Advocates of "good government" fret about the lack of participation in public elections, but the most important decisions are made by private governments in which the people may not participate.

Reformers deplore the influence of money in public elections, but we are ruled by unelected, private governments influenced only by money.

The airwaves fill with concern about the future of elected, public government, while the future is decided in the closed councils of unelected, private governments called corporations.

What is a Corporation?

The corporation has been called "a little republic" -- in the famous phrase of Thomas Hobbes, "a chip off the block of sovereignty" -- a creation of the state, empowered to do things the state wants done.

The men of the Eighteenth Century defined any institution below the sovereign level as a corporation. Monastic orders, municipalities, guilds, trading companies, universities, colonies: all were corporations, created by the sovereign state as "bodies corporate and politic" for the ostensible good of the commonwealth.

Such a delegation of sovereignty was no enacted lightly or frequently. At the birth of the American republic, there were only a handful of business corporations in existence, and they were not terribly important. Soon, however, investors were demanding corporate charters, couched in the language of improving the new nation. As these "paper projects" grew and multiplied, the revolutionary generation expressed deep misgivings about them and the "paper aristocracy" they spawned.

"All boast of doing good to a nation," scoffed the republican John Taylor. "Suppose a nation were to decline this beneficence and propose to reward it by doing good to paper projects, exactly in the same way?... These paper projects, which pretend to be a blessing to all nations, would be deprecated as curse by themselves!"

These corporate governments develop national resources and create wealth, said their owners. But even if the "paper system" does add wealth to the nation, "it only makes a minority rich and potent at the expense of the minority," Taylor responded. "Therefore, if paper systems extracted the wealth they accumulate from the winds and not from property and labor, they would still be inimical to every constitution founded in the idea of national will, because the subjection of a nation to individuals is an invariable effect of great accumulation of wealth."

The "paper system" does not monopolize power, argued their chieftains: anybody can buy stock. "It is said that paper systems, being open to all, are not monopolies ... as every man (meaning, however, only every monied man) may share in the plunder," Taylor observed. "Every man may enlist in an army, yet an army may enslave a nation."

Some spoke of "controlling" these emerging private governments. But the weaker does not control the stronger, insisted Taylor, and these private powers were much greater than those wielded in the public interest. "If you had seen the vulture preying upon the entrails of the agonized Prometheus, would you have believed, though Pluto himself had sworn it, that the vulture was under the control of Prometheus?"

"Shall the nation destroy charters, or charters destroy the nation?", Taylor bluntly asked. Jefferson saw the same opposition of monied interest and public interest. "I hope we shall crush in its birth the aristocracy of our monied corporations, which dare already to challenge our government to a trial of strength, and bid defiance to the laws of our nation."

Odd, is it not, that in this land of the "written constitution" the dominant institutions are not mentioned in the "constitution?

At the constitutional convention of 1787, Benjamin Franklin proposed to give the new national government authority to create canal companies. The power to grant charters had long been understood to be an aspect of sovereignty, and the states, having thrown off the imperial yoke, were now sovereign. As far as the nationalist James Madison was concerned, the states were themselves to be merely corporations within the sovereign national state a-borning. He proposed to give the new national government broad power to charter corporations for any purpose whatsoever. Madison saw that Frankilin's proposal would limit the granting of charters to one purpose. Rufus King, however, saw that Madison's proposal would raise the "bank question" and risk rejection of the proposed constitution. In the end, nothing at all was said on the topic.

The question of sovereignty was eventually resolved at Appomattox. In the meantime, the states retained this important aspect of sovereighty, and retain it yet, even though they are dwarfed by their own creations.

The

Corporate

Person

A medieval pope defined the church as "a mystical, immortal being existing only in the contemplation of god." He was drawing upon much older Roman law defining the temples.

The charters of lesser corporations mimicked this divine precept: cities and trading companies were immortal "persons." So were monarchies. "The king dies; long live the king," the saying went.

In the Dartmouth case of 1819, Justice John Marshall defined the corporation as "an artificial being, invisible, intangible, and existing only in contemplation of law." This quaint formula formed the bedrock of American corporate ideology. As the great abolitionist Wendell Phillips wryly observed, "Rich men die, but banks are immortal, and railroad companies never have any diseases."

"This being does not share in the civil government of the country, unless that be the purpose for which it was created," Marshall assured. "Its immortality no more confers on it political power, or a political character, than immortality would confer such power or character on a natural person."

In order to estimate what power immortality confers upon a natural person, we need only think of those natural persons who have achieved immortality, such as Pharaoh and Caesar. The notion that corporate government was "unpolitical," whatever modern "political scientists" might make of it, was mere gibberish in 1819. No generation has ever been more aware than Marshall's that monied institutions invariably have political power. That power follows property was the conventional wisdom of the day and a premiss of the American constitution.

For a time, the distinction between natural and artificial beings was apparent even to the legally trained. That changed in 1886, when the supreme court decided that the persons to be protected by the 14^th and 15^th amendments would not be the freedmen for whom they were clearly intended, but "corporate persons" who happened to be anxious to do business in the South. Implicit in the court's "thinking" is the presumption, hardly thinkable even in America, that the corporate person may be assigned to a race, and that the corporate person might be held in servitude, unthinkable especially in America. Pondering the meaning of Emancipation, the court, having maintained that people were property, now concluded that property was people. Thus was the ideological foundation of the new order solidified.

Voting Rights in Corporations

If early corporations were not Democracies, they were not necessarily oligarchies. The Bank of England allowed the larger investors a second vote but no more. Even the East India Company limited the voting power of the great investors. In Pennsylvania's Free Society of Traders, no one had more than three votes, and nonresidents had only one.

After the American Revolution, most corporate charters limited investors to ten or twenty votes. The Bank of North America offered one vote for the first share and scaled down voting power for larger investors: holders of thirty shares had eleven votes and holders of sixty shares, sixteen votes. "No person, partnership or body politic shall be entitled to a greater number than thirty votes," the charter stipulated.

The founder of the Bank was Alexander Hamilton, an extreme and open advocate for "the rich, the well-born and the powerful." But even Hamilton did not venture to offer the system of "one share, one vote," as that would have been clearly and shockingly unrepublican.

Republicanism did not surrender without a struggle. In 1834, the New Jersey Supreme Court invalidated the charter of a bridge company as a violation of republican principles:

The owner of one share or action of the capital stock is, in general, a member of the company-- a corporator-- and, as such, entitled to, and cannot be denied, the entire rights and privileges of a member. Those rights and privileges cannot be different in one member than they are in (an)other... A man with one share is as much a member as a man with fifty, and it is difficult to perceive any substantial difference between a bylaw excluding a member with one share from voting at all, and a bylaw reducing his one vote to a cipher by giving another member fifty or a hundred votes. The tendency-- at least, the apparent tendency-- of the bylaw in question is to encourage speculation and monopoly, to lessen the rights of the smaller stockholders, depreciate the value of their shares, and throw the whole property and government of the company into the hands of a few capitalists, and it may be, to the utter neglect of the public convenience and interest.

Of course, the smallholders were indeed reduced to ciphers. As public government was opened to large and growing constituencies, private government came under the control of a small and shrinking elite. As republicanism triumphed in the "public" sphere, eliminating property qualifications and universalizing access to the ballot box, real power moved to the corporate realm, where republican principles were gradually repealed.

Corporate government

is a constitution

above the constitution.

This now seems to be the natural, logical and legitimate order of things. Consequently, the most intrepid reformers quake before the lair of the corporate person.

Taylor realized that "we moderns surrender our intellects to yells uttered by the living monster, similar to those which its predecessors astonished, deluded and oppressed the world for three thousand years." Where the "aristocracy of superstition" had invoked the gods and their temples, the paper aristocracy invoked "sacred charters" and "security of property."

And so our immortal corporate "beings" gather on their tinsel Olympus and count their tribute, and when they are satisfied with the devotion of their mortal sharecroppers, we may bask in the upswing of their corporate mood cycle, until the gods grow surly again, and then we perish in the downswing.

Controlling the corporation

A century after Jefferson urged that monopoly be prohibited in the constitution, the vaunted Sherman Anti-trust Act was passed and soon deployed against ... the Danbury Hatters' Union!

The Sherman Act, according to Samuel Gompers, was "the most serious menace to the labor movement. That law, which was intended to benefit human beings ... has proved useless in establishing control or regulation over the trusts and monopolies. In a spirit of ironic glee, these same monopolies, trusts and corporations, unharmed by the law which was to have regulated them, now turn this law against the human beings who were to have been protected."

The New Deal enacted the next great anti-corporate initiative, the "corporation tax." In 1962, Estes Kefauver looked back on a third of a century of the tax and found that the after-tax corporate profit rate was somewhat higher than the profit rate had been before enactment of the tax. He concluded that the entire burden and then some had been passed to consumers. The "corporation tax" was a sales tax wrapped in pseudopopulist rhetoric.

For decades, reformers have dreamed of controlling the corporation through rechartering. This would slightly alter the position of the corporation within the sovereign state, but would maintain its role as a private government in opposition to the public government. This oligarchical adversary would still own the world and would soon reassert control over the public sphere.

Others have sought a panacea in reversing the supreme court's bizarre interpretation of corporate personality. But the triumph of corporate power over the Republic was not the result of that decree; rather, the decree reflected the triumph of corporate power.

What if such reforms really were to threaten the owning class? The long history of corporate institutions demonstrates that power would merely be shifted to new corporate forms, and that new taboos would be invented to insulate them from further encroachment.

The corporation could be forthrightly declared a "nonperson," but that would be meaningless unless the corporation were redefined in another manner. The doctrine of the corporate person is a legal fiction, but the fiction reflects a certain truth about institutions: they have "lives" that encompasses and transcends the lives of individuals and institutions. To proclaim that the corporate person does not exist would be whistling past the graveyard.

Bureaucratic "control" of great corporations is a snare and a delusion. The Next Republic should provide not merely for "rechartering" of corporations but for their reconstitution, root and branch, as democratic institutions.

Democratizing the Corporation

In a vast and complex society, everybody can hardly have a voice in everything. Even the richest capitalist must choose a handful of institutions in which to participate, and the citizens of a democratic society would be subject to similar limitations.

The share is a flexible instrument for the distribution and rationing of voting rights. Under a republican constitution, it is reasonable to assume that the share would no longer be a commodity, but rather an instrument of citizenship affording each citizen limited but real power in institutions of his or her choice.

Citizens could exercise these voting rights in all the guises of citizenship-- as workers, as consumers, and as members of the community. In some enterprises, these "interests" might be approximately balanced, while other companies might fall solely into the province of worker, community or consumer control. Some might have a rigid governance formula in their charters; others might be worked out in the process of development. In any event, they would be open to public scrutiny, and would be arenas for public voting power.

There is, after all, no reason why the corporation shouldn't be a little republic.

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