Another Inconvenient Truth
Government in the liberal democracies of the developed world is based on an experiment undertaken in the last half of the 18th century. That experiment theorized that the public interest could be protected under a system of laws enacted by the vote of the people's elected representatives.Under this system, people are free to do as they please as long as no law has been passed restricting their freedom. Laws are not passed restricting freedom until legal behaviour damages the public interest to the point where it makes another law necessary.
This system relies on the assumption that extensive harm cannot be done to the public interest before a law can be passed prohibiting the offensive behaviour. In the late 1700s this assumption may have been true. Today it is not. The modern corporation can legally do more damage to the public interest in one afternoon than a human being can do in a lifetime. Problems such as global warming, third world sweatshops, big companies walking out on small towns for greener pastures elsewhere and nearly five million deaths each year from tobacco, are attacks on the public interest that show government does not always have the will to make corporations stop. Indeed, by granting corporate charters, governments in some sense authorize these attacks rather than making them cease.
If big corporations can keep government from fulfilling its purpose, we should understand why and then change one or the other--either give government more power to deal with corporations than it needs to deal with people or make the corporation more respectful of the public interest. Changing the corporation is the better choice.
The liberal democracy was designed more than 100 years before the creation of the modern corporation. It was not designed to govern large institutions dedicated to the pursuit of self-interest. This is why government has so much trouble governing corporations today.
Although companies only act through their people--directors, officers and employees--these people must obey a rule which government sets down for all corporations. That rule makes profit the corporation's only goal.
Many say this causes companies to put greed above the public interest, but this analysis only polarizes. What really happens is really more subtle than that. A company goes into a particular business and finds itself successful. Eventually, a huge amount of shareholders' money is invested in the business--sometimes billions of dollars. Then, a hidden adverse side effect of the company's products or operations is discovered.
The law provides that corporate personnel must react to this discovery in a way that protects the financial interests of the company. To do this, a number of strategies are employed to frustrate calls to make their behaviour illegal. The first of these strategies is usually denial. Eventually, however, the truth comes out and corporate personnel must employ other measures to protect their company's assets. Usually these measures include trying to keep government from passing laws that would restrict the company's ability to carry on business as usual.
It should come as no surprise that modern corporations are highly successful at this. The environment, human rights, the public health and safety and the welfare of our communities are all elements of the public interest that government should be able protect. Today, liberal democracies in all parts of the world are continually frustrated in fulfilling this purpose by a small minority of large corporations which make money through means that harm the public interest.
It is no secret how this happens. Companies use their right to free speech to lobby and finance the election campaigns of politicians. They threaten job loss and economic ruin if they are forced by new laws to change their ways. They crank up their public relations machines to entice people to vote against each other and the public interest. Their task is made easier in today's globalized world where jobs in one state or country often create damage in another.
The inconvenient truth is that a system of government of the people, by the people and for the people is well down the road to becoming a government of the corporations, by the corporations and for the corporations. Ask yourself these question "do you believe governments can protect the public interest from today's big corporations or not? Do governments control companies or do companies control government?"
Some despair that nothing can be done. But Al Gore makes a good point, there is a long way between denial of the problem and despair that it cannot be solved.
A system of government designed to protect both the public interest and freedom cannot cope with powerful institutions dedicated to the furtherance of their own interests. We shouldn't expect it to do what it was never designed to. However, rather than deny or despair, we should recognize another not so inconvenient truth--profits and protection of the public interest need not be mutually exclusive.
The rules establishing corporations can be changed. Profit should remain the goal, but its pursuit should not come at the expense of the environment, human rights, the public health and safety or the welfare of our communities. Making this change will give people at work the flexibility to respect the public interest that today is missing. When it is made, the modern corporation will be more compatible with our system of government and the public interest under a lot less threat.
Robert C. Hinkley is an American corporate lawyer who lives in Mosman, NSW. His email address is rchinkley@optusnet.com.au.
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20 Comments so far
Show AllPeachmcd,
Absolutely right. The left used to be aligned with Christians years ago, and the reasons you mentioned were part of it. Think of William Jennings Bryan. He argued that the Republican capitalists and their corporations were dehumanizing society.
The Democrats problems started back in the 1960s when they adopted the positions and members of the pro-choice movement (nothing wrong with that). Then more radical social movements, such as the gay/lesbian movement, were absorbed by the Democrats. Then those supporting Reagan realized the Democratic Party was vulnerable on the social issues and that they could steal away working class social conservatives from the Democrats, the group that came to be known the "Reagan Democrats," and the Democrats have lost power and influence ever since.
As an agnostic trying to look at it objectively, I see that too many Democrats just sit back and engage in wishful thinking, hoping the Christians will soon stop being socially conservative. They just wait for that day and hope it will solve everything and they do little or nothing to reach out to the Christian community.
Corporate 'personhood' has stripped Americans of the sovereignty the Constitution's framers intended for us, and instituted Mussolini's favorite definition of fascism: 'a blending of corporation and state'.
But aside from all the legal, constitutional, & political detriments, readers may be interested to know that any notion of corporate 'personhood' is also (from a Christian theological perspective) blasphemous. Blasphemy is defined by Christian tradition as 'insult to God, either as God or as a Person of the Trinity', (e.g., Bush claiming he's a Christian of any sort).
It would shock most Christians, as it did me, to learn that our nation is being governed on inherently blasphemous assumptions. I'm an Episcopal laywoman with degrees in Church History. My jaw dropped when I first (around 10 years ago) learned about the legal 'personhood' of corporations. I understood immediately what the theological implications were.
I've spent the time since I learned this horrible fact doing what I can to raise awareness about this neglected problem. Obviously, I don't have access to a forum where I can address this problem effectively, but here I am, trying to make YOU aware of it, and tell you how to use that in the struggle to reclaim citizen sovereignty.
It takes time for any movement committed to necessary Constitutional amendment to gain national traction, but traction will come more readily if progressives include not only political, but Christian theological rhetoric.
Non-Christian progressives might find it problematic to use theological language to advance their cause, but look at all the traction gained by efforts to combat global warming once the Evangelicals came out in favor of Environmental Stewardship.
80% of ALL AMERICANS polled say corporations have 'too much power'. This is the wedge issue extraordinaire for progressives. Tactically and strategically, Christians in the US are a powerful bloc, and are statistically likely to respond positively to a theologically-framed assault on corporate power. Think about it.
Hasta la victoria,
Peach McD in Durham NC
Rebel Farmer April 2nd, 2007 6:56 pm
"Lobo - Welcome back! Heven't heard from you in a while."
Thanks, have had too many other things going on the last few days.
Lobo Gris
neoconned has it right, folks. Stop looking to others for the way out of this...it's all in our own choices. Our choices are our votes.
Enough of all the begging for money for "grass roots" movements going nowhere. If you want to impede or limit corporate power people in this country especially (US) need to stop buying all the crap they produce. You don't need to join a political movement and you don't need to financially support overeducated liberals who have made PAC's their new found careers.
African Americans are the largest spending consumer group in the country and yet are also the largest minority group in prisons and make up the majority of the poor. there IS a direct correlation here people. STOP buying the crap!!!
Look at the source of the things you do buy. Wal-Mart exists because people continue to buy their ill gotten products. All the change you want to see in the world has to start with your own day to day actions. Take small steps to start because yse it is hard to change the way you live overnight. Especially when fear is the main tool used to coerce people into buying things they do not need. WAKE UP folks. In the end change is simple, you just have to keep at it and stay focused on what your real needs are vs. those things you just want. Seriously, do we need $300 iPods? Hardly. Apple may have been a maverick in the business world once, but the plastic used by Apple in their products comes from the Saudi oil fields that the House of Saud and the House of Bush own. Peace out.
Realists know this.
We are running out of natural resources at the same time we are suffering from population explosion and dramatic loss in habitation.
There were two ways to work with this inevitability.
1) The world in a spirit of sharing to avoid conflict would work out a plan to share diminished resources and at the same time find solutions to both controlling population and alternative sources of energy.
2) Or do what we've always done. Seek out what we needed and crush with the use of deceit and brutal force any and all that would get in our way not really caring that the consequences of our actions would seal the world to a horribly, miserable fate.
We picked #2 - again. I've never been a big fan of mankind.
So, we've blown it. We crawled out of the cave and never let go of the club and we wound up beating ourselves to death with it.
It's why I drink and spit on SUV's.
Rebel Farmer: "Changing party affiliation won't get the job done". I disagree. It's the only thing that will get the job done. We have wasted our energies on the other corporate party. The result of all our work was the loss of all three branches of government and most state governments to corporate and theocratic rule.
Democrats did not win the Senate. Republicans barely lost it by having the worst government in history. And Dems continue to rubber stamp the neocon's atrocities. We can choose to follow Rahm Emmanuel and other ruling corporate conservative and Christian Zionist Dems, or we can tell them that we progressives are sick and tired of being taken for granted.
Joining the Greens doesn't mean that we can't vote for Kucinich, Lee, Waters and other progressives Democrats. It simply tells the conservative Dems that we think their massive corporate support is their greatest problem. That progressive change is not possible under the circumstances and that we intend to throw our considerable support behind the Greens, the party that holds all our progressive values. And that Greens can win!
If Dems were serious about winning, which they haven't shown to be, they would adopt the progressive values that Greens represent. Instead, they attack and sabotage the Greens at every turn. What better evidence that progressives have no chance with Democrats?
http://www.commondreams.org/news2003/0703-09.htm
http://www.commondreams.org/views03/0801-12.htm
fpal,
The rule you refer to evolved over time through judicial decisions. Originally corporations were granted charters for only a limited time and in order to receive a charter the corporation had to have a stated public purpose. The time limits eventually disappeared and so did the public purpose.
The main case that established that a corporation's only legitimate purpose was to maximize profits for the shareholders was a 1919 case styled Dodge v. Ford, which involved a suit by shareholders against Henry Ford (and had nothing to do with Dodge Motor Co.), who had decided to provide minimal dividends, even though he was the greatest stockholder, and stated that instead he would use the profits to spread the benefits of his industrial system to the greatest number of people, by raising wages and lowering the price of the cars. Ford probably just meant this as PR, but the shareholders felt Ford was inappropriately being a utilitarian and so they sued. The Michigan Supreme Court ruled for the Dodges, reasoning that a corporation exists only to benefit shareholders. Other courts copied this reasoning, and allowed exceptions only if the action generated positive PR that in the long-term would maximize benefit to the shareholders.
That case, along with the Santa Clara County v. Southern Pac. R. Co., and Buckley v. Valeo, are three of the most important with regard to the evolution of corporate law.
But don't expect much more from me because even though I am an attorney, I am no expert in corporate law.
Louisa - Thanks for the heads up on Reclaim Democracy! I'll check it out.
ezeflyer - Changing party affiliation isn't going to get the job done. We have to start with election and campaign finance reform. A lot is getting done right now. Also, until corporations no longer are recognized LEGALLY as having the same rights as people, there is little hope of reining them in. This is a much harder task because it will have to go all the way to the Supreme Court to undo past legal precedents.
Adele - I love it!!! But how do we get a Consitutional Amendment passed? How many years? When was the last one passed?
Lobo - Welcome back! Heven't heard from you in a while.
Thanks all...
AdeleTheCzech is right on. The Boston Tea Party was about corporate control of the UK - one if the reasons this country declared independence from England. They taught that when I was in school, but not anymore, now that corporations are imbedded there as well. Correcting this error is the only way to control fascism - it is an imperative! Then the military-industrial-congressional-media-prison complex will no longer have rights that supercede our own.
fpal April 2nd, 2007 4:39 pm
"…a rule which government sets down for all corporations. That rule makes profit the corporation's only goal."
Can someone tell me where this rule/law is written. I can't believe that making money is the sole purpose of a corporation."
Why can't you believe it? It is an unwritten law. Shareholders/investors demand maximum return on their investment. They elect the board members who run the Corporation. So guess who gets elected? The people that promise the largest return. Large returns on investment then attract yet more investors, the share price rises and the shareholders/investors profit. Why do you think that CEO's who the board hires are able to command such astronomical salaries? Because the ones that draw the highest salaries generally have a proven record of success. And if someone doesn't deliver? They soon find themselves out the door, even if it is with a golden parachute.
Lobo Gris
As Thom Hartmann has pointed out, the "personhood" that corporations enjoy (to our utter detriment) may have resulted from a clerical error in an 1886 Supreme Court decision (Santa Clara County v. Southern Pacific Railroad) wherein the Court apparently declared that no state shall deprive a corporation... "of life, liberty or property without due process of law."
In the Buckley v. Valeo case (1976) which allowed unlimited corporate spending on political campaigns, Justices White, Brennan and Marshall, sharply dissented:
"It has long been recognized ... that the special status of corporations has placed them in a position to control vast amount of economic power which may, if not regulated, dominate not only the economy but also the very heart of our democracy, the electoral process...The State need not permit its own creation to consume it."
Even more interesting was the separate dissenting opinion by Chief Justice Rehnquist (hardly a liberal):
"...the blessing of potentially perpetual life and limited liability...so beneficial in the economic sphere, pose special dangers in the political sphere."
The only way to change this travesty is with a constitutional amendment. Here's one proposed by Joshua Holland (slightly altered by me):
"Citizenship in the United States shall be conferred only on human beings. Neither this Constitution nor the constitution of any State, nor state or federal law, shall be construed to permit citizenship or the legal incidents thereof to be granted to corporations, partnerships, proprietorships, trusts, or any other business entities."
"...a rule which government sets down for all corporations. That rule makes profit the corporation's only goal."
Can someone tell me where this rule/law is written. I can't believe that making money is the sole purpose of a corporation.
The notion that corporations have rights, the same as a person, is misguided and dangerous. Corporations should not be allowed the right to participate in elections of our government.
How can full rights be granted to an entity that has but one narrow purpose? This is a recipe for disaster.
I'm neither a constitutional nor a corporate expert, however, I do remember learning that the founders of this democratic republic were VERY wary of the corporate structure. So much so, that they enacted strict laws under which corporations had to live. The first was that corporations were chartered by the states in which they resided and if it was determined that said corporations no longer served the interest of the people in that state, their charters could be revoked and the corporations ended.
Over time, by dint of greed and the very nature of the corporate structure, our representatives and judges were bought out and the laws weakened so that now, corporations essentially have more power than people.
When the author asks, "Do governments control companies or do companies control government?", I think the answer is self evident. While laws can be written to control corporations, they will always be subverted in the interest of greed. Therefore, I have concluded that the corporate structure has to go. By their very nature of amassing wealth and protecting those within from the inevitable harm they inflict, corporations are anti-democratic and lead to fascism.
Money-power corporations and religious factions all ruling by representative "democracy" would find it almost impossible to rule by direct, decentralized, grassroots democracy. They can buy 100 Congresspersons, but hardly millions of law-making people.
Escape corporate and theocratic rule by joining the grassroots Green Party, the largest, fastest growing and international third party.
I highly suggest folks read this interview of Chomsky as it deals directly with the topic at issue and is too long to reproduce here, http://www.zmag.org/content/showarticle.cfm?SectionID=10&ItemID=12475
An excerpt, "How does the social market system differ? There's no principle of economics or anything else that says – first of all that even says that corporations should exist, but granting that they exist – that they should be concerned only with the maximization of gain for their stockholders instead of what's sometimes called "stakeholders": the community, the work force, everything else. As far as economics is concerned, it's just another way of running things. And the European system to an extent has stakeholder interest. So, say, Germany has a theoretical form of co-determination – mostly theoretical, but some degree of worker participation in management, acceptance of unions, that's been a partial move towards stakeholder interest. And the governmental social democratic programs are other examples of it.
"The United States happens to be pretty much at the extreme of keeping to the principle that the corporate system must be pathological, and that the government is allowed to and glad to intervene to uphold that principle. The European system is somewhat different, the British system is somewhat in between, and they all vary."
Very well said, and I'm pleased the author has dropped his "corporate repsonsibility" rhetoric from from earlier writings.
I'm thoroughly biased because I volunteer with http://ReclaimDemocracy.org -- a group I consider extraordinarily effective for its size in building movement to revoke corporate power. In my view, however, we've failed to make progress in controlling corporations because the few grassroots groups focused on structural change are not supported adequately financially or in progressive media by either individuals or by foundations.
Instead the money and feature stories go to reactive campaigns that merely focus on swapping out politicians or to stopping individiual corporate harms. We need to support those striking at the root--stripping corporations of their political power. Every month or so, I see articles on progressive sites that reference the Powell Memo and how effective the strategy it outlines has been for the corporate right, but nothing changes.
If many of the progressives (rightfully) fed up with groups that confuse Democrats with democrats shifted their contributions to groups like those listed here: http://reclaimdemocracy.org/links.html , change will follow.
"The liberal democracy was designed more than 100 years before the creation of the modern corporation. It was not designed to govern large institutions dedicated to the pursuit of self-interest. This is why government has so much trouble governing corporations today."
Hogwash, the government has the ability to govern corporations, it lacks the will to do so. It lacks the will because our Congressmen and women are feeding at the trough of Corporate donations.
During the turn of the last cenury Corporations and companies in the U.S. were running sweatshops.
The eventual response was unionization, and laws passed by the Congress governing work hours, overtime, child labor, minimum wage, workplace saftey, workmens comp, environmental protections etc. It actually worked pretty well till Nafta and it's subsequent look alike trade agreements were passed. Now the sweatshops are back in place, just out of sight, outside the U.S. And the American worker that made gains during most of the last century? They have seen the wholesale loss of their jobs to those low wage non-regulated areas of the world where Corporations and companies can run their sweatshops with impunity. Plus they have seen a new wrinkle added for Corporations and companies unable to move, the importation of cheap labor from foreign countries through programs such as H1B, H2B, along with uncontrolled borders that allow the poor to walk across only to be exploited by employers paying less than minimum wage because of their illegal status.
Yes, Corporations and companies can be regulated to benefit all of America, without hurting their ability to make a profit, but to do so requires the will to take away their ability to influence politics.
Corporations and companies are not people, and that being the case, they are not protected under the bill of rights which protects individuals. To suggest that they are makes a mockery of the Constitution, and the Founding fathers who so carefully crafted a document that has withstood the test of time.
Lobo Gris
The power of corporations in the US is a result of Supreme Court decisions going back to the 1880s but in a market system, it is inevitable that power will wind up in the hands of the largest, wealthiest private intersts. Those interests are not compatible with democracy and often run counter to popular interests. If we want to restore a democratic republic that is willing and able deal effectively with the environmental crisis, power must be separated from wealth. This won't happen through legislation because those who legislate and those who sit on the bench are already in the employ of corporate interests. It would be like politely petitioning King George III for independence.
One slight correction to AdeleTheCzech, it was the clerk of the court's summary in Santa Clara that is sited as precedent. The actual decision did not address it, the court chickened out and defered. A corporate lawyer taking a rotation through the revolving door to clerk at the Supreme Court took the corporate interpretation of the court's bunt and inserted that into the summary. Since then, well look at what's happened...
Santa Clara coupled with Buckley v Valeo have so skewed the "dialog" that we are no longer represented much in DC. We can't outshout the megaphone.
David Cobb of the Green Party campaigned on this issue in 04.
May I also suggest inverting the wording of the Ammendment such as:
The Rights of Citizens and Residents of the United States shall apply only to flesh and blood human beings.
Not sure this has to be an amendment and not sure it has to be National. Every state has it's owncharter for corporations (hence the Delaware Corporation) this might be something to take through the initiative process (where you have them) and through the State Legislatures where you can find some progressive sponsors.