Corporate Emotions

If you prick IBM, does it not bleed?

Stop the presses: IBM Corp. has turned against the Holocaust. No, really, it says so right here in this recent press release: “IBM and its employees around the world find the atrocities committed by the Nazi regime abhorrent and categorically condemn any actions which aided their unspeakable acts.”

This sentence deserves close study as a hilarious example of the corporate public relations mentality in action. By denying—in stilted, phony language—an accusation no one has made, it rises above meaninglessness only to raise the very doubt it was meant to suppress. The press release was issued in response to a book and (naturally) a lawsuit raising questions about IBM’s dealings with Nazi Germany 60 years ago. The book doesn’t allege that IBM actually favored Nazi atrocities even at the time. Ordinarily, one would not even bother to consider the possibility that today’s IBM (which happens to have a Jewish CEO), or any other big public company, is soft on Nazis.

However, IBM’s earnest revelation that it has gone to the trouble of “finding” the Nazis objectionable suggests that the company took the question seriously and had to stop and think before reaching this conclusion. Perhaps it did a few computer runs to determine that, yes, the Nazis were bad, bad, bad. Furthermore, the company is obviously lying when it asserts that its vast army of “employees around the world” all share this corporate finding. How does it know? Did it interview each of them? Not one closet Nazi-phile in the bunch? None even who find Nazis “disgusting” but not quite “abhorrent”? That stagy word, “abhorrent” has become a strong signal that someone is overreaching for an emotion he doesn’t feel. In the case of the Nazis, no adjective is adequate, obviously, which makes florid ones especially suspect.

In short, IBM sounds like it has its fingers crossed. This is the same way it would talk if it were rebutting an actual and valid accusation. In the political world, this mode of discourse is known as “spin” and has been recognized long-since as a language operating far above petty concepts of truth and falsehood. But, as with so many other great American achievements, the private-sector contribution to the creation of spin is underappreciated. Companies like IBM do it darned well. Unfortunately, a morally universal language that makes truth and falsehood sound the same isn’t so wonderful on occasions when you are actually telling the truth. This still doesn’t give us cause to worry that IBM harbors any sympathy now for Nazis long ago. But the reflexive recourse to spin, among politicians and corporations alike, does give us cause to wonder if they’ll get it right the next time a moral dilemma comes along.

In a way, moral neutrality is built into the corporate form. Although corporations like to exploit the pathetic fallacy—the tendency to attribute human emotions to inanimate objects—by portraying themselves as devoted primarily to curing homeless orphans of cancer, they are almost required to avoid extravagant moral sensitivity and do whatever they can, within the law, to maximize value for their shareholders. Even corporate good works must be justified as good for business. There is a certain circularity here: It’s good for business for the company to look like it cares about more than just what’s good for business. The puzzle is that if people came to believe this, it would no longer be true. The business justification for corporate high-mindedness depends on the perception that there is no business justification.

The conceit that corporations are human beings is why today’s IBM is being held morally and legally responsible for what the company may have done two-thirds of a century ago. A class-action lawsuit demands that IBM “disgorge”—lovely word—its wrongful profits from that time. Plus interest. IBM, famous for stockholder loyalty, probably has more continuous owners since the 1930s than any large company other than AT&T. But this group surely represents a small fraction of IBM’s current ownership. Why should the rest bear responsibility for the company’s ancient wrongs?

The answer is: That’s the deal when you buy a share. In exchange for limited liability—the most you can lose is the value of your share—you assume your fraction of responsibility for anything the company has done or will do in its perpetual life. Still, it’s odd. Even if the company’s current value reflects whatever profits it made from its dealings with the Nazis, those profits presumably were reflected in the price you had to pay for your shares, so any payout now means you are disgorging twice for sins not your own.

A human being can be justly prosecuted for a crime he committed long ago, even though every cell in his body has been replaced many times. But that’s because everyone recognizes that human beings, not cells, are the moral agents. Humans remain the moral agents in a corporation, even though in that case they are the building blocks rather than the resulting structure.

Punishing shareholders for past corporate wrongs is even odder when you reflect on who gets punished. It’s not the shareholder when the sin was committed or even the shareholder when the punishment is inflicted; it’s the shareholder when the suit is announced. At that point, the stock price presumably adjusts itself to reflect the likelihood and likely cost of any punishment. After that, buying or selling the stock is merely a gamble on changing expectations about how the process will turn out.

But share price aside, it’s good to know that IBM abhors the Holocaust.