The rise of corporate power and wealth in the US

This raises some interesting points about how corporations in the US came to escape restrictions on them and empowered to inflict social and environmental damage with impunity. I do not recall this being taught in public schools, but it probably should be.

--------------------------------------------------------------------------------------------------------------------------------

Reclaim Democracy! writes:

When American colonists declared independence from England in 1776, they also freed themselves from control by English corporations that extracted their wealth and dominated trade. After fighting a revolution to end this exploitation, our country’s founders retained a healthy fear of corporate power and wisely limited corporations exclusively to a business role. Corporations were forbidden from attempting to influence elections, public policy, and other realms of civic society.

Initially, the privilege of incorporation was granted selectively to enable activities that benefited the public, such as construction of roads or canals. Enabling shareholders to profit was seen as a means to that end. The states also imposed conditions (some of which remain on the books, though unused) like these:

• Corporate charters (licenses to exist) were granted for a limited time and could be revoked promptly for violating laws.
• Corporations could engage only in activities necessary to fulfill their chartered purpose.
• Corporations could not own stock in other corporations nor own any property that was not essential to fulfilling their chartered purpose.
• Corporations were often terminated if they exceeded their authority or caused public harm.
• Owners and managers were responsible for criminal acts committed on the job.
• Corporations could not make any political or charitable contributions nor spend money to influence law-making.

For 100 years after the American Revolution, legislators maintained tight control of the corporate chartering process. Because of widespread public opposition, early legislators granted very few corporate charters, and only after debate. Citizens governed corporations by detailing operating conditions not just in charters but also in state constitutions and state laws. Incorporated businesses were prohibited from taking any action that legislators did not specifically allow.

States also limited corporate charters to a set number of years. Unless a legislature renewed an expiring charter, the corporation was dissolved and its assets were divided among shareholders. Citizen authority clauses limited capitalization, debts, land holdings, and sometimes, even profits. They required a company’s accounting books to be turned over to a legislature upon request. The power of large shareholders was limited by scaled voting, so that large and small investors had equal voting rights. Interlocking directorates were outlawed. Shareholders had the right to remove directors at will.

But the men running corporations pressed on. Contests over charter were battles to control labor, resources, community rights, and political sovereignty. More and more frequently, corporations were abusing their charters to become conglomerates and trusts. They converted the nation’s resources and treasures into private fortunes, creating factory systems and company towns. Political power began flowing to absentee owners, rather than community-rooted enterprises.

The industrial age forced a nation of farmers to become wage earners, and they became fearful of unemployment–a new fear that corporations quickly learned to exploit. Company towns arose. and blacklists of labor organizers and workers who spoke up for their rights became common. When workers began to organize, industrialists and bankers hired private armies to keep them in line — sometimes by killing key leaders. They bought newspapers to paint businessmen as heroes and shape public opinion. Corporations bought state legislators, then announced legislators were corrupt and said scrutinizing every corporate operation wasted public resources

Government spending during the Civil War brought these corporations fantastic wealth. Corporate executives paid “borers” to infest Congress and state capitals, bribing elected and appointed officials alike. They pried loose an avalanche of government financial largesse. During this time, legislators were persuaded to give corporations limited liability, decreased citizen authority over them, and extended durations of charters.

Attempts were made to keep strong charter laws in place, but with the courts applying legal doctrines that made protection of corporations and corporate property the center of constitutional law, citizen sovereignty was undermined. As corporations grew stronger, government and the courts became easier prey. They freely reinterpreted the U.S. Constitution and transformed common law doctrines.

One of the most severe blows to citizen authority arose out of the 1886 Supreme Court case of Santa Clara County v. Southern Pacific Railroad. Though the court did not make a ruling on the question of “corporate personhood,” thanks to misleading notes of a clerk, the decision subsequently was used as precedent to hold that a corporation was a “natural person.” (This story was detailed in “The Theft of Human Rights,” a chapter in Thom Hartmann’s Unequal Protection.)

From that point on, the 14th Amendment, enacted to protect rights of freed slaves, was used routinely to grant corporations constitutional “personhood.” Justices have since struck down hundreds of local, state and federal laws enacted to protect people from corporate harm based on this illegitimate premise. Armed with these “rights,” corporations increased control over resources, jobs, commerce, politicians, judges, and the law.

A United States Congressional committee concluded in 1941, “The principal instrument of the concentration of economic power and wealth has been the corporate charter with unlimited power….”

Some observations & commentary

Notice how power and wealth are persistent. They never stop looking for ways to get more, even if it takes centuries. Power and wealth accumulated by corporations have corrupted government and gained great power over citizens. That power often or usually is not used for the benefit of citizens. Instead, it is used to gain more power and wealth for corporations.

I keep harping here on the importance of keeping eyes on the flow of power when radical right American politicians howl about the tyrannical socialist horrors of business regulations. When those politicians deregulate, power usually flows from government and/or citizens to special interests. Power in the form of consumer protections, civil liberties and freedom from corporate deceit does not tend to flow to citizens. It usually flows away from citizens and/or government. 

Right now, our radical right, brass knuckles capitalist Republican Supreme Court is in the process of arrogating power to itself so it can block government efforts to deal with climate change and give state legislatures the power to turn elections into a non-democratic farce. Power flows away from citizens and to political elites and allied corporations who buy those elites.

Republicans in congress want to completely get rid of federal Consumer Finance Protection Bureau because it protects citizens, not corporations. Recent Supreme Court decisions shield corporate political activities behind an impenetrable wall of opacity. That allows for plausible deniability about corporations corrupting government (via campaign contributions, etc.), opposing efforts to deal with climate change, profiting from polluting, and spreading lies in vast propaganda campaigns to deceive the public and politicians. 

And there is this parody of an oil company ad pretending to care about climate change, in the initial ~1:40 of the video:

Acknowledgement: Thanks to Freeze Peach for bringing this article to my attention.