The
history of constitutional law is the history of the impact of the
modern
corporation upon the American scene.
- -
Supreme Court Justice Felix Frankfurter
Individuals are legally required to support corporations’
political advertising. Opposition is a violation of the corporation’s
First Amendment rights. [1]
EPA monitoring of the air over a corporation’s factory, constitutes
violation of the corporations Fourth Amendment rights. [2]
Corporations must be compensated for compliance to environmental
regulations. Lack of compensation violates the corporation’s Fifth
Amendment rights.[3]
Yes, inanimate, non-accountable corporate entities have the very same
rights[4]
afforded you by the authors of the Constitution. But it wasn’t
always so. The Constitution doesn’t mention corporations. In
Colonial times, corporations as we know them today didn’t even
exist. Instead, there were charters*.
The Founders knew well the abuses of the contemporary charters such
as the East India Company, the Hudson's Bay Company and the British
Crown charters in America and chose to allow the States to regulate
them.
*Technically
corporations are
charters. For the purposes of this post, “charter” is used to
identify the original charter entity before the re-definition of the
word in the 19th
century.
Some
key differences between corporations and charters;
Charters
|
Corporations
|
Of
limited duration, Must be renewed or disbanded.[5]
|
Perpetual
|
Capital
is limited
|
Capital
unlimited. Can be "too big to fail"
|
Established
for defined reason
|
Essentially
unlimited
|
Strong
accountability to shareholders is written into charter
|
Weak
accountability to shareholders.
|
Minority
shareholders protected
|
Minority
shareholder support not needed for major decisions
|
All
stakeholders responsible
|
Stakeholders
not responsible for corporate actions
|
As
early as 1816 Thomas Jefferson, always a foe of large powerful
entities, warned of the threat to the young democracy from “moneyed
corporations”;
“"I
hope we shall …crush in its birth the aristocracy of our moneyed
corporations, which dare already to challenge our government to a
trial of strength and bid defiance to the laws of our country."
-
Thomas Jefferson, Letter to George Logan, 1816”
It
took 70 years of struggle, but the corporations won their “trial of
strength” in the infamous landmark Supreme Court review of Santa
Clara County v. Southern Pacific Railroad, 1886; which overturned
previous precedent and was used to give corporations the legal status
of a natural person, and thus by extension, protection under the Bill
of Rights. (Before this time corporations were considered “artificial
persons” with a limited sub-set of human rights). Since then,
corporations have won erroneous judgements one after another, until
we have arrived at the sorry state we find ourselves now.
Supreme
Court Justice William 0. Douglas commented on the decision decades
later, writing;
"There
was no history, logic or reason given to support that view"
Corporations
are Accountable to No One
Not
the Government;
We
regularly see in the news headlines “Corporation X Fined XX
Dollars”. This is misleading. Corporations no longer exist as a
privilege granted by the people through their government, but rather
they exist under “contract” with the government. This is the
reason fine amounts are “recommended” and companies are allowed
to negotiate the final value. Corporations are not “fined” in the
sense that you are fined for speeding or jaywalking, but rather the
“fines” are more akin to liquidated damages for a violation of
their “contract” with the government.
Directors can be held liable only for their own personal
misconduct. No single person or persons are accountable for
miss-deeds of the corporation.[6]
Not
the People;
Corporations,
having usurped the Commerce Clause to relieve “themselves” of
government authority, and gained protections under the Bill of
Rights, have granted “themselves” much greater freedoms than
enjoyed by any individual. Individuals cannot invoke Commerce Clause
precedent to overrule laws. Corporation can, and do on a regular
basis. This has created the curious situation where an entity (the
corporation) is no longer accountable to the entity that created it
(the government).
Even
the most die-hard free-marketer must admit that even if individuals
and corporations should have equal rights, it is much more
difficult for the individual to assert those rights. Do you have a
personal lobbyist in Washington? (No, your congressional
representative doesn’t work for your interests. They follow
corporate wishes and interests; you are not going to
give them a job when they leave government).
Not
Shareholders
Shareholders
routinely resort to litigation to assert their supposed rights to
control the corporation. Minority shareholders are easy silenced by
majority shareholders or shareholder blocs. Shareholders have no
direct influence in matters such as treatment of workers or the
environment.
Not
the Consumer
Even
if corporations are not accountable to any one else, they must be
accountable to the consumer, right? Not really. Corporations can
treat consumers any way they chose. Telephone companies are one
example. They routinely mistreat their customers, their business
declines, and then they merge or otherwise reform themselves under a
different name and continue business with the same equipment, the
same employees and even the same customers (Who are non the wiser)
Study the history of ATT for proof. Airlines are another
striking example. Under a charter system, entities that harmed the
public good would be disbanded and their assets sold and delivered in
proportion to their stakeholders.
Corporations
(including the Federal Reserve) are the scourge of democracy and will
be the cause of the failure of the Grand Experiment. You cannot
“vote with your dollars” to force corporations to behave in an
ethical manner. The only hope is to reform the nature of corporate
“personhood” and return to the ideals of the founders of this
great country.
[1]
Pacific Gas & Electric Co. v. Public Utilities Commission of
California ET AL. Appeal from the Supreme Court of California. No.
84-1044.
[2]
Dow Chemical Corporation v. U.S.,
476 U.S. 337
[3]
U.S. Supreme Court review of Pennsylvania Coal Co. v. Mahon 260 U.S.
393 (1922)
260
U.S. 393 Pennsylvania Coal Co. v. Mahon et al. No. 549.
[4]
Actually, they have more. An individual’s power to control
government is through the vote and the resultant composition of
Congress and the Presidency, and ultimately, through elected
officials, the Judiciary. But since corporations have successfully
hijacked the Commerce Clause to limit government’s power, they are
ultimately accountable to no one.
[5]
The scourges of the First and Second Banks of the United States were
eliminated by allowing the charters of these abominations to expire.
The present incarnation of this evil, The Federal Reserve, cannot be
dispatched so easily because its status as a corporation allows it to
exist in perpetuity.
[6]
To cite a recent example, is the CEO of British Petroleum responsible
for the Gulf disaster? No, he wasn’t even there, he had no way to
know what they were doing, and he can’t be expected to keep up with
every employees actions. How about the guy on the
rig?
No, he was just an employee doing a job. He can’t be responsible
for the corporation. Inevitably, a mid-manager will be taken to task
for the disaster and punished accordingly. But does this change the
corporate attitude? Can this alter the corporation’s way of doing
business? Of course not. In the end, no one is accountable. What
incentive does BP really have to be responsible? If worse comes to
worse, they can always simply merge with some unknown company, change
their name, and continue business as usual. BP can easily change
their legal structure, since there is no longer a requirement to
serve a public good. Articles of Incorporation are available simply
for some relatively trivial paperwork and fees. Would the boycotters
even know? No, they would declare “victory”. Would anyone even
care that the new ACME Oil company was formerly BP? No, they will
have moved on to the next cause. BP knows this.
