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Stopping America’s Decline

It’s no secret, America is falling fast. Sure, we are the world’s only “superpower” and an economic juggernaut, but we would have to be both blind and stupid not to see that we are falling fast. Our government is not only non-functional, it no longer honors its purpose or its “contract” with the people. Our educational system still brings more people to a higher level of education than anyone else, but by all objective standards is merely average (perhaps a C- with a 3 out of 10 for effort). And, without doubt, we are no longer the “moral leaders” that we once were.

We have plenty of problems and more than enough suggested solutions, but none of those solutions seem likely to happen and there is a growing sense of hopelessness and discouragement. The two groups (the young and women) who have both the most at stake and the most power to fix things seem to have given up, thereby resolving themselves to lesser lives and condemning their children to even less.

Instead of offering a broad spectrum of long-term solutions (which are ultimately needed), I merely propose a starting/tipping/stopping point – two solutions that can be accomplished quickly and easily that would profoundly change things and are essential to any other solution anyway. The first of these solutions centers upon corporations – those poorly understood and grossly aggregious entities that we have allowed to run amok. Aligned with our corporation problem is the dire need for election reform – with the intent of restoring power of the proper electorate.

Our government is not the solution to all our problems and we-the-people are unlikely to elect better government leaders unless we do our duty (as in being informed and actually voting). But, as things are, the American government is not ours: it belongs to corporations. Yes, it BELONGS to corporations – they have bought it.

Now I am not the first to point out that corporations have “taken over”. But I am among the rare group who has founded several corporations, who sits on the board of directors for a few corporations, and who will publicly say that corporations are a good thing while acknowledging that they have become the primary cause of our demise. Few seem to understand how or why a good idea has become so harmful, so let us start there.

Since Roman times, governments have recognized the need for social entities which could have an existence independent of the individuals who either founded it or control it. About 400 years ago, the Dutch and English governments created corporations as legal entities recognized by the government under a charter which specified its purpose (and limited its functions). Such corporations were largely responsible for the establishment of the American colonies under royal charters which gave them monopolies, limited investor liability[1], and special distribution of profits. These corporations were quasi-governmental (essentially acting on the government's behalf and having a large degree of integration with both military and political leaders).

By the time of the American Revolution, most Americans were not only against business corporations generally, they feared their power and influence within government. Thus, the new federal government (from the original Constitutional Convention) was denied the power to charter corporations. On the other hand, states retained the power to incorporate with the general intent of structuring towns, districts, other units of local government, religious associations, educational institutions, and groups formed for charitable or other non-profit purposes[2]. As organized in most state governments, corporations enjoyed many of the rights of an individual possesses, but were specifically excluded from attempting to influence elections or public policy.

Initially, when states granted the privilege of incorporation, they were selective and specific so that the public benefit was clear (such as constructing roads, canals, or schools). Allowing limited personal shareholder profit under imposed conditions or limitations was seen as a means to public ends.  Corporate charters were scrutinized publically, were granted for a limited time, and were quickly revoked for violation of the charter or laws. The group of corporate officers (known as the board of directors) were often quasi-public officials entrusted with ensuring protection of the public interests.

In most states, corporations were prohibited from owning stock in other corporations or owning property that was not necessary for their chartered purpose. Initially, legislators maintained tight control of the corporate chartering process. Corporations were often terminated if they exceeded their authority. Corporate owners and managers were criminally liable for their illegal actions on the job. And, corporations could not make any contributions to political or charitable causes or act openly to influence law-making. Corporate charters limited capitalization, debts, holdings, and profits. The power of shareholders was limited by scaled voting, so that large and small investors had equal voting rights. Interlocking directorates were outlawed and shareholders had the right to remove directors at will.

From the 1780s to the civil war, corporations increased in number despite opposition from what is known as the "anti-charter doctrine." Americans argued and generally held the same anti-corporate ideas as the French (and increasingly, the British)[3], but “the demand for acts of incorporation is continually increasing," said New York's Chancellor James Kent in 1827. Having originated under the banner of mercantilism, business corporations evolved during the industrial revolution and American expansionism. New ideas arose for publicly traded private joint-stock corporations with limited liability and significant autonomy – the modern corporate structure. Business corporations were chartered with the primary “public benefit” of creating profit for share-holders[4]. Corporations were permitted to buy, sell, and own property, enter into contracts, and sue other persons and corporations (or be sued by them). “Free economy capitalism” and government sponsored corporatism morphed into monopolistic multi-national monstrosities. It didn’t take long for people to see the dangerous direction we were headed. One public official saw the problem clearly…

“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.” Abraham Lincoln, Nov. 21, 1864 (letter to Col. William F. Elkins) Ref: “The Lincoln Encyclopedia”, Archer H. Shaw (Macmillan, 1950, NY).

As we transformed from a nation of farmers to “employees” (wage earners), the power of corporations grew rapidly. With the civil war, corporations gained fantastic wealth and great power. Corporation-paid lobbyists (aka “borers”) freely infested state and federal governments, bribing elected and appointed officials alike to gain an avalanche of legal and financial benefits. It was probably the railroads which led the corporate takeover of America through a series of influenced[5] Supreme Court rulings which began with a side-note (“ipse dixit”) in the case of Santa Clara County v. Southern Pacific Railroad (1886) where high court held that the Fourteenth Amendment (intended to protect freed slaves) applied to corporations as “natural persons” under the U.S. Constitution (a ruling which has been repeatedly reaffirmed and expanded since by our courts and legislatures)[6].

After decades of abuses, including unfair trade and horrendous child labor practices, Americans finally forced governmental restrictions on corporations during the “progressive” anti-trust era. This began with the Interstate Commerce Act of 1887 which intended to regulate monopolistic practices of the railroads and the Sherman Antitrust Act of 1890 which intended to prohibit corporate anti-competitive business activities. Then, the Tillman Act of 1907 prohibited corporations from making monetary contribution to national political campaigns. Thus, since the civil war we find that corporations and our government (we-the-people) have been at war. We’re losing.

We managed some additional progress, such as the National Labor Relations Act of 1935 and the Fair Labor Standards Act of 1938 before World War II, but things began to change in two ways: we became increasingly enamored and dependent upon “big business” as we became increasingly enamored and bound to cheap products and our government allowed corporate influence to increase during the war. Our love of “things” was natural, but grew in direct proportion to how much we were being told (through advertising and schooling) that we wanted and needed so many things. Corporations found that they could control us through marketing while they also found that they could control politicians through political contributions. In short, we made corporations richer and more powerful so that they could make us poorer and weaker. The “military-industrial complex” that Eisenhower warned us about was only the tip of the iceberg.

There is no need to elaborate upon the extent of corporate power and influence. Everyone who cares knows that corporations have led us to our state of economic disparity and political corruption. Not many seem to realize that this is no longer an American issue: 51 of the 100 largest economies in the world are corporations (based on a comparison of corporate sales and country GDPs). It is a simple and plain truth – if we don’t act quickly and effectively to limit corporate power and influence, we will become a corporate planet where profit guides our decisions until we “enslave” and exterminate ourselves[7].

Our second solution is obviously tied to the first – we cannot correct our election process unless we reign in corporate influence over our politics. The obvious way to do this is through campaign finance reform. If you want to clarify your understanding of just how much corporations have gained control of our politics, all you must do is study campaign finance laws. Corporations have long understood that the key to their future lies in politics and that the key to politics is money. Thus, we have the recent Supreme Court decision[8] which makes the right of free speech applicable to corporations and affirms that political campaign spending is a form of free speech. It is hard to imagine a law which could have given more influence to corporations in America.

Our politicians didn’t need corporations to convince them to place their self-interest above that of their constituents, but corporations have encouraged such by essentially making corrupt politicians immune from electoral “feedback”. Our most powerful politicians know that the safe bet is to tow the corporate line because it is their money which will keep them in power (and rich).

There are many ways to correct this, but almost all of them involve trade-offs and difficulties. We might start by passing a law which actually accomplishes the goal of the Tillman Act – prohibiting generally ANY corporation from having ANY involvement in ANY political election. Our constitution may allow individuals free speech, but it only allows citizens to vote. We should simply make it illegal for non-citizens to attempt to influence our political system with money. Then, we should apply a long-standing tradition – one citizen, one vote. Every citizen should have an equal ability or opportunity to influence who gets elected to public office. Thus, no citizen should be allowed to contribute more than 10 times the minimum wage to any single political campaign.

Preventing corporations from being involved in politics and restricting campaign funding will temporarily stop the decline of America. While these two steps are not enough to get us back to where we belong as a nation, they will give us time and opportunity to reverse our course. I only hope that we’re not too late.

Rich VW (Dec. 2014)


[1] Remember, this was a time where an individual’s debts could be inherited by descendants and individuals could be jailed for their debts or the debts of other family members, so the corporate limitation of liability was a huge benefit for investors (generally, the rich).

[2] “The Revolutionary Origins of the American Corporation” by Pauline Maier, The William and Mary Quarterly

Third Series, Vol. 50, No. 1, Law and Society in Early America (Jan., 1993), pp. 51-84. I have relied heavily upon this excellent overview and analysis along with its cited sources (which I do not duplicate here. My sourced was http://www.jstor.org/discover/2947236?uid=60&uid=372744061&uid=3739256&uid=3&uid=372744051&uid=2&uid=70&uid=2134&uid=3739856&purchase-type=article&accessType=none&sid=21104917461461&showMyJstorPss=false&seq=4&showAccess=false

[3] See “The Corporation that Changed the World: How the East India Company Shaped the Modern Multinational“ by Nick Robins, Pluto Press (2006), especially the Introduction.

[4] Delaware was the first state to allow corporations without any particular government grant or authorization. Now, even states that require such authorization generally allow a for-profit only purpose.

[5] In a blatant conflict of interest, the railroads provided and US Supreme Court justices routinely utilized customized private railroad cars to “tour the circuits”. 

[6] 1 U.S.C. §1 (United States Code) now states: “In determining the meaning of any Act of Congress, unless the context indicates otherwise… the words ‘person’ and ‘whoever’ include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals...”

[7] See “The Moral Society: a Rational Alyernative to Death” by John David Garcia, Julian Press (1971) available at http://www.see.org/garcia/e-ms-dex.htm. A good example of how this might play out is detailed in “The Corporation that Changed the World: How the East India Company Shaped the Modern Multinational” by Nick Robins, Pluto Press (2006).






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