Topic Rise of Corporations Power vs People 2010

8/8/2019 Topic Rise of Corporations Power vs People 2010

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SECTION 4: ANALYSING GLOBAL BUSINESS ACTVITIES:

TNC STRATEGIES

TopicTopic 4e: The Growth of Corporate Wealth and Power vs People4e: The Growth of Corporate Wealth and Power vs People

Ref: Bakan, J. (2001), Chapter 1; Chapter 4

Learning objectives

By the end of this topic, students will be able to

define the meaning of 'corporation' trace and account for the growth of corporations in the modern world,

based on the experience of the US, the home to the most number of corporations

analyse why corporations have become very powerful and influential

how corporate responsibility and voluntary measures cannot effectivelycurb their power and influence

explain the consequences and impacts of corporations on business andsociety

discuss what can be done to reassert popular sovereignty over corporations

examine the status or power of corporations compared to states

Fact: Corporations nowFact: Corporations now are the worlds dominant economic institutionare the worlds dominant economic institution Today, corporations govern our lives, and determine

1. what we eat,

2. what we watch,

3. what we wear,

4. where we work, and what we do.

We are inescapably surrounded by their

1. culture,

2. iconography, and

3. ideology.

Fact:Fact: Wealth & power of transnational corporations have grownWealth & power of transnational corporations have grown..

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Corporations use trade and investment rules to dominate processes for managingcommerce.

In the U.S., legal doctrines such as corporate personhood have shifted thepower to corporations over natural persons.

TheThe Widespread ConsequencesWidespread Consequences ofofConcentrated Corporate PowerConcentrated Corporate Power

ON THEON THE ENVIRONMENTENVIRONMENTMany corporations despoil our forests, degrade the land, pollute the air and water, andresist public health regulations.

ON OURON OUR CULTURECULTURECorporations promote consumption and materialism to the detriment of civic values.

IN THEIN THE EXCHANGE OF IDEASEXCHANGE OF IDEASThe concentration of corporate media ownership limits political debate, the diversity ofviewpoints presented, and media access.

ONON GOVERNMENTGOVERNMENTLarge corporations wield enormous political and electoral power.

ONON SOCIETYSOCIETYCorporations are usurping civic space. Public functions are being privatized.

ON THEON THE MARKETPLACEMARKETPLACE

Mergers and monopolies eliminate competition and remove jobsMergers and monopolies eliminate competition and remove jobs

Outline of PresentationOutline of Presentation1. Examine the nature of the corporation - legally, economically, and politically

2. Explore the history of how corporations acquired such wealth and power

3. Cite examples of how corporate power affect citizens concerns

4. Review tactics that citizens and non-governmental organizations are using tohold corporations accountable and to redefine the relationship between citizensand corporations

5. Identify corporate accountability challenges

What is a Corporation?What is a Corporation?LEGAL DEFINITIONLEGAL DEFINITION

An ARTIFICIAL PERSON or LEGAL ENTITY,

Created by or under authority of the laws of a STATE OR NATION,

Composed, in rare instances, of a single person and successors. Ordinarily, anASSOCIATION OF NUMEROUS INDIVIDUALS,

Regarded as having a PERSONALITY and EXISTENCE distinct from itsmembers,

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Vested with the capacity of CONTINUOUS SUCCESSION, irrespective ofchanges in membership, in perpetuity, or for a limited term of years,

Acting as a UNIT OR SINGLE INDIVIDUAL, in matters relating to the commonpurpose of the association,

Within the scope of POWERS AND AUTHORITY conferred on such bodies BYLAW.

People v. CorporationsPeople v. Corporations

The rise of corporate powerThe rise of corporate powerTheThe riserise ofofcorporatecorporate powerpowerhas been the subject of a succession of best selling bookshas been the subject of a succession of best selling books

over the last decade, most notablyover the last decade, most notably Korten (1995),Korten (1995), Klein (2000), Monbiot (2000) andKlein (2000), Monbiot (2000) andBakanBakan (2004) - the latter also related to a general-release film documentary about(2004) - the latter also related to a general-release film documentary about corporatecorporate powerpower..

Protests in Seattle in 1999Protests in Seattle in 1999 andand later in Genoalater in Genoa were important for the fact that thewere important for the fact that the worldsworldsmainstreammainstream corporatecorporate mediamedia - forty percent of the worlds media is controlled by five- forty percent of the worlds media is controlled by fiveTNCs (Simms et al., 2000) -TNCs (Simms et al., 2000) - gave them extensive coverage and branded them as anti-gave them extensive coverage and branded them as anti-

corporatecorporate (Bendell, 2004).(Bendell, 2004).

Two principal legal reasons for the increased corporate powerTwo principal legal reasons for the increased corporate powerBy the end of the nineteenth centuryBy the end of the nineteenth century courts had fully transformed thecourts had fully transformed the corporation into acorporation into a

"person,""person,"1.1. with its ownwith its own identity,identity,2.2. separate fromseparate from the flesh-and-bloodthe flesh-and-bloodpeoppeople who were its owners and managers andle who were its owners and managers and

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empowered,empowered,

Corporations wereCorporations were like real persons couldlike real persons could,,

1.1. conduct businessconduct business in itsin its own name,own name,

2.2. acquire assets, employ workersacquire assets, employ workers,,

3.3. pay taxespay taxes, and, and

4.4. go to courtgo to court toto assert its rights and defend its actionsassert its rights and defend its actions..Corporations haveCorporations have gained their power for two principalgained their power for two principal reasons that have evolvedreasons that have evolved out ofout ofthe process of incorporationthe process of incorporation or the establishmentor the establishment of a separate legal identityof a separate legal identity..

Firstly,Firstly, thethe corporatecorporate legal person has gained some civil and legal rights, such aslegal person has gained some civil and legal rights, such asfreedom of speechfreedom of speech, which - in turn - has, which - in turn - has allowed them to influence political processes.allowed them to influence political processes.

Secondly, itSecondly, it can limit liabilitycan limit liability (that is,(that is,protect those who run it from some of theprotect those who run it from some of theresponsibilities of their actionsresponsibilities of their actions). As noted by Bendell (2004), [). As noted by Bendell (2004), [ t]hese two aspects oft]hese two aspects ofcorporationscorporations mean that theymean that they could acquire significantcould acquire significantpowerpower,, which they couldwhich they couldexercise with limited accountability.exercise with limited accountability.

UNFORTUNATELYUNFORTUNATELY CORPORATE SOCIAL RESPONSIBILITYCORPORATE SOCIAL RESPONSIBILITYAND VOLUNARY MEASURES INEFFECTIVEAND VOLUNARY MEASURES INEFFECTIVE TO CURBTO CURBCORPORATE POWER AND INFLUENCE.CORPORATE POWER AND INFLUENCE.

Part of the growing frustration amongst NGOs, activists and communities with ethicalPart of the growing frustration amongst NGOs, activists and communities with ethical consumerism,consumerism, CSR and voluntary initiativesCSR and voluntary initiatives is that theyis that they fail to challenge thisfail to challenge thispowerpowerdynamicdynamic..

TheThe majority of companiesmajority of companies will only stopwill only stop producingproducing damaging products or startdamaging products or startproducing ethical productsproducing ethical products if it suits their business interests.if it suits their business interests.

The company isThe company is still driven bystill driven by itsitsbusiness interestsbusiness interests and that is what will determine theand that is what will determine thefinal decision.final decision.

There areThere are no penalties if a company pulls out or blatantly disregards the commitments itno penalties if a company pulls out or blatantly disregards the commitments it has made.has made.

And it should be remembered thatAnd it should be remembered that for the NGOs, the only reason for being involved infor the NGOs, the only reason for being involved in such a process is if it is going to make a real difference in the way a companysuch a process is if it is going to make a real difference in the way a companybehavesbehaves..

Even worse,Even worse, rather than challenging corporate power, CSR has been used to reinforce it.rather than challenging corporate power, CSR has been used to reinforce it.

Despite the questionable efficacyDespite the questionable efficacy of voluntary initiatives and partnershipsof voluntary initiatives and partnerships,, they have beenthey have beenadopted by governments as a justification for inaction and by corporate lobby groupsadopted by governments as a justification for inaction and by corporate lobby groupsas proof that regulatory frameworks are not neededas proof that regulatory frameworks are not needed..

Nowhere was this clearer than at theNowhere was this clearer than at the 2002 World Summit on Sustainable Development2002 World Summit on Sustainable Development(WSSD) in Johannesburg(WSSD) in Johannesburg when for the first timewhen for the first time agreements between non-state actorsagreements between non-state actors

were endorsed at an intergovernmental conferencewere endorsed at an intergovernmental conference and theand the development was used bydevelopment was used bysome western countries and lobby groups such as Business Action for Sustainablesome western countries and lobby groups such as Business Action for Sustainable Development (BASD) and the International Chamber of Commerce (ICC) as evidenceDevelopment (BASD) and the International Chamber of Commerce (ICC) as evidence that legally-binding measures on business need not be agreed.that legally-binding measures on business need not be agreed.

As Bendell has put it: it became clear thatAs Bendell has put it: it became clear that some participants in and commentators onsome participants in and commentators onpartnerships were using them to pursue a neo-liberal political agendapartnerships were using them to pursue a neo-liberal political agenda (Bendell, 2004:(Bendell, 2004:31).31).

By allowing the market to decide on social and environmental standardsBy allowing the market to decide on social and environmental standards means themeans the

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majority of companies could ignore such standards and continue with business asmajority of companies could ignore such standards and continue with business asnormalnormal

How Wealthy and Powerful Have Corporations Become?How Wealthy and Powerful Have Corporations Become?

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CC

With 2002 sales of $246 billion, WalWith 2002 sales of $246 billion, WalMart is larger than 150 countries, includingMart is larger than 150 countries, including

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Corporations Have Acquired Tremendous Wealth andCorporations Have Acquired Tremendous Wealth andPowerPower

The gap between average CEO pay and worker payThe gap between average CEO pay and worker pay hashas risenrisen from 42 to 1 in 1982from 42 to 1 in 1982

to 301 to 1 in 2003.to 301 to 1 in 2003.

Merger Mania Has Led to Consolidations and LayoffsMerger Mania Has Led to Consolidations and Layoffs

In 1999, over the sales of the largest 200 corporations were in just 4 economicsectors.

In AUTOS, the top 6 firms produce 75% of the worlds motor vehicles.

In ELECTRONICS, the top 5 firms have garnered over the global sales.

From 1998-2000 there were $3.7 trillion in mergers in the United States.

The total value of cross-border merger and acquisition transactions in 2000 was$1.1 trillion, about 50% higher than in 1990.

In 1998, 678,000 Americans were laid off from their jobs, the highest total in adecade.

In 2001, a total of 986,424 people were laid off worldwide from the top 500 U.S.companies.

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The Global Power Elite (2006)The Global Power Elite (2006)Source: The Transnational Corporate Elite: Evidence from the 2006

Global Fortune 500, by Clifford L. Staples

Department of Sociology

University of North Dakota, USA

The FG500 companies and directors are concentrated in the triad of Europe, theAmericas, and Australasia, with the United States, Japan, Britain, France, andGermany together accounting for 70% of the companies on the GF500.

These corporations and the directors who run them are headquartered in or arecitizens of only 42 of the worlds 190+ nations.

Control over the worlds largest economic assets is concentrated in the hands of arelatively few nations, nationalities, and companies.

InterlocksInterlocks

Of the 6,632 director names, 5,095 appear only once, meaning that theseindividuals serve on only one board within the FG500.

The remaining 1,537 directors, or director positions, are occupied by 659individuals, and together these individuals create 1,201 Company A to Company B links,or interlocks.

The 659 linkers come from an even more select group of nations, with only 21nations accounting for all 659 linkers, and the United States alone accounting for 47% ofthe total.

Transnational LinksTransnational Links

Of these 1,201 company A to company B links, 319, or 26.6%, connectcompanies headquartered in different countries.

Most (95%) of the linked companies are concentrated in either Europe or theAmericas.

European companies are more than twice as likely (36.8% versus 15.6%) to beinvolved in transnational linkages than companies headquartered in the Americas.

The U.S.The U.S. SituationSituation

The United States has the largest number of companies in the GF500 (170), thelargest number of directors (2,070), the largest number of linkers (310), the largestnumber of female linkers (57), and the largest number of linked companies (994)

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Yet, the United States ranks quite low in its proportion of linked companiesinvolved in transnational links (130/992), at 13.1%. Only India, with at 6.7%, and Japanat 12.7% rank lower than the U.S.

Findings: CompaniesFindings: Companies

Most of the companies (370/498 or 74.3%) are connected to each other and sopart of the network.

But only 219 corporations are involved in transnational interlocks.

The Global Power EliteThe Global Power Elite

There are 48 individuals (of the 659 linkers) who are involved in both nationaland transnational interlocks.

70.8% are from Europe and 29.2% are from the Americas.

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The Top CorporationsThe Top Corporations

There are 30 companies that rank within the top 50 in both national andtransnational interlocks.

Most of these companies are household names and all but a few US companiesare headquartered in Europe.

All 30 companies can be found on the list of companies that connect the top 48most-connected directors.

Thus, to the extent that a Transnational Corporate/Capitalist Classor at least theelite fraction of that classcan be said to exist, its core is to be found in theseindividuals and companies.

Summary and ConclusionsSummary and Conclusions

The possible emergence of transnational corporate powerpower in the form

of a corporate elite acting on behalf of a transnationalizing capitalist classis

worrying to those of us interested in conserving and expanding democratic

alternatives to corporate power.

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Corporate Pork Barrel v. Social WelfareCorporate Pork Barrel v. Social Welfare

CorpCorp

Corporate Giants Adept at Avoiding TaxesCorporate Giants Adept at Avoiding Taxes

NONE of the 44 U.S. corporations in the year 2000 Institute of Policy Studies Top 200

Study paid the full corporate income tax rate from 1996-98.

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PerPer

InInCorporationsCorporations Have Used Their Wealth & Power to Sway Elections and LawmakingHave Used Their Wealth & Power to Sway Elections and Lawmaking In the 2000 federal election campaigns, corporations out-spent labor by 15-to-1.

In the 2004 federal election cycle, finance, insurance, and real estate corporationsled all sectors, giving $331 million to federal candidates.

CorporationsCorporations HaveHave UsedUsed TheirTheirWealth & Power to Sway Elections and LawmakingWealth & Power to Sway Elections and Lawmaking

Between 1998 and 2004, Verizon corporation and General Electric corporationspent over $100 million in lobbying expenditures.

CorporationsCorporations Use Governments to Distort the Public InterestUse Governments to Distort the Public Interest

In June 2005In June 2005, the, the U.S. Supreme CourtU.S. Supreme Court approved theapproved the use of eminent domain foruse of eminent domain forbusiness developmentbusiness development -- making it legal for local governments to seize homes andmaking it legal for local governments to seize homes andbusinesses, against the owners will, for the construction of residential, commercial,businesses, against the owners will, for the construction of residential, commercial,and manufacturing developments by giant corporationsand manufacturing developments by giant corporations such as Wal-Mart and Target.such as Wal-Mart and Target.

Eminent domainEminent domain hadhadpreviously been limitedpreviously been limited to development forto development forpublic usepublic use, such as, such asschools, roads, and bridgesschools, roads, and bridges ((Kelo v. City of New LondonKelo v. City of New London (04-108)).(04-108)).

http://money.cnn.comhttp://money.cnn.com , June 2005, June 2005

CorporationsCorporations areare Increasingly Usurping Civic Space/DemocracyIncreasingly Usurping Civic Space/Democracy

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The public sphere of decision making is shrinking with the increasingprivatization of services formerly provided through the public sector.

A September, 2000 Business Week/Harris Poll showed that 77% of U.S. adultsbelieve corporations have gained too much power over American life.

Who Owns the News Media?Who Owns the News Media?

U.S. Labor Unions Have Historically Confronted Corporate PowerU.S. Labor Unions Have Historically Confronted Corporate Power..

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30

35

40

U.U.

Global trade treaties favor corporationsGlobal trade treaties favor corporations over the environment, workers, andover the environment, workers, andcommunitiescommunities

Trade treatiesTrade treaties like NAFTA, GATT, CAFTA and proposed FTAA set ruleslike NAFTA, GATT, CAFTA and proposed FTAA set rules favoring corporationsfavoring corporations resulting in:resulting in:

Well paying unionized US manufacturing jobs shiftingWell paying unionized US manufacturing jobs shifting toto low-wagelow-wagecountriescountries

Lower wages and living standardsLower wages and living standards everywhereeverywhereWeakened worker rightsWeakened worker rights in all nationsin all nations

Environmental damageEnvironmental damage domestically and in other countriesdomestically and in other countries

Cuts in social safety netsCuts in social safety nets

Unpopular global trade treatiesUnpopular global trade treaties currentlycurrently favor corporations over thefavor corporations over theenvironment, workers, and communitiesenvironment, workers, and communities

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A: AHOWHOW DID THIS HAPPEN?DID THIS HAPPEN?

The Case of the USThe Case of the US

1500-1770: Joint Stock Companies and Royal Charter Corporations EstablishedTrade Monopolies for Colonization

These Crown Corporations, such as the Massachusetts Bay Corporation, and

Global Corporations, such as the East India Company

established vast systems of trade and governance

ravaged lands

killed and enslaved millions of people

These Corporations had Powers Like Dictatorial Governments

Corporate Directors could:

wage war

seize the commons

force human labor judge and punish

redefine the rights of the corporation

No Rights were held by:

employees

subjects

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neighbors

victims

1776: The American Revolution1776: The American Revolution

The American Revolution dismantled the Crown Corporations andtransformed them into states.

The Virginia Company, which ran the Virginia Colony, became theCommonwealth of Virginia.

Following the American Revolution:Following the American Revolution:

The people in each of the original 13 states wrote state constitutions including rules on:The people in each of the original 13 states wrote state constitutions including rules on:

electionselections

lawmakinglawmaking

judiciaryjudiciary

educationeducation

I hope that we crush in its birth the aristocracy of our monied corporations which dareI hope that we crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial of strength, and bid defiance to thealready to challenge our government to a trial of strength, and bid defiance to the laws of our country.laws of our country.

Throughout the 19Throughout the 19thth Century, a Struggle Ensued Between Commercial InterestsCentury, a Struggle Ensued Between Commercial Interests

Wishing to Expand Property Rights and People Seeking to Expand HumanWishing to Expand Property Rights and People Seeking to Expand Human

RightsRights

I see in the near future a crisis approaching that unnerves me and causes me to trembleI see in the near future a crisis approaching that unnerves me and causes me to tremble

for the safety of our country. As a result of the war, corporations have beenfor the safety of our country. As a result of the war, corporations have beenenthroned and an era of corruption in high places will follow, and the money powerenthroned and an era of corruption in high places will follow, and the money powerof the country will endeavor to prolong its reign by working upon the prejudices ofof the country will endeavor to prolong its reign by working upon the prejudices ofthe people until all wealth is aggregated in a few hands, and the Republic isthe people until all wealth is aggregated in a few hands, and the Republic isdestroyed. I feel at this moment more anxiety for the safety of my country than everdestroyed. I feel at this moment more anxiety for the safety of my country than everbefore, even in the midst of war.before, even in the midst of war.

1886: A Turning Point1886: A Turning Point

One of the most importantOne of the most important Supreme Court casesSupreme Court cases waswas Santa Clara County vs. SouthernSanta Clara County vs. SouthernPacific RailroadPacific Railroad

In 1886, the Supreme Court affirmed that a private corporation was a natural person,In 1886, the Supreme Court affirmed that a private corporation was a natural person, entitled to the same rights and protections as human beings under the Bill of Rightsentitled to the same rights and protections as human beings under the Bill of Rights..

TheThe Courts sided with corporationsCourts sided with corporations..

In 1886 alone, federal courts struck down 230 state laws regulating corporations.In 1886 alone, federal courts struck down 230 state laws regulating corporations.

Corporations took advantage of laws written for human beings.Corporations took advantage of laws written for human beings.

The 14th Amendment was passed to protect freed slaves. Of the 307 14th AmendmentThe 14th Amendment was passed to protect freed slaves. Of the 307 14th Amendment

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The Reagan Adm. complied and gave Monsanto rules favored by industry.

In 1992, Monsanto wanted to throw off the regulations and speed food to market.The Bush Adm. created a generous policy of self policing.

ConsequencesConsequences

Public confidence in the government regulatory process is diminished.

Citizen energy has been exhausted while popular outrage has been deflected from thecorporation to government. Corporations get what they want while escapingaccountability.

Example #3: Chapter 11, North American Free Trade Agreement (NAFTA)

WHAT IT DOESWHAT IT DOESExpands the rights of property to include intangible property rights, including currentExpands the rights of property to include intangible property rights, including current

and future profits.and future profits.

Gives corporations the right to sue national governments to protect their anticipatedGives corporations the right to sue national governments to protect their anticipatedprofits from natl, state, or local govt actionsprofits from natl, state, or local govt actions, no matter how legal or for what, no matter how legal or for what purpose they have been taken.purpose they have been taken.

AN EXAMPLEAN EXAMPLE

Metalclad, a US-based waste-disposal corp., sued Mexico for $90 million under Chap. 11Metalclad, a US-based waste-disposal corp., sued Mexico for $90 million under Chap. 11after the town ofafter the town of GuadalcazarGuadalcazar in the Mexican state of San Luis Potosiin the Mexican state of San Luis Potosi refused torefused toissue a permit for a waste-disposal facility on an alluvial stream, deeming it a threatissue a permit for a waste-disposal facility on an alluvial stream, deeming it a threat to the local water supply.to the local water supply. In Aug 2000, a NAFTA tribunal found that Mexico hadIn Aug 2000, a NAFTA tribunal found that Mexico had breached Chap. 11 and awarded Metalclad $16.7 million.breached Chap. 11 and awarded Metalclad $16.7 million. Metalclad then beganMetalclad then began

construction on the facility without having local approvals, claiming assurances fromconstruction on the facility without having local approvals, claiming assurances fromMexico.Mexico. In Oct 2001, the Mexican government dropped its appeal of the NAFTAIn Oct 2001, the Mexican government dropped its appeal of the NAFTAtribunals decisiontribunals decision

WHAT AREWHAT ARE THE CONSEQUENCES?THE CONSEQUENCES?Threat of corporate lawsuits under Chapter 11Threat of corporate lawsuits under Chapter 11 can have a can have a chilling effect on state orchilling effect on state or

local govtslocal govts considering passing laws or regs to protect the environment and publicconsidering passing laws or regs to protect the environment and publichealth.health.

Allows polluting corporations to sue govts to protect their profitsAllows polluting corporations to sue govts to protect their profits;; violates the concept ofviolates the concept ofa free market economya free market economy; and; and undercuts democratic decision making.undercuts democratic decision making.

WHATWHAT CAN BE DONE?CAN BE DONE?Actions to Reassert Popular Sovereignty Over CorporationsActions to Reassert Popular Sovereignty Over Corporations

Confront Corporate Crimes DirectlyConfront Corporate Crimes DirectlyResearch, expose, and educate others about abuses of corporate power and behavior.Research, expose, and educate others about abuses of corporate power and behavior.

Encourage corporate campaigns, shareholder actions, consumer boycotts, and sociallyEncourage corporate campaigns, shareholder actions, consumer boycotts, and sociallyresponsible investment.responsible investment.

End Corporate Pork BarrelEnd Corporate Pork Barrel

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Significantly restrict corporate tax breaks and subsidies.Significantly restrict corporate tax breaks and subsidies.

Encourage Tax ReformEncourage Tax Reform

Shift tax burdens more fairly to corporations and off individual taxpayers.Shift tax burdens more fairly to corporations and off individual taxpayers.

Encourage Campaign Finance ReformEncourage Campaign Finance Reform

Enact substantive campaign finance reform legislation prohibiting corporate campaignEnact substantive campaign finance reform legislation prohibiting corporate campaign

donations.donations.Put the People in Charge of Defining CorporationsPut the People in Charge of Defining CorporationsWrite state/local laws defining and limiting the rights of corporations.Write state/local laws defining and limiting the rights of corporations.

Establish and enforce social and environmental criteria for corporate charters.Establish and enforce social and environmental criteria for corporate charters.

Initiate state Three Strikes and Youre Out charter revocation laws.Initiate state Three Strikes and Youre Out charter revocation laws.

Re-regulate corporate investment through anti-trust legislation.Re-regulate corporate investment through anti-trust legislation.

Change Corporate ChartersChange Corporate ChartersAmend state corporation codes to extend liability and revoke charters of renegadeAmend state corporation codes to extend liability and revoke charters of renegade

corporations.corporations.

Limit Personhood Rights for CorporationsLimit Personhood Rights for Corporations

Challenge the Santa Clara US Supreme Court decision by denying corporate personhoodChallenge the Santa Clara US Supreme Court decision by denying corporate personhood

at the local level and ultimately by a constitutional amendment or a Supreme Courtat the local level and ultimately by a constitutional amendment or a Supreme Court challenge.challenge.

Expand Human Rights in Relation to CorporationsExpand Human Rights in Relation to CorporationsGrant Bill of Rights powers to include employees in corporations (free speech,Grant Bill of Rights powers to include employees in corporations (free speech,freedom of assembly), citizens in shopping malls, etc.freedom of assembly), citizens in shopping malls, etc.

Reassert Citizen Sovereignty in Global EconomReassert Citizen Sovereignty in Global EconomyyTake away corporate rights in trade agreements (NAFTA, GATT, CAFTA, FTAA) andTake away corporate rights in trade agreements (NAFTA, GATT, CAFTA, FTAA) and

re-structure global trade and financial institutions (WTO, IMF, World Bank).re-structure global trade and financial institutions (WTO, IMF, World Bank).

Encourage GrassrootsEncourage GrassrootsPro-Democracy Movement Go beyond tactics challenging one regulation or onePro-Democracy Movement Go beyond tactics challenging one regulation or one

corporation at a time to work with others nationally and internationally to challengecorporation at a time to work with others nationally and internationally to challenge

the rules giving corporations undue power and influence.the rules giving corporations undue power and influence.

Build Sustainable Local CommunitiesBuild Sustainable Local Communities

Encourage (Korten, D. 2001Encourage (Korten, D. 2001):):

Democratic Discussions Promoting a Just Society and an Environmentally SustainableDemocratic Discussions Promoting a Just Society and an Environmentally SustainableEconomyEconomy

Local Currencies & Community BankingLocal Currencies & Community Banking

Community Organic AgricultureCommunity Organic Agriculture

Holistic Health PracticeHolistic Health Practice

Cooperative & Worker Owned FirmsCooperative & Worker Owned Firms

Recycling Local Waste as a ResourceRecycling Local Waste as a Resource

Pedestrian & Bicycle TransportPedestrian & Bicycle Transport

Local Renewable EnergyLocal Renewable Energy

Buy Small & LocalBuy Small & Local

Community ForestryCommunity Forestry

Voluntary SimplicityVoluntary Simplicity

The Corporate Accountability Challenges forThe Corporate Accountability Challenges forCSOsCSOs

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1.1. Confront individual bad actorConfront individual bad actor despoiling and polluting corporations despoiling and polluting corporations via focused,via focused,highly visible campaignshighly visible campaigns..

2.2. Challenge domestic laws and court decisionsChallenge domestic laws and court decisions that unfairly enable all corporations tothat unfairly enable all corporations toexploit the Earth and its inhabitants.exploit the Earth and its inhabitants. Seek passage of laws to hold corporationsSeek passage of laws to hold corporationsaccountableaccountable to citizen defined and government enforced environmental standards.to citizen defined and government enforced environmental standards.

3.3. Join with other movements to challengeJoin with other movements to challenge the unfair trade and capital investment rulesthe unfair trade and capital investment rulesproposed by the WTO, IMF, World Bank.proposed by the WTO, IMF, World Bank.

The struggle for justice should never be abandoned because of the apparentThe struggle for justice should never be abandoned because of the apparent

overwhelming power of those who have the guns and the money and who seemoverwhelming power of those who have the guns and the money and who seeminvincible in their determination to hold on to it. That apparent power has, again andinvincible in their determination to hold on to it. That apparent power has, again andagain, proved vulnerable to human qualitiesagain, proved vulnerable to human qualities

- Historian Howard Zinn- Historian Howard Zinn

We have been fighting fire on the well-worn lines of old-fashioned politics andWe have been fighting fire on the well-worn lines of old-fashioned politics andpolitical economy, regulating corporations, and leaving competition to regulate itself.political economy, regulating corporations, and leaving competition to regulate itself.

But the flames of a new economic revolution run around us, and we turn to find thatBut the flames of a new economic revolution run around us, and we turn to find thatcompetition has killed competition, that corporations are grown greater than thecompetition has killed competition, that corporations are grown greater than the StateState,, and haveand havebred individuals greater than themselvesbred individuals greater than themselves, and that the naked issue of, and that the naked issue ofour time is with property becoming master instead of servantour time is with property becoming master instead of servant

- Henry Demarest Lloyd,- Henry Demarest Lloyd,

Wealth Against Commonwealth, 1894Wealth Against Commonwealth, 1894

Brief Review of Joel Bakans The Corporation.

The introduction is only three pages and sets out the premise of thebook:that

1. the corporation is an institutiona unique structure and set of

imperatives that direct the actions of people within it

2. it is also a legal institution one whose existence and capacity to

operate depend on the law.3. the corporation's legally defined mandate is to pursue,

relentlessly and without exception, its own self interest,regardless of the often harmful consequences it might cause to

others.

Bakan also sets out the structure of the book, and warns that his book

is not an academic study (although in the footnotes and bibliographyhe does cite academic works) and that he is not covering small

corporate organizations such as small businesses, privately-held

companies (large and small) and non-profit organizations (large andsmall). His focus is the large, publicly-traded corporate institution.

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Bakan sets out a brief history of the form of the public corporation and

how it emerged from its early beginnings in the mid-1500s wheretravelling salesmen would sell stock in fictitious companies trying to

take advantage of speculators in London England.

Scandal plagued the corporate form in the early 1700s, when it wasbanned by politicians after stock in the South Sea Company collapsed.

Bakan then discusses the corporation as having the same legal rightsas a person, and how it took advantage of the 14th Amendment,

designed to protect the rights of former slaves in America, to enforce

those rights.Bakan briefly mentions the New Deal after public legitimacy of

corporations was at a low end, and notes that only after the 1970s didcorporations recover their political strength with the election of Ronald

Reagan as President of the United States and Margaret Thatcher as

Prime Minister of England.

Bakan on the power corporations exert in society:

Corporations now govern society, perhaps more than

governments themselves do; yet ironically, it is their very power,

much of which they have gained through economic globalization,that makes them vulnerable. As is true of any ruling institution,

the corporation now attracts mistrust, fear, and demands foraccountability from an increasingly anxious public.

Corporations are using various strategieslumped into the term

"branding"to re-legitimize themselves in the eyes of the public

Bakans argument is that corporations are inherently psychopathic in

nature, provides some examples that purport to support this

argument, and concludes with some recommendations to rein incorporate power and prevent the downfall of civilization as we know it.

The psychopathic designation is derived from the fact that a

corporation, as a legal entity, exists purely to benefit its shareholders.

The way a corporation achieves this is to make profits; it has no otherreason for existence. Bakan compares this with people, who are

typically composed of a mix of self-interest and an altruistic sense ofobligation to others or to society as a whole.

Bakan argues that because executives do not own the profits, they

must act in the interest of the shareholders or the executives will findthemselves sued by the shareholders. This was not always so: Bakan

quotes Henry Ford in 1919 as saying "I do not believe that we shouldmake such awful profits on our cars. A reasonable profit is right, but

not too much."

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He interviews a psychologist, Dr. Robert Hare, who runs through the

DSM criteria for psychopathy and declares that corporations meetthose criteria:

they are singularly self-interested; are irresponsible,

try to manipulate everything; are grandiose;

lack empathy and

have anti-social tendencies;

refuse to accept responsibility;

are unable to feel remorse and

finally relate to others superficially.First, Bakan uses the term corporation to mean a very specific type

of company, the large Anglo-American publicly traded business

corporation. The book mentions companies such as BP, General

Electric, and Pfizer, but does not provide any guidance as to thefundamental difference between the type of corporation he thinks ispsychopathic and the smaller ones or privately-held ones. All such

companies have the same basic form.

Second, the term psychopathic implies that a corporation is aperson in more than just the legal sense. This anthropomorphizing

conjures up the image of a corporation as a being that has its ownthought, feeling, and morality, when in fact it is purely a tool for

structuring a business -- which is how even the author describes it

later in the book. The diagnosis is useless for any sort of analysis,and does little more than grab attention away from the actual guilty

parties in most of Bakans examples: people.

The book presents several examples of how corporations, even thosethat have Corporate Social Responsibility initiatives, still manage to

commit acts that are either illegal or immoral.

In almost all of these examples, however, the actual illegal or immoralact can be traced to one or more people, not the corporations

themselves.Some of the examples, such as the Triangle Shirtwaist fire in 1911,

dont even pertain to corporations -- Triangle was a partnership --

although that particular example is used merely as a lead-in to the factthat sweatshops, which were outlawed after that fire, still exist in the

US today.What the book fails to mention is that those sweatshops are not owned

by corporations, but are typically small businesses. But corporations

buy clothing produced by sweatshops, so of course corporations are toblame.

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Or take the example of the near-coup of the Roosevelt administrationas FDR was engineering the New Deal.

Bakan goes into some detail about it, including naming the people thatwere behind the effort. These were individuals, not corporations --

individuals who represented, or were part of, some very wealthy

families that were not in favor of changing the status quo. Again, theexample fails to support the books premise. This, too, was perhaps

used only for historical context, to introduce the subject of currentweak government regulation of corporations. If so, however, Bakan

could have been clearer about it.

Enron is mentioned multiple times throughout the book. Enron

influenced government regulation to manipulate energy markets andcreate the California electricity crisis. Enron cooked its books to create

fake profits, bilked investors, and went bust. But the root of it all was

people who took advantage of the system. People, not some legalinstrument structuring a business.

And since the corporate form is just a legal instrument, a tool that was

created by laws passed by our governments, it can be changed andregulated by governments.

This is the essence of the final chapter.

Bakan does not advocate abolishing corporations entirely -- that would

not be realistic -- but suggests strengthening the tools we alreadyhave for keeping corporations in check:

1. the regulatory system,2. democratic institutions,

3. public enterprises, and

4. international cooperation.

Throughout history, the wealthy have had power over the less-

wealthy, and they have exerted influence on governments and people.

One could even argue that todays large corporations, because theyhave such broad ownership and serve such a broad customer base, are

less of a worry than the monied interests of past centuries.

Bakan even mentions consumer democracy and shareholder

democracy as being not entirely implausible, but not as effective asdemocratic government regulation in ensuring that societys interests

are being upheld.

Large corporations happen to have the greatest concentration of

economic power in the world today, and it is certainly wise to be wary

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of such power, especially as it impinges on our democracies. However,the book fails to prove that this is uniquely inherent in corporations.

People do bad things, and people who do so that also happen to be in

positions of power (economic or political), can do a lot of damage. This

is nothing new.

SOME POINTS MADE BY J. BAKANSOME POINTS MADE BY J. BAKAN

Why the state continues to be powerful despite growing influence of corporationsWhy the state continues to be powerful despite growing influence of corporations

1. The state is the only institution in the world that can bring a corporation to life.

2. It alone grants corporations their essential rights, such as legal personhood and

limited liability, and it compels them always to put profits first.

3. It raises police forces and armies and builds courthouses and prisons (all

compulsorily paid for by citizens) to enforce corporations' property rightsrightsthemselves created by the state.

4. And only the state, in conjunction with other states, can enter into international

trade deals and create global institutions, such as the World Trade Organization,

that, in turn, limit its ability to regulate the corporations and property rights it has

created.

5. Without the state, the corporation is nothing. Literally nothing.

Incorrect to assume that states have become weaker because corporations areIncorrect to assume that states have become weaker because corporations arenow strongnow strong

It is a mistake to believe that because corporations are now strong, the state has

become weak. Economic globalization and deregulation have diminished the state's

capacity to protect the public interest (through, for example, labor laws, environmental

laws, and consumer protection laws) and have strengthened its power to promote

corporations' interests and facilitate their profit-seeking missions (through, for example,

corporate laws, property and contract laws, copyright laws, and international trade laws).

Overall, however, the state's power has not been reduced. It has been redistributed,

more tightly connected to the needs and interests of corporations and. less so to the

public interest.

As a society we have created a difficult problem for ourselves. We have over the last

three hundred years constructed a remarkably efficient wealth-creating machine, but it is

now out of control.

Bakan offers some general thoughts about how we might move forward.

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1. To begin with, tinkering with corporate governance is not enough.

2. Broader reforms that are unlikely to make corporations more accountable to

society in significant ways include:

tighter restrictions on acquisitions and mergers,

representation of stakeholders (union representatives, for example) on

boards of directors, and

laws that permit or require executives to consider stakeholder interests in

their business decisions (so-called constituency statutes), though desirable,

3. What to do about and with corporations right now remains unsolved.

Vandana Shiva states, a corporation-less future is, for now, too remote a possibility to

plan for. As Harvard Business School pundit Joe Badaracco says, "This institution, the

corporation, is going to be around for a very long period. The corporationthough

vulnerable, as all other dominant institutions have been, in the longer sweep of history

will remain present and powerful in society in at least the medium-range future.

4. What about remaking the corporation, changing it into a non-psychopathicentity?

However, proponents of social responsibility and ethical management

are profoundly limited by the corporation's legal mandate to pursue, without exception,

its own self-interest.

To reform the corporation meaningfully, the corporations legal

mandate would have to be changed. Corporations would have to be reconstituted and be

accountable to broader domains of society than just themselves and their shareholders.

Public-purpose corporations operate in numerous other public-servicedomainstransportation, utilities, broadcasting, and security and rescue services, to

name a few examplesand are, as I suggested in Chapter 4, preferable to for-profit

corporations for delivering key public programs and services.

But should all corporations become public-purpose corporations?

The corporation is an institutional reflection of the principles of laissez

faire capitalism. Changing it must be understood as part of a larger project of economic

change.

TheThe challenge for now is to find ways to control the corporationchallenge for now is to find ways to control the corporation

The challenge for now is to find ways to control the corporation to subject it to

democratic constraints and protect citizens from its dangerous tendencieseven while

we hope and strive in the longer term for a more fully human and democratic economic

order.

Bakan offer the following general prescriptions:

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Improve the regulatory systemImprove the regulatory system

Government regulation should be reconceived, and relegiti-mated, as the

principal means for bringing corporations under democratic control and

ensuring that they respect the interests of citizens, communities, and the

environment.

Regulations should be made more effective by

1. staffing enforcement agencies at realistic levels,

2. setting fines sufficiently high to deter corporations from committing crimes,

3. strengthening the liability of top directors and managers for their corporations'

illegal behaviors,

4. barring repeat offender corporations from government contracts, and

5. suspending the charters of corporations that flagrantly and persistently violate

the public interest.

Regulations designed to protect the environment and people's health

and safety should be based upon the precautionary principle, which prescribes

that corporations be prohibited from acting in ways that are reasonably likely to

cause harm, even if definitive proof that such harm will occur does not exist.

The regulatory system should be reformed to

o improve accountability and

o avoid both "agency capture" and the centralized and bureaucratic tendencies of

current and past regimes.

o Local governmental bodies, such as city councils and school and park boards,

should play greater roles in the regulatory system, as they are often more accessible to

citizens than federal and state agencies and more willing and able to forge allianceswith citizen groups around particular issues (as they have done effectively in relation

to, among other things, restrictions on advertising in schools, urban sprawl, "box"

retailers, and environmentally damaging practices).

The roles of trade unions and other workers' associations in monitoring

and regulating the behavior of corporations should be protected and enhanced,

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as should those of environmental, consumer, human rights, and other organiza-

tions that represent interests and constituencies affected by what corporations

do.

Electoral reforms that would bring new voices into the political system

and encourage disillusioned citizens to return to it, such as proportionalrepresentation, should be pursued.

Create a robust public sphere.Create a robust public sphere.

Social groups and interests judged to be important for the public good or too precious,

vulnerable, or morally sacred to subject to corporate exploitation, should be governed

and protected by public regimes. Inevitably, people will debate

o the extent to which such groups and interests should be immune to corporate

exploitation,

o the kinds of measures that should be used to protect them, and what groups and

interests should be protectedchildren's minds and imaginations, schools,

universities, cultural institutions, water and power utilities, health and welfare

services, police, courts, prisons, firefighters, parks, nature reserves, genes and

other biological materials, and public space are all likely candidatesbut these

are healthy debates to have, far healthier than the increasingly prevalent

presumption that no public interest exists beyond the accumulated financial

interests of individual corporations, consumers, and share holders.

Challenge international neo-liberalism.Challenge international neo-liberalism.

Nations should work together to shift the ideologies and, practices of

international institutions, such as the WTO, IMF, and World Bank, away from market

fundamentalism and its facilitation of deregulation and privatization.

The current ideological biases of these institutions can be reversed or

changed.

Most important, we must remember the most subversive truth of all:

that corporations are our creations. They have no lives, no powers, and no capacities

beyond what we, through our governments, give them.

The example of how a water corporation was deprivatized because of public resistance

and returned to the people of Cochabamba suggests that corporations are not fully

invincible or powerful.

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It may be possible to establish a "social corporation that really involves people in .. .

decision making and [solving] their problems." The nonprofit corporation, with a board

of directors composed of local officials and representatives from unions and professional

associations, is not only transparent, but more just, more efficient, and encouraging of

participation of the people in the solution to their problems.

TWO IMPORTANT POINTS ABOUT CORPORATE RULETWO IMPORTANT POINTS ABOUT CORPORATE RULE

Corporate rule is not inviolableCorporate rule is not inviolable

Corporate rule is not inviolable. When people unite and organize and have faith in

themselves and one another, their dissatisfaction can become a powerful source of

vulnerability for corporations and the governments that support and empower them. No

doubt the corporation is a formidable foe, but, as Olivera says, "small battles, are being

won around the world," including his and the people of Cocha-bamba's. Restoring broad

democratic control over the corporation is a large battle, but it is one that must be fought.

Corporate rule must be challengedCorporate rule must be challenged

Corporate rule must be challenged in order to revive the values and practices it

contradicts:

democracy,

social justice,

equality, and

compassion.

Though individualistic self-interest and consumer desires are core parts of who we are

and nothing to be ashamed about, they are not all of who we are. We also feel deep ties

and commitments to one another, that we share common fates and hopes for a better

world. Humans have organized themselves by and large for vast stretches of what we call

civilization in other ways.

The best argument against corporate rule is to look at who we really are and to

understand how poorly the corporation's tenets reflect us. We only have to remember

who we are and what we are capable of as human beings to reveal how dangerously

distorted is the corporation's order of narrow self-interest.

How does a free people govern themselves is in a sense not all about the corporation,

but about us as human beings ...

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our role on the earth,

our temporal span,

our life span,

what are we to do with ourselves;

how we come together with other people to govern ourselves ... to live in

harmony with other creatures on the earth, to live in harmony with the earth itself, to livein harmony with the future generations ... including the children of men and women who

work in corporations?

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Topic Rise of Corporations Power vs People 2010