Perhaps the greatest threat to freedom and democracy in the world today comes from the formation of the unholy alliances between government and business. This is not a new phenomenon. It used to be called fascism… The outward appearances of the democratic process are observed, but the powers of the state are diverted to the benefit of private interests. –
George SorosA corporation has been
defined as:
The most common form of business organization, and one which is chartered by a state and given many legal rights as an entity separate from its owners. This form of business is characterized by the limited liability of its owners…
In 1819, the U.S. Supreme Court ruled against the state of New Hampshire when it attempted to revoke the corporate charter of New Hampshire, in
Dartmouth College v. Woodward. New Hampshire citizens were outraged by that decision, arguing that corporations are created by the state, with the purpose of serving the public interest.
I don’t know enough about this specific case to comment on the merits of the Supreme Court decision, except to say that it should be patently obvious that the purpose of a corporation
should be to serve the public interest.
In a democracy, ALL actions of the state should be to serve the public interest. It’s hard for me to fathom how anyone could argue otherwise. Therefore, if the state grants a charter to a corporation, it should have the right to regulate that corporation in the public interest, in return for the privileges that it bestows on the corporation.
But instead, corporations have come to
oppose the public interest, in pursuit of their own private goals and the goals of their owners, and in the process they have cast a progressively darkening cloud of tyranny over our country and the world. In reality it is difficult or impossible to separate the goals of a corporation from the goals of its owners – those who exercise control over the corporation. After all, a corporation is merely a financial
tool, which can be utilized for whatever purposes those who control it wish. Yet it is legally
defined as an entity
separate from its owners. Thus those who control the corporation have a powerful tool at their disposal, while at the same time utilizing corporate law to shield them from the liabilities that mere individuals would incur without a corporation to hide behind.
That would be ok if the state was determined to regulate corporations in the public interest. However, through much of U.S. history, and especially since the “Reagan Revolution” of 1980, corporations have become powerful enough to enter into corrupt bargains with government, thereby enabling private corporations and government to mutually enrich each other at the expense of everyone else. And right wingers refer to this unholy arrangement as the “free market”.
The threat of corporate power at the founding of our nationAdam Smith’s “
The Wealth of Nations”, published in the same year (1776) as the U.S. Declaration of Independence, expounded on the advantages of a free market economic system, while at the same time warning of the dangers of corporations. That seems ironic on the surface, since today’s right wingers constantly push their own version of the “free market”, while using Smith as their authority. But in reality, Smith was deeply antagonistic towards any view of so-called “free market” principles that favored corporations – the very opposite of the stance advocated by today’s right-wing movement. This is what Smith had to say about the effect of corporate power on free markets:
It is to prevent this reduction of price, and consequently of… profit, by restraining that free competition which would most certainly occasion it, that all corporations, and the greater part of corporation laws, have been established… This prerogative of the crown seems to have been reserved rather for extorting money from the subject, than for the defense of the common liberty against such oppressive monopolies.
David Corten explains that our Declaration of Independence and the American Revolution that coincided with it were in large part a reaction against the same corporate abuses that Smith warned against in “The Wealth of Nations”:
It is noteworthy that the publication of The Wealth of Nations and the signing of the U.S. Declaration of Independence both occurred in 1776. Each was, in its way, a revolutionary manifesto challenging the abusive alliance of state and corporate power to establish monopolistic control of markets and thereby capture unearned profits and inhibit local enterprise. Smith and the American colonists shared a deep suspicion of both state and corporate power.
The conferring of corporate personhoodThere is nothing in our Declaration of Independence, nor our Constitution, nor any of the amendments to our Constitution that conferred special rights or privileges upon corporations. Indeed, as late as 1855 the U.S. Supreme Court made perfectly clear, in
Dodge v. Woolsey, that corporations have no special rights or privileges, and that they are subservient to the American people:
That the people of the States should have released their powers over the artificial bodies (i.e. corporations) which originate under the legislation of their representatives… is not to be assumed. Such a surrender was not essential to any policy of the Union, nor required… Such an abandonment could have served no other interest than that of the corporations, or individuals who might profit by the legislative acts themselves. Combinations of classes in society, united by the bond of a corporate spirit, for the accumulation of power, influence, or wealth… unquestionably desire limitations upon the sovereignty of the people… But the framers of the constitution were imbued with no desire to call into existence such combinations…
But in 1886, in an unofficial opinion by U.S. Supreme Court Chief Justice Morrison R. Waite, before any oral arguments took place in
the case of
Santa Clara County v. Southern Pacific Railroad Company, and without any explanation whatsoever,
Waite simply announced:
The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does.
This offhand statement – which cannot possibly constitute an official opinion of the court, which is always preceded by extensive research and debate – has since been considered the law of the land.
And as such it greatly increased the power of corporations against individuals by allowing them the protections given to persons under our Constitution, even though corporations are simultaneously showered with various powers that
actual persons don’t have and exempted from many of the responsibilities and obligations that
actual persons have. David Korten puts this in perspective in his book, “
When Corporations Rule the World”:
Thus corporations finally claimed the full rights enjoyed by individual citizens while being exempted from many of the responsibilities and liabilities of citizenship. Furthermore, in being guaranteed the same right to free speech as individual citizens, they achieved, in the words of Paul Hawken, "precisely what the Bill of Rights was intended to prevent: domination of public thought and discourse." The subsequent claim by corporations that they have the same right as any individual to influence the government in their own interest pits the individual citizen against the vast financial and communications resources of the corporation and mocks the constitutional intent that all citizens have an equal voice in the political debates surrounding important issues.
The restraint of corporate power by FDRExcessive corporate power led to
vast disparities of wealth, which in the late 19th Century became known as the
Gilded Age. This culminated in the
Stock Market Crash of 1929, which led to the Great Depression and the election of Franklin Delano Roosevelt as President.
FDR aggressively criticized the conditions that led to this state of affairs in his
1936 Democratic Convention speech to the American people. In that speech he condemned the men who were responsible for the nation’s economic woes, whom he referred to as “Economic Royalists”.
Out of this modern civilization economic royalists carved new dynasties. New kingdoms were built upon concentration of control over material things. Through new uses of corporations, banks and securities, new machinery of industry and agriculture, of labor and capital … the whole structure of modern life was impressed into this royal service.
There was no place among this royalty for our many thousands of small business men and merchants who sought to make a worthy use of the American system of initiative and profit. They were no more free than the worker or the farmer…
The privileged princes of these new economic dynasties, thirsting for power, reached out for control over Government itself. They created a new despotism and wrapped it in the robes of legal sanction. In its service new mercenaries sought to regiment the people, their labor, and their property. And as a result the average man once more confronts the problem that faced the Minute Man.
The hours men and women worked, the wages they received, the conditions of their labor – these had passed beyond the control of the people, and were imposed by this new industrial dictatorship. The savings of the average family, the capital of the small business man, the investments set aside for old age – other people's money – these were tools which the new economic royalty used to dig itself in.
The abuses of power that FDR detailed in that speech provided much of the rationale for his
New Deal, which lifted tens of millions of Americans out of poverty and created a vibrant middle class, while
taxing corporations at unprecedented levels.
The New Deal didn’t just fade away after FDR’s death. Instead, due to its stunning success, most of its components lasted for decades. Largely as a result of this, we experienced for the next three decades what Nobel Prize-winning economist Paul Krugman calls “
the greatest sustained economic boom in U.S. history”.
This chart shows median family income levels, beginning in 1947, when accurate statistics first became available. Family income rose steadily (in 2005 dollars) from $22,499 in 1947 to more than double that, $47,173 in 1980.
The effects of radical right wing “free market” ideology todayWith the advent of the
Reagan Revolution in 1981, characterized by a return to the “free market” ideology of the Gilded Age, the route marked out by FDR was reversed. Since that time, except for a brief respite during the latter years of the Clinton presidency, the income of American workers has been virtually stagnant, despite large increases in American productivity which have enriched the already wealthy.
The reign of “free-market” ideology has been characterized by an ideological ban against government intervention in economic matters to help those who most need it, which has played out domestically and internationally. William Greider, in his book, “
Come Home, America – The Rise and Fall (And Redeeming Promise) of our Country”, explains how this played out on the international stage:
The World Trade Organization enforces rules that protect capital investors and corporations, but it has no rules protecting workers and communities, that is, people. The so-called Washington Consensus – a stern dogma imposed on developing countries that borrow from the World Bank and International Monetary Fund preaches that national governments must not try to protect their people from the harsh side effects of capital and commerce. America’s representative democracy, meanwhile, is offered as the model the world should follow, despite the democratic breakdown that Americans well know is in progress….
Greider mentions globalization as another of the factors contributing to the demise of the United States. However, he also notes that other nations are affected by globalization just as much as the United States is, and yet other industrialized nations have much less economic inequality than the United because they are not bounded by the inflexible right wing ideology of the so-called “free market”.
James Galbraith, in his book, “
The Predator State”, explains why globalization and free trade agreements need
not cause serious adverse effects for American workers, if only we would give up that radical “free market” ideology that the right wingers have foisted upon us:
The populist objective is to raise American wages, create American jobs, and increase the fairness and security of our economic system… Is there a better way to do this…? Of course there is – and that is to do it directly. You want higher wages? Raise them. You want more and better jobs? Create them.
The utter hypocrisy of the corporate version of “free market” ideologyThere is nothing “free” about the right wing corporate version of so-called “free markets”. Rather, through the amassing of great wealth and power and the use of that wealth and power to
legally bribe our elected officials, they have stacked the deck in their favor so as to acquire monopoly control over so many aspects of our economic and political life. As Adam Smith, whom the right wing ideologues are so fond of quoting, says, creation of true free markets requires at a minimum the limiting of the power of corporations. Our corporate elites are not interested in “free” markets. They are interested only in gathering unto themselves as much wealth and power as they possibly can.
This is all part and parcel of the utterly nonsensical doctrine of “trickle down economics”, which was never supported by a shred of evidence. They want us to believe that the road to a healthy economy is to shower the wealthy with privileges and riches, so that eventually this wealth will shower (or trickle) down on the rest of us, by virtue of making the wealthy more productive. Well, we’re still waiting.
With their control of the news media, corporate America has foisted a toxic ideology on the American people that serves to maintain their wealth and power. When powerful banks lose money, they warn that the taxpayers must save them, lest our economy go into a permanent tailspin. Yet when the American people attempt to devise a health care system that will keep them financially solvent and
prevent twenty thousand deaths each year, the corporate elite scream SOCIALISM!! And they steadfastly maintain the myth of corporate personhood through reference to an
unofficial remark by a Supreme Court Justice made a century and a quarter ago.
In recent years the American people have caught on to the right wingers, as indicated by the elections of 2006 and 2008, in which the electorate restored control of Congress and the Presidency to the Democrats, thus showing their opinion of the Republican Party that brought us the Reagan and Gingrich revolutions.
Yet, corporate America remains one step ahead of the American people. While the Republican Party has been fully marginalized to the point that it even risks extinction, the corporate elites have bought out enough of the Democratic Party to get them to funnel hundreds of billions of dollars of taxpayer money to Wall Street and block meaningful health care reform thus far. And they continue to own most of our national news media, with which they continually bombard the American people with their right wing propaganda.
Nevertheless, the American people have become thoroughly alienated from the corporate elite who so affect their standard of living, as demonstrated by a
2007 Harris poll asking which industries Americans regarded as “generally honest and trustworthy”: Oil companies 3%; health insurance companies 7%; telephone companies 10%; pharmaceutical companies 11%; electric and gas utilities 15%. With numbers like that, and with more and more Americans
turning to alternate news sources, it hopefully won’t be too long before they begin to connect the dots and hold their elected representatives more accountable for their actions.
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