Week 5: Discussion 1 & 2

Weekly Activities

Here is what you will be doing this week:

• Read Chapter 9 in the text: Product Liability and Corporate Responsibility

• Post to Discussion Board 1 on Consumerism and Planned Obsolescence (due by Day 3, Thursday)

• Post to Discussion Board 2 on Conglomerates and Market Domination (due by Day 3, Thursday)

• Respond to two discussion posts by classmates in each discussion (by Day 7, Monday)

• Final paper (due by Day 7, Monday)

• Have a look at the grading rubric as you write the Final Paper to make sure you are addressing all the areas of concern

Consumerism

Much as the Globesity festival presents in its visual depiction, the US, along with many countries has an issue with consumerism. Consumerism is seen to be the rise of desire socially and economically to purchase products and services in ever increasing amounts, often far beyond individual need. Many have linked this to the rise in the middle class throughout the 19th and 20th century (Veblen, 1899; Farrell, 2005). The video above by Richard Wolff provides some background on how this issue, along with class, have significantly affected the economy, social systems, and social issues in the US. Consumerism is also linked to consumer activism in regards to environmental waste issues and product liability and design. Many social issues have been linked as an affect of consumerism: environmental waste issues, resource overuse and depletion, obesity and other public health issues, child labor, sweat shops, materialism, cult of celebrity and wealth, increased personal financial and mental health issues, planned design obsolescence, corporate and media influence, and increasing deviant behavior and consumption (pornography, prostitution, substance abuse) to name a few (Farrell, 2005). The ethical dilemmas of consumerism lay in the questions of: why do we design goods to fail?, why do we need and use so much?, and what impact does our over-need and over-use have on the environment, society and culture.

To help explain Consumerism, here are some videos which may also be helpful in the discussions...

Corporations

In school, including college, you spend a lot of time learning about the structure and function of government―how the U.S. government is organized, what each of the three branches does, and even how your state and local governments function. You study how laws are created and how policies have affected your life.

Interestingly, much less attention is paid to another large bureaucratic organization that today is in many ways as dominant as government, perhaps even more so in some cases. Unless you are a business major, you probably were never taught about the structure and function of large corporations. But over the past two centuries, corporations have grown well beyond mere economic actors, and have become central features in civic life in the U.S. and many other countries―and today, the list does not only include industrialized countries. Moreover, the largest corporations have become dominant actors on the global stage and in many ways the driving force behind global social change.

For over three decades, sociologists have been interested in the fact that corporations are growing, spreading around the world, and some have become so large that the corporate economy is roughly the same size as national states. See the list comparing countries and corporations compiled by the Global Policy Forum (2010):

http://www.globalpolicy.org/images/pdfs/Comparison_of_Corporations_with_GDP_of_Countries_table.pdf

Note that comparing economic measures for corporations and for countries is not an exact match, as they measure their economic output in different ways, as explained by Tim Worstall (2011) in Forbes magazine:

http://www.forbes.com/sites/timworstall/2011/06/28/gdp-for-a-country-is-not-the-same-thing-as-turnover-for-a-business/

Nevertheless, we can see that corporations are significant economic actors. And, another difference between corporations and national states is that corporations generally are responsible and accountable to their shareholders, while national states are responsible and accountable to their citizens.

To better understand how corporate accountability, let’s look at the structure of a corporation.

Corporate Structure

First of all, recognize that corporations are legal entities; they are created by law, and chartered by a government entity. In many countries, it is the national government that charters corporations; in the U.S., corporations are chartered by state governments. Laws in different jurisdictions differ slightly, but in general, states offer charters to a variety of different types of corporate entities: sole proprietorships, limited liability companies, cooperatives, partnerships, and publically traded corporations. We will focus on public corporations in this analysis.

The graphic above illustrates the basic structure of a public corporation. The corporation, as noted above, is chartered by a government entity. The corporation is led by a Board of Directors, which sets the policies and makes the most important decisions about the corporation. The Board is something like a legislative body in a government organization. The Board of Directors includes “inside directors” and “outside directors”; the outside directors are not actual employees of the corporation, although they typically are remunerated for their work. They sit on corporate boards to provide an objective view, as a check on the activities of the corporate directors. The head to the Board of Directors is known as the Chairman of the Board.

A public corporation is owned by its shareholders. Anyone can purchase stock in a corporation, and when you do, you become one of the owners of the corporation. Most large corporations have millions of shares in circulation, however. The rule is that each share entitles a shareholder to one vote, so it takes ownership of a lot of shares to have an influence on corporate decisions (although ownership of as little as 5% of outstanding shares can give one a controlling interest in a large company, due to the dispersion of the shares). The shareholders elect the Board of Directors.

The Board then names the corporation’s management team, which is the corporate “executive branch.” The management team consists of the Chief Executive Officer (CEO), who is responsible for carrying out the Board’s policies; the Chief Financial Officer (CFO), who is responsible for making sure everyone gets paid, the corporation pays its taxes, and other financial duties; and the Chief Operations Officer (COO), who is responsible for ensuring the company runs smoothly on a daily basis, and may oversee functions such as marketing, personnel and sales. Larger corporations may have other specialized functions on the management team, such as Chief Information Officer or Chief Technology Officer. The management team then directs the rest of the corporate bureaucracy, vice presidents, division heads, and workers.

Note that in public corporations, there is a separation of ownership and management. In private corporations, such as partnerships, such a separation does not exist―the owners and managers are the same people. Separating owners and managers allows the management team to act as agents of sorts for the interests of the shareholders, without any emotion or bias entering into the equation. What might be some of the advantages of such a structure?

Conglomerates

In today’s world, the notion of corporations as the largest global entities is outdated. Today, truly, market power is concentrated in the hands of large conglomerates, a type of mega-corporation that owns and operates many corporations. The names you are familiar with probably are parts of larger conglomerates. For example, in the realm of media, ABC Television, ESPN, stations such as the History Channel, Lifetime, and A&E, Marvel Comics, the Industrial Light & Magic special effects studio and Touchstone Pictures are all owned by the Disney Company, along with several Disneyland theme parks, many Disney Stores, numerous television and motion picture production studios, television stations in major markets around the world, book publishers, internet sites, cruise lines and vacation resorts, music studios, and a number of financial and property holding ventures (Walt Disney Company, 2013). These are more than just brand names owned by a company; many of these came from independent corporations which Disney purchased and consolidated into a large conglomerate. For example, ABC used to be an independent network, but Disney purchased ABC in 1996. Likewise, Industrial Light & Magic used to be part of LucasFilm, started by film director George Lucas. Disney purchased LucasFilm and all of its holdings in 2012.

The Disney Corporation is not the only media conglomerate. Time Warner, Inc. is another example. This company began as a publishing company (Time magazine, Life Magazine, Sports Illustrated, People magazine) and a movie studio (Warner Bros.), which merged, and eventually purchased Turner Broadcasting (TBS, TNT, CNN, Cartoon Network), and later internet giant AOL. Some of these have been spun off into independent companies, but Time Warner still owns many brands, including HBO, Castle Rock and New Line Cinema movies, Hanna Barbera animation, and numerous magazines and television stations in the U.S. and overseas.

Conglomerates are not unique to the world of mass media. There are a growing number of them worldwide, and many own a variety of diverse corporate properties. Corporations and conglomerates are important centers of power in the modern world.

To help explain this ideas further, here are some videos which may also be helpful in the discussions and final assignment...

References

Farrell, J (2005) Empire of Scrounge. NYU Press: New York.

Global Policy Forum. (2010). Comparison of the world’s 25 largest corporations with the GDP of selected countries (2010). Retrieved from http://www.globalpolicy.org/images/pdfs/ Comparison_of_Corporations_with_GDP_of_Countries_table.pdf.

Time Warner, Inc. (2013). Our content. Retrieved from http://www.timewarner.com/our-content.

Veblen, T. (1899) The Theory of the Leisure Class: an economic study of institutions. Dover Publications: Mineola, NY.

Walt Disney Company. (2013). Company overview. Retrieved from http://thewaltdisney company.com/about-disney/company-overview

Worstall, T. (2011, June 28). GDP for a country is not the same thing as turnover for a business. Forbes. Retrieved from http://www.forbes.com/sites/timworstall/2011/06/28/gdp-for-a-country-is-not-the-same-thing-as-turnover-for-a-business/.

The Sociology program hope you enjoyed this course and wish you the best for the future!