David
M. Boje
December 3, 2000; revised April 2, 2002
Notes
Weber’s iron cage has become an electronic one with virtual bars. We are seduced by technological Internet fetish; unless mediated by electronic machine, our communicative relations are second-class. We spend more time on our cell phone, computer, DVD, stereo seeking virtual confirmation of our human condition. We have turned from the mechanistic to the electronic age, and entered the age of postmodern sensibilities and ambiance. And this is a postmodern time and space that has its dark side; virtual leaders are preferred to ones who walk face-to-fact through the social fabric.
Figure 1 Enron's Collapse
Enron is a wakeup call in our era of postmodern capitalism. Figure 1 is the stock market picture of Enron before and after the collapse. Enron was able to use its theatrics to postpone the impact of the Internet economy bursting, until Feb 2001, when Jeffrey Skilling took over as CEO. You can see that the collapse could no longer be held back. Skilling told Congress that he left because he was exhausted trying to keep Enron's stock price up. Before J. Clifford Baxter committed suicide rather than tell all to a Congressional hearing, he left Enron in May of 2001. And the day Skilling abruptly abandoned ship (Aug 14, 2001) Enron stock fell 14 per cent in a day, a sure sign that confidence was fragile. During the collapse of Enron, some 29 executives sold off $1.1 billion in stock. Employees caught wind of this. On Oct. 29, 2001 stock plans for 15,000 Enron workers were locked down, workers were powerless to bail out of their rapidly depreciating stock for 16 days, starting Oct. 29.Enron's 401(k) retirement plan lost an estimated $ 1.3 billion during the stock's plunge from more than $ 80 in January 2001 to less than $ 1 when the firm sought bankruptcy protection Dec. 2nd.
You see that disclosure of October 15, 2001, that was the day Enron revealed that it had been hiding liabilities to inflate its profit and lost picture. Enron's credit rating was soon dashed, and the stock took its final plunge until it hit ground zero. Oct. 30, 2001 Sherron Watkins wrote in an e-mail that she had just given Lay a two-page list titled "Disclosure steps to rebuild investor confidence." I think this was too late to matter, don't you?
Enron used leadership theatrics to create a corporate spectacle, one that convinced everyone that the Internet bubble did pop on Friday, April 14, 2000, 88 years to the day after the Titanic disaster. While the Dow Jones industrial average dropped 617.78 points, its most precipitous plunge ever, the Enron stock continued to rise until August when it hit its high of $90.56.
In this new world of postmodern capitalism the spectacle became more real that corporate assets and profits. Enron's business partnership and accounting footnotes were keep the illusion going. The kingpin of the New Economy and the Dot.Com bandwagon paraded a sexy postmodern energy trading model. Enron laughed at the idea of asset ownership and entered the "weightlessness" os postmodern capitalism.
Jeffery Skilling, in particular acted with “showmanship” in putting on public relations efforts to promote Enron, in ways that were spectacular and theatrical:
Mr Skilling backs philosophy with opportunism and showmanship. In 1997, when Peco Energy, a large gas utility in Pennsylvania, was negotiating with state regulators over how it should be compensated for past investments, it offered to cut rates by 10 per cent. Enron saw a chance to enter the market and launched a lobbying and public-relations effort to promote its offer to of a 20 per cent discount.
The day Peco filed its plan with regulators, Mr Skilling got up at 4.30am and by 9am had done nine radio interviews. By noon, Enron had an airplane circling Peco's HQ in Philadelphia with a banner saying: "Enron doubles Peco's rate cuts" (Durgin & Skinner, June 26 2000).
Kenneth Lay was not to be outdone. When Enron’s Executive Committee proposed the
new company motto be “The coolest company on Earth” then-Chairman
Kenneth L. Lay suggested wrapping the headquarters building in a pair of giant
sunglasses. Enron’s
strategic narrative emerges in such spectacle acts, as the corporate showmen
dramatized their vision and their boldness in the conquest of the ‘New
Economy.’
Spectacles were theatrically produced by Enron during its rise as the poster boy of deregulation and the New Economy. We live in what Guy Debord calls the Society of the Spectacle. Corporations produce spectacles for our consumption. That is until they turn into flaming scandals. They we see the spectacle of Congressional hearings and White House spin control. Finally the scandal looses energy and the Society of the Spectacle regains its momentum. Enron was that postmodern company that outsourced its employees, trade in hierarchy for independent thinkers, and tried to deconstruct itself of all assets. Enron is a spectacle straight out of Bonfire of the Vanities.
Enron played Darth Vader in the Houston cowboy culture of postmodern capitalism, wooing White House officials from three administrations. When the scandal broke in February 2002, over 450 articles a week tried to turn the spectacular collapse into Enrongate. Arthur Andersen, by shredding Enron documents practically volunteered to take the heat off the White House.
Being opaque is a virtue in postmodern capitalism, but now there are cries for transparency, for financial statements that are open and honest about the reality of business assets and liabilities.
Jeffrey Skilling, Andrew Fastow, and Kenneth Lay are leaders who helped make the Enron culture a corporate theatre of grand illusion. Kenneth Lay was said to be the guru figure, a visionary in an almost Evangelical cult of corporate followers. Jeffrey Skilling operated his empire as Machiavellian Prince reincarnated. Dubbed as Darth Vader by his co-workers, Skilling made fear and deception the cornerstones of Enron corporate culture" When Jeff started to take over, I bought a copy," this executive said, "because I felt I was being eaten alive." The executive said one passage in particular described Mr. Skilling well: "It is much safer to be feared than loved, when, of the two, either must be dispensed with" (Schwartz, 2002: 1).Andrew Fastow is said to be the corporate magician, able to make entire unprofitable (ad) ventures disappears into a morass of off-the-balance sheet partnerships.
Enron's collapse was spectacular and unanticipated by the mavens of Wall Street. They were too dazzles by the spectacle to see behind the illusions of corporate theatre. They accepted the simulations over the facts.
Corporations everywhere are worried that they may be the next Enron. Their balance sheet could be discovered to be just one more dog and pony show. Postmodern capitalism is about financial presentation, about corporate theatre, not about checking out the material conditions.
Enron is a scandal wrapped in a spectacle. The scandal captures mass attention for a few weeks, and Enronitis seems everywhere. But as the perfect storm fades, spectacle retakes the stage.
Aristotle wrote about spectacles in 350 BCE in Poetics. At that time, the costuming and the fancy scenery was kept to a minimum. In fact, Aristotle though Spectacle to be the least important of the Poetic elements. But now Spectacle is the most important theatrical element. Enron is said by many critics to be a tragedy. Yet when we look at what kind of tragedy, we cannot decide if it is a tragedy for Enron employees, investors, superstar executives (and their spouses), or a collapse of checks and balances of free market capitalism. Enron's tragedy, for me, is that Adam Smith got it wrong: There is no Invisible Hand. There is rather a tragic acceptance of an ideology of "Greed is Good" and through Greed the invisible hand of capitalism will steer a course of self-correction, efficiency, and prosperity for all. The lesson of Enron is that some regulation is necessary, or our accounting statements will remain opaque, insider trading will be at the expense of employees and investors, and hero-worship of CEOs will continue to be quite dangerous to economic health.
I am working on a theory I call antenarrative (Boje, 2001, 2001). An antenarrative is a bet, that a pre-narrative can be told that will divert discourse along some other path. Enron spectacles are a web of competing antenarratives.
One antenarrative is that the driving ethic is greed masquerading as virtue, maximizing executive dividends in a culture of consumption and the Society of the Spectacle (Debord, 1967). Enron has a studiously cultivated benign spectacle-image in the globalization era. A second antenarrative is that free markets can do a better job than government regulated ones in delivering goods and service. This is opposed by a counter-narrative: regulation only exists at all because of capitalism's propensity when left unfettered to crisis, fraud and exploitative behavior. A third antenarrative is “in the new world of postmodern capitalism, the more speculative and removed from the real world a company is, the more markets approve of it” (Denny, 2001: 15). In the rise of Enron few dared to ask if its success was real. Fourth, is the antenarrative that Enron is public enemy number one in the anti-globalization movement. Fifth, is the antenarrative that Enron’s collapse is just a cathartic finale to the Internet bubble. Sixth, the antenarrative of Enron as a natural calamity generates such tropes as hurricanes, avalanches, and volcanic eruptions. Seventh, the antenarrative that Arthur Andersen is to blame, having failed its fiduciary function to provide transparency within modern capitalism. “Enron is only the latest and most dramatic instance of an accounting firm's failing to protect the public from largely fictional financial reporting by a major company” (NY Times editorial Jan 4 2002: 20). Eighth, there is the antenarrative that Enron’s success may have been a spectacular hoax of opaque accounting and executive fraud. Ninth, is the antenarrative that Enron’s corporate culture of greed and fear prevented hoards of MBAs from exhibiting ethical behavior. Eleventh, it is being said that Enron executives had to behave as they did because of the incentive structure of stock options. Finally, a set of competing antenarratives is the attempts by Democrats and republicans to turn the executive scandal into a political one.
Enron's spectacular rise and collapse
may trigger across-the-board changes in how corporate America works as well as
how global capitalism is regulated. “By the time we
finish this investigation, Enron
may be the most analyzed, dissected and discussed corporation in history”
(U.S. Representative Diana Degette, D-CO remark, February 7, 2002, House
Committee on Energy and Commerce). This article focused on the
inter-relationships of spectacles. The consequences of the Enron spectacles has
been the creation of billion dollar energy markets, the largest bankruptcy in
U.S. history, implementation of accounting and SEC reporting reforms, and
enactment of campaign contribution legislation. The checks and balances of
western capitalism have been transformed to prevent an Enron sequel. But the Society
of the Spectacle continues to spawn theatrical leaders for its postmodern
capitalism.
Beverley,
John, "The ideology of postmodern music and left politics.” Critical
Quarterly. Vol 31 no 1 spring 1989 p 40-56 Vmou 820.05/C934 http://www.eserver.org/music/text/pomo.txt
Boje, D. M. (2002) Revolutionary and Oppressive Pedagogies of Leadership: The Enron Spectacles March 3 2002 http://business.nmsu.edu/~dboje/388/revolutionary_pedagogy_of_leader.htm
Boje, D. M. (2001a) What is Antenarrative http://business.nmsu.edu/~dboje/papers/what_is_antenarrative.htm
Boje, D. M. (2001b) Intro to Antenarratives - http://business.nmsu.edu/~dboje/papers/narrative_methods_intro.htm From -- Narrative Methods for Organizational and Communication Research. London: Sage:
Boje, D. M. (2001 c) Flight of Antenarrative in Phenomenal Complexity Theory, Tamara, Storytelling Organization Theory September 20, 2001 Paper prepared tp honor of Professor Hugo Letiche and his work on Phenomenal Complexity Theory, for the September, 24thand 25th Conference on Complexity and Consciousness at HuizeMolenaar (Korte Nieuwstraat 6) in the old center of Utrecht - Netherlands. http://business.nmsu.edu/~dboje/papers/ante/flight_of_antenarrative.htm
Kode (2000) Postmodern Music Site http://www.kode.demon.co.uk/list.htm
Solomon, Larry (2000) “What is Postmodernism?”
Web site accessed December 4, 2000
http://www.azstarnet.com/~solo/postmod.htm
Doughty, Howard A. (1999) “The interpretation
of technology: Arthur Kroker and the Canadian Mind.”
Web page accessed December 3, 2000 http://www.innovation.cc/book_rev/Interpretation_Technology.htm
Sun Tzu and Art of War site http://www.informatik.umu.se/%7Erwhit/SunTzu.html