Know Thine Enemy

A Brief History of Corporations

by Joel Bleifuss

In These Times magazine, February 1998, their internet address: http://inthesetimes.com/

Corporations can't cast a ballot, but they do vote with their wallets. In the 1995-96 election cycle, corporations and corporate PACs contributed $147 million to candidates running for federal office. The United States is one of the few democracies where such donations are legal. The Supreme Court affirmed the right of corporations to pay for electoral campaigns in the 1978 case First National Bank v. Bellotti. Writing for the majority, Justice Lewis Powell explained that giving cash to influence the outcome of an election "is the type of speech indispensable to decision making in a democracy, and this is no less true because the speech comes from a corporation rather than an individual."

Indeed, under the prevailing interpretation of the Constitution, corporations have the same rights as individuals. This was not always the case: American corporations gained these protections in the 19th century, when the Supreme Court, in a series of rulings, defined the relationship between business and the state. Those rulings shielded companies from government regulation and thus allowed the corporation to become the dominant form of economic organization. [In] the 21st century, the combined gross revenues of the 200 largest corporations exceed the GDP of all but the nine richest nations. In this context, it is important to know how corporations came to hold such sway over our everyday lives, and what can be done about it.

The first corporations appeared in 17th-century Europe, during capitalism's infancy. At the time, the government chartered all corporations-that is, it gave them a specific public mission in exchange for the formal right to exist. The United States was settled by one such corporation, the Massachusetts Bay Company, which King Charles I chartered in 1628 in order to colonize the New World. The practice of chartering companies was a crucial part of the mercantile economic system practiced by the epoch's great powers-Holland, Spain and England. By allowing investors to pool their capital, the monarch made it possible for companies to launch ventures that would have been beyond the means of one person. And in exchange for the charter, companies expanded their government's wealth and power by creating colonies that served both as sources of raw materials and as markets for exported goods.

But in the 18th century, the Enlightenment challenged this model of economic organization by putting forward the idea that people need not be subjects in feudal structures but could act as individuals. American revolutionaries, inspired by radical notions of "unalienable rights" to "life, liberty and the pursuit of happiness," fought for independence not only from the Crown, but from the corporate bodies it had chartered. The Boston Tea Party, for example, was a protest against the British East India Company's monopoly of Eastern trade. Another critic was Adam Smith, whose Wealth of Nations was published in the same year as the Declaration of Independence. Influenced by John Calvin, Smith believed that human resourcefulness and industry were earthly signs of God's favor, and thus that wealth obtained in a market economy was an expression of "natural justice." Smith, however, did not think that corporations were a natural part of this order. Arguing that large business associations limit competition, he wrote, "The pretense that corporations are necessary to the better government of the trade is without foundation."

In the infancy of the republic, Americans gave little thought to corporations. In 1787, fewer than 40 corporations operated in the United States. By 1800, that number had grown to 334. Like the British corporations before them, these companies were typically chartered by the state to perform specific public functions, such as digging canals, building bridges, constructing turnpikes or providing financial services. In return for this public service, the state granted corporations permanence, limited liability and the right to own property.

American manufacturers began to form corporations only when trade with Europe was shut down by President Thomas Jefferson's embargo of France and Britain from 1807 to 1809 and by the War of 1812. In order to supply the domestic market with the manufactured goods that had previously come from England, Americans formed new companies to amass the capital needed to build factories. The rise of these associations-created not to fulfill a public mission, but to create private wealth-led to a legal dilemma: How would these new forms of business enterprise be treated under the law?

That task fell to the Supreme Court, then under the leadership of John Marshall, a staunch federalist from Virginia. The Marshall Court (1801-1835) created a national market by striking down trade barriers between the states. It also set precedent for later pro-business interpretations of the Constitution by invoking the Constitution's "obligation of contracts" clause (Article 1, Section 10), which states that "no state shall ... pass any ... Iaw imparing the obligation of contracts." For example, in Fletcher v. Peck (1810), the Supreme Court refused to allow the Georgia legislature to right a wrong committed by a previ- \) ous heavily corrupt legislature, because to do so would entail voiding contracts that had been made in good faith. Not all justices agreed that business reigned supreme. Chief Justice Roger Taney, an Andrew Jackson appointee who served from 1836 to~ 1864, tried to ameliorate the Marshall Court's rulings on the sanctity of contracts. In Charles River Bridge v. the Proprietors of the Warren Bridge (1837), he wrote for the majority, "The continued existence of a government would be of no great value, if by implications and presumptions, it was disarmed of the powers necessary to accomplish the ends of its creation; and the functions it was designed to perform, transferred to the hands of privileged corporations."

In the 1880s and 1890s, the Supreme Court allowed state courts to apply the Marshall Court's principles on a larger scale. At the time, states with strong Populist movements were passing laws to regulate corporations and the robber barons who owned them. But the courts, using Marshall's interpretation of the inviolability of contracts, struck down numerous attempts to regulate the workplace and protect collective bargaining.

The hand of capital was further strengthened by an unlikely legal sword: the 14th Amendment, which states that "no state shall deprive any person of life, liberty or property, without due process of law." The amendment was adopted during Reconstruction to protect recently emancipated slaves in a hostile South. But in the landmark case of Santa Clara County v. Southern Pacific Railroad (1886), the Court, invoking the 14th Amendment, defined corporations as "persons" and ruled that California could not tax corporations differently than individuals. It followed that, as legal "persons," corporations had First Amendment rights as well.

Using this definition of corporations as persons, the Court proceeded to strike down a whole range of state regulations. In 1938, Justice Hugo Black noted that in the 50 years after Santa Clara, "less than one-half of I percent [of Supreme Court rulings that invoked the 14th Amendment] invoked it in protection of the Negro race, and more than 50 percent asked that its benefits be extended to corporations."

Corporations suffered a setback in the '30s, when the Great Depression discredited laissez-faire economics. In West Coast Hotel Co. v. Parrish (1937), the Court redefined the due process clauses of the 14th Amendment. In a rebuke of the Marshall Court's ruling in Fletcher v. Peck, Chief Justice Charles Evans Hughes wrote, "The Constitution does not speak of freedom of contract. It speaks of liberty and prohibits the deprivation of liberty without due process of law." That --- In the same year, the Court, which had previously struck down key components of Roosevelt's New Deal, upheld the National Labor Relations Act and Social Security legislation. As Justice William Douglas observed in Williamson v. Lee Optical of Oklahoma (1955), "The day is gone when the Court uses the Due Process Clause of the 14th Amendment to strike down state laws, regulatory of business and industrial conditions because they may be ... out of harmony with a particular line of thought."

Although courts now permit government regulation of business, corporations have managed to retain the First Amendment rights they were granted in Santa Clara. Few, if any, mainstream voices consider the question: Should corporations have the same rights as people have? Corporations based in the United States wield vast economic and political power. They can live forever. They feel no pain. They do not need clean air to breathe, potable water to drink or healthy food to eat. Their only goal is to grow bigger and more powerful.

Rather than treating these institutions as if they were flesh and blood, the political and legal system should acknowledge the fact that corporations are merely one way that people organize themselves to do business. They are not "endowed by the creator with unalienable rights" but rather are human-made creatures that can just as easily be unmade if they cease to serve a worthwhile public function.

To begin this retooling process, we need to expose the absurdity of granting First Amendment rights to corporations. We can draw our inspiration from both the 17th-century English philosopher Thomas Hobbes, who decried corporations as "worms in the body politic," and from Hobbes' star pupil, King Charles II. In 1664, the owners of the Massachusetts Bay Company protested when Charles II tried to investigate their company's operations. The Crown responded, "The King did not grant away his sovereignty over you when he made you a corporation.... When his majesty gave you authority over such subjects as live within your jurisdiction, he made them not your subjects, nor you their supreme authority."

We should be as wise.

As a product of the relation with government is corporate welfare--jk

Stop Corporate Welfare

by Ralph Nader

What are poverty welfare programmes (e.g. a $300 monthly cheque given a welfare mother), says well-known consumer advocate Ralph Nader, compared to the corporate welfare programmes that shovel huge amounts of taxpayer money to corporations through inflated government contracts, subsidies, loan guarantees, etc?

The issue of concentration of power and the growing conflict between the civil society and the corporate society is not a conflict that you read about or see on television. So unfortunately, most of us grow up corporate; we don't grow up civic.

If I utter the following words, what images come to mind: crime, violence, welfare and addictors? What comes to mind is street crime; people lining up to get their welfare cheques; violence in the streets; and drug dealers - the addictors.

And yet, by any yardstick, there is far more crime, and far more violence, and far more welfare disbursement (and there are far more addictors) in the corporate world than in the impoverished street arena.

The federal government's corporate welfare programmes number over 120. They are so varied and embedded that we actually grow up thinking that the government interferes with the free enterprise system, rather than subsidising it.

It's hard to find a major industry today whose principal investments were not first made by the government - in aerospace, telecommunications, biotechnology and agribusiness. Government research and development money funds the drug and pharmaceutical industry. Government research and development funds are given freely to corporations, but they don't announce it in ads the next day.

Corporate welfare has never been viewed as debilitating. Nobody talks about imposing workfare requirements on corporate welfare recipients or putting them on a programme of 'two years and you're out'. Nobody talks about aid to dependent corporations. It's all talked about in terms of 'incentives'.

At the local community level, in cities that can't even refurbish their crumbling schools - where children are without enough desks or books - local governments are anteing up three, four, five hundred million dollars to lure very profitable baseball, football and basketball sports moguls who don't want to share the profits. Corporate sports are being subsidised by cities.

Corporations have perfected socialising their losses while they capitalise on their profits. There was the savings-and-loan debacle - and you'll be paying for that until the year 2020. In terms of principal and interest, it was a half-trillion-dollar bailout of 1,000 savings-and-loans banks. Their executives looted, speculated and defrauded people of their savings - and then turned to Washington for a bailout.

Foreign and domestic corporations can go on our land out West. If they discover gold, they can buy the acreage over the gold for no more than $5 an acre. That's been the going rate since the Mining Act of 1872 was enacted. That is taking inflation-fighting too far.

There's a new drug called Taxol to fight ovarian cancer. That drug was produced by a grant of $31 million of taxpayer money through the National Institutes of Health, right through the clinical testing process. The formula was then given away to the Bristol-Myers Squibb company. No royalties were paid to the taxpayer. There was no restraint on the price. Charges now run $10,000 to $15,000 per patient for a series of treatments. If the patients can't pay, they go on Medicaid, and the taxpayer pays at the other end of the cycle, too.

Yet what is the big issue in this country and in Washington when the word 'welfare' is spoken? It is the $300 monthly cheque given a welfare mother, most of which is spent immediately in the consumer economy. But federal corporate welfare is far bigger in dollars. At the federal, state and local levels there is no comparison between the corporate welfare and poverty welfare programmes.

We have 179 law schools and probably only 15 of them (and only recently) offer a single course or seminar on corporate crime. You think that's an accident? Law school curricula are pretty much shaped by the job market, and if the job market has slots in commercial law, bankruptcy law, securities and exchange law, tax law or estate planning law, the law schools will oblige with courses and seminars.

One professor studying corporate crime believes that it costs the country $200 billion a year. And yet you don't see many congressional hearings on corporate crime. You see very few newspapers focusing on corporate crime.

Yet 50,000 lives a year are lost due to air pollution, 100,000 are lost due to toxics and trauma in the workplace, and 420,000 lives are lost due to tobacco smoking. The corporate addictor has a very important role here, since it has been shown in recent months that the tobacco companies try to hook youngsters into a lifetime of smoking from age 10 to 15.

When you grow up corporate, you don't learn about the reality of corporate welfare. The programmes that shovel huge amounts of taxpayer dollars to corporations through inflated government contracts via the Pentagon, or through subsidies, loan guarantees, giveaways and a variety of clever transfers of taxpayer assets get very little attention.

Knowing What's Ours

We grow up never learning what we own together, as a commonwealth. If somebody asks you what you and your parents own, you'd say homes, cars and artifacts. Most of you would not say that you are owners of the one-third of America that is public land or that you are part-owners of the public airwaves.

When you ask students today who owns the public airwaves you get the same reply - 'the networks', or maybe 'the government'. We own the public airwaves and the Federal Communications Commission is our real estate agent. The radio and TV stations are the tenants who are given licences to dominate their part of the spectrum 24 hours a day, and for four hours a day they decide who says what.

You pay more for your auto licence than the biggest TV station pays for its broadcast licence. But if you, the landlord, want in on its property, the radio and TV stations say, 'Sorry, you're not going to come in.' These companies say they've got to air trash TV - sensual TV, home shopping and rerun movies.

We have the greatest communications system in the world and we have the most demeaning subject matter and the most curtailed airing of public voices (known in the trade as 'sound bite'). The sound bite is down to about five seconds now.

You and your parents also may be part-owners of $4 trillion in pension funds invested in corporations. The reason this doesn't get much attention is that although we own it, corporations control it. Corporations, banks and insurance companies invest our pension money. Workers have no voting mechanism regarding this money. If they did, they'd have a tremendous influence over corporations that have major pension trust investments.

Not controlling what we own should be a public issue, because if we begin to develop control of what we own, we will marshal vast existing assets that are legally ours for the betterment of our society. That will not happen unless we talk about why people don't control what they own.

All of the reforms require a rearrangement of how we spend our time. The women who launched the women's right-to-vote movement decided to spend time - in the face of incredible opposition. The people who fought to abolish slavery also decided to spend time. The workers who formed the unions gave time.

The Power of Civic Action

Historically, how have we curbed corporate power? By child labour prohibition, by occupational health and safety rules, by motor vehicle standards and food and drug safety standards. But the regulatory agencies in these areas are now on their knees. Their budgets are very small - far less than 1% of the federal budget.

Their job is to put the federal cop on the corporate beat against the illegal dumping of toxics. But these laws do not get high compliance by corporations, and the application of regulatory law and order against corporate crime, fraud, abuse and violence is at its lowest ebb. I've never seen some of these agencies as weak as they are now. President Ronald Reagan started it and President George Bush extended it. And now we have 'George Ronald Clinton' making the transition very easy.

The dismantling of democracy is perhaps now the most urgent aspect of the corporatisation of our society. And notice, if you will, two pillars of our legal system - tort law and contract law.

The principle of tort law is that if you are wrongfully injured, you have a remedy against the perpetrator. That's well over 200 years old. And now, in state legislatures and in Congress, laws have been passed, or are about to be passed, that protect the perpetrators, the harm-doers - that immunise them from their liability.

When the physicians at the Harvard School of Public Health testify that about 80,000 people die in hospitals every year from medical malpractice - a total larger than the combined fatalities in motor vehicle accidents, homicides and death by fire each year in the US - it raises the issue of why our elected representatives are vigorously trying to make it more difficult for victims of medical malpractice to have their day in court. [Note:President Clinton vetoed one such far-reaching tort reform bill.]

As in the Middle Ages, 1% of the richest people in this country own 90% of the wealth. The unemployment rate doesn't take into account the people who looked for a job for six months and gave up, and it doesn't take into account the underemployed who work 20 hours a week. Part of growing up corporate is that we let corporations develop the yardsticks by which we measure the economy's progress.

Democracy is the best mechanism ever devised to solve problems. That means the more we refine it - the more people practise it, the more people use its tools - the more likely it is we will not only solve our problems or at least diminish them, we also will foresee and forestall risk levels. When you see corporations dismantling democracy, you have to to take it very seriously and turn it into a public political issue.

Among the five roles that we play, one is voter-citizen, another is taxpayer, another is worker, another is consumer and another is shareholder through worker pension trusts. These are critical roles in our political economy. Yet they have become weaker and weaker as the concentration of corporate power over our political and cultural and economic institutions has increased year by year.

We're supposed to have a government of, by and for the people. Instead we have a government of the Exxons, by the General Motors and for the DuPonts. We have a government that recognises the rights and liabilities and privileges of corporations, which are artificial entities created by state charters, against the rights and privileges of ordinary people.

Jefferson warned us that the purpose of representative government is to counteract 'the excesses of the monied interests' - then the merchant class; now the corporations. Beware of the government that doesn't do that.

This essay is excerpted from a speech Nader delivered at Pennsylvania's Haverford College. This article first appeared in Earth Island Journal ('It's Time to End Corporate Welfare As We Know It', Fall 1996).

And it has only gotten worse under Bush’s watch—jk.

If there lips are moving they are lying.

The one thing you can be sure that they stand for, is to get elected.

If there lips are moving they are lying (said of politician)

To understand developments in our political system (both parties) one must understand the role of neoliberalism. Any analysis which misses this connection is grossly inadequate. (Neocons follow neoliberalism economic policies).

We have an evil, evil system. Words such as imperialism, greed, corporate greed, neoliberalism, neoconservate, globalism, bought politicians, control of media are descriptive. There are reasons why the labor movement has collapsed. It is the politics of neoliberalism, an out growth of corporate greed. Given how it opposes the public weal, we have devoted a section to expose just what neoliberalism is—a thing that the five corporations which own broadcasting will not do.

THE BRINK OF ECONOMIC COLLAPSE

Things have gotten worse, the hole the neocons has dug is much deeper. The economic stats are worse than bad: the trend is toward greater disparity of wealth and on top of that the U.S. is loaded with debt and imbalance of trade. The debt can through fiscal austerity can be paid off (as some of it was under Clinton), but the trade imbalance will only grow due to the dismantling of are industrial base and the setting up of free trade agreements such as NAFTA. The current foreign debt is equaled to over 70% of GDP, a ratio unmatched by far among industrialized nations. To find out what economics is called the dismal science and the role of neoliberalism.