From a Larry Lessig review of Robert Reich’s new book, Supercapitalism (via Ezra Klein):
[W]e need to understand the nature of the corporation — to make money — and come to love it, and yet, to keep it in its proper place, just as you can love a tiger, but know that it’s not the sort of thing that should play with your kid. Corporations are not more efficient governments. They are instead increasingly efficient money making machines. And while there’s nothing at all wrong with money making machines — indeed, wealth and growth depends upon them — there is something fundamentally wrong with trusting these machines to restrain the drive for profits in the name of doing the right thing. The cushion that enabled that in the past (relatively limited competition) is gone. The job of GM is even more now to make money for GM.
Recognizing this point forces you to recognize how important it is that we make government work. It is government’s job to set the appropriate limits on corporations (and individuals) so that when corporations and individuals pursue their self-interest, they will not harm a public interest. If government were doing that sensibly, it would force carbon producers to internalize the negative externality of carbon (something our current government doesn’t do), just as it would force those who benefit from creative work to internalize the positive externality of creativity (something our current government is obsessed with doing).
And this leads to the link with the work on corruption: for notice (surprise!, surprise!), government is pretty good at forcing internalization when it benefits strong special interests (again, copyright), and not when it harms strong special interests (again, carbon).
What’s striking to me about this is the echo of Milton Friedman famous 1970 New York Times Magazine essay, “The Social Responsibility of Business Is to Increase its Profits,” in which he wrote:
In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has a direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.
So Lessig basically endorses Friedman’s main point, demonstrating yet again how it has gone from very controversial in 1970 to commonplace today. He just sees that “the basic rules of society” that corporations are supposed to follow aren’t set in some kind of corporation-free vacuum. So how do you fix that? Lessig apparently gave a lecture on the topic last month, which appears to be available only in video form. I think he says the Internet will save us. I’m dubious, but I’ll reserve judgment until I take the time to watch it.