Corporate Control of America

June 2002

by Richard Garrard

Have you ever met an artificial person? No, I'm not talking about robots or androids. This is not the stuff of science fiction. It's strictly business. Chances are you've worked for an artificial person. You may even have been told it was a 'corporation.' You may have heard of the explosive growth of corporations, the global reach of the transnational corporations. Corporations are our friends. They give us entertainment, jobs, junk food. Corporations are the vehicles of capitalism, the free market, of freedom itself--right? Wrong.

What happened? In the beginning corporations were very useful, a means of managing risk and ensuring continuity and capitalization. The negative features of corporations were limited. In fact, they were created and operated under greater constraints:

  • Charters were granted for a limited time.
  • Corporations were explicitly chartered for the purpose of serving the public interest - profit for shareholders was the means to that end.
  • They could engage only in activities necessary to fulfill their chartered purpose.
  • Corporations were terminated if they exceeded their authority or if they caused public harm.
  • Owners and managers were responsible for criminal acts they committed on the job. Corporations could not make any political contributions, nor spend money to influence legislation.
  • Corporations could not purchase or own stock in other corporations, nor own any property other than that necessary to fulfill their chartered purpose.

The corporations of today straddle the world. They walk the halls of Congress and your state legislature. They move money from account to account, currency to currency, country to country, to escape regulation and taxation. They dictate environmental laws and foreign policy. They redistribute wealth unfairly.

Why is this permitted? Well, partly because corporations are such generous campaign contributors (directly or through PACs), and well, in the United States of America all natural persons are supposed to have inalienable rights. These rights are recognized, for instance, in the Bill of Rights and the 14th Amendment. Corporations are considered persons, created by the state. And this leads us to the concept of corporate personhood.

Corporate personhood is the idea (a legal fiction, currently with force of law) that corporations have constitutional rights just like real, natural, human persons. The doctrine derives from a 1886 lawsuit, Santa Clara County v. Southern Pacific Railroad. This decision was augmented by many rulings since, which have greatly expanded corporate rights.

While corporations certainly served a useful purpose in the first century of our country, the increasing power aggregated to the corporations began to endanger our democracy. The bizarre status of these organizations allowed them to compete successfully with many other interests. In the last fifty years, corporations have not only triumphed against organized labor, but against government itself.

The tendency in recent decades toward deregulation, acquisitions and mergers has often resulted in a consolidation of market position that often borders on monopoly. Naturally, under such conditions, the "free and open competition" that is necessary to a healthy and functioning capitalist economy does not occur. The lack of regulation has, unfortunately, permitted horrendous abuses (as in the Enron crisis) in the form of 'paper companies' with no other purpose than to hide taxable income and manipulate pricing.

As Arianna Huffington notes, "In the last two years, more than 400 public companies--including Enron, Global Crossing and Kmart--have declared bankruptcy. Two million Americans have lost their jobs. Four trillion dollars in market value has been lost on Wall Street." This sounds as if the corporate-based economy has become unstable.

Corporations increasingly dictate American foreign policy goals and values. The U.S. State Department and the Department of Defense have repeatedly stated that our foreign and military policy must protect U.S. "commercial interests." The prominence of the Middle Eastern oil reserves in our nation's recent history reveals corporate influence to a frightening extent. It is significant that many key members of the current administration, including both the President and Vice President, have come from the oil industry. Campaign finance contributions from corporations have reached record levels. Individual taxes for the middle class have gone up while taxes on the wealthy and corporations have gone down. Why do the few artificial persons have so much more representation than the real people?

The answer is not to eliminate corporations but to reverse judicial trends that have granted these entities such tremendous power. Corporations must be transparent to investors and regulators. They must be reformed and held accountable. They must reveal their activities relevant to the formation of legislation and policy.

And, most important of all, American citizens and consumers must insist that we are more real than any product or brand or marketing campaign; that this democratic republic is not merely a corporate welfare state, but is about us and for us: for "We the People."