If there’s one concern that pervades virtually every major political and economic issue facing the United States today, it’s the question of corporate power and influence. The subject erupted in January 2010 with the Supreme Court’s Citizens United v. Federal Election Commission decision, which opened the door for unrestrained corporate influence in elections, but even before that it was never far from most discussions of policy and economics. From the NAFTA debates of the 1990s to the corporate bailouts of the recent economic collapse, the appropriate role of corporations has become a recurring question.
Humanists, with a longstanding interest in both economic justice and participatory democracy, are very much engaged in the debate over corporate power. As such, it is instructive to consider several points with regard to the corporate entity.
An Exquisite Corpse
To understand the nature of the corporation, think corpse. After all, both words derive from the Latin corpus, for body. Corpus also gives us the word corps, meaning a group of people forming one unit (i.e. Peace Corps or Marine Corps). This word root for corporation is significant, because it helps explain the essential nature of the corporate entity. When a corporation is created, a body, or person, is created in the eyes of the law; not a living, breathing person, of course, but a person nonetheless. This corporate person can own things, buy and sell things, enter contracts, sue and be sued, and do many things that a physical person can do.
Importantly, while a corporation can be sued for its actions, the shareholders of the corporation generally cannot. Thus, the corporate phenomenon allows investors to reap the gains of business growth and profits while risking no more than the amount of their investment. If you buy shares of XYZ Corporation, for example, you can’t lose more than the amount of your investment, even if XYZ breaches a contract obligation of $100 million. If you own part of an unincorporated business that breaches a similar contract, your entire personal worth would be in jeopardy.
This shareholder immunity explains why corporations are an extremely attractive business vehicle, a great way of pooling capital for enterprising purposes. Risk can be controlled and capital can be compiled in great sums, making ambitious ventures plausible. And of course, that is exactly what has happened over the last two centuries, as corporations, once extremely rare, became pervasive.
Some history is in order. While a very few corporations existed in colonial America, it would be an absurdity to suggest that the Founders envisioned a country where corporate influence would be anywhere near what it is today.
In fact, whereas today anyone with a business idea can form a corporation by filing a simple form with a government office, such easy corporate formation was unknown in colonial times. English law usually required special permission from the crown or parliament to form a corporation, permission that required a showing of why the corporation would be in the public interest. Similar procedural obstacles made corporate formation difficult, if not impossible, in early America as well, as a special act of the legislature was usually needed. Thus, not only were corporations rare, but they were allowed only when formation was in the public interest.
Today, no such showing is needed, as incorporation can be accomplished easily by just about anyone. In fact, not only can any real person form a corporation, but even corporations can form new corporations, making the pursuit of revenue and profit an activity that is vastly removed from the interests of ordinary, real people.
In the United States today, the amount of wealth held and controlled by corporate entities is almost unimaginable, far in excess of that of real people. Each tiny listing on the stock exchange represents hundreds of millions, if not billions, of dollars in assets and revenue, much of it owned and controlled by other corporate entities. These corporations own and control most of the wealth in the country, whether real estate, financial instruments, or cash. In fact, many U.S. corporations (not to mention the giant multinationals) have wealth that far exceeds that of many of the world’s nations.
A Psychotic Person
If corporations are legally people (and they are), we should understand that they could correctly be described as pathological and psychotic people. They are completely removed from the reality of real human interests, devoted only to their own self-interest, with the singular goal of profit. Moreover, they pursue this goal from a completely amoral standpoint, with no innate impulses toward compassion or ethics. The corporation itself has no conscience, of course, and knows no right from wrong. (It has been argued that “psychopathic” would be more accurate than “psychotic,” since the latter is a term with no moral implications, whereas the former would more accurately describe the moral characteristics of the corporate person. In fact, both terms are generally accurate.)
While one could argue that the real people who run corporations have the moral and other human traits that corporations lack, this means little when we realize that corporate officers and directors are duty-bound to do one thing—make money for the corporation. This fiduciary duty requires them to put ethics aside, so long as they can operate within the law. And of course, since corporations have immense wealth, they can afford lawyers and lobbyists to shape the law to their liking and defend their legal interests most zealously when necessary. This ability is hugely significant, and has had enormous negative ramifications in American society and government.
Corporations are the only entities that actually have millions of dollars at their disposal for the sole purpose of defending their economic interests, shaping public policy, utilizing the courts, controlling the media, and advertising themselves and their products. With vast economic resources, no moral sense, and the singular goal of making money, corporations act narcissistically as a matter of ordinary practice. Even when they act charitably, they do so as a matter of public relations and some kind of business interest. The libertarian guru Milton Friedman, leaving all niceties aside, has expressly condemned the notion of corporate charity as a breach of duty to shareholders, unless it can be clearly justified for reasons of public relations or the like.
The notion of unrestrained corporate power is often defended with libertarian arguments espousing “free enterprise” and “small government,” always stressing that we should let the economy operate naturally, without government regulation. What this argument fails to consider, however, is that corporations themselves are unnatural, government-made entities. Corporations, unlike real people (and even non-corporate partnerships of people acting together for business purposes), do not exist in the natural world, but rather are created through a legal fiction that requires government involvement.
As such, if we created a true laissez-faire environment, it would be an environment without corporations. Without laws allowing for the creation of corporations and setting forth a procedure and legal structure for doing so, corporations could not exist.
Since government is necessary for corporate creation there seems to be little validity to claims that they should function without government oversight. Especially when we consider that these unnatural, government-created corporations take on unnatural degrees of wealth and power, the need to regulate them would seem obvious.
If so, then why are corporations not more strictly regulated? The answer is obvious, and sobering. Corporations have eluded stringent governmental oversight precisely because they are so powerful. When institutions have as much wealth as corporate interests do in the United States today, their influence is so pervasive that controlling them is akin to getting a genie back in the bottle.
Of course, to be fair one must concede that much of this pervasive influence has been positive. Corporate enterprises have brought us many of the technological advances and commodities of life, and it would be hard to imagine modern life without them. In the end, few people would suggest eliminating corporations altogether.
That said, the downside of unrestrained corporate power is indeed significant, showing that the public interest suffers when immensely wealthy corporate entities operate unchecked. Rampant commercialization and corporatism, with no counterbalance representing the public interest, leads to vast wealth disparity, general anti-intellectualism, dangerous foreign policy, arts that reflect the lowest common denominator, declining public education, a poorly informed electorate, and a culture of instant gratification, obsessive consumption, and materialism. Sound familiar?
To compound the problem, unrestrained corporate power is fatal to effective democracy. With corporate wealth funding not just many, but almost all of the lobbyists in Washington, it is not much of an exaggeration to say that corporations dictate public policy in the United States. And we often hear of “special interests” controlling Washington, as if there are lots of adversarial representative groups fighting one another over public policy, but in fact that usually isn’t the case. With very few exceptions, almost all “special interests” in Washington are corporate interests, funded entirely by corporations and industries. Defense contractors, for practical purposes, own and control the Pentagon. Medical and pharmaceutical interests own and control the FDA. Financial powerhouses have their hands in all policy that interests them. Rarely are any of these interests offset by a correspondingly powerful lobby defending the interests of ordinary Americans.
Because of this, participatory democracy is almost dead in the United States. Cynicism is high, because ordinary Americans, correctly, don’t feel that they’re in control. Corporate interests define the spectrum of debate, and that spectrum has no room for serious legislation that challenges the corporate oligarchy.
Ironically, corporate interests are quick to appeal to patriotism, often portraying themselves as synonymous with American values. There is little about corporate influence that is truly patriotic, however, because anything that poisons democracy is by definition un-American. In fact, corporations have become increasingly multinational and now routinely abandon the United States when possible to avoid taxes and move jobs. Yet, through well-funded advertising and public relations that appeal to patriotic impulses, corporations easily become household names and project an image of being solidly patriotic, even culturally iconic, while the war protestor in the public park becomes the bad guy.
The Need for Action
Thus, as humanists survey the landscape and consider issues of economic injustice and participatory democracy, the issue of corporate power and influence should stand out as key. This is a definable problem that has direct effects transcending the economy, going right to the heart of our democracy and our culture.
Perhaps a few legislative measures are attainable (tighter regulation of the financial sector, for example) but the long-term goal must be more serious and more ambitious. Efforts to push back against corporate rule by denying corporations the same rights as people (highlighted by Sean Mulligan in the March/April issue of the Humanist) are top priorities of a number of groups, including: The Backbone Campaign, Common Cause, Democrats.com, Fix Congress First, Free Speech for People, Organic Consumers Association, People for the American Way, Public Citizen, Women’s International League for Peace and Freedom, Alliance for Democracy, Center for Media and Democracy, Changing the Game, Coffee Party USA, and Move to Amend. Senator Bernie Sanders (I-VT) has spoken out in favor of such action as well, and recently declared that he supports a constitutional amendment redefining the role of the corporation. This type of action, returning corporations to the role of the public’s servant, not master, must be a primary goal of the humanist movement of our generation, working together with this wider progressive movement.
David Niose is president of the American Humanist Association.