Fighting corporate power since 1776

Boston Tea Patry print

Sorry, Tea Partiers. The original Boston Tea Party wasn't targeting socialism but excessive corporate power and plutocrats of the East India Company.

The Boston Tea Party, claims liberal talk radio host Thom Hartmann, wasn’t really a protest against higher taxes and unrepresentative government. Instead, its target was the excessive power of a large corporation — the British East India Company.

In Unequal Protection: How Corporations Became “People” — and How You Can Fight Back Hartmann explains that, at the behest of the East India Company, which counted members of Parliament and even the King himself as shareholders, the Crown put a tax and other restrictions on small colonial businesses in the tea trade while exempting the Company, essentially creating a monopoly and helping it to crush competition from American entrepreneurs.

Unequal Protection book cover

Unequal Protection: How Corporations Became "People" -- and How You Can Fight Back by Thom Hartmann, 376 pp, $19.95

Dumping the monopoly’s tea into the harbor was a way for the small businesspeople of Boston to protest the corporate plutocracy of their day.

And we all know where that led. The American Revolution established a democratic republic in North America and inspired revolts against rule by despots and their wealthy backers from France in 1789 to Egypt in 2011.

That American democracy has now been hijacked by big corporations, which want ordinary citizens to feel powerless, to get cynical and to forget about taking action. But Hartmann says no way.

Do you think it’s impossible to dethrone plutocrats before American society collapses under the weight of debt, unemployment and an oil crash? Don’t worry. Hartmann’s got a plan.

The power behind the throne

Behind the history of world revolutions — battles and riots, congresses and assemblies, ditsy queens and thuggish caudillos — is an ongoing tug-of-war between citizens and the largest businesses over who would ultimately rule: the broad public or a few rich people.

Back in the US, Hartmann finds that after the colonists liberated themselves from King George and the East India Company, the Founding Fathers called on their fellow citizens to remain vigilant against the power of moneyed interests.

“Let monopolies and all kinds and degrees of oppression be carefully guarded against,” said Samuel Webster in 1777. Madison and Jefferson feared a pseudo-aristocracy of corporations and echoed the sentiment that large corporations needed to be subordinate to ordinary citizens. Jefferson even wanted to control the size of corporations, as Hartmann explains:

Jefferson kept pushing for a law, written into the Constitution as an amendment, which would prevent companies from growing so large that they could dominate entire industries or have the power to influence the people’s government.

For the next century, federal and state governments passed laws to prevent any future corporations from gaining as much power over government as the East India Company had exercised over Boston — and over London.

In 1833, Andrew Jackson shut down the Second Bank of the United States, a private entity with authority over public finance much like today’s Federal Reserve. Throughout the nineteenth century, most states had laws that limited corporations to a specific purpose, such as building a certain bridge, canal or toll-road, and prevented them from expanding beyond it. According to Hartmann:

  • After it had completed its assigned task, a corporate charter would expire and the company would be dissolved. Corporate charters were not given, as they are today, “in perpetuity.”
  • The state could revoke a corporation’s charter if it either exceeded or did not fulfill its stated purpose or if it misbehaved.
  • To keep them out of politics, corporations were prohibited from making any political contributions, directly or indirectly through other groups.
  • To prevent them from extending their economic power inappropriately, corporations could only own real estate necessary to complete their stated business and were prohibited from owning shares in other companies.

Corporate charters were revoked on a regular basis during the first half of the nineteenth century when companies tried to overstep their limited bounds. Then, as today, most Americans did business without starting corporations, as sole proprietors, partnerships or without any business structure other than keeping track of receipts for taxes, so most Americans saw clear benefit in keeping the economy safe for small and medium-sized businesses and preventing the rise of monopolies.

But the period during and after the Civil War saw the rise of large monopolies, particularly in railroads and oil. And with a hunger for power to match their massive wealth, Gilded Age Robber Barons like Rockefeller, Carnegie and Jay Gould chafed under the limits on corporations prescribed by the Founding Fathers.

The original Supreme Court coup

Before the onset of mass media brand marketing and corporate-disinformation campaigns like today’s Tea Party Patriots, Americans had a healthy distrust of the rich and big business. Since popular opinion was strong against monopoly power, the plutocrats knew that they’d have little luck with the president or Congress, so they used the forum where their money really meant something, the Supreme Court. With an ability to hire expensive lawyers and file a seemingly limitless number of court cases until they finally prevailed, the corporations hit on a strategy.

Why not use the Fourteenth Amendment, passed after the Civil War to give equal protection to all citizens, to free corporations from popular control? It’s the theory of corporate personhood.

Of course, only a psychopath — and 5% of American corporate managers qualify as psychopaths, according to Jon Ronson — could come up with the idea that an amendment to free the slaves should also help rich white men to become even more powerful. But the Robber Barons obviously knew that this devilishly clever strategy would eventually work with their audience, the men of the SCOTUS.

And work it did, in a kind of backdoor way. The 1886 case of Santa Clara County vs. Southern Pacific Railroad has been interpreted as a precedent that corporations have the same rights as natural born persons to “equal protection” under the law guaranteed by the Fourteenth Amendment, including freedom of speech and freedom from search and seizure.

But what almost nobody recognizes is that the prevailing interpretation of the Santa Clara case is wrong. It is perhaps Hartmann’s biggest historical bombshell that the Supreme Court decision explicitly stayed away from the issue of whether corporations qualified as persons under the US Constitution. Instead, the court chose to narrowly rule on the tax issue at hand between the railroad and the county.

Corporations being persons is only mentioned in the headnote to the case, an add-on written by court reporter JC Bancroft Davis as his own personal opinion that carries no validity in law.

In other words, the whole edifice of corporate power in America for the last 125 years was built on a misunderstanding. According to Hartmann, no case has ever ruled that corporations are people too.

But what does it matter? Thousands of cases since have taken Santa Clara as precedent, and by now, the weight of corporations-are-persons law is just too huge to go back and correct the mistake from 1886.

Legally, that may be the case. But morally and politically, Hartmann wants us to know that corporations enjoy all the benefits of being people without any of the inconveniences of being a mortal, such as having to face death or prison, because of an underhanded and sneaky effort rather than through legitimate legal process.

And why does it matter that corporations are treated like people? Well, it means, for example, that almost any law passed to restrain corporate misbehavior can be challenged in court as discrimination.

Why corporations shouldn’t be people

In politics, corporate personhood guarantees plutocratic rule. Limits on campaign contributions from corporations? That’s unfair, since it would limit their free speech, as the recent Citizens United case decided.

Hartmann details many examples of corporate chicanery and outlines the extent of corporate power over government today, confirming what anyone who cares seriously about climate or energy policy already knows: that corporate interests trump the will of the people for clean energy time and time again.

But Hartmann doesn’t despair. Instead, he enjoins us all to join the movement to dethrone the new East India Companies of the world and take back America and other western democracies for their people. In the US, that would start with a campaign to declare that corporations do not have the same rights as people do, such as Free Speech for People.

On the federal level, we’d need to change the Fourteenth Amendment or pass a new amendment. This won’t be easy, so Hartmann suggests that in the meantime localities can start to pass ordinances denying corporate personhood one community at a time. That will help create momentum for a national effort.

It sounds daunting. But then fighting climate change and preparing for peak oil both present such a threat to the profits of so many big corporations, from Big Oil and Big Coal on down to automakers and big box retailers, that there may be no other way than fighting plutocracy to stop America from committing national suicide and taking the rest of the world down with us.

Until we take corporations back down to size, big polluters like ExxonMobil, BP, Massey Energy and their agents at the US Chamber of Commerce will keep bankrolling climate-science deniers and fighting against a rational energy policy that would take America away from fossil fuels and towards conservation and clean energy.

As Annie Leonard says in her video The Story of Citizens United,

So keep fighting for renewable energy, green jobs, healthcare, safe products, and top-notch public education. But save some energy for the battle of our lifetimes. A battle that can open the door to solving all of these things. It’s time to put the corporations back in their place and to put the people back in charge of our democracy.

– Erik Curren

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Comments

  1. Radoje says

    While it is a very nice thought, I really doubt there are any political solutions to these problems anymore. We are at least 30 years too late in this country to enact any sort of meaningful reform of the corporate system. The idea that a constitutional amendment to strip away corporate personhood is jaw-droppingly naive. Furthermore the idea that local governments will stand up to big employers in any meanful way is beyond comprehension. Has the author not seen how craven most local and state governments are towards corporations that will bring in jobs and tax revenue? Look at the fight between Washington and South Carolina over who would get the Boeing plant. Furthermore smaller political entities are even less well equipped to fight the expensive campaign battles that any sort of legislation would create. Not to mention defend against the lawsuits the corporations would file ad nauseum.
    Don’t get me wrong, I think citizen activism is capable of making limited changes (though some people seem to have a metaphysical belief that activism will change the world), but at this point rolling back corporate personhood is simply a non-starter. The consumerist public is not going to accept the price increases that the corporations would pass along, and government is certainly not going to, in this climate, do anything that would lead to lost jobs and tax revenue.
    Call me an Orlovite (or is it Kunstlerite?) Doomer, but at this point I think grandiose political campaigning is counterproductive. This sucker is going down and my time, energy, and money are far better spent building the resilience of my local community.

    • says

      Radoje — Believe me, there are days when I feel that national politics is futile and a waste of my time. But on other days, I see good reasons to engage and I think that a dis-engagement strategy is actually a bigger risk:

      1) I admire Kunstler and Orlov too, but neither has a crystal ball. It’s a truism worth repeating that nobody knows exactly what the future will look like or when it will come. It’s safer and more resilient to plan for a variety of scenarios.

      2) One scenario is “collapse.” But what does that mean — no US govt? No Constitution? No laws of any kind?

      3) Even if you think collapse will be total Mad Max anarchy, when will it come — 60 days, 5 years, 20 years? Are you prepared to put up with plutocracy till then?

      4) What we do today will influence what happens in the future, even in a totally new kind of political and social order. The ideas of today will determine what kind of revolution we have in the future. If we let authoritarian, consumerist and plutocratic ideas win today, they’ll certainly influence the kind of world we have tomorrow.

      5) Big corporations WANT you to be passive, cynical and withdrawn from politics. Are you so eager to oblige them? I’d like to try something different just to see what happens.

      In short, I think we need to have time for BOTH local resilience efforts AND national politics. We shouldn’t have to choose between the two.

      • Radoje says

        Well I admire you optimism regarding national politics, but we’ll probably have to agree to disagree on that matter. I would only ask you to consider the utter disconnect between Obama the candidate and Obama the president (bank bailouts, seeming inability to close Guantanamo, war-mongering in Libya…). Personally I feel like the corporations have won, we are now in occupied territory and need to adjust our aims accordingly. I would use the metaphor of a Resistance movement during WWII. The French Army was no longer fighting the Germans in 1943, but the Resistance was quite effective at disrupting their control of the country. Not that I am advocating violence, but instead of fielding an Army we need to accept the reality of our situation vis-a-vis corporate hegemony.
        Just for the record I’m not in the Mad Max anarchy camp (and I don’t think Orlov or Kunstler are either), but barring some sort of energy Deus Ex Machina in the next 5 years, most big corporations are going to become quaint anachronisms due to the inability to maintain the long distance globalized networks that give them power.
        I would disagree that no one has a crystal ball. In fact just the opposite, EVERYONE has a crystal ball so to speak. All of us are basing our decisions today on what we believe will happen in the future. After all every energy descent plan has a vision of how the descent will happen (if you, for example though the oil was going to run out next week, your energy descent plan would be very different than if you thought that local fuel deliveries would be increasingly disrupted in the next 2-3 years). The only difference will be that some of us are going to be more or less wrong or right. (And as a digression, one place I think the Transition Movement could do better would be incorporating (ha) more localized disaster planning into the mix, since state and federal governments may become increasingly unable to provide disaster relief during the coming energy crunch… a little WTSHTF thinking wouldn’t hurt, and might just get some of the serious doomer/survivalists out of their bunkers long enough to make some common cause).
        As I said in my previous comment, getting any sort of major reform on the national level will realistically years and likely billions of dollars. I agree 100% the the sort of future we build is going to depend on the ideals we work towards today, I just disagree that fighting corporate personhood is a worthwhile way to fight that fight.
        Frankly, I could care less whether corporations think me cynical and disengaged, as I hope to so order my life and my community to make them as irrelevent to me as the strong can ever be to the weak.

  2. Lo Sbandato says

    All this is nice and righteous, but sans armed revolution, how exactly are the plutocrats to be ejected? If they’ve been working diligently for 250 years (or more likely 10000 years) to collect the reins into their hands, do really believe grassroots activism and ballot boxes are going to cause them to relinquish that power peacefully? Don’t go citing the American Revolution: it was the Darfur of its day, a place that was way down the list of world problems, especially, in British eyes, to the problem of France.

    “5) Big corporations WANT you to be passive, cynical and withdrawn from politics. ” So what are you offering instead? Beating ourselves bloody in a vain attempt to change the unchangeable? Sad but true about the “99%”: most are happy to be serfs, as long as they gain at least the strong illusion of safety. You could write 10,000 of the most brilliant blogs, parade in 100,000 streets, and broadcast over 1,000,000 websites, and you will never break the basic programming of the powerful reptilian brain: Safety at all costs. (It’s also been called “Bantu philosophy”, that mere survival is the highest achievement for which to hope.) I hate Ayn Rand, but even survival is an individual pursuit. Those will to sacrifice whatever to maintain it can’t be helped. There’s not even any point in trying.

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