"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." -- President Abraham Lincoln, letter to William F. Elkins, Nov 21, 1864 (from The Lincoln Encyclopedia [MacMillan, 1950])
A group of political activists in New Jersey is looking to rein in corporate power by creating a mechanism by which corporations can be stripped of their state charter.
The group came together in June 1998, at a conference at Rutgers University in New Brunswick. The labor and environmental activists were there to talk about corporate power, to discuss why progressive groups were losing battle after battle.
They were frustrated. After years of struggling against everything from incinerators to new roads to new malls, they found they constantly were coming up against a brick wall. Every time they thought they'd won, the business interests they'd been opposing would just push back, using their cash and political access to win the war.
The problem was simple: Corporations had gained too much power and needed to be reined in.
Following the conference, about 15 volunteers began meeting, searching for a method to restore a measure of democracy to the decision-making process. They needed to find a way of leveling the playing field between average citizens and corporations.
Corporations are treated as individuals under the US Constitution, based on years of court decisions -- the first of which, the 1886 U.S. Supreme Court decision in Santa Clara v. Union Pacific, granted corporations the same free speech and privacy rights as individual Americans. This allowed corporations to use their vast resources to take over the airwaves and the presses and to petition lawmakers, while also shielding their activities from the prying eyes of the public.
"The Supreme Court ruling was built around the 14th Amendment," said Jim Mohn, one of the volunteers. "Corporations were declared to have personhood and to have the various right protected by the Bill of Rights but non of the responsibilities that go with it."
At the same time, however, the courts cast corporate profits as property, preventing the public from interfering in matters that ultimately might affect the bottom line. Richard L. Grossman and Frank T. Adams put it this way in a pamphlet called "Taking Care of Business: Citizenship and the Charter of Incorporation" (published in 1993 by Charter, Ink. and the Program on Corporations, Law & Democracy):
"[J]udges redefined the common good to mean corporate use of humans and the earth for maximum production and the profit. Workers, cities and towns, states and nature were left with fewer rights corporations were bound to respect."
And the individuals who made up the corporation were protected from civil suits and criminal charges. Stockholders and officers could act with impunity, violating environmental statutes, playing hardball with unions and workers, with the knowledge that their company might face a fine or other sanctions, but that they could not be touched.
According to Grossman and Adams, "Today's business corporation is an artificial creation, shielding owners and managers while preserving corporate privilege and existence. Artificial or not, corporations have won more rights under law than people have - rights which government has protected with armed force."
Grossman and Adams call it a "corporate system under the law."
"Investment and production decisions that shape our communities and rule our lives are made in boardrooms, regulatory agencies, and court rooms," they write. "Judges and legislators have made it possible for business to keep decisions about money, production, work and ownership beyond the reach of democracy."
But, as Grossman and Adams point out, it doesn't have to be that way. The concept of the corporate charter was created to allow private companies, under direct legislative oversight, to provide some public service -- to build roads, railroads or canals, to set up banks and the like. Citizens, through their legislatures, "governed corporations by detailing rules and operating conditions not just in the charters but also in state laws," Grossman and Adams write. "Incorporated businesses were prohibited from taking any action which legislators did not specifically allow."
Early charter rules in some states made individual shareholders responsible for the debts and liabilities of the corporations, while some states limited the length of time a charter could be in place, forcing businesses to dissolve and divide the assets when the charter expired.
Those rules went by the wayside, however, as the corporations grew larger and more profitable, and the courts began relying on legal doctrines that "made protection of corporations and corporate property the center of constitutional law," Grossman and Adams write.
And the legislatures followed, watering down the corporate charter code to strip citizens of oversight and to limit or shield officers and shareholders from liability.
The volunteers in New Jersey, organizing as the Democracy and Corporate Accountability Project, want to change that, to reverse this history and bring citizens back into the process. And the New Jersey group is not the only one working to change the rules governing corporations. Groups like the Program on Corporations, Law & Democracy (based in Massachusetts), the Corporate Accountability Project and others have been looking to reduce the reach of corporations into the political process. Some advocate working as shareholders, using the power of the vote to alter corporate behavior, while others want to attack the corporate order from the outside.
All of them work from the same principal, however: As the power of corporations grows, our democracy becomes less democratic and average citizens become more and more powerless.
DCAP has drafted revisions to the New Jersey corporate code designed to strip corporations of their "personhood." According to the revisions, drafted by labor attorney Bennet Zurofsky, corporations would no longer be treated as a person under the constitution. The state Legislature, therefore, would have the right to impose limits on corporations it could not impose on the rest of us -- including prohibitions against engaging in any kind of political speech or donating to any political cause.
In addition, the rule changes would "pierce the corporate veil" and make corporate decision-makers liable for their actions.
"This would put a light on corporate officers by making people like that responsible for the actions of their corporations," Mohn said.
Mohn understands there is little chance the New Jersey Legislature will adopt the changes. But DCAP hopes to use the proposed revisions to shed light on the problem and to energize citizens.
"It's a matter of educating people," he said. "If you approached people and said, 'Do you think corporations are screwing us,' they'd shake their head yes. If you asked them, 'Do you think you can do something about it,' they'd shake their head no.
"Ordinary people think corporations have too much power and are abusing it," he said. "But they think there is no alternative. That's where people are.
"We need to educate people on the depth of the problem and show them there are viable solutions."
DCAP's proposed revisions may just offer a starting point in that discussion.
For more information on DCAP contact Jim Mohn at mohn@galaxytowers.com
The Corporate Accountability Project can be found at (www.corporations.org). It offers a host of tools, including a database on corporations and links to various corporate campaigns and boycotts.
The Program on Corporations, Law & Democracy can be found at www.poclad.org or write POCLAD, P.O. Box 246, South Yarmouth MA 02664-0246; phone 508-398-1145; email: people@poclad.org. The organization publishes pamphlets and articles on reform of corporate charters, including "Taking Care of Business: Citizenship and the Charter of Incorporation," by Richard L. Grossman and Frank T. Adams, cited above.
The Northwest Corporate Accountability Project can be found at http://www.scn.org/earth/wum/ or write David E. Ortman, P.O. Box 17804, Seattle, WA 98107
The California Global Corporate Accountability Project can be found at http://www.nautilus.org/cap/
OTHER ORGANIZATIONS, including Public Citizen (www.publiccitizen.org), phone 202-588-1000; and US Public Interest Research Groups (pirg.org), 202-546-9707 and affiliated state PIRGs are also working to reduce corporate power.
Hank Kalet is a poet and managing editor of two central New Jersey newspapers. He can be reached via e-mail at hkalet@home.com
CORRECTION: In the 9/15/00 Grassroots column by Hank Kalet on Social Security, the threshold at which income ceases to be taxed should have been stated as $72,600.