The People's Business

1. Corporations: Artificial Entities, Not Natural Persons

"The State need not permit its own creation to consume it."

Corporations are legal fictions. Unlike human beings, corporations are not natural phenomena; they are abstract legal forms created by state governments. Originally, these charters were granted for specific public purposes, such as building infrastructure, and came with strict limits on size, lifespan, and activities. This historical context underscores that a corporation's existence is a privilege, not an inherent right.

Erosion of public control. Over the 19th century, states gradually loosened these controls, moving from special charters to general incorporation laws that allowed anyone to incorporate with minimal rules. This shift, coupled with the introduction of limited liability for investors, distanced owners from corporate operations and removed crucial accountability mechanisms. The result was a proliferation of corporations with immense power but little public oversight.

Reasserting state authority. The document argues that states retain the power to revoke corporate charters, a woefully underused authority. For instance, anti-tobacco activists incorporated "Licensed to Kill, Inc." to highlight how easily charters are granted, even for purposes detrimental to public health. Reinstating charter revocation as a serious consequence for corporate misconduct would remind corporations that their legitimacy stems from serving the public good.

2. Constitutional Rights: A Corporate Power Grab

"The inherent worth of the speech in terms of its capacity for informing the public does not depend upon the identity of its sources, whether corporation, association, union, or individual."

Rights for people, not entities. The Bill of Rights was designed to protect the freedoms of living, breathing citizens, essential for a functioning democracy. However, corporations have successfully claimed constitutional protections, such as freedom of speech and privacy, to undermine laws designed to regulate their behavior and protect the public interest. This legal "personhood" for corporations is a dangerous fiction.

First Amendment abuses. Corporations use free speech claims to challenge regulations on advertising, even for harmful products like tobacco. The Supreme Court's Central Hudson and Lorillard Tobacco rulings set a high bar for restricting commercial speech, prioritizing corporate communication over public health. This allows corporate voices, backed by billions in advertising, to drown out citizen voices in the marketplace of ideas.

Fourth and Fifth Amendment challenges. Corporations also invoke Fourth Amendment privacy rights to obstruct safety and environmental inspections, and Fifth Amendment "takings" clauses to demand compensation for regulations that reduce potential profits. This legal strategy elevates corporate profit over public safety and environmental protection, as seen in the Philip Morris v. Reilly case where a tobacco company successfully argued that disclosing product ingredients was an unconstitutional "taking" of trade secrets.

3. Shareholder Primacy: The Profit-First Imperative

"A business corporation is organized and carried on primarily for the profit of stockholders. The powers of the directors are to be used for that end."

The core mandate. Corporate law, particularly as interpreted in cases like Dodge v. Ford Motor Co., dictates that directors must run corporations primarily to maximize shareholder profit. This doctrine, known as "shareholder primacy," forces managers to prioritize financial returns above all else, often at the expense of workers, communities, the environment, and even long-term company stability.

Destructive consequences. This relentless pursuit of profit leads to decisions that externalize costs onto society. Examples include:

• Ford Pinto: A $10 fuel-tank redesign to save lives was deemed not cost-effective.
• General Motors: Fixing a gas tank defect was less profitable than settling lawsuits for fatalities.
• Pollution: Companies may violate environmental laws if penalties are less than compliance costs.
• Job cuts: Laying off thousands of employees is often seen as a necessary step to boost short-term profits.

Short-term focus. The rise of mutual funds and rapid stock turnover rates (the average holding period for a share is now less than one year) intensifies pressure on managers to deliver strong quarterly earnings. This short-term focus discourages long-term investments in sustainable practices, employee well-being, or research and development, even if these would benefit the company and society in the long run.

4. Deregulation: A Recipe for Market Manipulation

"America has painfully learned what happens when deregulation is applied to an industry with inelastic supply and demand, high capital costs and prohibitively expensive transaction costs."

The illusion of free markets. Deregulation, championed by corporations and their allies, promised greater efficiency and lower prices by removing government oversight. However, in essential sectors like electricity, telecommunications, and banking, deregulation often led to market manipulation, price spikes, reduced service quality, and increased instability, demonstrating that markets require rules to function effectively.

California's energy crisis. The California electricity crisis of 2000-2001 is a stark example. Deregulation allowed power companies like Enron to withhold supply, create artificial shortages, and gouge consumers, leading to massive debt for the state. This proved that without structural barriers and price controls, corporations will exploit essential services for profit, rather than ensuring reliable and affordable access.

Telecommunications and banking failures. Telecom deregulation led to a stunning misallocation of capital, with billions wasted on excess capacity, followed by massive job losses and stock market losses. Cable rates soared due to lack of real competition. In banking, the repeal of Glass-Steagall, which separated commercial and investment banking, fueled conflicts of interest that contributed to the 2008 financial crisis, as banks pushed risky investments while underwriting securities for failing companies.

5. Monopoly Power: Stifling Competition and Innovation

"The bigger the corporation in size of assets or the larger its market share, the higher its rate of profit."

Concentration's costs. While corporations often claim mergers create efficiencies, unchecked consolidation leads to monopoly power, allowing dominant firms to charge higher prices, stifle innovation, and reduce consumer choice. Studies show that concentrated industries earn systematically higher profits, often 30% more, at the expense of consumers.

Media concentration's impact. The media industry exemplifies this problem, with ten transnational conglomerates dominating the landscape. This concentration leads to:

• Reduced diversity of voices and opinions.
• Focus on cheap, sensationalist news over in-depth investigative reporting.
• Promotional tie-ins that blur the lines between news and advertising.
• Stifled innovation, as dominant players benefit from the status quo.

Lax antitrust enforcement. The massive wave of mergers over the last few decades, particularly between 1985 and 1999, was enabled by a significant decline in antitrust enforcement by the Federal Trade Commission and the Department of Justice. This ideological shift, favoring "laissez-faire" economics, has allowed private tragedies (corporate failures) to become social catastrophes, as corporations grow "too big to fail" and require taxpayer bailouts.

6. Corporate Crime: Widespread, Costly, and Under-punished

"Managers do not have an ethical duty to obey economic regulatory laws just because the laws exist. They must determine the importance of these laws."

A pervasive problem. Corporate crime, encompassing financial fraud, environmental pollution, workplace safety violations, and consumer product hazards, is far more widespread and costly than street crime. Estimates suggest healthcare fraud alone costs up to $100 billion annually, and occupational injuries cost $1 billion per week. Corporate negligence also causes thousands of deaths annually, dwarfing the national murder rate.

Profit over legality. The core reason corporations and executives break the law is simple: it's often profitable, and the likelihood of being caught and severely punished is low. The "cost-benefit analysis" of corporate decision-making often favors illegal activity if the potential fines are less than the profits gained. This perspective, articulated by some legal economists, suggests managers should violate rules if it's profitable.

Weak enforcement and sanctions. Historically, corporate criminals face lenient penalties. Executives convicted of fraud serve significantly shorter sentences than burglars, and many cases result in modest fines or deferred prosecution agreements. The Justice Department and regulatory agencies like the SEC and OSHA have been understaffed and underfunded for decades, making it difficult to investigate complex corporate crimes and hold individuals accountable.

7. Democracy for Sale: Corporate Influence Over Elections

"There are two things that are important in politics. The first is money, and I can't remember what the second one is."

The money primary. The process of getting elected has been distorted by massive amounts of corporate money. Business interests contribute the vast majority of campaign funds, acting as gatekeepers who anoint candidates whose agendas align with big corporate donors. This creates a "wealth primary" where candidates must appeal to the rich to be competitive, rather than to the broader electorate.

Quid pro quo corruption. While direct bribery is illegal, campaign contributions buy access and influence. Legislators are more likely to meet with representatives of generous corporate donors, who come armed with tailored arguments and studies from corporate-funded think tanks. This constant interaction fosters a sympathetic environment for corporate interests, often leading to policy decisions that benefit corporations over the public.

The revolving door. The "revolving door" between government and industry further entrenches corporate influence. Former congressmen, staffers, and administration officials become highly paid lobbyists, leveraging their connections. Conversely, former industry executives take key regulatory positions, often struggling to separate their public duty from loyalty to their former colleagues, as seen with former SEC chairman Harvey Pitt.

8. Lobbying: The Insidious Art of Policy Capture

"The fact that lobbyists are everywhere, all the time, has led official Washington to become increasingly sympathetic to the corporate cause."

An army of influence. Washington D.C.'s lobbying industry is a sprawling enterprise, with an estimated 100,000 individuals connected to lobbying, far outnumbering congressional staff. This army of lobbyists, often former government officials, works tirelessly to influence policy, not just through campaign donations but through a sophisticated mix of tactics including:

• Providing customized research from corporate-funded think tanks.
• Generating "astroturf" (fake grassroots) petitions and phone calls.
• Arranging lavish "fact-finding" trips and conferences for lawmakers.

Undermining regulation. Corporate lobbyists dominate the regulatory process, influencing the development, drafting, and review of laws. They often supply the language for proposed regulations, ensuring they are favorable to industry. This "continuing politics" behind the scenes means that even well-intentioned laws can be subverted, stalled, or ignored, rendering citizens' victories moot.

Lack of transparency. Current lobbying disclosure laws are inadequate, failing to capture the full scope of influence activities, especially public relations and think tank operations. This opacity allows corporations to hide behind front groups and obscure their role in shaping public policy, making it difficult for citizens to track and counter their influence.

9. Reclaiming the Public Sphere: Beyond Consumerism

"Citizen participation, which once defined the very essence of liberal-democratic politics, now seems thoroughly undermined by a culture that glorifies the single-minded pursuit of (economic) self-interest."

Consumerism's pervasive reach. Our hyper-commercialized culture encourages people to see themselves as consumers rather than citizens. Billions spent on advertising bombard Americans with thousands of commercial messages daily, promoting personal consumption as the path to happiness. This diverts energy from collective political pursuits to individual material desires, weakening civic engagement.

The illusion of personal responsibility. Corporations often shift blame for systemic problems onto individuals, promoting the idea that personal consumption habits (like recycling) are the primary solutions to issues like environmental degradation. This "Hints from Heloise" approach distracts from the need for large-scale industrial policy changes and collective democratic action.

Erosion of public institutions. Corporations wage an ideological assault on government and the public sphere, arguing that they are inherently inefficient. This narrative, coupled with tax cuts and privatization efforts, weakens public education, healthcare, and other essential services. Independent institutions like schools and arts organizations, once spaces for critical thought, are increasingly commercialized, losing their ability to foster values beyond market logic.

10. Building a Movement: Citizen Sovereignty is the Solution

"The most effective way to control corporations will be to restore citizen democracy and to reclaim the once widely accepted principle that corporations are but creatures of the state, chartered under the premise that they will serve the public good, and entitled to only those rights and privileges granted by citizen-controlled governments."

The path to control. To effectively control corporations, citizens must reassert their sovereign authority over government. This requires a large, diverse, and well-organized movement focused on restoring true democracy. While individual actions as consumers or investors have some impact, meaningful control over corporations can only be achieved through collective political engagement.

Key reforms for a stronger democracy:

• Campaign Finance Reform: Implement public funding for elections and overturn Buckley v. Valeo to limit campaign expenditures. This would reduce candidates' dependence on corporate money and level the playing field for diverse voices.
• Media Reform: Break up media conglomerates, strengthen non-profit media, and require broadcasters to fulfill their public interest obligations by providing free airtime for candidates and non-commercial programming.
• Lobbying Reform: Mandate full disclosure of all lobbying activities, including public relations and think tank funding, and eliminate tax deductions for lobbying expenses. Implement longer "cooling-off" periods for former government officials becoming lobbyists.

Uniting diverse constituencies. A broad-based movement must unite labor, environmentalists, consumers, small businesses, and other groups under the shared vision that corporate power fundamentally threatens a just, sustainable economy and a functioning democracy. By focusing on systemic changes that re-establish citizen sovereignty, we can transform corporations from masters to servants of the people.