Corporation Nation

1. The Unnamed Problem: Corporate Ascendancy Erodes Democracy

"Corporation Nation is the single best explanation of how big corporations have usurped the power of ordinary citizens and government—and pose a fundamental threat to our democracy and economic security."

A pervasive insecurity. Many Americans today face an "unnamed problem" – a growing sense of powerlessness and insecurity, even in well-paying jobs, stemming from forces beyond their control. This apprehension is veiled by a "corporate mystique," an ideology that disguises the quiet but profound shift of sovereignty from citizens to vast, publicly unaccountable corporate institutions. This corporate ascendancy is shaking the very roots of our democracy.

Giants among nations. Our social landscape is now dominated by corporations larger and more powerful than most countries. These entities are not just capturing global markets for traditional products but are invading traditionally public sectors like medicine, education, social services, and law enforcement. This signifies a fundamental reordering of society, where corporate administration touches nearly every sphere of American life.

Personal identity reshaped. The corporate order profoundly shapes personal identity, molding our morality and material lives through corporate-owned media, education curricula, and consumer goods. This deep involvement means that one's sense of self-respect and moral integrity is inextricably linked to how one is situated within this corporate world, making the issue of corporate power deeply personal for every citizen.

2. The New Gilded Age: Unchecked Corporate Power Returns

"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country... corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."

Echoes of the past. The current era mirrors the Gilded Age (post-Civil War to early 20th century) in its explosive change, fierce competition, and mass mergers. Then, as now, it was a time of:

• Accumulation of vast wealth alongside overwhelming poverty.
• "Robber barons" (Rockefeller, Carnegie) who knit business into national fiefdoms.
• Radical restructuring of the economy with dynamic technical progress.

Information Age barons. Today's "new establishment" – leaders of global media, technology, and finance like Bill Gates and Rupert Murdoch – wield power far exceeding their Gilded Age predecessors. While less charismatic, they preside over supercharged corporate systems that are remembered for their irresponsibility, reshaping not just the economy but also politics and morals.

The corporate web. Both eras saw the formation of intricate corporate webs of interlocking board directorships, strategic alliances, and contracting networks. This web, then and now, expands economic cooperation while concentrating power, allowing dominant competitors to become intimate partners. This entanglement brings the promise of wealth but also permanent economic insecurity and mass poverty for many.

3. The Corporate Mystique: An Illusion of Private Enterprise

"The corporate mystique is a symbolic universe of ideas and laws that has become almost universally accepted in American life—a way of thinking that both venerates and disguises corporate ascendancy."

A historical reversal. The core of the corporate mystique is the belief that corporations are purely private enterprises, a notion deeply embedded in American law and popular imagination. However, this is a historical anomaly. In early America, corporations were explicitly public institutions, created by state charters to serve the public interest, with strict limits on their duration, activities, and assets, and subject to revocation if they failed their public mission.

The Gilded Age transformation. The robber barons, through vast economic and political influence, radically privatized the corporation. Legal theorists redefined corporations from "creatures of the state" to "natural entities" formed by voluntary contracts among private persons. This shift was cemented by the Supreme Court's 1886 Santa Clara case, which declared corporations as "legal persons" entitled to the same constitutional due process rights as individuals, effectively equating corporate liberty with individual freedom.

Privatization as legal fiction. This privatization was largely a legal fiction, designed to appeal to public imagination and strip away accountability. States, competing for corporate revenue, dismantled restrictive charters, leading to a "race to the bottom" where states like New Jersey and Delaware offered increasingly permissive incorporation laws. This process institutionalized corporate rule, freeing business from legislative control and popular sovereignty, and establishing the corporate mystique as the dominant ideology.

4. Corporate Dependency: Government as a Silent Partner

"Corporations collect more government handouts than all of the nation's poor people combined."

The paradox of privatism. Despite the rhetoric of private enterprise, modern corporations are profoundly dependent on government support, making them undeniably public creatures with unacknowledged public responsibilities. This reliance, often termed "corporate welfare," involves billions of dollars in public subsidies and tax breaks, which are not merely padding profits but providing institutionalized life support for chronically dependent corporations.

An iceberg of support. Corporate welfare is just the visible tip of a massive "iceberg of corporate dependency." Governments spend billions on:

• Social Capital: Educating the workforce, building infrastructure (roads, ports), funding corporate R&D.
• Military & Foreign Policy: Protecting and promoting exports and foreign markets.
• Social Programs: Dissipating social unrest that could threaten corporate power.
• Tax Policies: Corporate tax burden fell from 35% in 1945 to a projected 11% in 2000.

Buying political influence. This deep dependency is compounded by corporations' massive political influence. Billions in corporate campaign contributions buy significant sway over public policy, effectively allowing corporations to help set the agenda for both political parties. This "massive purchase of government influence" is a transparent exercise of public power, further blurring the lines between government and business and demanding greater public accountability.

5. The Waning of Countervailing Forces: Labor, Government, and Globalism

"The social disuniting of America is the most important parallel between the Gilded Age and today. We may have a much larger and more affluent middle class today, as well as some safety nets that did not exist a hundred years ago. America's class structure and standard of living have changed dramatically. But once again today we are in the grip of a perverse form of economic growth that polarizes America into increasingly separate worlds."

Erosion of checks and balances. The current era is defined by a significant decline in the "countervailing powers" (unions, government, consumers, suppliers) that historically kept corporations in check. This marks a return to the Gilded Age model where corporate power was largely unchecked. The New Deal era had seen a strengthening of these forces, but recent decades have reversed this trend.

Labor's decline. The most visible sign is the precipitous fall of labor unions, from 34% of the workforce in 1954 to 15% today. This decline was fueled by:

• Globalization and automation: Weakening unions severely.
• Systematic anti-labor campaigns: Corporations breaking contracts, demanding concessions, and engaging in union-busting.
• Government hostility: Reagan's assault on PATCO and subsequent administrations siding with corporations.

Government as corporate booster. While the regulatory state remains, its role has shifted from an aggressive counterweight to a corporate advocate. Administrations, including Clinton's, have embraced corporate agendas like balanced budgets, free trade, and privatization. This erosion of governmental countervailing power, coupled with the immense mobility of global capital, leaves national governments vulnerable to corporate threats of relocation, further jeopardizing public control.

6. The Anxious Class: Corporate Strategies and Economic Insecurity

"What is disappearing... is the very thing itself: the job. That much sought after, much maligned social entity, a job, is vanishing like a species that has outlived its evolutionary time."

A new era of anxiety. Millions of Americans, from blue-collar workers to professionals, now belong to an "anxious class," facing unprecedented economic insecurity, stagnant wages, and the constant threat of job loss. This anxiety stems from the unraveling of the post-New Deal social contract, which had established long-term responsibilities and protections for employees.

Job genocide and virtual corporations. Corporations are systematically dismantling the traditional "job" through strategies like:

• Downsizing: Eliminating millions of permanent positions.
• Outsourcing: Contracting out core business functions (e.g., Nike producing no shoes itself).
• Contingent Labor: Replacing permanent jobs with temporary, leased, or part-time workers.
  • These workers often lack benefits, receive lower wages, and have minimal legal protections.
  • This strategy effectively evades labor laws and union contracts.

The "low road" to competitiveness. While corporations often justify these practices as necessary for global competitiveness, evidence suggests that downsizing and outsourcing do not consistently increase profitability in the long term. Instead, these "low-road" strategies primarily serve to:

• Shift risks and costs from corporations to workers.
• Consolidate corporate power by undermining labor's ability to organize and assert rights.
• Increase executive compensation and short-term profits at the expense of broader societal well-being.

7. Why We Don't Act: Diversion, Dependence, and Disempowerment

"There is something unnatural about not thinking about the most powerful forces in our lives."

A trained incapacity. Americans are largely disinclined to critically examine corporate power, a "trained incapacity" rooted in several factors. The "politics of diversion" constantly blames "big government" as the primary threat to liberty, a historical legacy from the Founding Fathers. This distracts from the real problem of corporate dominance and undermines the most important check on corporate power.

Creature comforts and dependence. Americans feel profound gratitude and dependence on corporations for the "creature comforts" and material well-being that define the American Dream. The thought of criticizing corporations feels like a threat to prosperity, making people reluctant to question the system that delivers so many goods and conveniences. This perception, while not entirely false, overlooks the devastating societal costs of unchecked corporate power.

Apathy and lack of alternatives. The collapse of communism and the perceived struggles of alternative capitalist models (Japan, Germany) have fostered a sense that "there is no exit" from the current corporate order. This, combined with the sheer immensity of corporate power, leads to a "couch-potato syndrome" – a feeling of disempowerment and apathy that discourages collective action and critical thinking about systemic change.

8. Positive Populism: Reclaiming Democracy and Redefining Business

"A positive populism will have to begin with an appreciation of the remarkable successes of the corporation. Corporate America, by delivering the goods as discussed in the last chapter, has earned a measure of the gratitude and appreciation most Americans feel."

A new path forward. Positive populism is an emerging social movement that seeks to challenge corporate ascendancy without demonizing business or threatening prosperity. It acknowledges the benefits corporations have brought but insists on reasserting public sovereignty and democratizing business. This approach aims to move beyond the limitations of traditional liberal and conservative debates, which often obscure the fundamental questions of power and democracy.

High road vs. low road. This movement advocates for a "high-road" corporate strategy that invests in workers, respects communities, and protects the environment, arguing that such practices can be more profitable in the long run than "low-road" strategies of cost-cutting and risk-shifting. It seeks to leverage the growing internal contradictions within corporate America, where some leaders recognize the value of social responsibility.

Beyond corporate responsibility. While the corporate social responsibility movement is a positive step, it is often limited by its top-down nature and failure to challenge fundamental power structures. Positive populism goes further by:

• Creating a national dialogue on market morality.
• Empowering all stakeholders, not just shareholders.
• Rechartering corporations as public entities.
• Promoting employee ownership and cooperatives.
• Rewriting the rules of the economic and political environment.

9. Democratizing the Corporation: Stakeholders, Charters, and Ownership

"As long as corporate directors owe their fiduciary responsibility to shareholders alone, there is little chance that any corporation can serve the public interest, no matter how saintly the chief executive."

Beyond shareholder primacy. The American model of shareholder capitalism legally mandates that corporations prioritize shareholder interests above all else. Positive populism advocates for a "stakeholder capitalism" model, where corporations are legally directed to recognize the interests of all who contribute to and are affected by the firm, including:

• Workers (investing labor and skills).
• Customers.
• Communities.
• Governments.
  This moves towards a "public corporation" model, making business legally accountable to a wider array of social groups.

Rechartering the public corporation. A new system of corporate chartering is essential to redefine corporations as public entities. This would involve:

• Federal Charters: For large corporations, to ensure uniform national standards and prevent states from competing to offer lax regulations.
• Public Purpose: Charters would explicitly define corporations' public purposes (e.g., environmental respect, dignified employment).
• Accountability: Periodic public reviews of corporate adherence to charters and re-examination of corporate "constitutional rights" (e.g., free speech for campaign finance).

Employee ownership and cooperatives. Empowering workers with real ownership is a cornerstone of economic democracy. Employee Stock Ownership Plans (ESOPs) and worker cooperatives (like Mondragon in Spain) offer models where:

• Workers have a formal voice and real decision-making authority.
• Ownership is linked to work, not just financial investment.
• Businesses can succeed by prioritizing worker well-being and community roots, demonstrating that democratic ownership can increase both prosperity and social good.

10. Global Populism: Rewriting the Rules of the World Economy

"Globalization is inevitable, but the kind of globalism we ultimately will live under is still up for grabs."

Challenging the shadow government. Globalization, while inevitable, is currently shaped by a "shadow economic government" of global institutions like the WTO and IMF, largely governed by political and corporate elites. These bodies, along with treaties like the proposed Multilateral Agreement on Investments (MAI), quietly assume sovereign powers that deeply affect national laws and public accountability, often prioritizing corporate investment rights over labor and environmental protections.

Democratizing global governance. Positive populism aims to democratize this global architecture, not dismantle it. This involves:

• Regulating Capital Movements: Implementing transaction taxes (Tobin tax) to limit speculative capital flows and give nations more control over their economies.
• Broadening Political Actors: Ensuring labor, environmental, and human rights representatives have a voice in global institutions like the WTO and IMF.
• Global Social Charters: Developing international codes of conduct and charters (like the European Social Charter) that set minimum labor, health, safety, and environmental standards, preventing a "race to the bottom."

A race to the top. The ultimate goal is to transform globalization into a "race to the top," where corporations compete by motivating and educating their workforce, rather than by exploiting cheap labor or lax environmental standards. This requires a global populist movement that works across borders, challenging corporate power while recognizing that a more just global order can benefit both businesses and individuals worldwide.

11. Beyond Personal Responsibility: The Need for Systemic Change

"Psychological moral empowerment doesn't necessarily help us to understand the economic and political arrangements that have contributed to the problems of both our pocketbooks and our spirit. Spiritual enlightenment is not the same thing as political understanding."

The limits of individual morality. In times of spiritual malaise, Americans often turn to a "politics of personal responsibility," emphasizing individual moral transformation. While sincere and emotionally resonant, this approach, championed by figures from the Christian Right to Bill Clinton, often deflects attention from the systemic corporate and market forces that contribute to moral decline, economic insecurity, and social breakdown.

Corporate roots of spiritual crisis. Corporate ascendancy fuels spiritual decline through:

• Hypermaterialism: Promoting "shop till you drop" culture, equating wealth with virtue.
• Hyperindividualism: Downsizing and disposable labor foster a "survival of the fittest" mentality, eroding trust and community.
• Family Instability: Financial pressures and longer working hours strain marriages and parent-child relationships, with corporations increasingly socializing children with market values.
• Community Decay: Corporate mobility and disinvestment rip the fabric of local communities, breeding spiritual anomie.
• Erosion of Democracy: Corporate money in politics and the siphoning of public power numb moral sensibilities and sap civic participation.

From therapy to politics. While personal empowerment and moral revival are crucial, they are not substitutes for political education and action. The "politics of personal responsibility" often remains therapeutic, focusing on individual growth rather than challenging the institutional arrangements that perpetuate injustice. True moral transformation requires changing the codes and practices of corporations and governments, not just individuals. A positive populist movement must translate personal hope into collective action, demanding systemic changes to create a more just and democratic society.