Last year a film titled The Corporation was released. The movie was based upon a book written earlier by Joel Bakan. The fundamental argument made is that the Corporation in it’s current form is a psychopath:
What you have is a legally created person who is legally required always to act in its own self interest and the idea is that if a human person was only able to act in its own self interests we’d generally diagnose that person as a psychopath.
It always amazes people when they discover that the law sees the Corporation as a person with the protection of the Constitution just like you and I. Central to the rise of the corporation is this notion of corporate personality. Corporate personality is a cop out, an unfair get out of jail free card, that grants wealth the rights and privileges of citizenship, but none of the responsibility. Bhopal, Unocal, Coke running death squads. Corporations are literally getting away with murder, so much for a culture of life.
Corporations rarely if ever pay the legal tax rate , and in 2004 Citizens for Tax Justice released a report showing that 82 large US companies paid no tax in one or more years of the Bush presidency:
Eighty-two of America’s largest and most profitable corporations paid no federal income tax in at least one year during the first three years of the George W. Bush administration — a period when federal corporate tax collections fell to their lowest sustained level in six decades. This is one of the many troubling findings of a major new report on corporate tax avoidance by Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP). The report covered 275 profitable Fortune 500 corporations, with total U.S. profits of $1.1 trillion over the three-year period.
“The sharp increase in the number of tax-avoiding companies reflects the results of aggressive corporate lobbying and a White House and a Congress eager to do the lobbyists’ bidding,” said Robert S. McIntyre, director of CTJ and co-author of the report with T.D. Coo Nguyen of ITEP.
Agressive lobbying, I wonder who or what that might be a reference to?
All the while capital gains tax rate cuts have ensured the work is taxed more heavily than wealth. Those who work for a living are expected to bear the the burden for a wealthy class of individuals who see privilege as their birthright. Historically “noble” classes have granted themselves immunity from taxation while pressing the burden upon peasants. This is the irony of Grover Norquist and the rise of the “libertarian” wing of the Republican party. They may talk Christ and compassion, but in their dark little hearts it’s all about the Benjamins. They talk about freedom, but their ideology places a heavy burden on working people. Grover talks about drowning government, but the corpses in New Orleans still waiting for a decent burial are the true victims of the lust for money.
Everyday working people go to their jobs trying to make a living, and they bear the burden so that psychopathic corporations can make an extra dime or two off their labor. Bush and Norquist want to turn back the clocks to an American where the social solidarity of the New Deal had not yet tempered American capitalism, and the elite that Bush claims as his base where in undisputed power living like parasites off the labor of others. Life wasn’t good for the working man those days.
You load sixteen tons, what do you get?
Another day older and deeper in debt.
Saint Peter, don’t you call me, ’cause I can’t go;
I owe my soul to the company store…
Recent events in West Virginia show that the Bush Adminstration’s desire to turn back the clock has suceeded, and has allowed mining companies to get away with manslaughter by not enforcing the law. The corporate psychopath is a threat to society, now it’s the time for an execution (put down the kitchen knife I’m speaking figuratively.)
The answer is abolish corporate personality.
During the Spanish Inquisition where burned at the stake. Why?
Because priests were forbidden to shed blood, and the flames where meant to mimic the hellfire from whence the heretics were presumed to have come.
The obsessions of the “government drowners” of the Right presents the opportunity for similar irony. We give them what they want, and it will be the end of the power.
In 2002, Norquist and the ATR were promoting a bill that would eliminate the “double taxation” of dividends. It was apparently lost upon Norquist and the bunch that the notion of corporate personality blows a very large hole in the notion that the taxation of corporate profits is double taxation. By his logic when I pay income taxes, I’m being taxed twice as well, after all my employer already paid taxes on this once, and the consumer on the products they bought from my company.
Grover’s attack on “double taxation” assumes the corporation has no legal personality, let’s make that happen. Let’s abolish the corporation and as a consequence abolish the corporate income tax, the limitation of liability to capital stock, and the immunity corporate personality grants to corporate management and the board of directors.
Oh my god, we’ve killed the corporation. How are we going to make this stick. I don’t buy the arguement that immunity created by government fiat is the only way to limit liability and allow for widespead participationon capital markets To replace limited liability of the corporation all corporations over a certain size should be required pay for the limited liablity they currently enjoy at society’s expense this can be accomplished through a quasi governmental body like the FDIC. Small business should be permitted to buy coverage at discounted rates, while large corporations should have to assume reponsbility for the liability created by their actions. We all have to buy car insurance to cover the liability above and beyond what can reasonably be expected to cver out of pocket. Why have corporations been getting this for free? And why do economists dismiss these costs as externalities whenever they are discussed as evidence of market failures? If it’s good enough for my car and yours, it’s good enough for GM.
And should the actions of the corporation be determined to be criminal, we’ve now got live bodies to throw in jail, or under it as it may be. When Coke runs death squads in, or the Bush campaign
sells sweatshirts made in Burma in violation of a law President Bush signed, there should be criminal consequence. Criminal actions should yield criminal consequences, and the institution of the corporation can be saved by putting people before profits.
Having killed the corporate person, it no longer has the rights of a person to stand in defiance of the law. I also believe that members of the board and of management should be forced to sign documents assuming for illegal actions that fall under their aegis. CEO’s won’t break the law so lightly if they know they will go to prision as a result of their actions. And this criminals should go to the same prisons as the other criminals. The first time one of the smartest guys in the room gets gang raped in the showers and infected with AIDS, the rest of Corporate America will gain a whole new understanding of the personal liability of their actions.
And finally by dethroning the shareholder owned Corporation, we can bring stakeholders into the game by mandating employee representation on corporate boards as is the case in Germany. And we can consider whether alternate forms allowing capital and labor to perform economic functions, like worker cooperatives should be encouraged. Worker cooperatives are not destined to be confined to corner boutiques. One of Spain’s biggest companies is the Mondragón Cooperative Corporation a company that started as a self help organization founded by a Basque priest in the 1940’s. Perhaps at least some of the progressive energy at Daily Kos could be channeled into challenging the conventional wisdom the corrupt capitalism is a forgone conclusion.
At the heart of the matter is whether the market exists to serve people, or for people to serve the market. It’s give and take, but the current state of affairs begs for reform, the first and most important being confronting the monster created in the corporate person.
how people like Norquist never get the irony in denouncing the taxation of corporate income as double taxation when this results from the notion of corporate persionality that keeps their corporate criminal friends out of jail.
Some functions of the corporation have meaning. There is, for example, a need for a structure to limit financial liability of entrepreneurs. (Though not, I should note, eliminate it) But do corporations really need to be able to own property, copyrights, patents, and trademarks? How can we change the structure to eliminate the use of corporations to shield individuals from criminal and civil responsibility for their actions? Perhaps enforced transparency of decision making? Personal responsibility for shareholders and financial responsibility for investors?
In trying to think through how your suggestion would work, what’s the difference between a shareholder and an investor?
… I’m not sure. It made sense when I wrote it, but I can’t think what I was thinking. Sorry!
I’ve long held the position that we need to have a different model for corporations, one that assigns workers a representative on the board of directors, and one that imposes duties on directors to someone other than shareholders. Frankly they should have a fiduciary duty to employees and to customers as well.
Another idea: limits to compensation for upper management. Today you can have a bankrupt company lay off workers while paying bonuses to top management.
At the heart of the matter is whether the market exists to serve people, or for people to serve the market.
Bingo!
I’m reading (holiday gift) Thom Harmann’s “Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights,” which is about this very topic.
At the end of his book he proposes amendments to each state’s constitution to rein in the corporate monster. Over at Democratic Underground, there’s a discussion at length on this topic (link)
from December 2004 that includes this proposed constitutional amendment:
I also am totally on board with the concepts of required worker representation on the boards of corporations, and Steven D’s point of limiting compensation of corporate officials.
The title I gave this is a little inflammatory, but it seems like it takes that to get any attention these days at Kos.
There’s more than one way to have corporations exist in a society, if you look at how German companies work you’ll see that they have worker representatives on the board. I’m also fascinated by the Mondragon cooperative system, something I’d like to take the time to research and write on. I’m very curious about what exists in corporate law and policy from other countries that might be useable here. Like the New Zealand law mentioned above that makes directors financially liable for the corporations actions.
You’re right the title of your diary is inflammatory. Unfortunately, although it gets you attention, it is distracting from a real discussion of corporate change.
There is, without a doubt, much that could be changed about corporate law to protect employees, the environment and to allow the boards of directors of corporations to take into account community benefits/costs rather than only shareholder benefits/costs. Perhaps it even makes sense to FORCE corporations to take the community issues into account in certain circumstances.
But the majority of corporations in this country are not comparable to Coca Cola etc. They are small corporations. Most of them are NOT avoiding their taxes (most of them are S corporations anyway)and for most of them forcing them to have employee representation on the board would be ludicrous. I just can’t see a mom and pop business having employee representation on its board. So it doesn’t make sense to approach the whole problem with a “kill” the corporation concept. The corporation (and LLC) is what allows ordinary people to take risks and start businesses and entrepreneurial enterprises without worrying about losing their homes to tort based lawsuits as long as they properly capitalize the corporation (including getting appropriate insurance).
I imagine as a mergers and acquisitions attorney you’d be supportive of the corporate form.
That having been said, so long as the corporation is concieved to have the same rights as a human being, it’s difficult to chain in their power.
I’m interested to know what if any changes you’re suggesting in corporate law that could rein in the corporation?
As for the nobility of small business, in my experience they’re often the most exploitatitve of their employees. They expect there workers to sacrifice, but when the benefits come they refuse to share it with their workers. And they are horrible tax cheats. I don’t get to write my car off as a business expense but this is but one of the many ways that small businesspeople screw the system.
I’ve long been in support of amending corporate law to allow boards of directors to take into account community interests when making decisions. I think it is ridiculous to think that it is a breach of the fiduciary duty of directors to take into account anything but the interests of shareholders when, if the corporation IS to be considered a person, a person would take other things into account.
As far as employees go, I am in support of greater rights for workers. However, abolishing the corporate form won’t keep small businesses from screwing their workers. I don’t think that the people who own small businesses are any more noble than people who are employed by small businesses. If you did away with the corporate form and the owners had to operate without limited liability — the ones who wanted to screw their workers would still screw their workers.
With respect to the deductability of certain items as expenses — I agree, the tax laws need to be changed. But doing away with the corporate form will not solve that problem; business deductions will exist whether or not corporations exist. Frankly, the biggest scam in the tax laws has nothing to do with businesses and everything to do with the home mortgage deduction. Why I can deduct a portion of my living expense and someone who rents can’t — I don’t understand. Why someone with a home equity loan can deduct the interest on the loan they took out to go to law school but I couldn’t deduct my student loan interest — makes no sense. The tax laws are a mess, I agree. They need to be revised. But, again, this has nothing to do with the corporate form.
You’re right, as a mergers and acquisitions attorney I am in favor of the corporate form. But that doesn’t mean that I think its perfect and can’t be improved. I do not, however, support “killing” it since I believe that would inhibit business creation and growth — thereby inhibiting job growth and tax base growth.
Would it be possible to hold them to something like a “reasonable person” standard? That they “knew or should have known” the consequences of their actions on communities or individuals adversely affected by them?
Two remarks:
Ideals are great, implementation is where it gets difficult…
I think you touch on perhaps the biggest problem of all with respect to corporations and corporate power. The trans-nationals are effectively beyond the control of any government. The largest trans-nationals have more economic power and by extension more political power than many if not most nation states. They are in many ways a law unto themselves.
Here is a thought. Assuming you could magically muster the political energy necessary to disband corporations in the U.S., or in any state, and assumption I doubt is realistic in the country at this time, they could be replaced with democratically controlled cooperatives, in order to pool resources sufficient to carry out corporate level project. Like the Mondragon system in Spain, for example.
As for the backlash against the nation or state from the multi-nationals, I suppose that the people of this mythical place could be enlightened enough to voluntarily adopt a new lifestyle. One that is not based on continual consumption, driven by advertising. A sustainable, renewable lifestyle. There maybe some loss of the convenience of the products now available at the local Wal-Mart. But people would still need to create and trade products in a more local and sustainable way.
Just some thoughts of an unattainable utopia that rattle around in my head from time-to-time.
Oh, you hit a nerve. I have worked for rural electric cooperatives for more than twenty years. I think the cooperative model answers many of the problems inherent in the corporation as it currently exists. I think the REC’s give us a model of another, I think better, way to structure large industrial enterprises.
In our coop, our shareholders, our stakeholders, and our customers are one in the same. Our focus is not on extracting maximum profit from our customers to pay dividends to someone else. Our focus is on providing the best possible service to our members at the lowest possible costs. We are acutely aware of the effects of our action on the community because we are the community.
Pity we don’t have a few dozen or a few hundred congressmen and senators with such thoughts rattling around in their heads.