The idea that a corporation is endowed with the rights and prerogatives of a
free individual is as essential to the acceptance of corporate rule in temporal
affairs as was the ideal of the divine right of kings in an earlier day.
Human rights secure our freedom to live fully and responsibly within life's
community. We are finding, however, that as corporations have become increasingly
successful in claiming these same rights for themselves, they have become increasingly
assertive in denying them to living people. For example ... they use property
rights as an instrument to deny the economically weak the most fundamental of
all human rights-the right to live-by denying them the right of access to a
means of living. The conflict between the person's right to a means of living
and the presumed right of the corporation to the security of its property and
profit is perhaps the ultimate confrontation between the natural rights of living
people and the rights that the institutions of capitalism have presumed for
themselves, but it is only one of many.
Supported by legions of corporate lawyers and sympathetic judges, corporations
have worked through the courts to acquire ever more of the rights and freedoms
that living persons gained only through long and difficult political struggle.
They have in turn used the rights so acquired to extend their control over the
institutions of democracy and the material, communications, and knowledge resources
on which people depend to secure their living. Now, in a further move to consolidate
their power, the institutions of money are well on their way to declaring themselves
owners of the whole of life through the systematic effort to expand the private
patenting of genetic materials.
There seems to be an ironclad relationship. The stronger the rights of corporations,
the weaker the rights of persons to live fully and well with freedom, responsibility,
and dignity. Thus, to restore human rights and dignity we must establish clearly
the principle that human rights reside solely in living persons.
From Property Rights to the Rights of Property
In the American colonies the vote was reserved for the owners of real property-a
mechanism widely favored by the landed aristocracy in the early days of democracy
to confine political control to the presumably more diligent landed classes.
In effect, that law connected political rights to property rather than to the
person, an idea that to this day carries the seed of democracy's undoing. When
a person's rights are recognized only in proportion to his or her property,
it is as though rights reside in the property rather than in the person.
We have since vested the vote in personhood rather than propertyhood and assumed
that all is right with democracy. Meantime, in other spheres of political and
economic life, the rights of property and the propertied have steadily expanded
at the expense of the rights of the person. Of special significance was a decision
by the U.S. Supreme Court to name the corporation, which is created by government
and claimed by its shareholders as property, an honorary person entitled to
the rights thereof.
In the United States the natural rights of persons are enshrined in the first
ten amendments to the U.S. Constitution, known as the Bill of Rights. Indeed,
the individual states approved the Constitution only once assurances were given
that a Bill of Rights would be added through amendment. Each provision was thoroughly
contested, publicly debated, and subject to ratification by all of the state
legislatures. Since the time of ratification all other U.S. laws have been subject
to the test of consistency with these constitutionally guaranteed human rights.
The U.S. Constitution, however, does not use the term "human" rights.
It speaks rather of the rights of persons, which most people would take to be
the same thing.
In 1886, however, in the case of Santa Clara County v. Southern Pacific Railroad,
the U.S. Supreme Court decided that a private corporation is a person and entitled
to the legal rights and protections the Constitution affords to any person.
Because the Constitution makes no mention of corporations, it is a fairly clear
case of the Court's taking it upon itself to rewrite the Constitution.
Far more remarkable, however, is that the doctrine of corporate personhood,
which subsequently became a cornerstone of corporate law, was introduced in
this 1886 decision without argument. According to the official case record,
Supreme Court Justice Morrison Remick Waite simply pronounced before the beginning
of argument in the case of Santa Clara County v. Southern Pacific Railroad that
The court does not wish to hear argument on the question of 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 opinion that it does.
The court reporter duly entered into the summary record of the Court's findings
The defendant Corporations are persons within the intent of the clause in section
1 of the Fourteen [sic] Amendment to the Constitution of the United States,
which forbids a State to deny to any person within its jurisdiction the equal
protection of the laws.
Thus it was that a two-sentence assertion by a single judge elevated corporations
to the status of persons under the law, prepared the way for the rise of global
corporate rule, and thereby changed the course of history.
The doctrine of corporate personhood creates an interesting legal contradiction.
The corporation is owned by its shareholders and is therefore their property.
If it is also a legal person, then it is a person owned by others and thus exists
in a condition of slavery-a status explicitly forbidden by the Thirteenth Amendment
to the Constitution. So is a corporation a person illegally held in servitude
by its shareholders? Or is it a person who enjoys rights of personhood that
take precedence over the presumed ownership rights of its shareholders? So far
as I have been able to determine, this contradiction has not been directly addressed
by the courts.
Without addressing this question directly, the courts have moved persistently,
however, in the direction of expanding corporate rights and increasing the autonomy
of corporate management, even from intervention by the corporation's titular
owners. Corporations now enjoy unlimited life; virtual freedom of movement anywhere
on the globe; control of the mass media; the ability to amass legions of lawyers
and public relations specialists in support of their cause; and freedom from
liability for the misdeeds of wholly owned subsidiaries. They also enjoy the
presumed right to amass property and financial resources without limit; engage
in any legal activity; bring liability suits against private citizens or civic
organizations that challenge them; make contributions to individual candidates,
political parties, and political action committees and deduct those contributions
from taxable income as business expenses; withhold potentially damaging information
from customers; and avoid restrictions on the advertising of harmful but legal
products in the name of commercial free speech. Although their owners hold the
ultimate decision-making power and the corporation is obliged to manage its
affairs for the sole benefit of its owners, these owners bear no accountability
for corporate misdeeds or liability beyond the loss of value of their shares.
Step-by-step, largely through judge-made law, corporations have become far more
powerful than ever intended by the people and governments that created them.
To Restore the Rights of the Living
Those concerned with curbing the excesses of the corporation have generally
focused on one of two losing strategies. The first is to appeal to the conscience
of the corporation to act more responsibly. As Robert Monks reminds us, however,
in The Emperor's Nightingale, Corporations are not people; they have no conscience.
Although corporate acts are carried out by individuals, even individuals with
high moral standards often find themselves caught up in a corporate action that
is beyond their control-or even, in some cases, their knowledge.
The corporation is a legal instrument and the people of conscience who work
for it are legally obligated to set aside their own values in favor of the financial
interests of the institution and its shareholders.
A further barrier to corporate responsibility resides in the extent to which
the existence and profitability of many corporations depend on successfully
promoting harmful products and encouraging behaviors damaging to one's self
and society. Could the R. J. Reynolds corporation, for example, really commit
itself to discouraging anyone under twenty-one years of age from smoking, knowing
this would virtually eliminate its future market for tobacco products? Could
the Coca-Cola corporation decide to stop encouraging children to consume large
amounts of flavored sugar water and encourage them to substitute clean tap water
and fresh fruit juices? Could the General Motors corporation become a serious
advocate of urban growth boundaries and improved public transportation to limit
dependence on the automobile?
When the Monsanto corporation announced it was divesting itself of most of its
industrial chemicals production to concentrate on genetic engineering, its stock
price doubled in anticipation of major increases in earnings. Can the management
of the Monsanto corporation now afford to hold a new genetically engineered
product off the market until it is certain there is no serious possibility of
harmful environmental or health consequences? In each instance, making the socially
responsible choice would be equivalent to corporate suicide and surely cost
the CEO his job.
The second losing strategy is to oppose corporate misdeeds corporation by corporation
and deed by deed. The victories are costly, few, and generally only temporary
because they do nothing to change the nature of the corporation or reduce its
staying power. A major case in point is the legendary citizen boycott of the
Nestle corporation demanding that it stop encouraging poor mothers in Third
World countries to favor bottle feeding over breast feeding-a practice responsible
for untold numbers of infant deaths. To end the boycott, Nestle agreed to change
its practices. Meanwhile, other infant formula producers continued similar promotions,
and Nestle itself was soon back to doing the same. On the other hand, the losses
are often permanent, as when children die, or when citizens lose the battle
to keep a Wal-Mart out of their town or to stop the clear-cut of an ancient
forest by a timber corporation.
Any initiative that raises public consciousness of corporate misdeeds makes
a useful contribution and we must surely oppose corporate abuses with all the
means at our disposal. However, although we may win some battles, we will continue
to lose the war so long as capitalism's dysfunctional structures remain in place.
To restore the rights and powers of the living we must eliminate the autonomous
rights and powers of money and its institutions through a six-fold agenda aimed
at restoring political democracy; ending the legal fiction of corporate personhood;
establishing an international agreement regulating international corporations
and finance; eliminating corporate welfare; restoring money's role as a medium
of exchange; and advancing economic democracy.
Each of these six agenda items defines an important goal for citizen action.
Although the agenda has universal relevance and is already being advanced by
citizen initiatives in a number of countries, most of the examples I will use
center on the United States. Our government and our corporations have been the
major architects of the global capitalist system and hold the major levers of
power. We therefore bear greater responsibility than any other country for the
global crisis and for taking steps to dismantle the system that has created
Each agenda item defines an important initiative in its own right requiring
the development of specific legislative proposals, programs of direct action,
and political mobilization strategies. The purpose here is only to identify
the critical focal points for citizen action aimed at transforming the existing
system of economic power.
AGENDA ITEM 1: RESTORE POLITICAL DEMOCRACY
To raise the money required to wage successful campaigns, politicians must spend
a large portion of their time courting favor with and tending to the interests
of the biggest corporations and wealthiest investors. It has become a vicious
cycle. The more the politicians bend the rules to channel an ever greater share
of society's real wealth to the already rich, the more money the rich can channel
to politicians to gain further advantage.
There are few issues in America on which public consensus is so clear and unanimous.
Eighty-six percent of Americans believe campaign contributions influence the
policies supported by public officials moderately or a great deal. Seventy-nine
percent favor "putting a limit on the amount of money candidates for the
U.S. House and Senate can raise and spend on their political campaigns."
Eighty-one percent favor "limiting the total amount of money which business
and industry can contribute to U.S. House and Senate campaigns each election."
Sixty-four percent believe it would be a good idea for the federal government
to provide a fixed amount of money for the election campaigns of candidates
for Congress and prohibit all private contributions. And 48 percent think they
are more likely to see Elvis Presley in person than to see the U.S. Congress
pass real campaign finance reform.
Increasingly of the opinion that political bodies have become too corrupt to
reform themselves, citizens in the United States are turning to state ballot
measures. In November 1996, voters in the state of Maine passed a clean-money
campaign-reform initiative by a 56 to 44 percent vote after the state legislature
had rejected more than forty reform proposals during the previous decade. Eleven-hundred
grassroots volunteers collected more than sixty-five thousand signatures on
Election Day 1995 to place the measure on the ballot. The initiative, passed
in 1996, did what no state or federal legislative body had ever done-offered
full public financing to candidates for state office who reject special-interest
contributions and agree to campaign-spending limits. Spurred to action by the
Maine initiative, Vermont's state legislature passed a similar measure by a
wide majority. By mid-1998, diverse grassroots coalitions and reform-minded
legislators were pursuing similar measures in fourteen other states. Although
state-level measures change the election rules only for state-level offices,
the spreading and strengthening of these efforts sends a powerful signal to
national-level politicians that the voters care.
No issue is more central to restoring the rights of living people than serious
campaign finance reform. If a democracy of people based on one person, one vote
is to be restored, then we must have strict limits on political giving and spending
and get corporations out of the political process.
Meaningful reform will necessarily include a combination of public financing
of political campaigns and provision of free television and radio time to qualified
candidates as a public service obligation of those licensed to use the public
airwaves, and a prohibition on any effort by a corporation to influence the
outcome of an election, legislation, or referendum, or the negotiation of an
international agreement or treaty.
The matter of excluding corporations from political participation merits elaboration.
The authority by which a government issues a corporate charter is derived from
the sovereign authority of its people. It is appropriate that those who have
created the corporation determine the rules under which it will exist and function
and that the corporation accept those rules or relinquish its charter and operate
as an unincorporated entity. Barring the corporation from politics affirms the
principle that political rights and freedoms reside in the person, not in properties
or artificial legal entities.
AGENDA ITEM 2: END THE LEGAL FICTION OF CORPORATE PERSONHOOD
The legal fiction that the corporation is a natural person is a major lever
by which corporations have acquired the rights they now use to deny the right
of living people to a means of living. Similarly, this legal fiction is used
by corporations to claim free speech rights for themselves in promoting their
products without public oversight and in seeking to influence public policy,
while they use a combination of speech and property rights to prohibit the exercise
of the right to free speech by real people. Thus union members are barred from
engaging in organizing activities on company property. Citizen activists are
barred from exercising their speech rights in shopping malls. The corporations
that control the mass media reserve the right to decide whose voices will and
will not be heard on the public airwaves.
Step-by-step, a small number of corporations are privatizing ever more of our
public spaces and reserving them solely for the exercise of their own speech
rights to the exclusion of the speech rights of real persons. In these and other
ways the doctrine of corporate personhood actively endangers the rights of people
and presents a barrier to citizen efforts to hold corporations accountable to
a larger public interest.
The time has come to launch a serious challenge against the legal fiction of
corporate personhood on the principle that the natural rights of persons belong
only to living persons. Although the longer-term goal is to eliminate the for-profit,
publicly traded corporation as we know it, the interim objective is to restore
the doctrine that a corporation enjoys only those privileges specified in its
charter to facilitate the conduct of a business in the public interest and that
these privileges are subject to periodic public review and withdrawal. Furthermore,
the privileges extended are exclusive to the jurisdiction of the governmental
entity that issued the charter and do not extend to any other jurisdiction except
by the explicit action of the appropriate governmental authorities in that jurisdiction.
This doctrine would place strict limits on corporate privileges, without in
any way restraining or limiting the recognition and exercise of the universal
rights of living persons.
There are few actions we might contemplate with comparably far-reaching positive
consequences than the elimination of corporate personhood. Progress on this
issue in any country would be a positive step, but it is especially important
that we engage the cause in the United States, for it is here that the doctrine
AGENDA ITEM 3: ESTABLISH AN INTERNATIONAL AGREEMENT REGULATING INTERNATIONAL
CORPORATIONS AND FINANCE
International trade and investment agreements such as GATT, NAFTA, APEC, and
the others have become the favored venues for further extending corporate rights
at the expense of democracy and the right of people to govern their own economic
affairs. Created largely outside any democratic process, these agreements override
democratically enacted laws protecting human and environmental interests. So
deeply have our governments aligned with the interests of global capitalism
that, following the Uruguay Round of the GATT negotiations that established
the World Trade Organization, there was a flurry of initiatives led by the United
States to put in place agreements on international investment and finance, including
a Multilateral Agreement on Investment (MAI) that would preclude virtually any
governmental regulation of the free international flow of speculative money
and require governments to guarantee foreign investors against any losses they
might incur from the subsequent introduction of environmental or health and
A number of trade disputes between the United States and Europe brought to or
resolved by the World Trade Organization (WTO) show how these agreements and
institutions are used to thwart the ability of democratic governments to respond
to the wishes of their citizens for responsible laws on social goals, food security,
and food safety. Consider two cases in which the WTO ruled in favor of the United
States and against the European Union. One was a U.S. complaint against Europeans
for giving preference to bananas produced in the Caribbean over those grown
in Latin America. The bananas from the Caribbean were being produced largely
on small family farms and were one of the only foreign exchange earners of several
small Caribbean island economies. The bananas from Latin America were being
grown by U.S. agribusiness corporations-Chiquita, Dole, and Del Monte, which
together control almost two-thirds of the world's banana market-on large plantations
that have displaced hundreds of small farmers from their lands. The United States
thus used the WTO to force Europe to end its preference for the small producers
and open its markets to unrestricted access by global megacorporations. Government
and company representatives maintain that political donations of $1.1 million
to the Democratic Party and $1.4 million to the Republican Party by the Chiquita
corporation and its chairman had no influence on the U.S. government's interest
in the case.
The second case involved a U.S. complaint against a European ban on the import
of beef from cows treated with hormones. As the use of hormone supplements is
routine in U.S. beef production, the United States complained that the ban discriminated
against U.S. producers. The WTO agreed with the United States, ignoring the
widespread concern in Europe that the hormones may involve health risks and
a strong consumer preference to avoid eating meat from hormone-treated cows.
" The U.S. corporations involved in the production and use of the hormones
argue that such concerns are groundless and unsupported by scientific data and
therefore should be disregarded-claims similar to those long made by cigarette
companies regarding concerns about the dangers of tobacco smoke.
On a third issue, Europe yielded voluntarily to U.S. pressure to relax restrictions
on the import of furs from the United States obtained by use of leg-hold traps,
restrictions many feel were fully justified on humanitarian grounds. Unresolved
was a U.S. threat to bring a WTO action against France for blocking imports
of genetically engineered corn on the grounds that it was simply a measure to
protect French corn farmers. Here again many European consumers are concerned
about the implications of genetically altered food in relation to health, ethics,
and the environment, but such concerns are likely to carry little weight with
the WTO unless backed by conclusive scientific findings. Even if there were
no health issue, from a human interest perspective there is a strong case to
be made that national governments have an obligation to both their own and the
world's people to maintain food production capacity and national food security
in a world likely to be threatened by severe food shortages in the near future.
But there is no sympathy for such concerns in the WTO if they lead to the restriction
Managed borders are essential to the very existence of life - a principle that
applies to economies as well as to cells and organisms. To create mindful markets
people must be able to protect the coherence and integrity of their domestic
and local economies, which is virtually impossible if their borders are wide
open to foreign corporations and financial institutions they are forbidden to
control. If we are to take economic democracy seriously, decisions regarding
economic policies and choices must be firmly in the hands of a country's citizens.
Citizen groups have become increasingly active in opposing trade agreements
that undermine the democratic rights of people. It is important that these resistance
efforts continue. We must block further efforts to use trade agreements to circumvent
democracy. The time has come, however, for a citizen-led initiative to demand
that our governments put in place an entirely different kind of international
agreement aimed at holding global corporations and finance accountable to the
This may logically begin with an international alliance of citizen groups joining
to draft a prototype international agreement affirming the rights of people
to set their own health, safety, employment, and environmental standards and
to establish standards and mechanisms for regulating international corporations
and financial flows. The document should establish mechanisms to discourage
financial speculation, break up international concentrations of corporate power,
and phase out the World Trade Organization, the World Bank, the International
Monetary Fund, and other international agencies whose primary mission is to
advance the interests of transnational capital. It should also recognize and
secure the right of each individual country to set its own economic priorities
and standards and determine the terms under which it will trade with others
and invite others to invest in its economy. The process of drafting such an
agreement should be designed to engage the broadest citizen participation and
build a significant citizen political constituency demanding that our governments
sign and enact the agreement as a replacement for existing corporate-sponsored
trade and investment agreements.
AGENDA ITEM 4: ELIMINATE CORPORATE WELFARE
Corporate welfare is not limited to direct public subsidies and tax breaks.
It includes a much wider range of externalized costs relating to such things
as substandard wages and working conditions, worker health and safety, environmental
damage, and dangerous and defective products. Chapter 2 noted the estimate by
Ralph Estes that in the United States alone corporations annually externalize
more than $2.6 trillion in costs per year, roughly five times the amount of
corporate profits. The global figure may be on the order of $10.7 trillion.
There is a strong case to be made that corporations provide handsome returns
to their top managers and shareholders only at an extraordinary cost to the
rest of society. Many would surely go out of business if required to pay their
own way as market principles dictate.
An obvious starting point toward the elimination of corporate welfare is to
eliminate direct public subsidies and tax breaks for corporations, because these
are direct financial transfers from taxpayers to corporate managers and shareholders.
The next step is to charge environmental use fees for the full public costs
of natural-resource extraction and the release of pollutants into the environment.
Such action would align with current tax-shift proposals that call for reducing
or eliminating taxes on employment, basic incomes, and essential consumption
and making up the lost income through fees for resource extraction and pollution.
Such a shift from employment and consumption taxes to environmental fees would
encourage employment, eliminate the most regressive sales taxes, reduce pollution
and resource extraction, and encourage recycling-all highly beneficial outcomes.
If the environmental fees reflect actual costs to society, it would also be
a significant step toward eliminating market-distorting public subsidies.
A third step would be to establish procedures for estimating the amount of other
indirect subsidies enjoyed by individual corporations and assessing a public
facilities fee in that amount. The fee would recover idle costs to society of
corporations that fail to provide a living wage adequate to support a family,
health insurance, pension contributions, and safe working conditions for their
workers on the grounds that these costs are thus borne by the larger society.
Similarly, it would recover the public costs of harmful and defective products
such as cigarettes and unsafe automobiles. For example, cost-recovery fees would
be assessed on the basis of actuarial experience with the health costs of smoking-related
diseases in the case of cigarettes and accident rates and consequences in the
case of automobiles.
Ideally, all countries would choose to move toward the elimination of corporate
subsidies in unison. Given, however, that there is almost no prospect of this
happening, it is important to establish the principle that each nation has the
right to protect its own producers from predatory competition from subsidized
producers by imposing compensating tariffs.
AGENDA ITEM 5: RESTORE MONEY'S ROLE AS A MEDIUM OF EXCHANGE
Money serves a useful social function as a medium of exchange. In the hands
of speculators, however, it becomes an anti-democratic, anti-market instrument
of instability and unjust extraction. A central goal of economic policy should
be to eliminate financial speculation and restore money's primary role as a
medium of exchange.
Nearly $2 trillion now changes hands in the world's currency exchange markets
each day. Perhaps 2 percent of that money is related to trade in real goods
and services. The rest, which is largely pursuing speculative profits, creates
massive international financial instability while serving little if any public
purpose. The following are reforms that merit consideration.
Prohibit banks from financing speculators.
... the financial speculation that destabilized the Asian economies in 1997
was fueled by reckless bank lending that financed the creation of large stock
and real estate bubbles. The 1998 collapse in the United States of a single
highly leveraged hedge fund, Long-Term Capital Management, that made bad bets
on the Russian ruble posed such a threat to the U.S. banking system that the
Federal Reserve stepped in to arrange a private bailout. LongTerm Capital's
gambling habit was financed with $25 in bank loans for every dollar of equity.
There are an estimated 4,000 hedge funds in the world. Some have as much as
$100 in loan financing for every dollar in equity. Bear in mind these bank loans
represent money that banks created out of nothing and you begin to see how the
enormous speculative overhang in the global money system is being created. This
lending is a key source of speculative bubbles and the related financial instability
that has been rocking the world.
Gambling with borrowed money is a bad idea under any circumstances. When it
is done on a scale that threatens the integrity of national financial systems,
there is a compelling rationale for strong public measures to eliminate it.
Appropriate measures include prohibiting banks from accepting financial assets
as loan collateral and from lending to hedge funds and other financial institutions
for the purpose of leveraging the purchase or sale of financial securities or
derivatives. Buying stocks on margin should be similarly prohibited.
Tax short-term capital gains at rates substantially higher than earned income.
Giving a tax advantage to those who live from speculative gains over those who
do productive work for a living is unjust and bad policy. It is appropriate
to tax away virtually all gains from capital assets held less than a month as
they are almost certainly speculative in nature. It is appropriate that gains
from assets held for longer periods of time enjoy more favorable treatment,
but in general gains from an asset held less than five years should not enjoy
a tax advantage over earned income. This should be true for corporations as
well as for individuals.
Encourage the use of local currencies.
Money's value is based solely on a social contract-an agreement among a group
of people that they will accept a particular tender in the payment of debts.
A common currency not only facilitates exchange but also defines a community
with a mutual interest in productive exchange among its members. The community
thereby affirms its own existence and creates a natural preference for its own
products. Bernard Lietaer estimates that fifteen hundred communities around
the world have issued their own local currencies to facilitate local commerce.
The idea is not to eliminate national currencies but rather to supplement them
with local currencies that necessarily stay in the community that issues them
so that local workers and assets need never stand idle for a simple lack of
the money to facilitate exchange.
Make the creation of national currencies a public function.
A nation's money supply is created by either government's spending new money
into existence or a bank's loaning it into existence. The former approach allows
a government to pay for public services beyond the amount of its tax revenues.
The latter generates large profits for private bankers. Though it's not generally
recognized by the public, virtually all money is now loaned into existence by
private banks, which means a nation's money supply and the stability of its
money system depend on continuously expanding debt to create enough money to
repay the old debts and avoid bankruptcy-a primary reason why capitalist economies
are prone to collapse if they do not grow exponentially. Placing a 100 percent
reserve requirement on demand deposits in the banking system and returning the
function of creating national currencies to government would largely eliminate
the federal government's need to borrow, reduce the power of the banking system,
and eliminate an important source of the money world's growth imperative.
Place a demurrage charge on money.
Holding virtually any real asset involves a cost to the holder. Forests, factories,
farmland, and buildings must be protected and maintained. Personal skills and
technologies must be updated. Even holding gold involves costs for secure storage.
Only those who hold money as a future claim against the wealth that others are
creating and maintaining expect a secure, cost-free interest return with no
effort on their part. This feature of money encourages the conversion of real
wealth to money to be held in inflating financial assets, though the interests
of society are best served by encouraging the creation, stewardship, and augmentation
of real wealth. Money expert Bernard Lietaer suggests that the resulting distortions
be corrected by charging a small demurrage fee for holding financial assets-say
a quarter of a percent a month or 3 percent a year. This might, for example,
make it more profitable to invest in growing trees than to hold money in a bank
account. Banks would continue to pay interest on savings accounts and charge
interest on loans as they do now. The government, however, would levy the demurrage
fee against any outstanding financial balances.
Restore the concept of community banking.
At one time the United States had what is known as a unitary banking system,
which means that each bank was individually owned and functioned as a community
institution. Local savings were deposited and the money was loaned back to the
community for local housing and business investment. It is appropriate to restore
this concept by using antitrust rules to break up banking conglomerates and
limiting federal deposit insurance to funds deposited with community banks that
Restrict the conversion of national and local currencies for purposes other
than tourism and trade in real goods and services.
Beneficial foreign investment necessarily involves the importation of real capital
goods, skills, and technologies that increase a country's future productive
potential. Purely speculative foreign investment involves no such transfer.
It simply creates financial instability, transfers ownership of productive assets
to absentee owners, and increases foreign claims against the country's future
foreign exchange earnings. As speculative investment flows create public hardship
without increasing public welfare, governments have both the right and the obligations
to regulate, and even to prohibit, them in the public interest.
AGENDA ITEM 6. ADVANCE ECONOMIC DEMOCRACY
The previous elements of the agenda focus on constraining the power of global
corporations and finance in order to open economic spaces within which people
can create the institutions of economic democracy and a true market economy.
In addition to such defensive measures, there is room for public policy to be
proactive in promoting human-scale, stakeholder-owned enterprises to displace
the subsidized megacorporations whose hold the earlier measures are intended
Many such enterprises already exist in the form of family businesses, cooperatives,
community-owned businesses, worker-owned enterprises, and others. New ones are
being formed each day. Here the need is to acknowledge the central role of these
enterprises as the foundation of the new economy and expand the spaces in which
they can flourish as the corporate superstructure is cleared away.
We can also salvage much from existing corporate structures by breaking down
megacorporations into human-scale, stakeholder-owned firms. The measures already
suggested, such as getting corporations out of politics, restoring the integrity
of national economic borders, and eliminating corporate welfare, will likely
make most megacorporations unprofitable and thereby increase the receptivity
of their managers and shareholders to selling off their component businesses
to stakeholders at appropriately depreciated prices.
Measures to support stakeholder ownership might include requiring that before
a major corporation is allowed to close a plant or undertake a sale or merger
of significant assets, the affected workers and community must be given first
option to buy out the assets on preferential terms. There might be preferential
tax treatment for shareholders who sell their shares to stakeholders under an
organized stakeholder buyout program. Similarly, relief on estate taxes might
be used to encourage the conversion of larger family-owned corporations to stakeholder
ownership on the death of their founders. Procedures could be established for
converting worker pension funds into meaningful worker ownership programs. Banks
might be given incentives to provide loans on preferential terms to finance
stakeholder buyouts. Financing might also be mobilized by what Jeff Gates calls
a user fee on personal financial accumulations in excess of $10 million "for
the privilege of utilizing the nation's private property tradition as a vehicle
for accumulating assets totally disproportionate to any conceivable notion of
need." This would be a wealth redistribution initiative addressed directly
to the need to redistribute asset ownership.
Efforts to move toward stakeholder ownership must take into account the history
of worker ownership schemes that have not led to meaningful worker participation
and empowerment. As noted in Chapter 9, many employee stock ownership plans
(ESOPs) in the United States place the control of employee shares in the hands
of management. The result is a perversion of the concept of stakeholder ownership
that gives the titular stakeholder owner less power and say in management than
an ordinary absentee owner. Our goal should be exactly the opposite-a much larger
and more meaningful role in management by stakeholder owners than by absentee
There is need to reform the legal framework and mechanisms of ESOPs to enable
and encourage ESOP owners to engage in real ownership participation. Consideration
might also be given to expanding existing employee ownership plans to facilitate
broader participation by other nonfinancial stakeholders. Significant investment
will be needed in educational programs designed to prepare workers and other
stakeholders for meaningful and responsible participation. An imaginative and
reinvigorated labor union movement could take the lead in advancing stakeholder
ownership and providing educational support as part of an agenda to secure the
rights of working people and create people-friendly working environments.
It will be appropriate to supplement these initiatives in support of stakeholder
ownership with the rigorous application of antitrust legislation revamped to
establish the presumption that smaller is better until proven otherwise. Thus,
mergers and acquisitions would be approved only in those rare instances in which
their proponents make a compelling case that the combination would significantly
advance the public interest. Any firm with more than a 10 percent share in a
major market might be required every five years to make a compelling case in
a public regulatory hearing as to why it would not be in the public interest
to break it up into more human-scale stakeholder-owned firms.
The proposed six-fold agenda attacks the foundation of unaccountable financial
and corporate power and opens the way to a radical redistribution of economic
wealth and power by returning human rights to living persons. Although the agenda
is based on solid, conservative principles of individual responsibility and
local control, it does require a frontal assault on the institutional and intellectual
underpinnings of our present system of elite privilege. One might for that reason
expect a massive backlash against such ideas from within the establishment.
But although such a backlash must be expected, the unanimity of the present
power holders should not be assumed. There is evidence of deep and growing concern
among thoughtful corporate leaders, bankers, and even economists, that they
may be sitting atop an increasingly unstable system on the brink of collapse.
Seeds of a New Citizen-Led Politics
As we look to the formidable task ahead, we should remember that slavery was
once legal in the United States, as was discrimination based on race. There
was once a Roman Empire, later a Soviet Empire, a Berlin Wall, and until recently,
apartheid in South Africa. Corrupt and unjust regimes have a way of falling
once ordinary people decide their time has come.
In Silent Coup: Confronting the Big Business Takeover of Canada, Tony Clarke,
a leader of Canada's growing citizen movement against corporate rule, points
to the need to build a political movement that sets the end of corporate rule
as one of its top priorities. Corporate rule is the megaton gorilla in the middle
of the room that most discussions of political and economic failure have too
long avoided mentioning. Acknowledging the gorilla is an essential step toward
The depth and seriousness of the massive dysfunctions of global corporations
and the contemporary capitalist economy have only recently gained prominence
in the public mind. Already, new initiatives are emerging that draw attention
to the need for serious structural mechanisms to hold corporations accountable
to the public interest. Indeed, the seeds of a new popular movement toward serious
reform are emerging from across the political spectrum. A few of those centered
in the United States are mentioned in the following paragraphs. They merit broad
and enthusiastic public support from those who are seeking ways to participate
in the creation of a post-corporate world.
The New Party, a grassroots citizen-led political party working under the banner
of "A Fair Economy. A Real Democracy. A New Party," is systematically
building a citizen-led politics around an agenda that centers on strengthening
the rights and capacities of people to self-organize democratically in both
political and economic affairs. It is racially diverse; works m alliance with
labor, community, environmental, feminist student, gay, and lesbian groups;
and is built around values rather than personalities. Its strategy is to build
political strength by winning local elections while concentrating on problems
that can be addressed at the local level. It is taking a serious and systematic
approach to building what ~t hopes may one day become a new majority party.
As of 1997, 152 of the 231 candidates it had supported in election contests
had won their races Roughly half of New Party candidates are women and more
than a third are people of color.
A former corporate executive and staunch Republican who held a number of high-level
appointments in the Reagan and Bush administrations, Robert Monks has for some
years been organizing retirement and other investment funds to exercise their
shareholder voting rights to oust and replace complacent managers who take more
interest in increasing their personal compensation and entitlements than producing
returns for shareholders. Now he is taking on the larger issue of the corporation's
social performance. Monks believes that pension funds are the key to increasing
corporate responsibility, because they serve a broad clientele with a long-term
interest in the health of society as well as the health of the corporations
in which their money is invested. He is thus organizing pension funds to take
the lead in advancing shareholder resolutions holding corporate executives accountable
to shareholders for (1) obeying the law; (2) fully disclosing in their financial
reporting what they know or strongly suspect regarding the costs imposed by
their firms on the function of society; and (3) minimizing their involvement
in political processes. These ideas are radical only in the extent to which
they depart from current practice. Ideally, his proposals will become a centerpiece
of the socially-responsible-investing movement.
The Politics of Meaning is a grassroots nonparty political movement with chapters
in ten major U.S. cities promoting a value-oriented politics based on ideas
articulated by Michael Lerner, editor and publisher of Tikkun magazine, and
lawyer and educator Peter Gabel. It has announced two major initiatives to increase
the integrity of economic life. The first is a model resolution for adoption
by city, county, and state governments committing them to take into account
the history of social responsibility of corporations, as measured by an "Ethical
Impact Report," in awarding public contracts. Its second initiative is
a proposed "Social Responsibility Amendment" to the U.S. Constitution.
It would require every corporation with annual revenues of $20 million or more
to apply for renewal of its charter every twenty years. To secure its charter
renewal, the corporation would be required to "prove that it serves the
common good, gives its workers substantial power to shape their own conditions
of work, and has a history of social responsibility to the communities in which
it operates, sells goods, and/or advertises." Each five years the corporation
would have to prepare and make public an Ethical Impact Report with one section
prepared by management, another by its employees, and another representing community
The Alliance for Democracy is a progressive populist movement with forty-nine
local chapters around the United States. Following in the footsteps of the populist
movement of the late 1800s, it aims to provide a vehicle for citizen action
to end government-corporate collusion against the public interest and expose
the antidemocratic nature of rule by global capital. The Alliance is carrying
out long-term citizen education on issues of corporate governance and campaigning
for legislative action to increase corporate accountability. It is considering
a campaign in support of an amendment to the U.S. Constitution to establish
that corporations are not persons and not entitled to the rights thereof. Related
efforts center on redefining the processes and requirements for corporate chartering
and charter revocation. The Alliance is also drafting a model international
treaty on the responsibilities of international investors as an alternative
to corporate-sponsored agreements aimed at freeing global investors from regulatory
The international NGO Taskforce on Business and Industry, under the leadership
of Jeff Barber of the Integrative Strategies Forum, is a citizens' alliance
that functions within the framework of the United Nations Commission on Sustainable
Development. It is working to counter initiatives from the corporate sector
aimed at keeping issues of corporate accountability off the U.N. agenda. The
Taskforce is also helping make visible within the U.N. system the consistent
failure of voluntary codes of corporate conduct.
The Program on Corporations, Law, and Democracy (POCLAD), a national alliance
of individuals concerned with corporate rights co-directed by Richard Grossman
and Ward Morehouse, is spearheading a campaign to restore the concept that corporate
charters are limited and revocable and to pursue a wide range of legal initiatives
intended to restrict corporate rights and increase corporate accountability.
These and related initiatives too numerous to list are still new and small.
Each, however, is growing in size and momentum, carried forward by the concern
and commitment of citizens who are fed up with political corruption and the
abuse of corporate power. The most prominent barrier to turning the widespread
disgust into a powerful political movement is the lack of credible and well-articulated
alternatives and of an awakening to the belief that change is possible.
Those to whom a living-world politics offers potential appeal come from all
classes and segments of society: working people concerned with job security,
respect, and honest pay for honest work; religious groups seeking to bring moral
values back into everyday life; members of the women's movement concerned with
equity and the balancing of work with family and community life; minority group
members who advocate a political and economic agenda that meets the needs of
all; members of environmental groups working to restore and protect the health
of living systems; peace and human rights groups concerned with equity and the
possibility of replacing global competition with global cooperation.
Other constituents for change include small business owners and managers struggling
to survive as the backbone of community economies; the growing ranks of ecological
economists who are providing intellectual leadership in challenging the hegemony
of neoliberal economists; heads of business seeking to make business more responsible
and humane; socially responsible investors, community bankers, community development
foundation leaders; and the members of groups such as the Social Ventures Network,
Business for Social Responsibility, and the World Business Academy.
Then there are the downsized whom capitalism has discarded and the disaffected
who remain within the corporate establishment while longing for alternatives.
There are the retired executives who know the system from the inside and are
deeply concerned for the future they leave their children. There are the youth
who are rightly concerned about their own futures. There are the journalists
concerned that the integrity of their profession suffers from concentrated corporate
control of the media. There are the teachers concerned about the integrity of
the educational process as corporate advertising and propaganda infiltrate the
classroom. There are the farming households that are committed to stewardship
of the earth and the production of healthful foods.
The goals of stakeholder ownership and individual responsibility affirm the
values of conservatives. The emphasis on one person, one vote democracy and
the recognition of government's dear and necessary role affirm the values of
political liberals. It all adds up to a substantial and potentially unstoppable
constituency behind the politics of a post-corporate world.
There is no more powerful expression of a society's values than its economic
institutions. In our case, we have created an economy that values money over
all else, embraces inequality as if it were a virtue, and is ruthlessly destructive
of life. The tragedy is that for most of us the values o global capitalism are
not our values.
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