Countering Corporate Power

...Nace's account of the confused, confusing ruling is admirably clear...

...States with irksome conditions in their corporation charters now faced the likelihood of corporate flight, at least on paper...

...Unfortunately, the legislative and judicial barriers against attempts to create a kinder, gentler U. S. capitalism have risen to dizzying and daunting heights...

...Does it mean a short-term run up in the stock of a company that imposes long-term costs through pollution, say, on society as a whole...

...Instead, it was a riot against a power play by a British corporation, specifically "the plan by the East India Company to sell its tea exclusively through specially commissioned local consignees...

...But hardly anyone, including Madison, wanted a U.S...

...Although Greider's title is The Soul of Capitalism, he concludes early on that "American capitalism doesn't have one...

...His major coup was to persuade the Pennsylvania Legislature, against fierce public opposition, to rescind the ban on corporations owning stock in other corporations...

...He offers a few suggestions— chiefly involving rescinding the privileges granted corporations over time—that he admits won't be adopted as long as government at every level in the U.S...

...Greider readily concedes that his book offers "very few ideas that are genuinely new...

...Corporations could not own shares in other corporations (no mergers, no acquisitions...

...Field concocted the notion that corporations were "persons" and entitled to the same rights and protections, a position the Court took, or seemed to, in its Santa Clara decision of 1886...

...He does argue forcefully, though, that the monsters that grew out of those increments are imperiling democratic institutions and representative government...

...a "race to the bottom" began as state legislatures competed to make their charters ever more lenient and alluring...

...Then came the railroads, with their voracious interstate, indeed transcontinental, designs, and along with them came a lobbyist for the Pennsylvania Railroad named Tom Scott...

...He elaborates: "We [Americans] have escaped the elemental struggle that has stalked human societies since the origins: hunger, scarcity, the burdens of producing...

...The classic antipathy between labor and management can rage on inside a single soul...

...State corporation charters, which, as Nace writes, usually "were reserved for quasi-public projects like toll roads, bridges canals, banks and other sorts of infrastructure," stringently barred those entities on the reciving end from conducting business outside the state or outside the terms of the original charter...

...is so solicitous of and beholden to business interests...

...But the "optimism" Greider repeatedly expresses that we the people can regain control of our economic livesrunscounterto the pessimism brought on by a reading of Ted Nace's book...

...Nace's research convinced him that the Boston Tea Party was not, as generations of American schoolchildren have been taught, a blow against King George III and colonial rule, nor was it principally a protest against the tax on imported tea...

...As a result of the war, 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...

...The question is why, despite the misgivings of Jefferson, Lincoln and FDR, are our elected officials, Republicans and Democrats alike, vying today to outdo each other in coddling and kowtowing to corporate behemoths...

...Greider lists a number of areas where attempts to begin this task are being made...

...That countervailing power, as Nace's and Greider's books demonstrate, is not what it used to be...

...Pension funds currently hold some $6 trillion in trust for U. S. employees: "Along with other financial institutions that have fiduciary obligations to their beneficiaries— mutual funds, insurance companies, trusts, and a few others— they [pension funds] literally 'own' the American economy," including half of the publicly traded corporate stocks...

...The other major factor in the growing power of U.S...

...Greider, the author of five previous books and a veteran journalist who has worked at the Washington Post, Rolling Stone and the Nation, announces at the outset what would seem to be a bit of splendid news: "The United States has solved the economic problem...

...In other words, the East India Company planned to replace independent local merchants with a company-owned distribution system...

...But, Greider proceeds to wonder, if we're so materially secure, why aren't we happier...

...And during his 1932 Presidential campaign Franklin Delano Roosevelt, in a San Francisco stump speech, noted that 600 companies controlled two-thirds of U.S...

...But what precisely constitutes shareholder value...

...Looking back on the social transformations wrought by organized labor and the New Deal, John Kenneth Galbraith declared that Populist fears about the concentration of wealth and power in America were ill-founded: "Private economic power is held in check by the countervailing power of those who are subject to it...

...That, in fact, is what most of them are legally bound to do...

...This blasé reaction is what Greider hopes to challenge...

...Legislative charters were granted for limited periods, and the genuine threat of charter revocations posed an effective curb on corporate overreaching or misbehaving...

...Writers & Writing Countering Corporate Power By Paul Gray Anticipating the END of the Civil War, Abraham Lincoln wrote a friend in 1864: "It has indeed been a trying hour for the Republic...

...business...

...Much ink has been given to the swelling income disparity between workers and bosses, and the inexorable concentration of wealth within the tight circle of the superrich...

...Why, for instance, should pension funds invest in companies that are busily slashing or eliminating pensions...

...More aptly, the corporation might be compared to a megaphone...

...The upshot of the Court's protracted, piecemeal process of enhancing corporate rights, whichNace calls "an immense transfer of power from democratic institutions to private ones," can be seen in the extreme difficulty now encountered by all attempts to modify corporate conduct through legislation or the courts...

...When one participant in a discussion has the power to drown out all those in disagreement, the ideal of free speech seems to have been turned on its head...

...What else is new...

...It comes as a surprise, for instance, to learn that big corporations were not always considered synonymous with—and exemplars of—the American Way, despite all the glossy advertising and public relations campaigns that have been launched over the last century or so to trumpet this claim...

...But Nace has done a formidable amount of homework and come up with plenty of information that other readers will find intriguing...

...corporations was the Supreme Court...

...The author acknowledges, though, that employee ownership has not always worked, most visibly in the case of United Air Lines, where the pilots union president once observed, "We may be 'shareholders by night' keenly interested in the profitability, but we are 'employees by day' who must be concerned about the size of our paychecks and security of our jobs...

...invest— this enormous pile of money still do so with the sole intent of maximizing shareholder value...

...Scott's victory led to the concept of the holding company and rapidly freed corporations from rigorous oversight at the state level: "Let's say a company in Missouri didn't like the restrictions contained in its charter...

...industries, then warned: "If the process of concentration goes on at the same rate, at the end of another century we shall have all of American industry controlled by a dozen corporations and run by perhaps a hundred men...

...Greider the journalist has visited a few of these enterprises and worker cooperatives and interviewed some of the participants, almost all of whom have rosy things to report...

...It would be nice to believe, along with Greider, that change can take place...

...Think of the paradox as enormous and without precedent in history: a fabulously wealthy nation in which plentiful abundance may also impoverish our lives...

...Examples of this clash have become so familiar that most people notice them, if at all, with a shrug...

...Nace explains: "More than any other person, Scott is responsible for the institution that has increasingly dominated the world since the late 1800s—the corporation in its modern incarnation...

...The machine's relentless, single-minded rationale—churning out more from less—regularly collides with social health and well-being...

...He offers two quotations that nicely capture the contrast between the goal of capitalism and the ideals of society...

...That may not sound like a huge triumph, but Nace demonstrates how it utterly changed the dynamics of US...

...However, Greider argues, those who manage—i.e...

...The author implies no dark, overarching, plutocratic conspiracy...

...Lincoln was not the only American icon to worry about "the money power of the country...

...a general standard of well-being that is not restricted to the powerful few...

...Neither a professional economist nor a historian, he actually was the founder of Peachpit Press, a publisher of computer-related books...

...It's an ingenious approach, turning capitalism's logic against it: You can't do that anymore because it's hurting our bottom line...

...He was a superb backroom manipulator, content to remain behind the scenes distributing his employer's money and muscle to best advantage...

...Can the chasm between these opposing views ever be bridged...

...version of the East India Company, and the responsibility for chartering corporations devolved to the state legislatures, where gimlet-eyed locals, so the theory went, could keep aspiring monopolies in check For four or five decades this system worked...

...Put plainly, we are steering a steady course toward economic oligarchy, if we are not there already...

...An entertaining and sometimes arresting answer can be found in Ted Nace's Gangs of America: The Rise of Corporate Power and the Disabling of Democracy (BerrettKoehlers, 282 pp., $24.95...

...New Jersey took an early lead in this capitulation sweepstakes, eventually to be eclipsed by Delaware, which is where matters stand now...

...There already are a goodly number of mutual funds that offer "socially responsible investing," and the trend may continue...

...A similar clarion calls at the beginning of William Greider's The Soul of Capitalism: Opening Paths to a Moral Economy (Simon & Schuster, 400 pp., $28.00...

...Nevermind the clunky subtitle...

...That Scott's name rings few bells for contemporary readers would probably have pleased him...

...Nace finds the concept that a corporation is a "person" and hence a "speaker" bizarre: "After all, a corporation is not a speaker at all—speaker is entirely the wrong metaphor...

...He examines the spread of employee stock ownership plans (ESOPS) and produces a statistic that may startle some readers: "At the start of this new century, around 10 million Americans are worker-owners in some 11,000 employee-owned companies, with total assets of more than $400 billion...

...His approach is that of an interested amateur, one who senses, as do many sentient Americans, the contemporary discontents of capitalist civilization—"the social dislocations and gross wastefulness, the confinements on personal liberties and enduring injustices, the inequalities and ecological destruction...

...We are there now, in 2003, to be sure...

...Nothing in Gangs of America will be new to experts in the history of corporations...

...He is willing to court the scorn of economic sophisticates by asking, "Why does it have to be this way...

...The growth of corporate power and influence came about through small tweakings—a legislative modification here, a judicial decision there...

...Nace points out several times that the word "corporation" appears nowhere in the Constitution or its Amendments, although James Madison twice unsuccessfully urged language that would have given the Federal government the power to grant corporate charters in cases where national, as opposed to state, interests might be effectively served...

...Nace points out several times that nothing in the tale he recounts had to turn out the way it did...

...the book is a lively read and Nace an interesting companion...

...Nine years after leaving the White House Thomas Jefferson, also in a letter, expressed his thoughts on the matter: "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 country...

...After creating and eventually selling his own corporation to a much bigger one, Nace realized he didn't know much about what corporations were and how they grew...

...Greider acknowledges this trend, of course, but points out that ordinary American working stiffs and families collectively possess greater economic clout than they may realize...

...One comes from conservative economist Milton Friedman, who asks, do corporate executives have responsibilities "other than to make as much money for their stockholders as possible...

...but I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country...

...Another town left to wither away when its largest employer pulls up stakes and flees to a cheaper labor base...

...And my answer is, no, they do not...

...The fairly modest campaign finance reform bill passed by Congress last year could well come a cropper in the Supreme Court, since it has already established that limiting corporations' political spending may, given the specific circumstances, violate their First Amendment rights to freedom of speech...

...The other is drawn from Emil Brunner, a Protestant theologian, who condemned capitalism some 70 years ago: "It is debased and irresponsible...

...It is now being argued, Greider writes, that pension funds "must become active investors who pressure and punish companies for their deleterious practices, not as a gesture of social conscience, but because the corporate antisocial behavior damages a pension fund's own wealth...

...So he decided to find out...

...But he ends with a warning: "either we control our creations, or they control us...

...By having its lawyers incorporate a new corporation in New Jersey, and then selling its stock to the New Jersey corporation, the Missouri company could effectively free itself from Missouri's jurisdiction without physically moving...

...Nace begins this story with another currently obscure man, Stephen J. Field, a California judge sympathetic to the railroads who eventually rose to the Supreme Court...

...This precedent provided the thin edge of a wedge that canny corporation lawyers proceeded to use to leverage stunning new immunities from all sorts of pesky rules and regulations for their clients...

...He also seems to have been considerably smarter than any of the politicians he greased or threatened...

...indeed we may go further and say that it is irresponsibility developed into a system...