Corporation

Also a book and video about the corporation as a dysfunctional format of governance.

Corporation as Concept

History of the Corporation

David Korten:

"Buccaneer is a colorful name for the pirates of old who pursued personal fortune with rules of their own making. They were, in their time, an iconic expression of “free market” capitalism.

Privateers were buccaneers to whom a king granted legal immunity and safe harbor in return for a share of the booty. Their charge was to extract physical wealth from foreign lands and peoples by whatever means—including the execution of rulers and the slaughter and enslavement of native inhabitants.

Hernán Cortés claimed the Mexican empire of Montezuma for Spain. Hernando de Soto made his initial mark trading slaves in Central America and later allied with Francisco Pizarro to take control of the Inca empire based in Peru.

Some privateers operated powerful naval forces. In 1671, Sir Henry Morgan (yes, appreciative British kings granted favored privateers with titles of nobility in recognition of their service) launched an assault on Panama City with thirty-six ships and nearly two thousand brigands, defeating a large Spanish force and looting the city as it burned to the ground. As with the buccaneers and privateers of days past, Wall Street’s major players find it more profitable to expropriate the wealth of others than to find honest jobs producing goods and services beneficial to their communities.

Eventually, the ruling monarchs turned from swashbuckling adventurers and chartered pirates to chartered corporations as their favored instruments of colonial expansion, administration, and pillage. The sale of public shares enabled a single firm to amass virtually unlimited financial capital and assured the continuity of the enterprise beyond the death of its founders. Limited liability absolved the owners of personal liability for the firm’s losses or misdeeds.

Corporations chartered by the British Crown established several of the earliest colonial settlements in what later became the United States and populated them with bonded laborers—many involuntarily transported from England—to work their properties. The importation of slaves from Africa followed.

The East India Company (chartered in 1600) was the primary instrument of Britain’s colonization of India, a country the company ruled until 1784 much as if it were a private estate. In the early 1800s, the East India Company established a thriving business exporting tea from China, paying for its purchases with illegal opium.

The Dutch East India Company (chartered in 1602) established its sovereignty over what is now Indonesia and reduced the local people to poverty by displacing them from their lands to grow spices for sale in Europe.

It is no exaggeration to characterize these forerunners of contemporary publicly traded limited liability corporations as, in effect, legally sanctioned and protected crime syndicates with private armies and navies backed by a mandate from their home governments to extort tribute, expropriate land and other wealth, monopolize markets, trade slaves, deal drugs, and profit from financial scams.

Wall Street hedge fund managers, day traders, currency traders, and other unlicensed phantom-wealth speculators are the independent, unlicensed buccaneers of our day. Wall Street banks are modern day commissioned privateers who ply a similar trade with state backing and safe harbor. The economy is their ocean. Publicly traded corporations serve as their favored vessels of plunder, financial leverage is their favored weapon, and the state is their servant-guardian.

As with the buccaneers and privateers of days past, Wall Street’s major players find it more profitable to expropriate the wealth of others than to find honest jobs producing goods and services beneficial to their communities. They walk away with their fees, commissions, and bonus packages and leave it to others to pick up the costs of federal bailouts, gyrating economic cycles, collapsing environmental systems, broken families, shattered communities, and the export of jobs along with the manufacturing, technology, and research capacities that go with them.

They seek self-enrichment by plundering wealth they had no part in creating, enjoy substantial legal immunity, and acknowledge no duty or accountability other than to themselves. Legal or not, taking the property of another through deception, fraud, and expropriation is theft. Only tyrannies guarantee the liberty of the few to plunder the wealth of the many." (http://www.yesmagazine.org/blogs/david-korten/on-the-origin-of-corporations)

Book

Book: Joel Bakan. The Corporation.

Review

By Dave Pollard:

"Joel Bakan's book The Corporation argues that, in their single-minded pursuit of short-term profit at any cost, corporations now behave pathologically (see graphic above), and against the public interest. Is the corporation, as a model, a hopeless case, or can it be reformed or reinvented?

There are many who believe corporate charters can and should be rewritten to require the pursuit and balancing of a so-called "triple bottom line" -- social and environmental as well as financial performance. Many others think this is naive (there are no established or easy measures or benchmarks of social or environmental performance) and unreasonable when the three bottom lines are in irreconcilable conflict -- the company that chooses to emphasize profit over the other two will, in our 'free' market, outgrow and hence dominate and even eliminate its more balanced competitors.

Even those who argue that the three bottom lines should, in the long run, coincide, have to concede that in the short term -- the horizon of most corporate shareholders and managers -- profits always trump social and environmental responsibility.

Corporations were originally invented to allow people to raise money for large ventures. Without the opportunity for substantial return, and limited liability, investors would not advance funds where there was considerable risk. But soon, ownership of 'shares' was confused with ownership of the business. Then, thanks to an incompetent legal error, corporations were granted the rights of 'persons' -- the right to sue, to lobby, and to otherwise use the collective wealth of the company to influence legal, political, economic and social affairs far beyond protecting the security of the original investment. At this point, the sole objective of the corporation became to satisfy the shareholders insatiable demand for higher returns and lower risk on their investment, at any cost to the real 'owners' of the enterprise -- the employees and the community who granted the corporation the privilege of existence.

The end result -- pathological behaviour, a Frankenstein monster out of control of its master. So what can be done? Is the corporation salvageable? If not, how can we revoke corporate charters without precipitating economic chaos?

Bakan proposes stronger regulation and enforcement, greater legal liability for officer and directors, public education, and regulated use of the precautionary principle to govern corporate behaviour. Other corporate reform advocates have proposed, in addition to the above, the elimination of 'personhood' rights, moving public well-being activities back from the private to the public sphere, standard global corporate codes of conduct (with severe penalties for breaching them), putting "triple bottom line" objectives into corporate charters, prohibiting dishonest corporate advertising, ending subsidies for large corporations, scrapping or redrafting 'free' trade and other corporatist and anti-democratic regulations, and taxing pollution, speculation and other 'bads'. I've personally advocated not allowing corporations to own other corporations, restricting the number of corporations any one person can beneficially control to one, and putting a size cap on corporations." (http://blogs.salon.com/0002007/2007/10/16.html#a2009)

Video

Strongly recommended video documentary: " The Corporation "

YouTube playlist version available at http://video.google.com/videoplay?docid=-3969792790081230711

extract from http://en.wikipedia.org/wiki/The_Corporation:

"The Corporation is a 2003 Canadian documentary film critical of the modern-day corporation , considering it as a class of person and evaluating its behaviour towards society and the world at large as a psychologist might evaluate an ordinary person. This is explored through specific examples."

More Information

1. Marjorie Kelly. The Divine Right of Capital
2. David Korten. When Corporations Rule the World ; The Post-Corporate World