March 11, 2011

Corporations Are Anti-Democratic


Lewis Powell’s 1971 strategy memo for a renewed corporate assault on democracy included the call for corporations to subvert the polity by using their wealth to become the dominant political speakers themselves. The plan was to directly buy the government, which would then destroy democracy and politics from above.

But one should not postpone more direct political action, while awaiting the gradual change in public opinion to be effected through education and information. Business must learn the lesson, long ago learned by labor and other self-interest groups. This is the lesson that political power is necessary; that such power must be assidously (sic) cultivated; and that when necessary, it must be used aggressively and with determination — without embarrassment and without the reluctance which has been so characteristic of American business.

As unwelcome as it may be to the Chamber, it should consider assuming a broader and more vigorous role in the political arena.

The tried and true weapon of corporate constitutional “rights” would be helpful here.

Neglected Opportunity in the Courts
American business and the enterprise system have been affected as much by the courts as by the executive and legislative branches of government. Under our constitutional system, especially with an activist-minded Supreme Court, the judiciary may be the most important instrument for social, economic and political change…….

This is a vast area of opportunity for the Chamber, if it is willing to undertake the role of spokesman for American business and if, in turn, business is willing to provide the funds.

As with respect to scholars and speakers, the Chamber would need a highly competent staff of lawyers. In special situations it should be authorized to engage, to appear as counsel amicus in the Supreme Court, lawyers of national standing and reputation. The greatest care should be exercised in selecting the cases in which to participate, or the suits to institute. But the opportunity merits the necessary effort.

Powell himself was soon on the SCOTUS, leading an ecumenical (conservative and liberal) charge to empower corporate rule. The big modern breakthrough was Buckley v. Valeo (1976), which said, in a nutshell, money = speech, for constitutional purposes. There we’re already at the end of any democratic or political principle. It’s on the same ideological wavelength as Lochner (by definition a contract is 100% voluntary, and there’s no such thing as economic coercion) and Law and Economics (law should directly calculate what would be in the interest of the biggest property-holder and support him). There can be no debate with a proposition like “money = speech”; it’s the direct enshrinement of corruption, bribery, extortion. The ideology I sketched in this paragraph is nothing but the ideology of kleptocracy in the most literal sense. (I discussed in an earlier post how by definition corporate speech has to seek political corruption. If it didn’t, it would be a dereliction of the duty of corporate management to shareholders.)
(If one wanted to say that as long as concentrated wealth exists it would be somehow “unfair” or at any rate unworkable to not give it special rights, then the answer must be to dissolve the wealth concentrations. But it’s absurd and malign to say that because Might exists, it has to be declared Right in principle. So long as Might has the prerogative of its strength, it will do what it wants. But that’s no reason for human beings to submit in their souls and collaborate to the extent of calling it anything but criminality. If the system was too corrupt and cowardly to condemn corporate power and the power of concentrated wealth as crime, then that means we must include the system in the condemnation. The anti-democratic work of the SCOTUS simply proves the SCOTUS has no legitimacy.)
As usual the SCOTUS moved incrementally. Buckley applied to human candidates buying elections for themselves. Two years later in First National Bank of Boston v. Bellotti the court extended political speech rights to corporations. Soon there would be a menagerie of cases refining this fraudulent corporate speech right, always in the corporation’s favor.
How did the SCOTUS justify legalizing corruption? Is this strict or loose jurisprudence? Activist or passive? The answer is that it’s all of these at the same time, by design. The SCOTUS set up a heads-I-win-tails-you-lose double standard for its interpretations. As Ted Nace describes (chapter 13, p. 185):

These decisions placed two serious obstacles in the path of campaign
finance reform. First, the Court interpreted very broadly the connection
between corporate political spending and free speech, thus
setting a high constitutional bar in front of any efforts to restrict political
spending. Second, the Court interpreted very narrowly the issue of
corruption, making it difficult for reformers to use systemic corruption
(as opposed to direct favor trading or quid pro quo corruption). Together,
these two obstacles have drastically narrowed the ability of state
and federal legislatures to deal with the overwhelming influence of
corporate money in the political process.

Just as with the original whack-a-mole of justifications for corporate rights in themselves, so with the newly invented corporate speech right, and “speech = money” in general, the corrupt courts had to keep dodging and weaving and spinning and distorting in order to prop up a jurisprudential rationale at all, while they had to keep issuing often mutually contradictory decisions. Thus the proclaimed First Amendment rationale in Bellotti was to maximize the amount of speech available to the public. (I’ll leave aside for now how empowering money directly contradicts this rationale, but I discussed it further in my post on constitution and process liberalism.)
But it wasn’t long before the predictable result was in: Corporate money was drowning out non-corporate speech. Now some locales enacted regulations intended to maximize speech (the court’s own rationale) by piggybacking it on corporate speech. For example, the California Public Utilities Commission required the monopoly utility to include conservation materials with its bills. A clear cut case of leveling the speech playing field and increasing the amount of information available to the public, right?
But now it was the corporation who balked at speech. Suddenly maximizing speech was bad. The SCOTUS was eager to please. In Pacific Gas and Electric v. Public Utilities Commission (1986) it invented a brand new corporate right, “negative free speech”. The corporation cannot be “forced” to associate with speech of which it disapproves, even where it exercises a monopoly, even where that monopoly has been explicitly enshrined by government. The court found that a corporation, alleged bearer of First Amendment rights insofar as those rights serve to maximize speech, can deploy the same right to stifle speech wherever it chooses. Suddenly, without warning, maximizing speech was no longer the court’s rationale.
If there’s to be negative free speech, isn’t the prior speech right that of democracy itself? The formula should run: A law or rule restricting corporate speech = democracy not wishing to be associated with predatory corporate speech.
So what was the new SCOTUS rationale? Although not formally elucidated, it boils down to: Corporate management decides (Nace 200) what level and kind of speech the public should receive. The courts should validate these decisions, and state legislatures must not interfere with them. (Citizens United extended this to the federal government.) We see again the Law and Economics style of calculus, the refined neo-Lochnerism.
With this radical anti-democratic, anti-political result, we see the culmination of two major threads of the corporate coup going back to the postbellum 19th century: The extension of corporate rights (redistributing power from democracy to corporations) and the shift of power from shareholders to management within the corporation.
As Nace put it (p. 202)

Like a myopic Dr. Frankenstein, the Court had worked piecemeal
and haphazardly, grafting a finger here, an eyebrow there, until the result
was a full-fledged legal super-person. Yet only sporadically, in dissents
interspersed across the decades, was there an explicit recognition
that the cumulative impact of its decisions was to tie the hands of legislative
bodies seeking to control corporate power. In general, the Justices
displayed no awareness that the Supreme Court’s creation of a corporate
bill of rights amounted to an immense transfer of power from democratic
institutions to private ones. The process was not driven by any
overarching theoryto this day, the Court has yet to lay out any consistent
rationale to support its creation of the corporate bill of rights. On
the contrary, the process has been muddled and blurry, a perfect illustration
of the Orwellian ability of large, unaccountable institutions to bend
even ordinary language into a tool to serve their own needsthe gravitational
force exerted by power. Far from laying orderly tracks, that
force of power seemed to operate between the cracks of reason, leaving
in its wake only muddled, blurry traces.

And as we saw in discussing the reality of the “transparent veil” concept, this “corporation” is nothing but a gang of regular people, convened to commit crimes, and receiving a special charter to do so with impunity.
Clearly, for Powell and the SCOTUS, and for all corporatists, the right decision and result is by definition the pro-corporate one, and then they invent an ad hoc rationale for it.
We anti-corporatists, on the other hand, are always consistent in our correct appeal to the authority of:
1. Common sense and the simple morality of democratic principles.
2. The actual history of the American Revolution.
3. The text of the Constitution.
4. The empirical evidence of all subsequent history.
The enemy has nothing to back them up but their criminal greed. 
This combination of the monstrous concentration of sociopathic corporate power in itself, with a government which has worked assiduously to abdicate its own claim to embody sovereignty in favor of becoming corporate bagman and hired goon, has brought our politics to endangerment of becoming extinguished forever. It will be the death of democracy unless we fight back with a new vision for a redeemed and expanded democracy. This is the affirmative need.
On the negative side, we must abolish corporations, which are inherently anti-democratic and anti-political, and a clear and present danger to democratic institutions in practice and in principle.


  1. There are number of evils that exist in capitalism. They’re not evil necessarily because of their mere existence, but because of the degree to which they distort the social fabric of human society. Thes “evils” can be controlled to reduce/minimize distortion to the point where the benefit outweighs the cost.

    Because the people that comprise them are not inherently evil, corporations themselves are not inherently evil, and to the extent that they are made subservient to the democratic and political process, corporations’ inherent anti-democratic nature is irrelevant. If you control the size of corporations to prevent their tyranny, they can be put into productive use.

    I will take the time over the weekend to post up Henry Simons’ approach to dealing with the evils of corporations, which I think is a pretty interesting proposal. The excommunicated neoliberal understood that size begets power and that too much power begets tyranny, regardless of whether states or corporations wield that power.

    FYI – I spent an hour of my day this afternoon helping a client, a small venture backed start-up, plan for a negotiation with a giant company. Both are corporations. My task was to help the board of directors (all VCs) understand the company’s options in the negotiation.

    I can guarantee you that nobody in that room (except me) has ever stopped for a moment and thought about the kinds of things Russ is talking about in this post and elsewhere. And believe me, these are some of the nicest people you’d ever want to meet (it is certainly the most ego-free board I’ve ever been around).

    Maybe, when they’re bigger, they’ll convene to commit crimes, but right now they just want to build a more energy-efficient product that will make people’s lives better (by ameliorating Peak Energy/Oil), and to make some money doing so. The founder and CTO was particularly gracious in offering to spend as much time with me as I thought I needed (and I ain’t cheap) to understand the technology enough to help in the negotiation. He wants to see his brainchild be the next big thing. More than money, that’s what he wants.

    And this ties us back into Paul’s “value system” concept. I’ve met very few people in life that I’d call “evil.” Most people want the same thing, which includes others caring about them. The real issue is to normalize a value system across all strata in society to destratify it. The inequality that the neoliberal value sytstem breeds reinforces the stratification that makes it so hard to see that we’re all pretty much the same except within a narrow band of innate ability and motivation that can make a huge difference in what each of us can do, but that can makec no difference in what each of us is truly worth as a member of society.

    When the amount of money you make (I won’t say earn) is the metric of being a productive member of society, society is doomed.

    Comment by Tao Jonesing — March 11, 2011 @ 11:00 pm

    • Yes, people can still have good intentions when they’re starting out small. Even corporations can start out that way, not to mention how decent people may be coerced by the system to incorporate.

      In everything I say I’m referring to:

      1. Big corporations.

      2. The inherent tendency of all corporations to Get Big or Get Out. (In the kind words of Nixon’s agriculture secretary.)

      (Nace tells a typical story. He started his business, ran it for awhile as a family affair. It got bigger, at which point his accountant matter-of-factly told him, “time to incorporate”; at your size the tax system etc. favors corporations over sole proprietorships. He continued this corporation for a while, it got bigger. Then, although he’s cryptic about why, he decided he’d better Get Out. So he sold out to a big corporation, and that was that. Textbook.)

      As I’ve written, I think this is the inherent tendency of everything in this system. On the other hand, if we could transform the system, it would no longer be a system which encouraged/forced people to incorporate in order to “compete”.

      As for the ability of the existing system to reform itself, and the prospect going forward if we continue the war of attrition (i.e. even if by some ephemeral miracle real reform were to be temporarily undertaken), I don’t think that’s possible, nor would it be desirable even if possible. It’s not desirable because we shouldn’t be willing to settle for that permanent war of attrition, even if brief victories were still possible.

      I think all the good things you cite can be accomplished far better in the absence of the corporate form. The kinds of projects which require immense capitalization* should be socially cooperatve efforts anyway, not profit-seeking ventures. We already been through the inherent evils of that, starting way back with the railroads.

      (When I refer to “evil” in this context I mostly mean the structure itself, not necessarily any particular individual. Although like I said in the sociopathy post, a sociopathic system selects for innately sociopathic personnel. So that concentrates.)

      I look forward to reading your post.

      *That is, if such projects could still exist going forward, post-Peak Oil and without corporate welfare; I think only the latter still renders any of them possible. Can anyone give a counterexample?

      Comment by Russ — March 12, 2011 @ 4:03 am

  2. I will continue our exchange about political action and the use of symbolism here.

    Mr. Powell wrote:

    “This setting of the “rich” against the “poor,” of business against the people, is the cheapest and most dangerous kind of politics.”

    Shame on you Russ for dealing in cheap and dirty politics! Ha ha ha! But no, really, I think politics is a game of ego and the only way to win is not to play.

    Kevin Carson writes:

    “I think ignoring the law and developing countermeasures against
    enforcement are a much more cost-effective use of resources than
    political action to repeal it.”

    Maybe he’s talking about specific laws here and would be in favor of constitutional amendments. My basic position is that a change of behavior due to an internal transformation of consciousness is meaningful whereas trying to restrict behavior externally with laws is illusory. Man-made laws get broken the very moment any person finds them to be inconvenient. If you really want ‘rule of law’ then stick with the laws of physics (they enforce themselves, he he).

    As for invoking the myths of the American revolution, I’d rather see people look forward to the future rather than back into the past. Here again, we are talking about an active change of mind vs. the worship of the dead and their traditions. Here’s what you get when you go whole hog with the symbolism:


    Comment by Karl — March 12, 2011 @ 3:15 am

    • I agree with Carson about reformism in general. However, I’m not a purist where it comes to any particular tactic. As I’ve written before, I think carefully targeted pressure on the system can still sometimes achieve results, although I’ll grant the evidence for that becomes more threadbare with each passing year. (The best recent example I can think of is that on account of grassroots pressure the Food Control bill ended up being not as bad as it could have been. The final version was an improvement over the 2009 House version. But it’s still very bad.)

      I agree completely that attempting restrictions of things with laws does not work. That’s why I say we need to abolish corporations, not try to reform them. (Although I can go along with e.g. an amendment to abolish corporate personhood, even though from my point of view that’s reformism.)

      It’s the difference between the government legally recognizing something and then trying to constrain it, as opposed to not recognizing it in the first place.

      Another example is how I don’t want something like CDS reform or derivatives reform. I don’t seek a law to try to control Goldman Sachs and its contracts. I simply want one big bucket law which would declare any such contract as unrecognizable, period.

      I appreciate your desire to look only to the future and not at all to the past. But the evidence of history is that that’s not possible. Most people, and any mass of people, need some sense of grounding in the past. No revolutionary movement failed to make such an appeal. The American Revolution itself, at least for the consumption of intellectuals, appealed to the mythical-historical Anglo-Saxon democracy of the Witan Moot, something allegedly destroyed by the Norman Conquest, which was in turn the source of the tyrannical, alien British monarchy.

      I don’t propose to dredge up the Anglo-Saxons, but I’ll certainly do all I can to conjure the Spirit of ’76. That’s an ideological battleground which has to be won.

      Besides, it’s historical fact and philosophical truth that democratic ideals and anti-corporatism follow from the original Revolution. So why wouldn’t one demand its heritage as one’s birthright? That’s yet another thing the criminals are trying to steal.

      Comment by Russ — March 12, 2011 @ 4:22 am

    • I don’t know if you saw this post:


      but it discusses the same idea of solving problems through refusing to grant legitimacy to their sources.

      Comment by Russ — March 12, 2011 @ 5:27 am

  3. […] […]

    Pingback by Corporatism is Legalized Crime « Volatility — March 14, 2011 @ 5:35 am

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