Poverty & Race
POVERTY & RACE RESEARCH ACTION COUNCIL
September/October 1995 Volume 4: Number 5
Minorities, the Poor & Ending Corporate Rule
by Richard L. Grossman and Ward Morehouse
[In Santa Clara v. Southern Pacific Railroad (1886), the Supreme Court] held that a corporation was a person under the Fourteenth Amendment and thus was entitled to its protection.
-- Morton Horwitz, The TransformationGiant corporations in banking, food, pharmaceuticals, railroads, publishing, petrochemicals, utilities, forestry, real estate, insurance, data, entertainment, health care, weapons -- you name it -- rule us. Over a century of corporate expropriation of law and land, along with corporate violence against nature and communities, have undermined our independence and colonized our minds.
of American Law, 1870-1960, p. 66.
Today, We the People give legal fictions called corporations greater rights than we give to people. We concede to them the sole right, the constitutional authority to make investment, production, technology and work decisions which shape our communities and our lives.
The largest 500 U.S. industrial corporations control 25% of the assets of America's 3.8 million corporations. And corporations are awash in money: according to The Wall Street Journal, the first quarter of 1995 brought "the highest level of corporate profitability in the postwar era. . . . Life in corporate America is about as good as it can get." As a result of corporate decisions, poverty is up, wages are down and millions -- largely people of color -- are literally working their way into poverty. David Dembo and Ward Morehouse, in The Underbelly of the US Economy, call this the corporate "pauperization of work . . . replacement of higher paid jobs by those at or close to the minimum wage, often part-time, and below the poverty line."
Corporate leaders and their shills in effect direct Congress, state legislatures and local officials to close libraries, schools, hospitals and parks; to gut health and environmental protections; to withhold services to young people, the poor, the sick and elderly; to obstruct citizen lawsuits. A recent New York Times headline says it well: "State Budgets Are Cut, Millions in Tax Breaks Go To Companies."
Most Americans exercise little authority over corporations. Poor Americans and Americans of color have even less say. They are especially assaulted as corporations warp elections, legislatures and the courts, move vast amounts of capital seeking the cheapest labor, manufacture poisons, disinvest and intimidate.
Corporations vs. the People
Great gaps have always existed between the ideals and the achievements of the American Revolution. Our Constitution and the law have served as tools for legalized oppression as well as for inspiration and liberation. The founders, who boldly extolled equality and liberty, denied Africans, Native peoples and women the rights of personhood. But the American Revolution did launch a struggle that has lasted until today: people excluded from constitutional personhood agitating for inclusion in "We the People."
Since the last third of the 19th Century, corporations -- unmentioned in the Constitution -- have opposed this popular struggle by shaping judicial doctrines, claiming corporate rights as property, imposing their hierarchical-, profit- and production-oriented values and interfering with the mechanisms of government. In 1877, for example, Thomas Scott, president of the country's largest corporation, the Pennsylvania Railroad, helped broker a deal between the Republican Party and politicians from former slave states to withdraw federal troops from the South and bring Reconstruction to a screeching halt. Nine years later, in a case brought by a railroad corporation, the US Supreme Court declared corporations to be legal persons, whose life, liberty and property were constitutionally protected by the Fourteenth Amendment (even though that amendment had been written and ratified in 1868 to protect the rights of freed slaves).
By 1904, corporations controlled four-fifths of the nation's industrial production, had begun to perfect a corporate system of finance, industry and governance, and had brought about what Morton Horwitz calls "the transformation of American law." Corporations actually turned themselves into de facto persons able to participate in elections and the process of self-governance -- well before indigenous peoples, women, African Americans and other persons of color, well before most people without property.
The Sovereign People
In every generation, valiant organizing by millions of "non-persons" has expanded the civil and political rights of people, gaining (in theory, at least) equal protection of the law. And there has been a continuous history of struggle in this country against corporate harm-doing. But in these struggles against poverty and discrimination, and for equity, health, jobs and the environment, the focus has not been on breaking corporations" grip over capital, production and jobs; on changing bedrock legal doctrines relating to property; or on getting corporations entirely out of our elections, out of our legislatures, out of our governors' houses and judges' chambers. Taking back the wealth, power, privileges and immunities that corporate fictions have stolen, and dismantling offending corporations, has not been the subject of public debate and action.
Recently, Cynthia Hamilton has urged all Americans "to demand greater democratic control of economic ownership, production and investment. The environmental justice movement cannot allow questions of land use, land rights and land ownership to remain the province of corporate decision makers. It needs instead to create a democratic alternative."
We the People give legal fictions called corporations greater rights than we give to people.
If people were to demand "greater democratic control of economic ownership. production and investment," from whom should we demand it?
The answer may be surprising: We the People can draw upon our own sovereign authority to impose our collective will upon tyrannical corporations.
For what other reason did so many non-persons educate, agitate and organize since the Revolution? Why else did people build Suffrage Abolitionist, labor, Populist, Civil Rights, anti-poverty, Indian rights, women's, gay, lesbian and environmental movements across the land . . . if not to govern ourselves?
Lessons from History
History provides some inspiration. There was a time when corporations were understood to be mere fictions, subordinate to the sovereign people and the public interest. Incorporation was a public trust, a privilege -- not a right. The legal powers corporations wield today were nothing more than the wish lists of corporate lawyers.
Elected state legislators issued corporate charters and wrote state corporation laws that carefully defined the nature of corporations. Charters were granted only for fixed terms, which meant that corporate directors had to come back to the people at regular intervals to request renewal of their charters. Corporate owners, managers and directors were liable for corporate debts and for harms their corporations caused (sometimes doubly and triply so). Corporations were prohibited from functioning except as specifically permitted, as this 1864 Wisconsin law decreed: "The purposes for which every such corporation shall be established shall be distinctly and definitely specified in the articles of association, and it shall not be lawful for said corporation to appropriate its funds to any other purpose." A 1923 Wisconsin statute read: "The legislature may at any time limit or restrict the powers of any corporation organized under any law." An early 20th Century amendment to the Maine Constitution stated: . . . [H]owever formed, [corporations] shall forever be subject to the general laws of the state."
Citizen authority clauses dictated rules for issuing stock and for public access to corporate information. The power of large stockholders was limited: large and small investors had equal voting rights. Interlocking directorates were outlawed, and the rates corporations could charge were sometimes set by legislators. Turnpike charters frequently exempted the poor, farmers or worshippers from paying tolls. In New York, turnpike gates were "subject to be thrown open, and the company indicted and fined, if the road is not made and kept easy and safe for public use." Banking corporations had to get legislative approval to increase their capital stock or to merge. Some states required banks to make loans to local manufacturing, fishing and agricultural enterprises, and to the states themselves. Other states banned private banking corporations altogether.
People did not want business owners hiding behind legal shields, but in clear sight, so corporations were prohibited from owning other corporations. And corporate property and capital holdings were routinely limited. As the Pennsylvania legislature stated in 1835, "A corporation in law is just what the incorporating act makes it. It is the creature of the law and may be moulded to any shape or for any purpose that the Legislature may deem most conducive for the general good."
Most important, people reserved the right to amend corporate charters, and to dissolve a corporation by revoking its charter if the corporation exceeded its authority or caused harm to the body politic. In 1825, Pennsylvania legislators adopted broad powers to "revoke, alter or annul the charter" at any time they thought proper. The Rhode Island legislature declared in 1857: "The charter or acts of association of every corporation hereafter created may be amendable or repealed at the will of the general assembly." Pennsylvanians adopted a constitutional amendment in 1857 instructing legislators to "alter, revoke or annul any charter of a corporation hereafter conferred . . . whenever in their opinion it may be injurious to citizens of the community.
We the People have always been sovereign over the fictional entity called the corporation, and today 49 states (all but Alaska) have charter revocation clauses. By revoking corporate charters, we can uproot the most abusive corporations from our communities. By amending state corporation codes and the charters themselves, we can define corporations any way we want.
Organizing Against Corporations
Working through The Program on Corporations, Law & Democracy, we have been striving to place the corporation as an institution, and resistance to corporate rule, onto the agendas of people aspiring to justice and self-governance. Towards these ends, we have organized ten "Rethinking The Corporation Rethinking Democracy" gatherings, involving about 250 people, from Washington State to Maine: half a dozen more meetings are planned for the coming months. We've also been coordinating popular research on the history of corporations and corporate law in our states and documenting citizen use of state mechanisms to limit corporate authority.
Out of these initiatives is emerging a growing network of people and a strategic agenda. Among other things, people are exploring ways to:
- Dismantle especially harmful corporations;
- Re-charter corporations for limited time periods, subject to precise restrictions;
- Reduce the size of corporations;
- Establish worker and community control over production units of corporations to protect the property interests and other rights of workers and communities, ban specific toxic chemicals and technologies and the hiring of replacement workers during strikes, cap management salaries, etc., by writing explicit rules into charters and state corporation laws;
- Organize referendum campaigns to strip corporations of "personhood" and constitutional rights appropriate only for natural persons;
- End corporate extortion and subsidy abuse, by which corporations have been raking off billions of taxpayer dollars;
- Prohibit corporations from making any contributions to electoral campaigns, from all lobbying, from using any money to influence public policy;
- Prohibit a corporation from owning another corporation;
- Nurture cooperative, worker-, community-owned and -controlled enterprises;
- Invigorate debates on property and the rights of natural persons, communities, other species and the Earth, and on the role of government.
Because corporations, with few exceptions, are created by state governments, our states will have to become key arenas for citizen organizing. In many ways, the move on the part of the Right and corporate leaders to devolve power from the federal government to the states could strengthen organizing to disempower corporations. So far, groups have formed in Maine, Wisconsin and Oregon to plan agendas and begin this work.
As we connect with people around the country, we find growing numbers who recognize that giant corporations now govern; that these corporations are major causes of poverty, community destabilization, discrimination, ill health and environmental destruction. A potentially powerful consensus is emerging that to begin investment transitions in energy, housing, transportation, agriculture, food, timber, finance, etc.; to have fair and democratic elections and lawmaking where people (not corporations) are represented; to create institutions of enterprise that will not turn upon us like the sorcerer's apprentice; to get justice in our courts -- We the People will have to learn about the sources of corporations' powers, take those powers away, dismantle the worst corporations and assert popular sovereignty over all enterprises we allow to do business in our land.
Minorities, the Poor & Corporations at a Glance
- Compensation: Ratio of corporate CEO to pay of average worker: 1974 -- 34:1; 1994 -- 159:1.
- Corporate Assets/Jobs: Assets of 500 largest US corporations are up: 1980 -- $1.18 trillion; 1993 -- $2.68 trillion. Jobs provided by 500 largest US corporations are down: 1980 -- 15.9 million; 1993 -- 11.5 million.
- Wage Levels: Worker productivity is up, but 1994 average real weekly wage decreased to 81% of 1973 level. 75% of 26.5 million jobs that corporations have created (1979 to 1994) are in two lowest-pay categories of service sector (retail trade, health and business services).
- Toxics: 230 times more toxic waste is dumped in disproportionately lower-income and minority neighborhoods near polluting corporate factories than where corporate CEOs live.
- Corporate Profits: First quarter 1995, average return on equity of Standard & Poor's 500 corporations was 20.12%.
- Taxes: Corporations now pay less than 10% of the nation's taxes, compared to 1/3 of the taxes in the 1940s and 1/5 of the taxes in the 1970s.
Logical? Yes. Difficult? Of course. Corporate leaders and the politicians in their pockets will resist with vigor. They will call upon the most manipulative advertising, public relations, media and law corporations for help, threaten to wipe out jobs and tax payments, intensify their divide and conquer campaigns by driving wedges between workers, environmentalists and communities; between people of color and whites, and among people of color. They will try to split community against community, state against state, country against country.
They will challenge the histories that people are uncovering in their states, while they continue to unleash their lawyers, bully judges and marshal their non-profit, subtly named corporate front groups designed to look like just folks for health, property, justice and apple pie. They will try to buy people off with grants or negotiations or empty promises. When citizen pressure mounts, they might even invite token representatives to join their corporate boards.
We cannot control the tactics corporate leaders will use. But we can end the colonization of our own minds, what Edward Said calls our "ideological pacification," by helping one another dispel the absurd idea that today's giant corporations were inevitable and that there is no alternative to these global fictions ruling our lives. And we can and must reach out to people in other countries organizing to end corporate rule. Indeed, there is much we can learn from them: witness the community groups in India that forced two American giants -- DuPont Corporation and Cargill Corporation -- to close down their operations through well planned and persistent direct action.
Giant corporations are major causes of poverty, community destabilization, discrimination, ill health and environmental destruction.
Since the 1776 Declaration of some Americans' independence, people excluded from personhood have organized to gain the rights of citizenship and the constitutional guarantee of equal protection of the law. We the People are now numerous enough and strong enough to govern ourselves. We can dismantle corporate tyrants. We can establish the institutions of enterprise we want and need. The alternative is abandoning our children and the Earth to global corporate authority, and living out disenfranchised, toxic lives not as citizens, but as automatic consumers squabbling over corporate crumbs.Richard Grossman and Ward Morehouse are co-directors of The Program On Corporations, Law & Democracy. Grossman was director of Environmentalists for Full Employment from 1976-1984 and is co-author (with Frank Adams) of the pamphlet, Taking Care of Business: Citizenship and the Charter of Incorporation. Morehouse, president of the Council on Public and International Affairs, is a human rights activist and co-author (with David Dembo) of the 1995 publication The Underbelly of the US Economy: Joblessness and the Pauperization of Work in America. To obtain these publications, or for further information, contact the Program at 211 1/2 Bradford Street, Provincetown, MA 02657, 508/487-3151 or 212/972-9877. Contacts for the 3 states where Program groups already have formed are as follows: Maine: Pine Tree Folk School, RR2, Box 7162, Carmel, ME 04419; Wisconsin: The Wisconsin Campaign, 731 State St., Madison, WI 53703; Oregon: The Oregon Campaign, HCR-82, Fossil, OR 97830.
P&R welcomes letters & comments on our articles; we will print as many as space allows.
We also more than welcome voluntary "subscriptions" to cover our production/mailing costs, so we can continue to distribute the newsletter without charge. Some 550 of you already have contributed (see p. 8 for the latest honor roll); the modal amount has been $25, but lots of $50 and $100 checks, too, we're happy to say.
Ending Corporate Rule . . . . . . . 1
Cumulative Voting . . . . . . . . 5
Thank You, New Contributors . . . . 8
L.A. Researcher-Activist Network . 9
Independent Politics Gathering . . 11
Advocacy Updates . . . . . . . 12
Affirmative Action Resources . . . 13
PRRAC Update . . . . . . . 14
Resources . . . . . . . 15
Poverty & Race (SSN 1075-3591) is published six times a year by the Poverty & Race Research Action Council, 1711 Conn. Ave. NW,#207, Washington, DC 20009, 202/387-9887, fax: 202/387-0764. Chester Hartman, Editor; Catherine M. Dorn, Editorial Assistant. There is no charge for the newsletter (except to libraries), but donations are encouraged. Articles, article suggestions and general comments are welcome, as are notices of publications, conferences, job openings, etc. for our Resources Section. Articles generally may be reprinted, providing PRRAC gives advance permission.
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