We hear so much these days about new paradigm business practices, socially responsible investing, values-oriented approaches to business, and the emergence of postmodern business. Yet when we peel away the outer layers of such visions, we discover a number of major assumptions which have not been challenged in this country for 100 years, and which - we find to our dismay - are almost identical to the assumptions made by those who endorse traditional top-down corporate models of business.
What are the assumptions? That corporations have the right to instruct and direct their employees, set their wages, move their operations whenever they desire, participate fully in the political process, maximize shareholder profit. I could go on and on. And corporate employees (i.e. citizens) have internalized these assumptions to the point that they rarely even act as if they have Constitutional rights.
If we are to truly challenge corporate power, we will have to dig deeper to discover what the founders of our nation intended as the proper relationship between We The People and Business.
First, a brief history lesson...
The American Revolution was fought for many reasons, but its chief purpose was to create a nation where citizens were the government and ruled corporations. It transformed crown corporations (such as the Carolina, Virginia and Pennsylvania Colonies) into constitutionalized states. As one revolutionary, Thomas Allen, put it: "It concerned the People to see to it that whilst we are fighting against oppression from the King and Parliament that we did not suffer it to rise up in our Bowels... [and to have] Usurpers rising up amongst ourselves."
The founding fathers never intended for corporations to have any intrinsic rights, which is why the U.S. Constitution makes no mention of corporations. And because they feared further power-plays by new American corporations, they gave citizens - via their state legislatures - the right to define and instruct corporations through charters (the certificates of incorporation) and state constitutions. In exchange for the charter, a corporation was obligated to obey all laws, to serve the common good, and to cause no harm. Incorporation was a privilege, not a right. When a corporation caused harm or exceeded its authority, the state legislature could act to revoke its charter, and until the late 1800's this was done hundreds of times. The process was surprisingly straightforward. Citizens understood that they were the Sovereign People, and they used their authority and responsibility to define, instruct, and control the subordinate legal entity known as the corporation. The earliest profit-making corporations were chartered to build turnpikes, canals and bridges. Not-for-profit charters were issued to establish libraries, churches, firehouses, charitable associations, and municipalities.
Here are just a few of the limitations We The People once placed on corporations:
* Corporations were required to have a clear purpose, to be fulfilled but not exceeded.
* Corporate charters were granted for a specific period of time, usually 10 to 30 years, and the corporation ceased to exist after that time unless its charter was renewed.
* Corporations were prohibited from owning stock in other corporations in order to prevent them from extending their power inappropriately.
* All corporation records and documents were open to the public (or appropriate offices of state government).
* A corporation's real estate holdings were limited to what was necessary to carry out its specific purpose.
* Corporate management and stockholders were fully (sometimes triply) liable for all corporate acts, and individuals could be held criminally liable for violating the law or causing harm (i.e. no limited liability).
* Corporations were prohibited from participating in the political process at any level of government (still a felony in Wisconsin until 1953); nor were they permitted to make any charitable or civic donations outside of their specific purpose.
To an American citizen in 1997, this must all seem very odd. We have long since forgotten our rightful relationship with the corporation, and have come to view it as the dominant institution of our time. And it is no surprise that we think the way we do because since the late 1800's, corporations have learned how to dominate our society and overwhelm our democracy. One example is the workplace where every morning millions of us hand our Constitutional rights over to a corporate fiction and get them back on our way out the office or factory door (i.e. free speech and assembly, protection from arbitrary search and seizure, etc).
Corporate fictions now define our labor, control our wealth, demarcate the commons, write our laws, elect our officials, pit employee against employee, poison our food, indoctrinate our children, and select our news. They have become so dominant that their annual sales now dwarf the economies of whole countries. Exxon is larger than Israel, GM is larger than Hong Kong, and Wal-Mart is larger than Poland. (*1)
What went wrong? How did We The People lose so much control?
Towards the end of the 19th century, corporations began to transform the law and recreate themselves. One of their greatest victories took place in 1886 when they convinced the Supreme Court that the corporation was a legal person for the purposes of the 14th Amendment to the Constitution. (Corporations gained personhood long before women and many other classes of people.) This decision gave them enormous new political rights: free speech (advertising and political participation), private property (land speculation and protection against unreasonable search and seizure), and much more. With these new rights and over many decades, they successfully replaced the basic tools of a sovereign people with regulatory and administrative law, new legal doctrines, and fines as corporate punishment (rather than corporate dissolution) - none of which prevents harms or corrects wrongs. While they redefined themselves as citizens, they were also busy redefining We The People as merely workers, consumers, and taxpayers. The Agrarian-based Populist movement of the 1880's/90's was not willing to concede that the corporate form would define work and money and progress and efficiency and productivity and unions and justice and ethical conduct and sustainability and harm and personhood. So they organized, educated and resisted. It became the largest social movement rebellion in U.S. history. But ultimately, it was crushed by the new power of increasingly giant corporations. (*2)
For much of the 20th century, a multitude of organizations and authors have understood that corporate policies are causing massive environmental deterioration and widespread human suffering. Yet citizens' efforts against corporations have been struggles against the symptoms of corporate domination rather than the causes. There are growing movements of people challenging corporate sweatshops home and abroad, corporate logging in our last ancient forests, and the tobacco industry's poisoning of our youth. Yet their challenges consistently concede to those very corporations the right to define the groundrules and shape the debate. For example, the media (corporations) inform us that we are finally winning the war against the mighty tobacco industry which will be forced to pay huge settlements and no longer be allowed to advertise at sporting events (among other supposed victories). In fact, if we were truly acting as a sovereign people should, we would demand a different outcome: revoke the charters of all of the tobacco corporations, put their executives in jail, and divvy up the enormous assets among their victims. Yet this viewpoint goes unheard and mostly unthought. Tobacco corporations have been shaping our thoughts, aspirations, culture and language, maiming and killing under protection of law, and running our governments for decades. (*3) We have become a colonized people once again, yet this time it is more insidious, because many of us confuse freedom with the maintenance of the status quo.
What will it take for American citizens to reclaim our rightful authority over the corporate fiction? When will we stop studying the regulatory agencies and trying to strengthen them? When will we stop bringing corporations to court one mass layoff at a time, one plant closing at a time, one chemical at a time, one clearcut at a time? When will we stop pleading with corporations to do a little less harm? When will we start to focus instead on corporate nature, not corporate behavior?
This is not simply a story of defeat, because in fact citizens have begun to awaken from our long slumber, and thousands of people in many states are now taking the necessary and difficult first steps of relearning our history, decolonizing our minds, and challenging the very legitimacy of the modern giant corporation. Organizations now exist in three states, all inspired by the work and ideas being generated by the Program on Corporations, Law and Democracy (POCLAD) - see contact info below.
So what does this mean for conscientious employees of corporations?
The answers are not simple but they are potentially very exciting. As citizens' movements grow large and strong enough to reclaim our rightful authority over the institutions we created, we will begin the long and complex process of revoking the charters of the major corporate criminals, and rechartering all of the rest so that they once again pursue their original purpose: to serve the common good and cause no harm. This is not about punishing corporations for being bad; it's about cutting the cancer out of the body politic. The big question is: Can corporate employees see these changes as a great opportunity rather than a huge threat? If they can, I am absolutely convinced that the transition to democratically-managed non-coercive forms of business will be liberating not only for them, but for everyone who has suffered under corporate rule. To this end, I urge anyone working for a corporation to take leadership in this new movement. Our history is filled with successful worker-owned enterprises and cooperatives, and efficient businesses owned by cities and towns. Overseas, businesses such as the Mondragon Cooperative offer convincing models of industrial-scale worker-owned and managed business. The potential is enormous, but it will require an equally enormous effort from a reawakened citizenry ready to re-engage in the workings of our democracy.
I close with the words of Richard Grossman, co-director of POCLAD:
"Our sovereign right to decide what is produced, to own and to organize our work, and to respect the earth is as American as a self-governing peoples' right to vote. In our democracy, we can shape the nation's economic life any way we want."
Pull-Quotes:
"I would submit to you that the era of the giant corporation is over and that it is time for us to take the offensive in the struggle to establish democratic control over corporations." - Ward Morehouse, Co-Director: Program on Corporations, Law and Democracy
"The life of a corporation is, indeed, less than that of the humblest citizen..." - New York State Court of Appeals, People v. North River Sugar Refining Company, 1890
"There is looming up a new and dark power... the enterprises of the country are aggregating vast corporate contributions of unexampled capital, boldly marching, not for economical conquests only, but for political power... For the first time really in our politics, money is taking the field as an organized power. It is unscrupulous, arrogant, and overbearing...
The question will arise and arise in your day, ...which shall rule - wealth or man; which shall lead - money or intellect; who shall fill public stations - educated and patriotic freemen, or the feudal serfs of corporate capital...?" - Chief Justice Ryan of the Wisconsin Supreme Court addressing the UW Law School Class of 1873
Footnotes:
1. The Top 200: The Rise of Global Corporate Power, by Institute For Policy Studies, Washington DC, 1996
2. Corporations, Accountability and Responsibility, unpublished article by Richard Grossman, Feb 97.
3. Pravda Today, The New York Times Tomorrow, unpublished article by Richard Grossman, June 97.
Friend Paul