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Monday, 7 June 2004

Corporate Power

(Read previous post about corporations)

The Profit Motive

The purpose of a corporation is to make money and only to make money. In fact, they are legally obligated to make as much money as possible. And legally obligated to make said money in the short term. If a corporation fails to make as much money as possible, they can be sued by their stockholders who would argue that the corp had not done enough to increase the stockholders' wealth. Corporation must always think of the short term financial interests of their stockholders first and everything else second.

This means that if they can figure out a way to make money, they must do it. For example: tobacco companies. They sell cigarettes to children in the third world. They park logo-decorated vans outside of elementary schools and tell kids that American kids smoke their brand. And they have to do it. If company X stopped doing that while all the other companies still did it, they could be sued by their shareholders. Tobacco companies have to lobby against laws designed to protect people from second hand smoke. They have to fight public health measures against them. Nicotine is one of the most addictive drugs on earth. More so than heroin. And smoking-related deaths are a major problem around the world. Tobacco companies are shortening lives and hurting quality of life around the world. Yet the US government blocks any efforts to outlaw smoking in other countries. Even ones that really cannot afford the additional health costs brought about by smoking (life long smoking, starting from elementary school). Countries that try to create minimum smoking age laws are bullied by the Us government. Why? Because the tobacco industry has super-good lobbyists. They have to. It maximized profits. It's the law.

Ok, now take an example of a company that produces 7 tons of dioxin every year. This is a fictitious example. (However, dioxin is an extremely common pollutant, produced ad a byproduct of many process, including burning diesel and bleaching paper. It's also one of the most carcinogenic chemicals on earth and was a major "inactive" component of agent orange and currently lurks in Monsanto product Roundup.) Let's say the dump all 7 tons into the San Francisco Bay. Right now, it is illegal to dump dioxin into the bay. (And in fact, most dioxin pollution in the bay is no longer from industrial dumping, but comes from things like folks burning dino-diesel in semi-trucks.) Let's say it would cost $100 million to alter their production lines so they produce 75% less dioxin. Lets' say it would cost $2 million to dispose of the dioxin in a legally allowable manner. Let's say the fines for dumping dioxin in the bay are $3 million and 4 inspectors work in the entire Bay Area and only visited the factory once in the last two years. All these numbers are made up. So, on average, if the inspectors only come every other year, the fines for illegally dumping dioxin would be $1.5 million per year. And if they only produce dioxin on Tuesdays and the inspectors do not time their visits accordingly, the cost of dumping dioxin in the bay is $300,000 per year. That means, that it's cheaper to pay on average $300,000 in fines for dumping carcinogenic toxins in the bay than disposing of it legally. That's the behavior that would maximize short term profit for stockholders. That's a cost of doing business. That's what capitalism is all about. And they'll lobby against higher fines with their vast wealth. And they'll lobby against being mandated to install equipment to reduce dioxin. And they'll hire a team of extremely good lawyers when people sue saying they've gotten cancer. So the only way to make them reduce output is if a concerned public hounds government with the same tenacity as the corporate lobbyists or if they threat of lawsuits becomes strong enough that they feel they can best protect their assets by taking action now to prevent future losses.

This is how the system has been legally and socially structured to work. Corporate structures limit financial liability. They also function to limit moral liability. It's a bunch of people just doing their jobs. Who do you point at and say, "that's a bad guy!"?? Chomsky says, in the movie The Corporation (I highly recommend this film), that the system is monstrous. Individuals in the system may be great people, but the system itself is evil. The system itself must be radically altered. Either the character of corporations must be entirely rethought, or they must be come much less powerful and forced to look at the interests of society. Because when the most powerful institutions in society are working against the interests of society, there is a huge problem.

What to do

Reducing corporate power! It's the answer.

Revoking Charters

Recall that corporations are chartered in a particular state. If they keep violating the laws of that state, they can have their charter revoked. They cease to exist. However, this is like putting out spot fires. It's a good idea to give regulatory agencies more teeth for sure. Our fictitious dioxin-producing company would be more likely to follow the law if they could be de-chartered for breaking it. But you still would have to challenge every corporation separately while the still lobbied against you and donated money to all politicians involved. In California, citizens cannot sue to revoke a charter. Only the attorney general (an elected position) can.

Ending Corporate Personhood

As I've said before, clearly corporations are not people. I mean, what if a real person was only concerned with making as much money as possible and saw hurting people and paying fines for breaking the law as just part of that quest. We'd say they were nuts. A sociopath, even. The legal "decision" giving corporations the rights of people must be overturned. I've put "decision" in quotes because no written decision exists. Before the Supreme Court was set to heart oral arguments in SANTA CLARA COUNTY v. SOUTHERN PACIFIC RAILROAD CO., 118 U.S. 394 (1886), the chief justice just announced that the whole court agreed that corporations deserved the rights of people and didn't want to hear arguments about it. And thus it became law in that once sentence. No public debate. No legal reasoning.

How to do it

In the past, the court has made decisions that were ultimately overturned. For example, the same court that decided that corporations deserved equal protection later decided (with only one dissenting vote) that African Americans did not. That decision was overturned in Brown vs The Board of Education. The Bauer decision, which said it was ok to make sodomy illegal was overturned last summer. Roe Vs. Wade is currently under attack and may be overturned. These fights seem to have some elements in common.


People were in the streets protesting against anti-sodomy laws. Protesting against Jim Crow and now protesting against abortion rights. Activism increases public awareness, gets attention, lets the other side know that you're serious. The Montgomery Bus Boycott ended segregation on public transit. It was a court case and direct action. Both elements were needed.

Legal Action

there is now a huge mass of precedent saying corporations are people. That precedent must be challenged. A body of anti-corporate people arguments must be produced. This means getting think-tank-types: law students, professors, interested professionals, together to start writing stuff. It also means getting lawyers to start arguing stuff in courts. We need law students and some law professors to get on board. Labor Law is probably a good recruitment area.

Other Actions

I was surprised to see a note in The Corporation that two cities had passed ordinances saying they would not consider corporations people. This sounds like something Berkeley could get on board with. These ordinances may not have much legal power, but they have huge symbolic values. They show that people care about the issue and are engaged in government and politics. They show that voters care. Which can affect court appointments.


I think this is something that could happen and something that's worth working on. However, right now corporations have way more resources than us and have more rights than us. They will fight this any way that they can. Heck, they have to. It will not be easy. But something must be done. Our system is unsustainable an cannot be fixed without radically changing the dominant institutions. Institutions that control resources must be publicly accountable. We cannot put essential life-sustaining resources in the hands of organizations that only look for short term-profits. It's suicide. We can do this. We must do this.

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