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mardi, 02 novembre 2010

An Aristocracy of Industry? Andrew Fraser's "Reinventing Aristocracy"


An Aristocracy of Industry?
Andrew Fraser’s Reinventing Aristocracy


Ex: http://www.counter-currents.com/

Andrew Fraser
Reinventing Aristocracy:
The Constitutional Reformation of Corporate Governance

Brookfield, Vermont: Ashgate Publishing Company, 1998

If you own even a single share of stock, you have probably been pestered with letters requiring your opinion on matters of corporate policy well beyond your competence to decide. Should the firm add Joe Schmedlep to its Board of Directors? Do you approve the proposal (200 pages long) for the creation of a new subsidiary? Should the company outsource accounting and make its own ball-bearings, or find a ball-bearing supplier and do its own accounting?

You are holding stock in this company for one reason only: you think you might one day be able to sell it for a higher price than you bought it. Your natural reaction to the letter, therefore, is to toss it in the trash. “Rational apathy” is Professor Fraser’s useful term for this.

The company, of course, knows that you will feel this way. So, reducing the demand on your attention to an absolute minimum, they are even telling you how to vote: normally, they “recommend” that you approve all their proposals. Still, you must find a pen, check a box, stuff the paper in an envelope, and mail it in. “No way,” you say; “into the can.”

If you are lucky, the matter will end there. But sometimes the law forbids the company from acting without consulting its owners—and that’s you, as long as you hold their stock. So they may pursue you further. I have known of people on vacation receiving emergency phone calls from frantic boards of directors seeking their views on matters wholly unintelligible to them. “Shareholder democracy,” this is called. Does it sound like any way to run a business? Professor Fraser thinks not, and it is hard to disagree with him.

On the other hand, there also exists a class of persons who take their shareholder rights with extreme seriousness. Armed, perhaps, with a single share of company stock, they march into the annual meeting, head high, and seize the agenda: is the firm protecting the ears of homosexuals in its employ from disagreeable pleasantries? Has it provided reasonable accommodation for deaf, dumb, and blind quadriplegics? Might its manufacturing process bring about the extinction of the critically-endangered Rocky Mountain Stinkweed? Has, in short, the base pursuit of lucre made the greedy capitalists forgetful of justice and righteousness?

Very often, these moral crusaders have bought stock only for the privilege of delivering their tirades. Corporations have been forced to devise procedural methods for limiting such people’s ability to monopolize shareholder meetings. Surely allowing them to push management around would be no way to run a business either. But then isn’t “shareholder democracy” a bit of a sham?

Well, yes it is, says Professor Fraser. His central thesis is that the public would be better served by a smaller, more committed “shareholder aristocracy.” The term aristocracy is “a metaphor for the civic virtues that a free people might expect of their leaders in politics, business and intellectual life” (p. 1). It should not conjure up a picture of effete fops dancing the minuet at Versailles. Fraser’s proposed aristocracy would even be self-selecting rather than hereditary (pp. 21-22).

Fraser quotes Christopher Lasch’s remark that “the value of cultural elites [such as an aristocracy] lay in their willingness to assume responsibility for the exacting standards without which civilization is impossible.” Such an elite must “live in the service of demanding ideals.” Ortega y Gassett similarly writes that “nobility is defined by the demands it makes on us—by obligations, not by rights” (p. 8).

Why, after all, does the prima donna of the shareholders’ meeting strike us as silly? Because he has no obligations toward the company, its employees, its other shareholders, its customers, or the general public. The neo-puritan crusader accuses others and poses demands, but bears no responsibility if his own proposals lead to disaster.

In smaller, family-run businesses the issue of placing responsibility hardly arises; everyone can see that the buck stops with the owner, who also runs his business from day to day. But in the modern corporation described by Berle and Means, characterized by a “separation of ownership and control,” it becomes unclear who is responsible for corporate acts.

The law at least makes clear that it does not hold individual shareholders responsible. This is the principle of limited liability, which only gained widespread acceptance around the middle of the nineteenth century. A company has legal personality, and can be held liable for harm it causes (think of the Exxon Valdez oil spill of 1989). But the individual shareholder cannot be held liable for any amount greater than the value of his stock. Thus, while it is possible to lose all the money you invest in stocks, it is not possible to lose more than that. Would you want to invest in Exxon if you knew you would have to share responsibility for Exxon Valdez-type disasters?

Probably not. Limited shareholder liability has even been credited with causing the industrial explosion of the late nineteenth century. Nicholas Murray Butler, President of Columbia University wrote in 1911 that “the limited liability corporation is the greatest single discovery of modern times. . . . Even steam and electricity are less important.” (Some scholars dissent; cf., e.g., Michael S. Rozeff, “Limited Liability” at http://www.lewrockwell.com/rozeff/rozeff28.html.)

Who if not the owners, then, should bear public responsibility for corporate behavior? The next likeliest suspect would seem to be the managers. But they have been notably successful at disclaiming responsibility on the grounds that they are mere agents of the shareholders, and act only upon the objective demands of economic efficiency.

This view finds support from surprisingly many scholars. They believe our dominant form of corporate governance is itself the result of market competition. The Berle and Means model, combining shareholder passivity with managerial irresponsibility, exists today, in other words, because it has proven itself the most economically efficient corporate constitutional model in free competition with all possible alternatives. (Best not ask these theorists to fill you in on the historical details.)

Professor Fraser sarcastically speaks of this view as a “cult of the divine economy” in which sovereignty has slipped from human hands into an impersonal system of economic demands. These demands rule over us like the inscrutable God of the Old Testament (p. 11); the managers function as its priesthood, interpreting and carrying out the divine will. No mere mortal is responsible.

Now, the market undoubtedly does impose some constraints on managerial behavior. But it would be difficult to believe, e.g., that the demands of profitability are what force the entertainment industry to churn out movies which consistently insult the religious and moral sentiments of the majority of American moviegoers. “Diversity training” does not improve efficiency either, but managerial enthusiasm for this fad goes well beyond what could be explained by fear of lawsuits. I will not undertake to determine the precise degree of freedom which the market leaves to managers, but it is certainly greater than zero.

Furthermore, a markedly different corporate structure is the rule in both Germany and Japan, where relatively “permanent” shareholders exercise control over major enterprises (pp. 17, 62).

Professor Fraser distinguishes “accountability for behavior” from “responsibility for actions.” Managers are accountable to shareholders for keeping firms profitable; this involves responding to the objective economic demands of the market. But human action is more than a reaction to circumstances. Managerial decisions affect not merely the profitability of the firms they direct but also the life of the larger society within which their firms operate. Financial accountability is too narrow a notion to substitute for public responsibility.

For example, “whenever risks generated by corporate activity become known, someone must decide how much danger to allow and assess the costs of preventing the danger.” Think of automobile design: morally responsible decisions about safety features may not be economically efficient. “Whenever government has failed to provide a policy of its own, corporate officials decide in ways that are practically binding for the ordinary citizen” (p. x). Just as Henry Ford’s customers were offered the Model T in “any color so long as it’s black,” the public today has neither any voice in nor any recourse from the safety decisions made on their behalf.

The author oddly neglects to mention government regulation at this point. Safety is, in fact, the main pretexts for such regulation, which is often onerous, arbitrary, and of questionable benefit to the public. While others worry that government is strangling private initiative, Professor Fraser baldly asserts that “the problem we face is the appropriation of public power by the corporate sector” (p. 2). Note, however, that he never recommends governmental regulation as a solution to the problem of corporate responsibility.

Safety is merely one example. Corporations today—like governments—allocate values by controlling the distribution of goods, services, honors, statuses, and opportunities. Corporate policies can be made binding and effective through the use of sanctions. These need not involve physical coercion or violence: punishment commonly takes the form of severe economic loss or a psychologically painful loss of social status. In any case, the modern corporation is private only in the formal sense that it remains extra-constitutional (pp. 73-74). Being a law unto itself, it is a legitimate target for constitutional reform.

“Corporate politics continues as a secretive affair conducted in corridors and behind closed doors,” Fraser points out; “our problem is that corporate elites have freed themselves only from constitutional politics. (p. 22). This, he believes, is leading us toward a kind of “neo-feudalism,” in which structures of corporate authority are based upon exchanges of services between persons: a system of private patronage without any place for rational deliberation or public involvement. Resistance by wage-earners would become virtually impossible, due to their economic dependence upon the managerial elite. (Professor Fraser is aware of the “managerial revolution” theory of James Burnham and Sam Francis.)

The author harks back to an older legal tradition which recognized the corporation not merely of a profit-generating system but as a civil body politic—a kind of tiny republic, in fact. In America before about 1840, the business corporation was created by a special act of a state legislature: the charter, which explicitly vested public service functions in it. Turnpikes, e.g., were not merely investments on the part of those who built and operated them, but were also authorized in order to provide a service to the community. Even banks and insurance companies were understood as hybrid amalgams of private interests and public purposes. The charter endowed each corporation with a specific raison d’être, and the corporation could be legally challenged if it acted outside its sphere of competence. Corporate decisions were sometimes voted upon by members according to the principle “one man one vote”; more often, caps were set upon the voting power of the larger shareholders. These constitutional features cannot be explained solely in terms of economic utility (p. 27).

As the nineteenth century progressed, special charters were replaced by general rules of incorporation. The notion of a defined sphere of corporate competence fell by the wayside, so that directors could seize upon any business opportunities that might arise. The principle of “one share one vote” became firmly established, entrenching monied interests. Ordinary shareholders came to be understood not as partners in a common public enterprise, but as passive investors whose preferences are fixed, unitary and homogeneous, viz., to maximize profits (p. 28). This assumed unanimity obviates the need for any deliberation on the public effects of their actions, such as is supposed to occur in a legislature. In Professor Fraser’s terminology, the bourgeois drove the citizen out of corporate life.

The nature of property itself was gradually transformed. Ownership once signified a form of personal dominion over the external things of the world. But property in a corporate entity does not carry with it the right of dominion over the physical plant and equipment, which remain the property of the corporation conceived as an entity distinct from the shareholders. Corporate shares establish instead a complex set of relationships between persons (pp. 18, 77). So complex, indeed, that a stockholder today would need to make an advanced study of international finance just to understand what it is he owns.

Yet Fraser notes the interesting circumstance that it is still illegal for a shareholder to sell his voting rights in a corporation. Such behavior is seen, perhaps inconsistently, as a violation of duty. Even corporate raider T. Boone Pickens “has been moved to outrage at the corrupt practice of vote selling, describing it as ‘un-American’ and akin to ‘prostitution’” (p. 37).

One thing these residual scruples may indicate is a still widespread feeling that the public good cannot safely be entrusted to a body of men motivated wholly by individual self interest and not liable for the effects of their actions. What is needed is a counterweight to managerial power which operates more effectively than our inherited system of an annual general shareholders’ meeting.

Professor Fraser’s central proposal is to establish a special class of corporate shares conferring both voting rights and responsibilities for corporate conduct. The ordinary investor will be able to buy stock up to some certain limit just as before. Meanwhile, “propertied persons could trade less diversity in their investment portfolios for the opportunity to play an active civic role in the governance of a narrower range of corporate enterprises” (p. 19). They would be expected to deliberate regularly with other shareholders and pass binding resolutions according to the principle “one man one vote.” This recognizes that the corporate enterprise involves deliberative rationality and not merely the pooling of economic assets. Such a voting procedure would counteract the plutocratic tendency of current corporate law.

Professor Fraser derives his model from classical aristocracy, an exclusive group of peers charged with public duties; but his proposal is a “reinvention” of aristocracy in that the peerage would not be a hereditary caste. In fact, his aristocracy would be entirely self-selected, and other investors would be free to exclude themselves from the order of corporate citizens. Such self-exclusion, “far from being arbitrary discrimination, would in fact give substance and reality to one of the most important negative liberties we have enjoyed since the end of the ancient world, namely, freedom from politics” (p. 22).

The central purpose of his proposal is to restore the role of collective deliberation in the conduct of public affairs, and he sees the ostensibly “private” corporate world as the venue where this can best be achieved today. “It may still be possible,” he concludes, “to govern corporations in the public interest without relying solely on the heavy hand of the nanny state” (p. 21).

Professor Fraser does not recommend simply imposing his republican model on all existing corporations:

It would be more useful to experiment with the concept in corporate enterprises whose business has an obvious public service dimension. Media corporations come immediately to mind. If media corporations have become surrogates and not just vehicles for public opinion, it may not be unreasonable to expect those firms to be governed in accordance with republican principles. So far the courts have not explained how a few autocratic media moguls can be expected to use their freedom from state interference to enhance rather than to corrupt the civic culture of constitutional democracy.

He goes on to mention “hospitals, universities and even prisons . . . tobacco, liquor and gambling interests . . . weapons manufacturers and defense industries generally” (p. 50).

The active shareholders would have to give up limited liability; they would be fully liable for the actions of managers under their direction. They “would become a political surrogate for the elusive ‘directing mind’ that the law requires as the sine qua non of corporate criminal liability. By holding active shareholders responsible for criminal misdeeds, the law could encourage them to create and sustain internal justice systems capable of preventing or punishing unlawful behavior by agents and employees of the firm” (p. 72).

The agonistic dimension of citizenship offers the real possibility of self-fulfillment, along with the dramatic risk of personal disaster. If Aristotle was right in claiming that man is a political animal, civic action may not be motivated solely by the hope of extrinsic rewards but also by the opportunity to exercise in public powers of reasoned speech and dramatic action [where] individuals compete for glory and recognition in the eyes of their peers. (p. 16)

Not to mention that their words would carry more weight than those of the itinerant one-share moralizers of today’s general shareholders’ meetings.

If the Western “democracies” were to implement Professor Fraser’s reform proposal, what could we expect? My guess is that the racial composition of shareholder boards would instantly become the biggest issue in politics and clog the courts with litigation. For similar reasons, I would be more enthusiastic about internal corporate judicial proceedings if I did not know that kangaroo-courts were already busy meting out punishment to white men who “offend” their colleagues. Professor Fraser is thinking of Cato and George Washington, but we would be more likely to get stuck with Al Sharpton and Catharine MacKinnon.

But these reservations are meant more in criticism of the present state of our civilization than of Professor Fraser, a contributor to TOQ who has gained international notoriety for defending the late White Australia policy to his ideologically besotted fellow-countrymen. A reading of Reinventing Aristocracy proves that long before emerging as a lightening rod for the “anti-racist” left, he had already demonstrated himself an independent thinker with an uncommon degree of political imagination.

TOQ Online, April 26, 2009

00:10 Publié dans Livre | Lien permanent | Commentaires (0) | Tags : aristocratie, élite, réflexions personnelles, livre | |  del.icio.us | | Digg! Digg |  Facebook

jeudi, 26 août 2010

Leadership & the Vital Order

Leadership & the Vital Order:
Selected Aphorisms by Hans Prinzhorn, Ph.D., M.D.

Translated and edited by Joseph D. Pryce

370.jpgThe enduring fame of German psychotherapist Hans Prinzhorn (1886–1933) is based almost entirely upon one book, Bildnerei der Geisteskranken (Artistry of the mentally ill), that brilliant and quite unprecedented monograph on the artistic productions of the mentally ill, which appeared in 1922. Sadly, it is too often forgotten that Hans Prinzhorn was the most brilliant and independent disciple of Germany’s greatest 20th-Century philosopher, Ludwig Klages (1872–1956).

Although Prinzhorn himself would have protested against the oblivion into which his mentor’s life’s work has fallen, it is a fact that Prinzhorn is still a major presence in the technical literature, whilst his hero, paradoxically, has been “killed by silence.” One should be thankful for even the smallest mercies.

Prinzhorn is even now a not inconsiderable presence in the field that he made his own, and he will remain a major figure, albeit a controversial one, in the field of psychology, as long as his discoveries are cherished and his insights developed as a living heritage by those who recognize, and are willing to repay, at least some small portion of the debt that scholarship still owes to his memory.

Humanitarian Demagogues, Egalitarian Rabble. Whether today’s mechanistic and atomistic experiments with human beings originated in the Orient or in the Occident, the result is always the same: the tyranny of a clique in the name of the equality of all. And it is from this very tendency that the fantastic pipe dream of human individuals being reduced to the status of mere numbers arises. This wishful thinking is a symptom of the nihilistic Will to Power that conceals its true nature behind the cloak of such humanitarian ideals as humility, solicitude for the weak, the awakening of the oppressed masses, the plans for universal happiness, and the fever-swamp vision of perpetual progress. All of these lunatic projects invariably result in a demagogic assault on the part of the inferior rabble against the nobler type of human being. These mad projects, it need hardly be said, are always concocted in the name of “humanity,” in spite of the fact that decades earlier Nietzsche had conclusively demonstrated that it was the ressentiment, or “life-envy,” of those who feel themselves to be oppressed by fate that was at the root of all such tendencies. Indeed, it is even now quite difficult for the select few who have no wish to enroll themselves among the oppressed mob to understand the realities of their situation!

The Goals of Socialism. When we set our goals in the direction of socialism, whether in the sphere of politics, of welfare work, or of the ideal community, the fanaticism that inspires the socialist is customarily tinged with Christianity. Thus the socialist urges the citizen to progress from wicked egoism to a more social attitude. Even when we ignore the social, religious, or political nature of the ideologue’s desiderata, there is one positive aspect to this development, for socialism at least directs our attention away from the tyrannical ego and towards the world that surrounds us, thus calling upon the only one of socialism’s fundamental motives that we can regard as positive and biologically sensible.

Characterological Truth vs. Psychoanalytical Error. The most extensive, pleasant, and (one might even say) amusing effects wrought by the application of the psychoanalytic treatment depended on the fact that the most wretched and feeble blockhead was now able to convince himself that he was equal to Goethe in that the instincts that played so decisive a role in the cretin’s development were identical with those that were operative in the case of Goethe, and it was only a malicious practical joke on the part of Destiny that permitted Goethe to find in poetry a congenial sublimation of his sexuality.

The Psychopath and the Revolution. We can hold out no hope whatever for the successful creation of the sort of community that is constructed by ideologists on the basis of purely rational considerations, for the projects that are hatched out in the mind of the rationalist are most definitely not analogous to the development of living forms in nature, no matter how often the contrary position has been proclaimed by false prophets. Thus, the delusive hopes that are cherished for the successful implementation of the simple-minded schemes of our socialist and humanitarian ideologists must fail in the future as they have always failed in the past. The only tangible result of these schemes has been to intoxicate the isolated psychopath with an egalitarian frenzy, from which his tormented ego awakens, more desperate than ever, in order to plunge once again, with ever-increasing violence, into his political ecstasies, into bellowing his eulogies to those nameless “masses” who are so dear to the ideologue that he has appointed them to be the sole beneficiaries of his activism, now that he has been made sufficiently mad by a nebulous and insatiable longing for “liberation.” But the “sham” anonymity, which functions effectively as the cloak for politicians who pretend to act in the name of “the masses,” can only benefit clever, robust, and willful politicians, such as those who rule the Soviet Union; the real psychopath, on the other hand, who often possesses a taste for novel sensations and who, perhaps, may also be seeking personal publicity, will never be able to conform to the prescriptions of such an icy, strict self-discipline. As a result, he “breaks out,” and is soon overwhelmed by calamities from which he thinks he can only escape by resorting to even more violent attempts to achieve “liberation.” From the standpoint of psychology, the history of revolutions is very helpful to those who wish to increase their understanding of the “everyday” behavior—as well as the political actions—of his fellow human beings, not least to the physician who seeks enlightenment as to the nature of the motivations that drive men to perform violent deeds in situations to which they lend the halo of freedom, equality, and fraternity.

Heredity as Destiny (and Tabula Rasa as Sheer Nonsense). The life-curve of an individual’s development is a single event, which arrays itself along the lines of irrevocable changes. Strictly speaking, therefore, every occurrence, no matter how insignificant, involves an irrevocable change: in life nothing can be reversed, nothing repudiated, nothing ventured without an attendant responsibility, nothing can be annihilated: that formula constitutes the biological basis of destiny. Just as the individual must accept his biological heritage as a whole, whether he likes it or not, in precisely the same fashion must he accept the pre-ordained pattern of obscure rhythms transpiring within him.

Today we have become tragically unconcerned with our biological destiny, to say nothing of the fact that we refuse to feel the slightest reverence to the sphere of life, to which we owe everything. …That very attitude accounts for the success that has greeted the claims advanced by Alfred Adler and his followers, who advance the dogma that the hitherto customary views on heredity are fundamentally false, since man is born as a tabula rasa whereon his environment makes impressions that, by means of education, one can direct at will, and according to the capacity of that will, toward any desired goal. Adler compounds his felony by claiming that there is no such thing as inborn talent or traits of disposition. …

It would be impossible to reject the principles of biological theory more absolutely than Adler and his cohorts have done. Even that which we understand by the old, almost obsolescent name of “temperament”—that which represents the sum-total of the somatically connected, permanent tendencies of an individual—even this link between the purely psychological and the purely somatic view is repudiated by Adler in his grotesquely teleological and hyper-rationalist construction. … Since there is no biological basis whatsoever for his stupendous assertions, one must seek for such a basis in another sphere, viz., the author’s ideology. Sure enough, we learn that Adler is a fanatical believer in the coming Utopia of socialism, and, as we all recognize, no Utopia can prosper until a faceless equality of disposition has been forced upon every individual by the ideological zealots who will run the show. Therefore I denounce the politically tendentious World-View that Adler and his apostles put forward as “science,” for it is a perfect example of nihilism passing itself off as scholarship, and no cloak of pedantic and prudent caution can hide the fact.

Genetic Endowment and Environmental Conditioning. Upon his entry into individual existence, the human being’s development as a psychosomatic creature is determined as regards substance, capacity for expansion, and direction, in the first place by his genetic endowment as a whole; in the second place by his pre-natal environment; and lastly by the circumstances of his birth. That almost all the active factors rise and fall in varying phases, makes a rational interpretation and estimate of the state of things at any given moment impossible in the strictest sense of that word.

But the fact that such an admission of the difficulties that arise due to methodological limitations is exploited by false prophets in order to deceive the world as to the real nature of biological facts—usually in order to breathe some life into the defunct heresy of the infant born as a tabula rasa—is either a sad indication of their childish mentality or additional evidence that they are indulging their ideological proclivities in the wrong place. What Goethe described as “the law under which you entered the world,” what Kant, Schopenhauer, and others called the “intelligible character,” is the first unavoidable actuality that we must accept as the destiny of our being, and as the starting-point of all investigation and thinking that relates to the human being. All experience and all reasonable thinking drives us back to this basic fact.

The Occidental Observer, August 8, 2010, http://www.theoccidentalobserver.net/authors/Pryce-Prinzhorn.html

Joseph Pryce (email him) is a writer and poet and translator from New York. He is author of the collection of mystical poems Mansions of Irkalla, reviewed here. His translation of the German philosopher Ludwig Klages’ work will be published shortly.