The fact that the interests of corporations and people of wealth are closely
intertwined tends to obscure the significance of the corporation as an institution
in its own right. The corporate charter is a social invention created to aggregate
private financial resources in the service of a public purpose. It also allows
one or more individuals to leverage massive economic and political resources
behind clearly focused private agendas and to protect themselves from legal
liability for the public consequences.
Less widely recognized is the tendency of corporations, as they grow in size
and power, to develop their own institutional agendas aligned with imperatives
inherent in their nature and structure that are not wholly under the control
even of the people who own and manage them. These agendas center on increasing
their own profits and protecting themselves from the uncertainty of the market.
They arise from a combination of market competition, the demands of financial
markets, and efforts by individuals within them to advance their careers and
increase their earnings. Members of the corporate sector also tend to develop
shared political and economic agendas. In the United States for example, corporations
have been engaged for more than 150 years in a process of restructuring the
rules and institutions of governance to suit their interests. Some readers may
feel uneasy with my anthropomorphizing the corporation, but I do so advisedly.
Corporations have emerged as the dominant governance institutions on the planet,
with the largest among them reaching into virtually every country of the world
and exceeding most governments in size and power. Increasingly, it is the corporate
interest more than the human interest that defines the policy agendas of states
and international bodies, although this reality and its implications have gone
largely unnoticed and unaddressed
The corporate charter is a grant of privilege extended by the state to a group
of investors to serve a public purpose. Its history goes back at least to the
sixteenth century. At that time, an individual's debts were inherited by his
or her descendants and could result in the descendants' imprisonment through
no doing of their own. Those who sailed forth from England to trade for spices
in the East Indies faced not only the inevitable perils of the dangerous sea
voyage but also the prospect that they and their families could be ruined, even
into future generations, if their cargo were lost to bad weather or pirates.
The corporation represented an important institutional innovation to overcome
this barrier to international commerce. Like so many important inventions, the
corporate charter opened enormous new opportunities to advance the interests
of human societies-so long as civil society held in check the potential abuse
that the concentration of power made possible.
Specifically, the corporate charter represented a grant from the crown that
limited an investor's liability for losses of the corporation to the amount
of his or her investment in it-a right not extended to individual citizens.
Each charter set forth the specific rights and obligations conferred on a particular
corporation-including the share of profits that would go to the crown in return
for the special privilege extended. Such charters were bestowed at the pleasure
of the crown and could be withdrawn at any time. Not surprisingly, the history
of corporate-government relations since that day has been one of continuing
pressure by corporate interests to expand corporate rights and to limit corporate
Holding Corporations at Bay
America was born of a revolution against the abusive power of the British kings.
The corporate charter was an institutional instrument of that abuse. Chartered
corporations were used by England to maintain control over colonial economies.
In addition to such well-known corporations as the East India Company and the
Hudson's Bay Company, many American colonies were themselves chartered as corporations.
The corporations of that day were chartered by the king and functioned as extensions
of the power of the crown. Generally, these corporations were granted monopoly
powers over territories and industries that were considered critical to the
interests of the English state.
The English Parliament, which during the seventeenth and eighteenth centuries
was made up of wealthy landowners, merchants, and manufacturers, passed many
laws intended to protect and extend these monopoly interests. One set of laws,
for example, required that all goods imported to the colonies from Europe or
Asia first pass through England Similarly, specified products exported from
the colonies also had to be sent first to England. The Navigation Acts required
that all goods shipped to or from the colonies be carried on English or colonial
ships manned by English or colonial crews. Furthermore, although they had the
necessary raw materials, the colonists were forbidden to produce their own caps,
hats, and woolen and iron goods. Raw materials were shipped from the colonies
to England for manufacture, and the finished products were returned to the colonies.
These practices were strongly condemned by Adam Smith in The Wealth of Nations.
Smith saw corporations, as much as governments, as instruments for suppressing
the competitive forces of the market, and his condemnation of them was uncompromising.
He makes specific mention of corporations twelve times in his classic thesis,
and not once does he attribute any favorable quality to them. Typical is his
observation: "It is to prevent this reduction of price, and consequently
of wages and 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."
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 U.S.
Constitution instituted the separation of governmental powers to create a system
of checks and balances that was carefully crafted to limit opportunities for
the abuse of state power. It makes no mention of corporations, which suggests
that those who framed it did not foresee or intend that corporations would have
a consequential role in the affairs of the new nation.
In the young American republic, there was little sense that corporations were
either inevitable or always appropriate. Family farms and businesses were the
mainstay of the economy, much in the spirit of Adam Smith's ideal, though neighborhood
shops, cooperatives, and worker-owned enterprises were also common. This was
consistent with a prevailing belief in the importance of keeping investment
and production decisions local and democratic.
The corporations that were chartered were kept under watchful citizen and governmental
control. The power to issue corporate charters was retained by the individual
states rather than being given to the federal government. The intent was to
keep that power as close as possible to citizen control. Many provisions were
included in corporate charters and related laws that limited use of the corporate
vehicle to amass excessive personal power.' The early charters were limited
to a fixed number of years and required that the corporation be dissolved if
the charter were not renewed. Generally, the corporate charter set limits on
the corporation's borrowing, ownership of land, and sometimes even its profits.
Members of the corporation were liable in their personal capacities for all
debts incurred by the corporation during their period of membership. Large and
small investors had equal voting rights, and interlocking directorates were
outlawed. Furthermore, a corporation was limited to conducting only those business
activities specifically authorized in its charter. Charters often included revocation
clauses. State legislators maintained the sovereign right to withdraw the charter
of any corporation that in their judgment failed to serve the public interest,
and they kept close watch on corporate affairs. By 1800, only some 200 corporate
charters had been granted by the states.
The nineteenth century emerged as a time of active and open legal struggle between
corporations and civil society regarding the right of the people, through their
state governments, to revoke or amend corporate charters. Action by state legislators
to amend, revoke, or simply fail to renew corporate charters was fairly common
throughout the first half of the century. However, in 1819, the U.S. Supreme
Court ruled against the state of New Hampshire in a case in which New Hampshire
had attempted to revoke the charter issued to Dartmouth College by King George
III before U.S. independence. The Supreme Court overruled the revocation on
the ground that the charter contained no reservation or revocation clause.
This decision was seen as an attack on state sovereignty by outraged citizens,
who insisted that a distinction be made between a corporation and the property
rights of an individual. They argued that corporations were created not by birth
but by the pleasure of state legislatures to serve a public good. Corporations
were therefore public, not private, bodies, and elected state legislators thereby
had an absolute legal right to amend or repeal their charters at will. The public
outcry led to a significant strengthening of the legal powers of the states
to oversee corporate affairs.
As late as 1855, in Dodge v. Woolsey, the Supreme Court affirmed that the Constitution
confers no inalienable rights on a corporation, ruling that the people of the
states have not released their power over the artificial bodies which originate
under the legislation of their representatives.... Combinations of classes in
society. . . united by the bond of a corporate spirit . . . 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.
Spoils of the Civil War
The U.S. Civil War (1861-65) marked a turning point for corporate I rights.
Violent anti-draft riots rocked the cities and left the political system in
disarray. With huge profits pouring in from military procurement contracts,
industrial interests were able to take advantage of the disorder and rampant
political corruption to virtually buy legislation that gave them massive grants
of money and land to expand the Western railway system. The greater its profits,
the more tightly the emergent industrial class was able to solidify its hold
on government to obtain further benefits. Seeing what was unfolding, President
Abraham Lincoln observed just before his death:
"Corporations have been enthroned.... An era of corruption in high places
will follow and the money power will endeavor to prolong its reign by working
on the prejudices of the people . . . until wealth is aggregated in a few hands
. . . and the Republic is destroyed."
The nation was divided by the war against itself; the government was weakened
by the assassination of Lincoln and the subsequent election of alcoholic war
hero Ulysses S. Grant as president. The nation was in disarray. Millions of
Americans were rendered jobless in the subsequent depression, and a tainted
presidential election in 1876 was settled through secret negotiations. Corruption
and insider deal making ran rampant. President Rutherford B. Hayes, the eventual
winner of those corporate-dominated negotiations, subsequently I complained,
"this is a government of the people, by the people and
for the people no longer. It is a government of corporations, by corporations,
and for corporations." In his classic The Robber Barons, Matthew Josephson
wrote that during the 1880s and 1890s, "The halls of legislation were transformed
into a mart where the price of votes was haggled over, and laws, made to order,
were bought and sold. " These were the days of men such as John D. Rockefeller,
J. Pierpont Morgan, Andrew Carnegie, James Mellon, Cornelius Vanderbilt, Philip
Armour, and Jay Gould. Wealth begat wealth as corporations took advantage of
the disarray to buy tariff, banking, railroad, labor, and public lands legislation
that would further enrich them. Citizen groups committed to maintaining corporate
accountability continued to battle corporate abuse at state levels, and corporate
charters were revoked by both courts and state legislatures. Gradually, however,
corporations gained sufficient control over key state legislative bodies to
virtually rewrite the laws governing their own creation. Legislators in New
Jersey and Delaware took the lead in watering down citizens' rights to intervene
in corporate affairs. They limited the liability of corporate owners and managers
and issued charters in perpetuity. Corporations soon had the right to operate
in any fashion not explicitly prohibited by law.
A conservative court system that was consistently responsive to the appeals
and arguments of corporate lawyers steadily chipped away at the restraints a
wary citizenry had carefully placed on corporate powers. Step-by-step, the court
system put in place new precedents that made the protection of corporations
and corporate property a centerpiece of constitutional law. These precedents
eliminated the use of juries to decide fault and assess damages in cases involving
corporate-caused harm and took away the right of states to oversee corporate
rates of return and prices. Judges sympathetic to corporate interests ruled
that workers were responsible for causing their own injuries on the job, limited
the liability of corporations for damages they might cause, and declared wage
and hours laws unconstitutional. They interpreted the common good to mean maximum
production-no matter what was produced or who it harmed. These were important
concerns to an industrial sector in which, from 1888 to 1908, industrial accidents
killed 700,000 American workers-roughly 100 a day.
In 1886, in a stunning victory for the proponents of corporate sovereignty,
the Supreme Court ruled in Santa Clara County v. Southern Pacific Railroad that
a private corporation is a natural person under the U.S. Constitution-although,
as noted above, the Constitution makes no mention of corporations-and is thereby
entitled to the protections of the Bill of Rights, including the right to free
speech and other constitutional protections extended to individuals.
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.
These were days of violence and social instability brought on by the excesses
of capitalism that Karl Marx described to powerful political effect. Working
conditions were appalling, and wages scarcely covered subsistence Child labor
was widespread. By one estimate, 11 million of the 12.5 million families in
America in 1890 subsisted on an average of $380 a year and had to take in boarders
to survive. Both organized and wildcat strikes were common, as was industrial
sabotage. Employers used every means at their disposal to break strikes, including
private security forces and federal and state military troops. Violence evoked
violence, and many died in the industrial wars of this era.
These conditions gave impetus to a growing labor movement. Between 1897 and
1904, union membership rose from 447,000 to 2,073,000. Unions provided fertile
ground for the thriving socialist movement that was taking root in America and
called for the socialization and democratic control of the means of production,
natural resources, and patents. These were times of open class warfare, with
zealous new recruits joining the army of the dispossessed in growing numbers-ready
to fight and sacrifice for the cause. Socialists who sought to organize labor
along class lines vied for primacy with more conventional unionists who preferred
to organize along craft or industrial lines.
These movements united ethnic groups. An emergence of black pride and culture
began to unify blacks. The women's movement took hold, with women forming their
own labor unions, leading strikes, and assuming active roles in populist and
socialist movements. In 1920, female suffrage (the right to vote) was guaranteed
by a constitutional amendment.
In the end, the conditions of chaos and violence that characterized the period
of explosive free-market industrial expansion were not conducive to the interests
of either industrialists or labor. Competitive battles between the most powerful
industrialists were cutting into profits. There was considerable fear among
industrialists of the growing political power of socialist and other popular
movements, which threatened to bring fundamental change that might eliminate
their privileged position.
These conditions set the stage for consolidation and compromise, which transformed
social and institutional relationships. Industrialists merged their individual
empires into larger combines that consolidated their power and limited competition
among them. Formerly bitter rivals, J. P. Morgan and John D. Rockefeller joined
forces in 1901 to amalgamate 112 corporate directorates, combining $22.2 billion
in assets under the Northern Securities Corporation of New Jersey. This was
a massive sum in its day, equivalent to twice the total assessed value of all
property in thirteen states in the southern United States. The result was:
The heart of the American economy had been put under one roof, from banking
and steel to railroads, urban transit, communications, the merchant marine,
insurance, electric utilities, rubber, paper, sugar refining, copper, and assorted
other mainstays of the industrial infrastructure.
Eventually, major industrialists came to realize that by providing better wages,
benefits, and working conditions, they could undercut the appeal of socialism
and at the same time win greater worker loyalty and motivation. There was a
parallel interest in the regularization of loosely organized craft-based production
processes to take greater advantage of the methods of industrial engineering
and mass production. This meant organizing around more highly structured rule-driven
production processes that demanded worker stability and discipline.
Big business came to see advantages in working with large moderate (nonsocialist)
labor unions that negotiated uniform wages and standards throughout an industry
and enforced worker discipline according to agreed rules. These arrangements
increased stability and predictability within the system without ultimately
challenging the power of the industrialists or the market system.
These reforms took place against a backdrop of continuing struggle. A pro-business
judicial system that consistently ruled against labor interests helped prompt
the labor movement to become increasingly political, resulting in labor's development
of a legislative agenda and an alliance with the Democratic Party. Reform legislation
at local, state, and national levels began to set new social standards and reshape
the context of labor relations. Particularly important to labor was the Clayton
Anti-Trust Act, which banned court injunctions against striking workers.
Even so, during the Roaring Twenties, corporate monopolies were allowed to flourish
within a loosely regulated national economy. A stock market fueled by borrowed
money seemed to be a limitless engine of wealth creation. With faith in the
free market and the power of big business at its peak, an ebullient President
Herbert Hoover proclaimed, "We shall soon with the help of God be within
sight of the day when poverty will be banished from the nation." Irving
Fisher, perhaps the leading U.S. economist of the day, announced that the problem
of the business cycle had been solved and that the country had settled on a
high plateau of endless prosperity.
It was evident that the average American family was better fed, better dressed,
and blessed with more of life's amenities than any average family in history.
This reality masked the enormous underlying inequality of an America in which
just 1 percent of families controlled 59 percent of the wealth. In October 1929,
only a few months after Fisher announced the end of business cycles, the highly
leveraged financial system came crashing down. Financial fortunes evaporated
almost overnight. It took World War II to provide the impetus for a new social
contract between government, business, and labor based on Keynesian economic
principles that set the global economic system back on the track of prosperity.
Ascendance and Reversal of Pluralism
By the time Franklin D. Roosevelt became president in 1933, business excesses
of the 1920s, the depression, and the resulting plight of farmers, laborers,
the elderly, blacks, women, and others had produced a wave of political and
cultural radicalism throughout the United States. Roosevelt feared that without
dramatic action, this radicalism might overwhelm the entire structure of government.
He set about to save the system by pushing through an epic agenda of social
and regulatory reforms. Congress's passage of his National Industrial Recovery
Act (NIRA) was key, as it gave government a mandate to play a more active role
in achieving an economic recovery that market forces alone seemed unable to
On May 27, 1935, the Supreme Court voided the NIRA and ruled that states could
not set minimum wage standards. This decision continued a century-old pattern
of Supreme Court defense of business and corporate interests over civil or human
rights. Some observers believe that the Supreme Court's action on NIRA and the
minimum wage radicalized a furious Roosevelt, motivating his commitment to a
sweeping reform of American institutions. He set about to break up the business
trusts, strengthen the regulation of business and financial markets, and push
through legislation providing stronger guarantees for worker rights. Programs
of public employment were started. A social safety net was put into place.
Roosevelt attacked the Supreme Court with a vengeance and tried to expand its
membership with new appointments of his choice. His attempt to "pack"
the Court failed, but his charges had a distinct impact on the justices themselves,
and the majority became more supportive of progressive initiatives. In the end,
Roosevelt's long period in office allowed him to appoint justices to fill seven
of the Court's nine seats, setting the Court on a liberal course that lasted
until the 1970s, when Republican President Richard Nixon began to re-create
the Court in its earlier pro-business image.
World War II brought the government into an even more central and politically
accepted role in managing economic affairs. The government placed controls on
consumption, coordinated industrial output, and decided how national resources
would be allocated in support of the war effort. A combination of a highly progressive
tax system put in place to finance the war effort, full employment at good wages,
and a strong social safety net brought about a massive shift in wealth distribution
in the direction of greater equity. In 1929, there had been 20,000 millionaires
in the United States and two billionaires. By 1944, there were only 13,000 millionaires
and no billionaires. The share of total wealth held by the top 0.5 percent of
U.S. households fell from a high of 32.4 percent in 1929 to 19.3 percent in
1949.34 It was a great victory for the expanding middle class and for those
among the working classes who rose to join its ranks.
Pluralism flourished into the 1960s, a period of cultural rebellion in the United
States. A new generation, the flower children, vocally challenged basic assumptions
about lifestyles, the military-industrial complex, foreign military intervention,
the exploitation of the environment, the rights and roles of women, civil rights,
equity, and poverty. The U.S. corporate establishment was badly shaken by the
apparent threat to its values and interests. Perhaps most threatening of all
was the fact that the young were dropping out of the consumer culture. This
generation was rebelling not against poverty and the deprivations of exploitation
so much as against the excesses of affluence. This rejection of materialism
by a new generation of Americans in some ways presented a more fundamental threat
to the system than had earlier generations of angry workers seeking a living
wage and safe working conditions.
The names of consumer activist Ralph Nader and environmentalist Rachel Carson
became household words. Liberal Democrats had firm control of Congress and were
passing important legislation that extended the scope of governmental regulation
to strengthen environmental protection and product and worker safety. The government
was aggressively pursuing antitrust cases to break up monopolies and keep markets
Abroad, U.S. corporations were under attack on two fronts. Japan and Asia's
newly industrializing countries (NICs)-Taiwan, South Korea, Singapore, and Hong
Kong-had become enormously successful in penetrating U.S. markets. At the same
time, U.S. corporations were being prevented from fully penetrating Southern
economies, including those of the NICs, by Southern governments' aggressive
support of domestic industries, protectionism, and foreign investment restrictions.
These Southern government policies militated against a "level playing field"
for U.S. corporations. With high taxes on corporations and investor incomes
and rigorous enforcement of environmental and labor standards at home, U.S.
corporations felt doubly handicapped in global competition.
It was a critical historical moment, and the corporate establishment rallied
to protect its interests-as will be examined in more detail in Part III. The
election of Ronald Reagan as president in 1980 ushered in a concerted and highly
successful effort to roll back the clock on the social and economic reforms
that had created the broadly based prosperity that made America the envy of
the world and to create a global economy that was more responsive to U.S. corporate
In his insightful book Dark Victory, Philippine economist Walden Bello provides
a Southern perspective on the Reagan agenda:
[A] highly ideological Republican regime in Washington. . . abandoned the grand
strategy of "containment liberalism" abroad and the New Deal modus
vivendi at home. Aside from defeating communism, Reaganism in practice was guided
by three other strategic concerns. The first was the re-subordination of the
South within a US-dominated global economy. The second was the rolling back
of the challenge to US economic interests from the NICs, or "newly industrializing
countries," and from Japan. The third was the dismantling of the New Deal's
"social contract" between big capital, big labor, and big government
which both Washington and Wall Street saw as the key constraint on corporate
America's ability to compete against both the NICs and Japan.
The debt crisis of 1982 provided the opportunity to address the threat of prospective
new NICs. The U.S.-dominated World Bank and International Monetary Fund moved
to restructure the economies of debt-burdened Southern countries to open them
to penetration by foreign corporations. The "structural adjustment"
imposed by these institutions rolled back government involvement in economic
life in support of domestic entrepreneurs, eliminated protectionist barriers
to imports from the North, lifted restrictions on foreign investment, and integrated
Southern economies more tightly into the Northern-dominated world economy. Trade
policy was the weapon of choice for imposing similar "reforms" on
The full political resources of corporate America were mobilized to regain corporate
control of the political agenda and the court system. High on the political
agenda were domestic reforms intended to improve the global competitiveness
of the United States by getting government "off the back" of business.
Taxes on the rich were radically reduced. Restraints on corporate mergers and
acquisitions were removed. And the enforcement of environmental and labor standards
was weakened. The government sided with aggressive U.S. corporations seeking
to make themselves more globally competitive by breaking the power of unions,
reducing wages and benefits, downsizing corporate workforces, and shifting manufacturing
operations abroad to benefit from cheap labor and lax regulation.
As these measures took hold in the United States, unemployment became a chronic
problem, and labor unions lost members and political clout. Wages began to decline,
as did the incomes of the poorest households. A fortunate few profited handsomely.
The earnings of big investors, top managers, entertainers, star athletes, and
investment brokers skyrocketed. The number of billionaires in the United States
increased from one in 1978 to 120 in 1994.39 Lending abuses by a deregulated
savings and loan industry left U.S. taxpayers with a bill for $500 billion to
clean up the mess. They were hard times for ordinary citizens. Greed had a field
As the Reagan initiatives took hold abroad, backed by similar conservative revivals
in other Western nations, there were parallel declines in most of the other
Western countries as well as the indebted countries of the South. Inequality
increased within and between countries. Unemployment rose to alarming levels,
and many social indicators that had shown steady improvement over the previous
three decades stagnated or in some instances began to decline. Many of the indebted
Southern countries fell even further into international debt. The number of
billionaires in the world increased from 145 in 1987 to 358 in 1994.
The Reagan administration had pledged to arrest U.S. decline. However, it made
a number of strategic policy blunders that strengthened U.S. military might
and economic growth in the short term but seriously weakened the U.S. position
in the global economy over the longer term. First, massive deficit spending
on the military contributed to making the United States the world's leading
international debtor country. The main holder of that debt was Japan, the major
competitor of the United States. Second, by denying any government role in economic
planning and priority setting, the Reagan administration left the economic future
of the United States entirely in the hands of corporations that were being pressed
by the capital markets to focus only on short-term profits. Third, by allowing
corporations to pursue their anti-labor strategy, the United States squandered
its key resource in the competitive global marketplace-its human capital.' The
overall result was a significant weakening of U.S. economic strength compared
with that of Japan and Western Europe. The consequences were clearly harmful
to ordinary American citizens. In the end, they may have been harmful to U.S.
corporations as well.
This was not the result of a conspiracy. Major shifts in national policy do
not come about as a consequence of corporate and political elites gathering
in a conference room to define a strategy for imposing global adjustment. They
are far too independent minded and represent too broad a range of conflicting
interests. As Bello observes:
What usually occurs is a much more complex social process in which ideology
mediates between interests and policy. An ideology is a belief-system-a set
of theories, beliefs, and myths with some internal coherence-that seeks to universalize
the interests of one social sector to the whole community. In market ideology,
for instance, freeing market forces from state restraints is said to work to
the good not only of business, but also to that of the whole community.
Transmitted through social institutions such as universities, corporations,
churches or parties, an ideology is internalized by large numbers of people,
but especially by members of the social groups whose interests it principally
expresses. An ideology thus informs the actions of many individuals and groups,
but it becomes a significant force only when certain conditions coincide....
Market ideology became a dominant force only when a political elite which espoused
it ascended to state power on the back of an increasingly conservative middle-class
social base, at the same time that the corporate establishment was deserting
the liberal Keynesian consensus in its favor, because of the changed circumstances
of international economic competition.
A Question of Governance
Interwoven into the political discourse about free markets and free trade is
a persistent message: the advance of free markets is the advance of democracy.
Advocates of the free market would have us believe that free markets are a more
efficient and responsive mechanism for political expression than even the ballot,
because business is more efficient and more responsive to people's needs than
are inefficient and uncaring politicians and bureaucrats. The logic is simple:
In the free market, people express their sovereignty directly by how they vote
with their consumer dollars. What they are willing to buy with their own money
is ultimately a better indicator of what they value than the ballot, and therefore
the market is the most effective and democratic way to define the public interest.
Given the growing distrust of government, it is a compelling message, and it
embodies an important truth: markets and politics are both about governance,
power, and the allocation of society's resources. It is also a misleading message
that masks an important political reality. In a political democracy, each person
gets one vote. In the market, one dollar is one vote, and you get as many votes
as you have dollars. No dollar, no vote. Markets are inherently biased in favor
of people of wealth. Even more important in our present world, and less often
acknowledged, is that markets have a very strong bias in favor of very large
corporations, which command far more massive financial resources than even the
wealthiest of individuals. As markets become freer and global, the power to
govern increasingly passes from national governments to global corporations,
and the interests of those corporations diverge ever farther from the human
People, even the greediest and most ruthless among us, are living beings with
needs and values beyond money. We need air to breathe, water to drink, and food
to eat. Most of us have families. All but the most truly demented among us find
inspiration in things of beauty, including a natural landscape or a newborn
baby. Our bodies are of flesh, and real blood runs through our veins.
Behind its carefully crafted public-relations image and the many fine and ethical
people it may employ, the body of a corporation is its corporate charter, a
legal document, and money is its blood. It is at its core an alien entity with
one goal: to reproduce money to nourish and replicate itself. Individuals are
dispensable. It owes only one true allegiance: to the financial markets, which
are more totally creatures of money than even the corporation itself.
The problem is deeply embedded in the structure and rules by which corporations
are compelled to operate. The marvel of the corporation as a social innovation
is that it has the ability to bring together thousands of people within a single
structure and compel them to act in concert in accordance with a corporate purpose
that is not necessarily their own. Those who revolt or fail to comply are expelled
and replaced by others who are more compliant.
As Washington journalist William Greider writes in Who Will Tell the People?
"[The corporations'] . . . tremendous financial resources, the diversity
of their interests, the squads of talented professionals- all these assets and
some others are now relentlessly focused on the politics of governing.
This new institutional reality is the centerpiece in the breakdown of contemporary
democracy. Corporations exist to pursue their own profit maximization, not the
collective aspirations of the society. They are commanded by a hierarchy of
managers, not the collective aspirations of the society. "
Human societies have long faced the question whether the power to rule will
reside with the rich or the poor. We now face a different and even more ominous
question, which-to the extent that its implications are fully understood-should
unite rich and poor alike in a common cause. Will the power to rule reside with
people, no matter what their financial circumstances, or will it reside with
the artificial persona of the corporation?
During this critical historical moment, in which one of the most fundamental
challenges our species faces is to rediscover the purpose and unity of life,
we must decide whether the power to govern will be in the hands of living people
or will reside with corporate entities driven by a different agenda. To regain
control of our future and bring human societies into balance with the planet,
we must reclaim the power we have yielded to the corporation. One important
step will be to free ourselves from the illusions of the ideology that legitimates
the policies that are freeing the corporation as an institution from human accountability.