Statecraft: Corporations



Table of Contents

1. Pre 1850

Human organizations throughout history have been largely local communities held together by family ties, states held together by force of arms, or religious movements held together by force of shared beliefs. These are the primary social structures. For short, we can refer to them as "the state".

The state provide a safe environment for a "business" -- one or more individuals working together to explore, develop, produce, sell, trade, service, etc. Businesses trade their goods and services with individuals, other businesses, or the state in exchange for money or yet more goods and services.

The trades are monitored for fair play by the state. The state accepts the burden of ensuring fair play and for protecting businesses from theives and warfare, in exchange for taxes and services.

Of course, it is possible for business to infiltrate the state and cause it to benefit the business all out of proportion to the taxes and services received. Historically this balance was maintained by making the business leaders personally responsible for the agreements (contracts) made by the business. A business leader (a "principal") does not cheat if the result of getting caught is personal impoverishment or hanging.

Naturally, business leaders wanted to escape these dire consequences. A compromise was arranged: Businesses could form "limited corporations" for specific projects, in which only the money invested was at risk. The state got valuable services (canals, steamships and railroads). The business leaders got profits in good times and mere loss of investments in bad times. The state used its armies and police to protect the leaders from irate associates in failed projects.

The limited duration meant that this exceptional form of state-sponsored protection could not be abused over extended periods.

2. 1850-1900

The USA decided to allow (and support/protect) corporations with indefinite lifetimes. Since these corporations had no obligations beyond making a profit, they could compete successfully against indivuduals (who needed to also support communities, raise families, and come to terms with their religious teachings).

Given an infinite life and a few percent advantage per year, corporations grew in wealth and power without limit.

3. 1900-1950

The obvious dislocations lead to reactions (e.g., Populists, Progressives, labor unions) which used the power of the vote to counterbalance corporate power.

4. 1950-2000

Wealthy families were at first stumped. By definition, in a democracy they could not win elections (and thus power) if citizen interests did not match corporate leaders' interests. However, by pouring billions into propaganda shops (think tanks), mass media, advertising, persuasion science, and lobbying, they were able to:

  • Convince some people to not vote at all
  • Convince some poeple that progressives and unionists were evil bad commie anit-americans.
  • Convince many to vote against their own interests, in the name of religion or NASCAR or beer.
  • Convince electeds to vote against the interests of their constituents.
  • Convince citizens that elected government was evil and wasteful, and should be replaced by contracts with corporations -- thus elminating the effective power of voting.

Net result: By 1990, international corporations were in position to force nominally democratic nation states to accept and enforce laws which were purely owned and operated by the corporations. The World Trade Organization (WTO) was well on its way to becoming a "legal personality" in its own right.

5. 2000-2050

But some citizens saw through the sham.

In December 1999, at the Seattle meeting of the WTO, there were massive marches and protests. Not content to merely ignore the environmentalists and labor unions (who were peaceful), the corporations inserted "anarchists" to perform vandalism and thus provide an excuse to bludgeon and gas marchers, reporters, and folks on their way to the laundry.

This was in keeping with the Project for a New American Century, whose thesis was that they had adequate power to ensure that no one ever again could rise to power.

Unfortunately, the police riot was so inappropriate that millions of US citizens realized their democracy was at stake, and needed defending. WTO was on the run.

When the SCOTUS declared GW Bush president in 2000, even more citizens saw the writing on the wall.

When the WTC towers collapsed in 2001, in perfect demolition style and "under suspicious circimstances", yet more citizens questioned the integrity of the US governmental apparatus.

By 2004 there was a bit of a pushback. By 2008 there was a nominally progressive president elected, though he was hamstrung because the corporate leaders had bankrupted the nation in the name of a financial markets collapse.

6. References


John A. Pearce, Richard B. Robinson Jr. "Strategic Management", 7th ed. McGraw-Hill, 2000. ISBN 0-07-229075-7.

Creator: Harry George
Updated/Created: 2009-11-09