BOOK REVIEW
BY MICHAEL A . MARTORELLI
Taming the Octopus : The Long Battle for the Soul of The Corporation By Kyle Edward Williams W . W . Norton & Company , 2024 278 pages
In Taming the Octopus , Kyle Edward Williams becomes the latest author to explore our 160-year fascination with the “ large , publicly traded corporation .” He does so through an informative narrative about the “ Long Battle ” for that entity ’ s “ Soul .” The book is really about the history of the perennial conflict between two ideas . One asserts that a corporation ’ s only objective is to generate profits for its owners . Another contends that since a corporation only exists thanks to a charter from a state government , it should also display a sense of social responsibility .
One part of the historic problem of controlling corporate behavior has involved the limited authority of the federal government to force a corporation ’ s owners and / or managers to “ subserve the public good .” Williams tells how as far back as
1907 President Theodore Roosevelt and his congressional allies failed in the first of what would prove to be many attempts to pass legislation calling for federal registration of corporations . They believed that giving the government the power to grant corporate charters would make their managers “ well-paid public servants rather than old-style capitalists .” His successors did pass legislation empowering administrative agencies to regulate Interstate Commerce and Food and Drugs , as well as Securities and Exchanges . But reformers remained skeptical of counting on laissezfaire principles to rein in irresponsible corporate behavior .
During the 1930s , President Franklin D . Roosevelt ’ s New Deal actions imposed new standards of financial accountability on corporations . Yet , the President and his congressional allies failed yet again to supplement or replace the assortment of state incorporation laws with one federal chartering act . They did succeed , albeit unintentionally , in establishing the idea that corporations were the property of shareholders , not the government or the public . But it would take several decades before the concept of measuring “ shareholder value ” took on a life of its own , a topic the author addresses in some detail .
Large corporations performed magnificently during World War II . But in the post-war years , Williams acknowledges the continued existence of “ blistering anxieties ” about those industrial giants and their professional managers . He particularly notes both the celebration in 1955 of the first “ Fortune 500 ” and the ongoing concerns about the very nature of “ bigness ” and the economic power of concentration . Across several chapters , he tells the colorful stories of shareholder groups , politicians , annual meeting gadflies , corporate raiders and other activists and reformers who sought over time to force corporate managers to act more responsibly . Their complaints ranged from “ corporate apartheid ” in hiring , to profiteering from making war materials and unsafe cars , to the ultra-aggressive marketing of baby formula . Several passages feature descriptions of not only various actors ’ and groups ’ specific actions , but also the circumstances and tenor of the times during which they pursued their objectives . Williams peppers this set of narratives with annotations from books , articles , presentations , studies and even films documenting the ways large corporations were acting in irresponsible ways .
Unlike other volumes discussing the controversy over corporate power and corporate social responsibility , this one also includes the stories of such cheerleaders of capitalism as Milton Fredman and the lesser-known Henry Manne . In books and presentations , both men insisted that the pursuit of corporate profitability should always eclipse the desire to exhibit a keen sense of corporate social responsibility . In another unusual element of this story , Williams tells the stories of many corporations that have seemed to agree with the need to show some corporate responsibility . But he also intimates that over time , most of their managers ’ actions suggested they were merely paying lip service to that idea . His discussion in the last chapter about the current use of environmental , social and governance ( ESG ) considerations when investing is particularly illuminating .
In the final analysis , Williams admits that he did not find the “ soul ” he had been seeking , and that maybe the corporate octopus is “ incapable of being tamed .” Those admissions do not detract from his worthwhile effort to explore a controversial topic that is likely to remain the subject of much more ink during this reviewer ’ s lifetime .
Michael A . Martorelli is a Director Emeritus at Fairmount Partners in Radnor , Pennsylvania , and a frequent contributor to Financial History . He received his MA in History from American Military University .
44 FINANCIAL HISTORY | Summer 2024 | www . MoAF . org