The Corporation's Two Bodies

The New York Times quotes Laura Martin of Soleil Securities, as saying “This is management putting its employees and its job security ahead of current Yahoo shareholders’ interest.” The sense of horror here–that management could actually put the interests of employees ahead of the interests of investors–is interesting, to say the least. It raises an important question that’s really almost theological in nature. It is most certainly theological in, as Lawrence Ferlinghetti wrote, “the promised land where every coin is marked In God We Trust, but the dollar bills do not have it being gods unto themselves. (“Autobiography,” A Coney Island of the Mind, 1958, New Directions)

Where did the notion arise that management’s sole responsibility is to its funding sources? It’s not surprising that someone who represents investors thinks that investors are the only people who count. There’s certainly some legal precedent for that view–employees work at the will of their employer, and if you take the abstraction far enough, the employer is basically a pile of money, and the employees are abstract labor power. But while Marx’s formulation for the age of the Industrial Revolution may be applicable to workers in sweatshops, it’s certainly not an appropriate formulation for the creators of value at Yahoo. Where, ultimately, is Yahoo’s value? After all, Yahoo’s contribution to the technology of the Web is second only to Google’s (and that not by much). Yahoo engineers are not merely interchangeable cogs in an industrial machine.

Behind the idea of a “corporation” is, of course, the notion that a business entity is a kind of mystical body and can be treated as a person. So, what is that mystical body? Is it the investors, who certainly enable that body’s existence, or the developers who create the value that the investors are after? Do we give priority to the food, or to the processes that digest the food? To give priority to the food lands us in a “cult of the investor,” where Dollars provide the divine spark that animates the body corporate. In this view of the world, the investors are, in fact, little divinities. But Yahoo’s value certainly doesn’t derive from the investors, but from the company’s technical creativity–something for which the investors are not responsible, and that they ultimately have nothing to do with. Would those creators be equally creative as Microsoft employees? Would the culture still be productive? Maybe yes, maybe no; it seems to me that the history of corporate acquisitions is littered with takeovers in which the shareholders may have profited, but the corporation’s life and creativity withered.

It’s certainly an oversimplification to imply that all (or even most) Yahoo employees opposed the Microsoft deal. But it’s likewise an oversimplification to imply that all investors approved it–after all, one imagines that Yahoo’s board and senior management are significant investors. But whether Jerry Yang was thinking in these terms or not, I can only applaud the idea that his company’s value has something to do with the people who make it creative, not just with passive investors who wouldn’t know a line of Javascript if it bit them on the wallet.

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