13 years of age.

Do many people in your family work here?

Just me.

How many people do you support?

Eight people?

And how do you do it with that salary is it enough?

No.

Let's look at it from a different point of view

Let's look at it from a point of view

of the people in Bangladesh who are starving to death.

The people in China who are starving to death

and the only thing that they have to offer to anybody

that is worth anything

is their low cost labour.

And in effect what they�re saying to the world

is they have this big flag that says

Come over and hire us.

We will work for $ 0.10 an hour.

Because $ 0.10 an hour will buy us the rice

that's wanted not to starve.

And come and rescue us from our circumstance.

And so when Nike comes in

they are regarded by everybody in the community

as an enormous godsend.

Hey wait!

You are not permitted to be here!

The door was wide open.

No no no no no.

That�s my clothes.

Those are my clothes.

This is not your clothes.

Why your camera!?

Don�t touch the woman.

Why!?

This is a private company.

Without permission how can you come here?

Yes well the door was wide open

The doors for employees

not for you.

We went through the garbage dump

in the Dominican Republic.

We always do this kind of stuff

we dig around.

One day we found a big pile

of Nikes internal pricing documents.

Nike assigns a time frame to each operation.

They don�t talk about minutes.

They break the timeframe into ten thousandths of a second.

You get to the bottom of all 22 operations;

they give the workers 6.6 minutes to make the shirt.

It's $ 0.70 an hour in the Dominican Republic.

That�s 6.6 minutes equals $ 0.08.

These are Nikes documents.

That means the wages come to three tenths of one percent

of the retail price.

This is the reality.

It's the science of exploitation.

What happens in the areas where these corporations

go in and are successful?

They soon find that they cant do anymore in that country

because the wages are too high now.

And what�s that another way of saying

well the people are no longer desperate.

So okay we�ve used up all the desperate people there

they�re all plump and healthy and wealthy.

Let�s move on to the next desperate lot and employ them

and raise their level up.

Well the whole idea of the export processing zone

is that it will be the first step towards

this wonderful new development

through the investment that�s attracted to these countries

there will be a trickle down effect

into the communities.

But because so many countries are now in the game

of creating these free trade enclaves

they have to keep providing more and more incentives

for companies to come to their little denationalized pocket.

And the tax holidays get longer.

So the workers rarely make enough money

to buy three meals a days

let alone feed their local economy.

Something happened in 1940

which marked the beginning of a new era.

The era of the ability to synthesize and create.

On an unlimited scale

new chemicals that had never existed before

in the world.

And using the magic of research

oil companies compete with each other

in taking the petroleum molecule apart

and rearranging it into well you name it...

So suddenly it became possible

to produce any new chemical

synthetic chemicals

the likes of which had never existed before in the world

for any purpose and at virtually no cost.

Fabrics toot brushes tires insecticides

cosmetics weed killers.

A whole galaxy of things to make a better life on earth.

For instance if you wanted to go to a chemist and say

look I want to have a chemical say a pesticide

which will persist throughout the food chain

and I don�t want to have to renew it very very often

Id like it to be relatively non-destructible

and then he�d put two benzene molecules

on the blackboard and add a chlorine here

and a chlorine there

that was DDT!

When the eighth army needed Jap civilians to help them out

in our occupation

they called on native doctors to administer DDT

under the supervision of our men

to stand a potential typhus epidemic.

Dusting like this goes a long way in checking disease

and the laughs on them.

"Pardon our dust"

As the petrochemical era grew and grew

warning signs emerged that some of these chemicals

could pose hazards.

The data initially were trivial anecdotal

but gradually a body of data started accumulating

to the extent that we now know that the synthetic chemicals

which have permeated our workplace

our consumer products

our air our water

produced cancer and also birth defects

and some other toxic effects.

Furthermore industry has known about this

at least most industries have known about this

and have attempted to trivialize these risks.

If I take a gun and shoot you that�s criminal.

If I expose you to some chemicals

which knowingly are going to kill you

what difference is there?

The difference is that it takes longer to kill you.

We are now in the midst of a major cancer epidemic

and I have no doubt

and I have documented the basis for this

that industry is largely responsible

for this overwhelming epidemic of cancer

in which one in every two men get cancer in their lifetimes

and one in every three women get cancer.

Towards the end of 1989

a great box of documents arrived at my office

without any indication where they came from.

And I opened them

and found in it a complete set of Monsanto files

dealing with toxicological testing of cows

who�d been given RBGH.

BST trade name Posilac is being used in more than

a quarter of the dairy herds in the United States

according to Monsanto.

The milk is being drunk by a large portion

of the American population

since the food and drug administration declared it safe

for both cows and humans...

And at that the Monsanto was saying

There�s no evidence whatsoever

of any adverse affects

We don�t use antibiotics.

And this clearly showed that they had lied

through their teeth.

The files described areas of chronic inflammation

in the heart lungs kidneys spleen

also reproductive effects

also a whole series of other problems.

...the most comprehensive independent assessment of the drug

"concludes that bust results in un necessary pain

suffering and distress for the cows.

This is not acceptable for a drug designed simply

to increase milk production...

It is a silly product.

We have the industrial world is a wash in milk.

We're over producing milk.

We actually have governments around the world

who pay farmers not to produce milk.

So the first product Monsanto comes up with

is a product that produces more of what we don�t need.

Of course you�ll want to inject Posilac in every eligible cow

as each cow is not treated is a lost income opportunity.

But the problem was

that use of the artificial hormone

caused all sorts of problems for the cows.

It caused something called mastitis

which is a very painful infection of the udders.

When you milk the cow

if the cow has bad mastitis

some of the

and I don�t know how to say this in a you know

I hope people aren�t watching at dinnertime

but the pus from the infection of the udders

ends up in the milk.

And the somatic cell count they call it

the bacteria count

inside your milk goes up.

There�s accost to the cows.

The cows get sicker when they�re injected with RBGH.

They�re injected with antibiotics.

We know that people are consuming antibiotics

through their food

and we know that that�s contributing

to antibiotic resistant bacteria and diseases.

And we know we're at a crisis when somebody can go

into a hospital and get a staff infection

and it cant be cured and they die.

That�s a crisis.

Bad for the cow

Bad for the farmer

Bad potentially for the consumer

The jury is out

we see a lot of conflicting evidence

about potential health risk.

And of course as a consumer

my belief is why should I take any risk?

Factory farm cows have not been the only victims

of Monsanto products.

Large areas of Vietnam were deforested by the us military

using Monsanto�s agent orange.

The toxic herbicide reportedly caused

over 50000 birth defects

and hundreds of thousands of cancers in Vietnamese civilians and soldiers

and in former American troops serving in South East Asia.

Unlike the Vietnamese victims

U. S. Vietnam war veterans exposed to Agent Orange

were able to sue Monsanto for causing their illnesses.

Monsanto settled out of court

paying $80 million in damages.

But it never admitted guilt

Sleeping in a motel in Brewer Maine one night

I woke up with terrible hay fever

and my eyes were burning.

And I looked out at the river

and there were great mounds of white foam

going right down the river.

And the next morning I got up and I said

My God what was that happening last night

He said "Oh that�s just the river".

And I said "what do you mean?"

He said "Well look every night the paper company sends

the stuff down the river."

And I said "What are you talking about?"

And he said "Don�t you understand?"

"That show we get rid of the effluent from the paper mills."

Well I knew at that time I had been in the business.

I had sold oil to the paper mills.

I knew all the owners.

I had been in politics.

I knew the people in the towns.

I knew not one constituent of the paper mills

wanted to have the river polluted.

And yet here the river was being polluted.

And it was more or less as if we created a doom machine.

In our search for wealth and for prosperity

we created something that�s going to destroy us.

The traders who are involved in the market

are not guys who are

whose moral fibre

when it comes to environmental conditions

are going to be rattled at all

They�re seeing dollars and they�re making money.

Brokers don�t stay away from copper

because it violates their religious beliefs

or your environmental policies.

No.

There are times when you think about it

but it's fleeting.

It really is a fleeting moment.

It's like yeah oh yeah yeah

well a town is being polluted down there in Peru

but hey this guy needs to buy some copper.

I�m getting paid a commission too.

Our information that we receive does not include anything

about the environmental conditions

because until the environmental conditions

become a commodity themselves or are being traded

then obviously we will not have anything to do with that.

It doesn�t come into our psyche at all.

It's so far away and it's you hardly hear

anything about it.

I mean keep in mind there are things going on right in our

backyards for god sake.

We trade live hogs.

I mean there are so many pigs in the state of Carolina

and they�re polluting the rivers

but how often do you find out about that?

At Multinational Monitor we�ve put together a list

of the top corporate criminals of the 1990s.

We went back and looked at all the criminal fines that

corporations had paid in the decade.

Exxon pled guilty in connection to federal criminal charges

with the Valdez spill and paid $ 125 million in criminal fines.

General Electric

was guilty of defrauding the federal government

and paid $ 9.5 million in criminal fines.

Chevron was guilty of environmental violations

and paid $ 6.5 million in fines.

Mitsubishi was guilty of anti-trust violations

and paid $ 1.8 million in fines.

IBM was guilty of illegal exports and paid.

Eastman Kodak was guilty of environmental violations.

Pfizer the drug manufacturer

was guilty of antitrust violations.

Odwalla was guilty of food and drug regulatory violations.

Sears was guilty of...

Damon Clinical Laboratories was guilty of...

Blue Cross Blue Shield was guilty of

Again and again we have the problem

that whether you obey the law or not

is a matter whether its cost effective.

If the chance of getting caught

and the penalties are less than it costs to comply

people think of it as just a business decision.

Drawing the metaphor of the early attempts to fly.

Theban going off of a very high cliff in his airplane

with the wings flapping

and the guys flapping the wings

and the wind is in his face

and this poor fool think she�s flying

but in fact he�s in freefall

and he just doesn�t know it yet

because the ground is so far away

but of course the craft is doomed to crash.

That�s the way our civilization is

the very high cliff

represents the virtually united resources

we seem to have when we began this journey.

The craft isn�t flying

because it's not built according to the laws of aerodynamics

and is subject to the law of gravity.

Civilization is not flying

because it's not built according to the laws of aerodynamics

for civilizations that would fly.

And of course the ground is still a long way away

but some people have seen that ground rushing up

sooner than the rest of us have.

The visionaries have seen it and have told us its coming.

There�s not a single scientific

peer reviewed paper published in the last 25years

that would contradict this scenario

Every living system of earth

is in decline

every life support system of earth is in decline

and these together constitute the biosphere

the biosphere that supports and nurtures all of life

not just our life but perhaps 30 million other species

that share this planet with us.

The typical company of the 20th century

extractive wasteful abusive linear

in all of its processes

taking from the earth

making wasting sending its products

back to the biosphere waste to a landfill...

I myself was amazed to learn just how much stuff

the earth has to produce through our extraction process

to produce a dollar of revenue for our company.

When I learnt I was flabbergasted.

We are leaving a terrible legacy of poison

and diminishment of the environment

for our grandchildren�s grandchildren

generations not yet born.

Some people have called that intergeneration tyranny

a form of taxation without representation

levied by us on generations yet to be.

It's the wrong thing to do.

One of the questions that comes up periodically

is to what extent could corporation be considered

to be psychopathic.

And if we look at a corporation as a legal person

that it may not be that difficult to actually draw

the transition between psychopathy in the individual

to psychopathy in a corporation.

We could go through the characteristics

that define this particular disorder one by one

and see how they might apply to corporations.

They would have all the characteristics

and in fact in many respects

the corporation of that sort

is the proto typical of a psychopath.

If the dominant institution of our time has been created

in the image of a psychopath

who bears moral responsibility for its actions?

Can a building have moral opinions?

Can a building have social responsibility?

If a building cant have social responsibility

what does it mean to say a corporation can?

A corporation is simply an artificial legal structure

but the people who are engaged in it

whether the stockholder

whether the executives in it

whether the employees

they all have moral responsibilities.

It's a fair assumption that every human being

real human beings

flesh and blood ones

not corporations

but every flesh and blood human being is a moral person.

You know we've got the same genes

we're more or less the same

but our nature

the nature of humans

allows all kinds of behaviour.

I mean everyone of us under some circumstances

could be a gas chamber attendant and a saint.

No job in my experience with Goodyear

has been as frustrating as the CEO job.

Because even though the perception is

that you have absolute power to do whatever you want

the reality is you don�t have that power

and so metes if you had really free hand

if you really did what you wanted to do

that suits your personal thoughts

and your personal priorities you�d act differently.

But as a CEOm you cannot do that

Layoff shave become so wide-spread

that people tend to believe that

CEOs make these decisions

without any consideration to the human implications

of their decisions

It is never a decision that any CEO makes lightly.

It is a tough decision.

But it is the consequence of modern capitalism

When you look at a corporation

just like when you look at a slave owner

you want to distinguish between the institution

and the individual.

So slavery for example or other forms of tyranny

are inherently monstrous

but the individuals participating in them

may be the nicest guys you could imagine

benevolent friendly nice to their children

even nice to their slaves caring about other people.

I mean as individuals they may be anything.

In their institutional role they're monsters

because the institution is monstrous.

Then the same is true here.

My wife and l some years ago had a tour home

a demonstration.

25 people arrived

they hung a big banner on the top of our house

saying murderers

they danced around outside with gasmasks and so on.

As a public demonstration it wasn�t very effective

due to the fact that this is a very rural area

two people and a dog

and it's not a very big house

which I think rather surprised them

but then we sat down and talked to them

for a couple of hours

and we gave them tea and coffee

and they had lunch on our lawn.

After about 20 minutes they said

Well the problem is not you. It's Shell.

And I said now wait a minute lets talk about

what is Shell?

It's made up of people like me.

In the end what we found in that discussion

were all the things they we're worried about

I was worried about as well

climate oppressive regimes human rights

the big difference between us was

I feel that I can actually make a contributions to this

these people were frustrated

because they felt that they had no nothing to do.

So an individual CEO lets say

may really care about the environment

and in fact

since they have such extraordinary resources

they can even devote some of their resources to that

without violating their responsibility

to be totally inhuman

which is why

as the Moody Starts serve tea to protestors

Shell Nigeria can flare unrivalled amounts of gas

making it of the worlds single worst sources of pollution.

And all the professed concerns about the environment

do not spare Ken Saro Wiwa and eight other activists

from being hung for opposing Shells environment practices

in the Niger Delta.

The corporation is not a person

it doesn�t think.

People in it think

and for them it is legitimate to create terminator technology.

So that farmers are not able to save their seeds.

Seeds that will destroy themselves

through a suicide gene.

Seeds that are designed to only produce crop in one season.

You really need to have a brutal mind.

It's a war against evolution to even think in those terms.

But quite clearly profits are so much higher in their minds

The profit motive which drove Klutzy

to accomplish so much may bring out the evil

as well as the good...

Hellooo?

My work spans all industry sectors

I mean I virtually have worked for like Id say

25 percent of the fortune 500.

I�ve posed as an investment banker.

I�ve posed as a venture capitalist.

I�ve set up front companies

that are executive recruiting firms.

Essentially I�m a spy.

I'll locate your employees

and I will tell them that I�m calling

from Acme Recruiting Agency

and that I�ve got a job that pays them

considerably more than what they�re paying.

Would they mind meeting me for an interview?

And when the executive shows up

what he doesn�t realize is

I�m actually debriefing him on behalf of a competitor.

That there is no job and that the office

that he�s at has been rented

and the picture on my desk of my family is a phoney

and it's all just a big elaborate ruse

to glean competitive information from him.

I don�t feel any guilt.

It's you know what I mean you have to expect

that guys like me are out there.

We're predators.

It's about competition it's about market share

it's about being aggressive

and it's about shareholder value.

What is your stock at today?

If you�re a CEO

I mean do you think your shareholders really care

whether you�re Billie Buttercup or not?

Do you think that they really

they would prefer you to be a nice guy?

Over having money in their pocket?

I don�t think so.

I think people want money.

That�s the bottom line.

The fact that most of these companies are run

by white men white rich men

means that they are out of touch

with what the majority of the world is.

Because the majority of this planet

are not a bunch of rich white guys.

They are people of other colours

they are the majority.

Women are the majority

the poor and working poor

make up the majority of this planet.

So the decisions they make

come from not the reality that exists in the world.

How much is enough?

How much is enough?

If you are a billionaire

would it be okay just to be a half a billionaire?

Wouldn�t it be okay for your company

to make a little less money...

When I bought those two airplane tickets

for Phil Knight and myself to fly to Indonesia

I was prepared for him to say okay lets go.

Oh no not a chance

Not a chance.

No?

They�re transferable.

I can change it to another day.

And call me on it.

Call my bluff.

He�s a smart guy.

I mean he�s not he�s not stupid.

And so I thought okay get ready for this.

Especially because you know I bought first-class tickets.

So you know it would be a comfortable ride at least

you know and of course he tells me then on camera.

I�ve never been to Indonesia.

And I�m like taken aback by this.

I cant believe it.

The guys the head of the company

he�s never walked through his own factories.

Oh you�ve got to go.

I cant go right now and the rest of this year.

When we were done filming he calls me up

a couple of weeks later and he goes

I may have a chance to go there with you to the factories.

I�m going to the Australian Open to watch some tennis.

and uh you know maybe I can get up there

or at least you can go there.

Would you like to go to the Australian open?

For 21years

I never gave a thought to what we were taking

from the earth or doing to the earth

in the making of our products.

And then in the summer of 1994

we began to hear questions from our customers

we had never heard before

What�s your company doing for the environment?

And we didn�t have answers.

The real answer was not very much.

And it really disturbed many of our people

not me so much as them

and a group in our research department

decided to convene a taskforce

and bring people from our businesses around the world

to come together to assess

our company�s world wide environment position

to begin to frame answers for those customers.

They asked me if I would come and speak to that group

and give them a kick off speech

and launch this new task force with an environmental vision

and I didn�t have an environmental vision

and I did not want to make that speech.

And at sort of the propitious moment

this book landed on my desk.

It was Paul Hawkins book The Ecology of Commerce

and I began to read The Ecology of Commerce,

really desperate for inspiration

and very quickly into that book

I found the phrase The death of birth.

It was E. O. Wilson�s expression for species extinction

The death of birth

and it was a point of a spear into my chest

and I read on and the spear went deeper

and it became an epiphanal experience

a total change of mindset for myself

and a change of paradigm.

Can any product be made sustainably?

Well not any and every product.

Can you make landmines sustainably?

Well I don�t think so.

There�s a more fundamental question than that

about landmines.

Some products ought not to be made at all.

Unless we can make carpets sustainably you know

perhaps we don�t have a place in a sustainable world

but neither does anybody else making products unsustainably.

One day early in this journey it dawned on me that

the way Id been running interface

is the way of the plunderer

plundering something that�s not mine

something that belongs to every creature on earth

and I said to myself

my goodness

the day must come when this is illegal

when plundering is not allowed

it must come.

So I said to myself my goodness

some day people like me will end up in jail.

I�ve got to be honest with you.

When the September 11th situation happened

I didn�t know that the and I must say

and I want to say this because its

I don�t want to take it lightly

it's not a light situation.

It's a devastating act.

It was really a bad thing

it's one of the worse things

I�ve seen in my lifetime you know.

But l will tell you and every trader will tell you

who was not in that building

and who was buying gold and who owned gold and silver

that when it happened

the first thing you thought about was

well how much is gold up?

The first thing that came to mind was

my god gold must be exploding.

Fortunately for us all our clients were in gold.

So when it went up they all doubled their money.

They�ve all doubled their money.

It was a blessing in disguise.

Devastating you know crushing heart shattering

but on the financial sense

for my clients that were in the market

they all made money.

Now I wasn�t looking for this type of help

but it happened.

When the us bombed Iraq back in 1991

the price of oil went from $ 13 to $40 a barrel

for Christ sake!

Now we couldn�t wait for the bombs

to start raining down on Saddam Hussein.

We were all excited.

We wanted Saddam to really create problems

Do whatever you have to do

set fire to some more oil wells

because the price is going to go higher.

Every broker was chanting that

there was not a broker that I know of

that wasn�t excited about that.

This was a disaster.

This was something that was you know

catastrophe happening.

Bombing wars

In devastation there is opportunity.

The pursuit of profit is an old story

but there was a time when many things were regarded

either as too sacred or too essential for the public good

to be considered business opportunities.

They were protected by tradition

and public regulation.

We can really begin to take a look at the emergence

of the modern age with the enclosure movements

of the great European commons in the fourteenth

fifteenth and sixteenth century.

Medieval life uh was a collectively lived life

It was a brutish nasty affair.

But there was a collective responsibility

People belonged to the land;

the land did not belong to the people.

And in this European world

people farmed the land in a collective way

because they saw it as a commons.

It belonged to God.

And then it was administered by the church

the aristocracy

and then the local manors as stewards of gods creation.

Beginning with Tudor England

we began to see a phenomenon emerge

and that is the enclosure of the great commons

by Parliamentary Acts in England

and then in Europe.

And so first we began to take the great landmasses

of the world

which were commons and shared

and we reduced those to private property.

Then we went after the oceans the great oceanic commons

and we created laws and regulations

that would allow countries

to claim a certain amount of water outside

their coastal limits for exploitation.

In this century we went after the air

and we divided it into air corridors

that could be bought and sold

for commercial traffic for airplanes.

And then of course the rest is history.

With deregulation privatization free trade

what we're seeing is yet another enclosure

and if you like private taking of the commons.

One of the things I find very interesting

in our current debates

is this concept of who creates wealth.

That wealth is only created when it's owned privately.

What would you call clean water fresh air

a safe environment?

Are they not a form of wealth?

And why does it only become wealth when some entity

puts a fence around it and declares it private property?

Well you know that�s not wealth creation.

That�s wealth usurpation.

Over the centuries

we have put more and more things in that public realm

and lately just lately

in the last

lets say in the last three or four decades

started pulling them out again.

So fire-fighters for instance.

Fire-fighters started as private companies

and if you didn�t have the medallion

of a given fire-fighter brigade

on your house and it was on fire

those fire-fighters would just ride on by

because you didn�t have a deal.

Well it gradually evolved a public trust

for the provision of safety on that very specific level.

This is important.

We should not go back from that and start saying

well you know why don�t we put that back in the market

and see what that does?

Maybe it will make it more efficient

Privatization does not mean you take a public institution

and give it to some nice person.

It means you take a public institution and give it

to an unaccountable tyranny.

Public institutions have many side benefits

For one thing they may purposely run at a loss.

They're not out for profit.

They may purposely run at a loss

because of the side benefits.

So for example if a public steel industry runs at a loss

it's providing cheap steel to other industries

maybe that�s a good thing.

Public institutions can have a counter cyclic property

So that means that they can maintain employment

in periods of recession

which increases demand

which helps you get out of recession.

Private companies cant do that in a recession

throw out the work force cause that�s the way you make money.

There are those who intend that one day everything

will be owned by somebody

and we're not just talking goods here.

We're talking human rights human services

essential services for life.

Education public health social assistance

pensions housing.

We're also talking about the survival of the planet.

The areas that we believe must be maintained

in the commons

or under common control or we will collectively die

Water and air.

Even in the case of air there�s been some progress

and that is the trading of pollution permits.

And here the idea is to say

look we cant avoid the dumping of carbon dioxide.

We cant avoid the dumping of sulphur oxides

at least we cant at the moment afford to stopping it

so we're dumping a certain amount of stuff

into the environment.

So we're going to say with the current tonnage

of sulphur oxides for example

we will say that is the limit.

And well create permits for that amount

and give them to the people who�ve been doing the polluting

and now we will permit them to be traded.

And so now there�s a price attached

to polluting the environment.

Now wouldn�t it be marvellous if we have one of those prices

for everything?

It sounds like you�re advocating private ownership

of every square inch of the planet.

Absolutely.

Every cubic foot of air water.

It sounds outlandish to say

we want to have the whole universe

the whole of the earth owned.

That doesn�t mean I want to have Joe Bloggs

owning this square foot.

But it means the interests that are involved in that stream

are owned by some group

or by some people who have an interest in maintaining it.

And that you know that is not such a loony idea.

It's in fact the solution to a lot of these problems.

Imagine a world in which one of the things

owned by a corporation was the song happy birthday.

In fact

an Aol/Time Warner subsidiary holds the copyright.

In the past

it has demanded over $ 10000

to allow you to hear anyone sing this popular song

in a film.

We didn�t pay.

We preferred to use the money to fly our crew to Boston

and Los Angeles to bring you the following story

Comparing the marketing of yesteryear

to the marketing of today

is like comparing a b. b. gun to a smart bomb.

It's not the same as when I was a kid

or even when the people

who are young adults today were kids.

It's much more sophisticated and it's much more pervasive.

It's not that products themselves are bad or good.

It's the notion of manipulating children

into buying the products.

In 1998 Western International Media

Century City and Lieberman Research Worldwide

conducted a study on nagging.

We asked parents to keep a diary for three weeks

and to record every time

you could imagine

every time their child nagged them for a product

we asked them to record when where and why.

This study was not to help parents cope with nagging.

It was to help corporations help children nag

for their products more effectively.

Anywhere form 20 percent to 40 percent of purchases

would not have occurred

unless the child had nagged their parents.

That is we found for example

a quarter of all visits to theme parks

wouldn�t have occurred unless a child nagged their parents.

Four out of ten visits to places like Chuck E. Cheese

would not have occurred.

And any parent would understand that

you know when I think of Chuck E. Cheese

oh my goodness its noise.

And there�s so many kids.

Why would I want to spend two hours there?

But if the child nags enough you 're going to go

We saw the same thing with movies with home video

with fast food...

We do have to break through this barrier

where they do tell us or they say

they don�t like it when their kid snag.

Well that�s just a general attitude that they possess.

It doesn�t mean that they necessarily act upon it

a 100 percent of the time.

You can manipulate consumers into wanting

and therefore buying your products.

It's a game.

Children are not little adults;

their minds aren�t developed.

And what�s happening is that the marketers are playing

to their developmental vulnerabilities.

The advertising that children are exposed to today

is honed by psychologists;

it's enhanced by media technology

that nobody ever thought was possible.

The more insight you have about the consumer

the more creative you�ll be in your communication strategies.

So if that takes a psychologist

yeah we want one of those on staff.

I�m not saying it's wrong to make things for children.

I also think its important to distinguish

between psychologists who work on products for children

to help you know toy corporations make toys

that are developmentally appropriate.

I think that�s great

that�s different from selling the toys

directly to the children.

Initiative is huge.

I think in the U. S. we place

about $ 12 billion of media time.

So well put it on TV well put it in print

well put it up in outdoor well buy radio time;

so we're the biggest buyers of advertising time and space

in the U. S. and in the world.

One family cannot combat an industry that spends

$ 12 billion a year trying to get their children.

They cant do it.

They are tomorrows adult consumers

To start talking with them now build that relationship

when they�re younger...

And you�ve got them as an adult.

Somebody asked me you know Lucy is that ethical?

You know you�re essentially manipulating these children.

Well yeah is it ethical?

I don�t know.

But our role at initiative is to move products

And if we know you move products

with a certain creative execution

placed in a certain type of media vehicle

then we�ve done our job.

Every institution provides the people

who are members of it

with asocial role to occupy

And typically institutions that are vibrant

and have a lot of power will specify that role

in some sense as a list of virtues.

It's true for churches for schools

for any institution that has power over people

and shapes them.

The corporation likewise.

It provides us with a list of virtues

a kind of social role

which is the good consumer.

Like the waters of the mighty ocean

people also represent tremendous force

the understanding of which is the greatest importance

to the American way of life.

This force is known as consumer power.

The goal for the corporations is to maximize profit

and market share.

And they also have a goal for their target

namely the population.

They have to be turned into completely mindless consumers

of goods that they do not want.

You have to develop what are called created wants

So you have to create wants.

You have to pose on people what's called

a philosophy of futility.

You have to focus them

on the insignificant things of life

like fashionable consumption.

I�m just basically quoting business literature.

And it makes perfect sense.

The ideal is to have individuals

who are totally disassociated from one another.

Who�s conception of themselves the sense of value

is just how many created wants can I satisfy?

These people are customers

because they are willing to trade money for widgets.

And all the customers take the widgets home

to all parts of the country.

Look at all the money the widget builder has

taken in from the sale of his widgets.

We have huge industries public relations industry

monstrous industry

advertising and so on which are designed

from infancy to try to mould people

into this desired pattern.

We saw Tiger Woods on TV

with a hat with a Nike logo on it

and we figured you know he probably gets

like millions of dollars

just to wear the hat on a press conference.

And therefore we figured we can do that for someone else.

And hopefully get money in time so we can go to school.

And that show we came up with being corporately sponsored.

We made our sponsor announcement

on the Today Show on June 18

...were thrilled to be sponsored by First U. S.A...

We're thrilled to be working with first U. S.A as our corporate

sponsor and they�re covering our college tuition...

...we found First U.S.A as our sponsor and we're proud

to be working with them...

...our sponsor if First U. S.A

we're really thrilled to announce First U.S.A

as our sponsor...

...we're thrilled to be working with First U.S.A...

and so we give First U. S.A

a good name in the media

and include them in our news stories

and through there

they get as much advertising as we can give them.

They�ll be conforming

not to the wishes of demanding parents

but to the wishes of an image conscious corporation...

They�re not just out there for the money and they�re just...

I mean they want to work with us

and be our friends and let us help them help us

and vice versa.

And we became walking billboards

to pay for our college tuition.

Cool Site of the day picked us as a cool site

and Yahoo picked us and we were in U.S.A Today.

When we did our photo shoot for people magazine

This is where we stood up on top.

We stood up here and we smiled.

We smiled and took the picture.

Our parents had war stories and stuff to tell us.

We have our corporate sponsor story.

Exactly.

I have a lot of faith in the corporate world

because it's always going to be there

so you may as well have faith in it

because if you don�t then it's just not good.

Some of the best creative minds

are employed to assure our faith

in the corporate worldview.

They seduce us with corporate beguiling illusions.

Designed to divert our minds

and manufacture our consent.

Corporations don�t advertise products particularly;

they�re advertising a way of life.

A way of thinking.

A story of who we are as people and how we got here and

you know what�s the source of our so called liberty

and so called freedom.

You know so you have decades and decades and decades

of propaganda and education

teaching us to think in a certain way.

When applied to the large corporation

it's that the corporation is was inevitable

that it's indispensable

that it is somehow remarkably efficient

and that it is responsible for the sort of

for progress and the good life.

Perception management is a very interesting concept

It's basically a methodology

which helps us when we work with our clients

to go through a very systematic thoughtful process

in order to be able to help our clients identify

what the resources are that they have.

What the barriers to their success are

and how we can use communications

to help them accomplish their objectives.

If Michael or Angelica came tome and said

Dad what do you do and why is it important?

My answer to that question is basically

that I help corporations have a voice.

And I help corporations share the point of view

about how they feel about things.

They�re selling themselves

they�re selling their domination

they�re selling their rule

and they�re creating an image for themselves

as just regular folks down the block.

Hi how y'all doing today?

Good to see you.

How are you doing today?

Hi how you doing today?

We're from Pfizer.

We're your neighbours.

You're in the new houses?

Are you in the new houses?

Ohhhhhh!

These are some neighbours.

Can we say hello?

Can we say hello just for a minute?

So what do you think of the neighbourhood now?

It's all right it's good.

Yeah l think it�s been getting better

over the last 20years that I�ve been coming here.

Yeah

So I think together you know working with you

and Pfizer and our other partnership

well make this a better place.

Okay.

Okay nice to see you Miss Fraser bye.

There used to be a lot of crime at this subway.

One night as I was going home I got caught

and was almost mugged.

So we decided to make a change

to make this community better.

We're looking at turnstiles

that prevent fare beating.

It used to be you could just hop right over.

So Pfizer in collaboration with the transit authority

actually purchased these machines.

This is a talkback box that allows us to speak

to the Pfizer guard

which is approximately 500yards from here.

Now I haven�t seen the Pfizer guard today

but I�m going to see if I can call him.

If he�s not I'll have to go wake him up.

Hello.

Hello.

Tom Kline speaking.

So I'm sure

before we're through hell call back.

But particularly on the off-hours

this allows a passenger to call directly

to the Pfizer desk for assistance.

And then the Pfizer guard calls the transit police

and the transit police respond to any crime situation.

As a result of all this crime is down in that station.

It's much safer for our community partners.

Thank you.

I'll press the other button just to be sure...

Well go over and talk to him personally.

It's tough you know they�re putting

some taxpayer shareholder money into helping

and who can say?

But that money should be going to the taxpayers

to decide what to do.

And while they�re doing those sorts of nice things

they�re also playing a role in lowering taxes for corporations

and lowering taxes for wealthy people

and reconfiguring public policy.

And what we don�t see is all that reconfiguring going on;

we don�t see all that vacuuming up of money

vacuuming out the insides of public processes

but we do see the nice fa�ade.

When I was researching the takeover of public space

when I started off I thought okay this is just advertising.

We�ve always had advertising.

It's just more advertising.

But what l started to understand

and what I understand now

is that branding if not advertising its production.

The very successful corporations

the corporations of the future do not produce products.

They produced brand meaning.

The dissemination of the idea of themselves

is their act of production.

And the dissemination of the idea of themselves

is an enormously invasive project

so how do you make a brand idea?

Well a good place to start is by building

a three dimensional manifestation of your brand.

For accompany like Disney

it goes even further

where it's actually building a town Celebration Florida.

Currently there are about 5000 residents

who call Celebration home.

And there are about 1300 single-family homes

a town centre that�s a place where people gather.

It has about four or five restaurants

and about a dozen other shops.

Their inspiration their brand image

is the all American family.

And the sort of by gone American town.

Their brand driver is family magic and everything

that the company does is in and around those two words.

If you take that

a branded environment such as a Disney World

or a Disneyland is a logical extension of that brand.

Film animated film family oriented film;

it's a very logical extension of that.

As a business though

they also know that if they want to get

into other forms of entertainment

that does not fit family magic

they do not brand it Disney.

If they want to get into adult

more serious type fare

when it comes to film they brand it Touchstone.

Disney brand speaks of reassurance

it speaks of tradition it speaks of quality.

And you can see that here

in this community that we�ve built.

And that�s where you see the truly imperialist

aspirations of branding which is about building

these privatized branded cocoons.

Which maybe you start by shopping in

and then you continue by holidaying in

but eventually why not just move in.

What happens if we wake up one day

and we find out that virtually all of our relationships

that are mediated between us and our fellow human beings

are commercial?

We find out that virtually every relationship we have

is a commercially arbitrated relationship

with our fellow human being?

Can civilization survive on that narrow a definition

of how we interact with each other?

Wow what a dream...

I can give you the day in the life of a person

who might be the target of undercover marketing.

And I will tell you this

that some of these things are happening right now

around you.

So you walk out of your building in the morning

in some city

and you walk by the doorman and say

hey good morning!

And you notice there�s a bunch of boxes at his feet

from some on line or mail order retailer.

And there�s a bunch of boxes there with of course

big brand message on it.

You walk out and wonder

a lot of people must be ordering from that company.

Well what you don�t know is that we paid the doorman

to keep those empty boxes there.

You walk out into the street

and you hear some people having kind of a loud conversation

about a musical act

and they are passing headphones back and forth

and going this is great!

Hey do you know that I heard this C D is really hard to find

but I heard they sell it at store X.

You hear that and you register it

and you might kind of pick up on that

and may be later on you�ll think

hey I wonder what the hot act is bang

that might be in your head.

Now you get into your office

and there�s a certain brand of water in the refrigerator.

What is that?

You take it out you drink you slug it down it's there

not really thinking about it.

Wow!

That�s pretty good water.

Who knows?

Maybe someone placed the water there

You kind of go out for your lunch break

you�re sitting in the park and people are kind of out there

talking in the park and bang

all of a sudden you hear another message.

By the time you go to bed you've probably received

eight or nine different undercover messages.

People are always thinking

well oh I know product placement.

That�s when they put stuff in movies!

Well yes kind of.

I mean that�s definitely traditional product placement.

But real life product placement is just that:

Placing stuff in movies but the movie�s actually your life

Well take a group of attainable

but still inspirational people

they are not supermodels

they are kind of people just like you

they�re doing something for us

whether they are having a certain kind of drink

or they are using a certain laundry detergent

whatever it may be.

They are kind of the roach motel if you will

People are going to come over to them

and they are going to give them

this little piece of brand bait.

It could be a sound bite of knowledge or a ritual.

Consumers will get that piece of roach bait

then they would take it.

Oh pretty cool!

Then they go out and spread it to their friends.

If you want to be critical

if you want to go through your life like that

sure be critical of every single person

that walks up to you.

But if they are showing you something that fits

and something that works

and something that makes your life better in some way

well then who cares.

We again just say thanks!