The following piece is slated to be chapter 9 in the second volume of Values & Ethics: From Living Room to Boardroom (itself based on an Internet-based talk radio show of the same name I did in times past). My adroit and careful partner in dialogue is Richard L. Grossman. Richard’s words are indicated by the initials RG, and mine are JM. For paragraphs with no initials, assume they are a continuation of the speaker who was speaking in the previous paragraph. Enjoy this chapter entitled Corporations, Law and Democracy.
“The courts ruled in favor of treating the corporation as a private economic actor which could then, for all intents and purposes, compete as freely as individuals, but with the advantage of much greater economic resources and, as critics noted, with much less responsibility than that required of individuals.” ~ Robert N. Bellah, Richard Madsen, William M. Sullivan, Ann Swidler, Steven M. Tipton
JM: Today I am speaking with Richard L. Grossman. He has a lot to say about corporations. He’s known for pioneering an organization called POCLAD (the Program on Corporations, Law and Democracy) and is currently with The Community Environmental Legal Defense Fund. Here is a long talk on YouTube.com by Mr. Grossman.
There is a lot of talk these days about “corporate citizenship” and “socially responsible business.” Some people think that is great — no more unnecessary polluting, propping up totalitarian regimes, and globehopping for the cheapest labor. I think it’s pretty clear that the folks who have brought corporations to a low point in public regard and corporate citizenship because of financial irregularities, abuse of people, ruination of the environment, etc. these people don’t have an internalized sense of honor, or if they do, it’s not the definition of the word that I would use.
Randy Hayes says: “Politicians and corporate ‘leaders’ have merged, reducing our political system to a ‘democracy theme park.’ This leaves us with the Republican side and the Democratic side of the ‘Big Business Party.’” Two of the same sides of the coin. So it’s just a very interesting topic, one that I’d like to get involved in, and I think there are few people who are better to speak with on the topic of corporations than Richard Grossman.
In addition to being the co-founder of POCLAD, Mr. Grossman is an expert on law and corporations, and was formerly a Peace Corps volunteer in the Philippines, Director of Environmentalists for Full Employment, and a number of other things. He’s also an author of articles, pamphlets, and books on labor, environment, economics, the Constitution, corporations, and legal history, etc. He’s also featured in the movie The Corporation, which is a stunning look at corporations and exposes the dark side of business.
Hi there. Is it okay if I call you Richard?
JM: First of all, tell us: what did you think about the movie The Corporation?
RG: Well, frankly, I was quite disappointed in it. I thought they missed an opportunity to really delve into the nature of the corporation and its history and get beyond… to help people see what we’ve been trained very carefully over a long period of time what not to see regarding what the corporation is and how it functions, and how fundamentally antithetical it is to the first principles of a democratically, self-governing nation.
JM: Do you have a word on why that movie seemed to lack the teeth that you would have liked to have seen?
RG: I don’t know. I think the book that it ended up being based on is an exceedingly inadequate book written by a Canadian lawyer who I think may be new some Canadian law and history but his grasp of United States law and history around these matters was infinitesimal. That might have been part of it. And I think, to be fair, it’s a very difficult subject and it takes time for professionals who have been trained in a certain way to “untrain” themselves and ask lots of questions, and to go down past what at first may seem counterintuitive or contrary to established law and culture. And I think they just didn’t engage in that process adequately.
JM: Ok. Well, here’s an attorney saying something about corporations, Robert Hinckley. He said: “Corporations are set up to make money. The corporate system has no conscience, no obligations of citizenship. In fact, it is encouraged to take advantage of the public interest.” Would you agree with that?
RG: There are a bunch of sort-of “half-truths” in that, but it’s a diversionary statement. I mean, one of the challenges in talking about corporations is that we can’t talk about corporations today without talking about United States history. And ideally, going back even farther.
The mess that we’re in now, or that some people think we’re in now, didn’t begin with the Reagan Administration or the Bush Administration; it goes back a very long time. It’s tied into the founding of the nation, and the problems inherent in the founding of the nation, such as only a relatively small number of people had rights in the beginning. A small number of people were able to use the Constitution and use the law of the land to deny the rights of the majority.
So, it’s a long history. The men of property who began using corporations as their primary vehicle after the Civil War to a large extent: their fundamental goal, in addition to making money, was to use the corporation as a governing vehicle. As a rule-making vehicle. To make the rules, and to make the rules to make the rules. So when Hinckley suggests that they take advantage of the law and the rules – I mean, that’s just nonsense. They created them.
The corporate class of people starting right after the Civil War basically reconfigured law in this country, and they didn’t have to do too much because the slave masters had pretty much written the law up to the Civil War, and they had a lot of things in common with “the corporate masters.” They have actually configured the law and configured the culture and define the institutions like the law schools and most colleges and universities to basically come up with this “creation of law” – a fiction. But actually which wields more power than the states that created it. It is actually able to overpower, legally (so-called) the rights of people to govern ourselves.
So, these are governing entities. It’s nothing personal — the people running these corporations may be perfectly nice people, and that’s irrelevant. It’s the entity. The corporation is clothed in the Constitution, and because it basically created a corporate culture, we don’t even really see what’s going on for the most part. You have these centers of private power that are run by a few people in each case, who are essentially making the fundamental decisions and creating the values that determine what happens in our communities, determines who lives and dies, determines what goes on and what we can and cannot do. So, it’s way more than what I think Mr. Hinckley is suggesting.
JM: I have thought once or twice myself that the strain of capitalism and state-managed crony capitalism we have in this country is in a way reminiscent of a kind of slavery. I believe Marx used the term “wage slave.”
RG: Yeah, the more I look, the more I see the parallels, too. For example, what we had up to the Civil War was a slave system. In fact, it was codified in law— written into the Constitution. That means that the default in a society was that slavery was legal and that slaves as humans had no rights. The wealth of the country – North and South – because you had an awful lot of banks and merchants that were invested in Southern slavery, the slave trade, etc. So it wasn’t just a question of the South. There was no freedom of speech in the South, no First Amendment. Even if a bunch of white people wanted to meet in 1830 to talk about abolition, that violated the laws of every state in the South, and they could be put in jail. So, slavery was a system where the law said that a few people (the white owners) could use the law to deny the rights of a whole class of people. Right?
RG: We now have a parallel in corporations. The default is a corporate system – throughout all the institutions and the culture and the law – that says, for example, that the few people who are running the corporation have the right under the law to deny all of the employees their constitutional rights. That is, if you work for a corporation, as soon as you cross the property line every day, you hang up your constitutional rights on the wall. You don’t have any freedom of speech; you have no freedom protection from unreasonable search and seizure; you have no right to due process; you have no equal protection – because their people, in previous generations, have defined the corporation as a private entity. Even though it’s chartered by our states, still it’s considered a private entity, and therefore the Constitution does not apply on private property.
We have a case here in Pennsylvania that a group of citizens has brought where they claim that the state, by chartering the corporation and by giving the corporation the same rights a person has in its state corporate code, is therefore complicit in the corporations’ denying people their constitutional rights. What the district court has ruled is that, Well, the state may have chartered the corporation, and the state may well have and did give corporations the rights to personhood in the state corporate code, but the state has absolutely no authority for anything the corporation does, and therefore, for the plaintiffs – the people in this community – to come to the state for remedy, or to go to the federal government and say, “We need a remedy from the state for unleashing this private government upon us and denying our rights.” It was thrown out.
So, the reality is, the states create the corporation on paper, and as soon as the corporation is created, the people are running it, are able to wield the law. They have the First Amendment, and they have the Fourteenth Amendment. I’m talking about the corporate directors. And they wield that to deny us our fundamental rights. If you heard me saying that there is a parallel between the slave system and the corporate system, that’s exactly what I mean.
JM: Wow, that’s a lot of shocking information. I guess when I hear you say it, I knew some of those things, but I probably let recede out of my conscious mind. I guess that’s the nature of ignorance – or probably more accurate, the nature of information that is hard to accept emotionally.
RG: Well, as I said very carefully, we’ve all been trained, and our minds have been colonized, and not in too many places in this country do people have this kind of a conversation. So I’m very happy to be on your show.
JM: I have been talking with the informed and unwavering Richard Grossman. Thanks for sticking with me on Values & Ethics: From Living Room to Boardroom, here on World Talk Radio. Richard, what’s on your mind?
RG: There are a number of communities around the country that have continued to resist the invasion of the Walmart Corporation. People might know that that’s happening— Walmart wanting to open a “superstore” in their community. They are really just the tip of the iceberg of what Walmart Corporation is: the largest “private government” in this country.
The reality is, given the history I just spoke of, the community – even if the majority of the people in the community have expressed their views through their elected officials in the most democratic/representative way, they do not have the authority to simply say “No. We don’t want corporations like this here.” It’s a whole range of issues. They can negotiate with the company regarding traffic patterns, size perhaps, water runoff, technologies, lighting schedule, etc. But they cannot say no under the law because the corporations have what they call “right to conduct a lawful business.” They have this slew of Constitutional rights and powers, including First Amendment, Fourteenth Amendment, Fifth Amendment, and other parts of the Constitution that they actually wield.
What happens is, you go to your planning board or your zoning board for a meeting, and there are the lawyers for Walmart sitting right there, because of their due process and protection, basically spouting the law, saying, “You can’t say no; we’ll talk to you about lighting, but you cannot say no.” This is why you have communities battling year after year in their zoning boards and planning boards trying to set up some kind of regulation. It would be the same if it were General Motors Company, or whatever.
The reality is that we, although it says in our state constitutions that we are the source of all governing authority, the source of all political authority, we are constantly trumped, our rights are consistently denied, by what essentially amounts to a private concentration of power in the hands of corporations.
But that’s not what our society calls them, and that’s not how the law views them, and therefore, you have a very simple picture of corporate directors and managers using the law to deny us our rights and to do the real governing just like the slave masters use the law to deny people their rights, and do the real governing and make the real decisions.
JM: Corporatocracy is a scary thing. What about the idea of “servant leadership.” Have we lately begun to see corporations actually becoming more integrated into the community, and socially responsible?
RG: I don’t. The only way that that’s legitimate, in my view, is when the corporation becomes totally subordinate – that is has no constitutional rights, no ability to shape the ideas, to educate, to give money in the body politic, no authority to help elect people, to basically set the values of the country. They need to be subordinate, as if they are an indeterminate object— which is what they are.
In some parts of the country there is a beginning, over the last five or six years, of very different conversations in communities that are struggling with various different kinds of corporate invasions whether it’s factory farms or toxic dumps or ethanol factories are quarries, etc. where people are realizing that their thinking about what’s going on has to be changed, and the nature of the struggle that a community needs to put together also has to be very different.
As I suggested before, if people think that through our zoning boards and are planning boards in the various state and federal environmental, labor, and other regulations that we are going to turn corporations into subordinate entities, we’re crazy. As I said, we are dealing with the culmination of several hundred years of law and culture that have created the institutions and created the very powerful forces that are backed by law – backed by the armed might of the nation.
So, I’m always happy when people running giant institutions say they are going to do less harm and be kinder and gender and all that; I think that’s wonderful. But, in fact, it’s in a sense irrelevant and diversionary because if we’re the sovereign people and take seriously all the wonderful language of the Declaration of Independence and the American Revolution…then how can we create a piece of paper – something called a Charter – and then give to that corporation more power and rights than we have? To give to this very small number of people who are running Fortune 500 corporations this power over us? To give them the authority to use law to deny our rights? To set the values and the rules, and “the rules for making the rules?” It’s violative of the first principles of governance that we all grew up thinking learning that
To give to this very small number of people who are running Fortune 500 corporations this power over us; to give them the authority to use law to deny our rights; to set the values and the rules (and “the rules for making the rules”). It’s violative of the first principles of governance that we all grew up thinking learning that are supposed to be the basis of the extraordinary thing that’s different about this country.
Corporations are doing the real governing, and so for most of us, we are begging them to please not be so bad, to please not do so much harm, to please give us a little more solar, give us a little more medical care, don’t put so much poison into the air and the water, please! Meanwhile, when they dump poisons into the air and water, they’re legal because they have permits from the state due to the Clean Air Act and the Clean Water Act. When they deny workers their fundamental constitutional rights, that’s legal. That doesn’t make any sense to me.
JM: Let me give you two quotations, one of which is on this side and one is on the other. The first is by Noam Chomsky, who said: “There wasn’t a law that said the King and the nobles had to run everything, and there isn’t a law that says that corporate owners and managers have to run everything, either. These are social arrangements. They developed historically; they can be changed historically.”
RG: Well, but they’re laws now! Most of that stuff is either written into law or judge-made law – therefore “the Constitution has been interpreted in certain ways.” Think of this: when you get out in the Northwest, or in Northern California, when a bunch of people go onto Maxam Corporation land and chained themselves to a tree to protect the whole ecosystem, and trees that were here before Columbus landed, you know – the corporation calls the sheriff, who comes and puts pepper spray in their eyes and arrests them and the criminal justice system takes over. It’s reminiscent of the way the sheriff would support the slave master. It is the law, and it is enforced with violence.
JM: So, how do we get these pernicious and absurd laws changed?
RG: We start with discussions like this; we start with education – with people starting to discover that there are other ways of seeing what is going on around us. The extraordinary thing that we’ve learned is that there is a very, very rich history of people who fought every step of the way what was going on, who resisted mightily and bravely. We have their words, we have their experiences. You know, most everything that I said has been said by people before me. At other points in our history, those words had a lot of credibility.
For example, for the first 50-75 years in this country, corporate stockholders were in fact liable for harms and debts of corporations – that had to be changed. Corporations didn’t always have constitutional rights— that had to be changed. Just like African-Americans once didn’t have any rights; women didn’t have rights; Native Americans didn’t have rights. A lot of things had to be changed – some have changed for the better.
You know, a relatively few number of people, who have descended from the relatively few people who wrote the Constitution, have been controlling things. I know that sounds conspiratorial and mysterious and all that, but if you just go around and add up the directors on Fortune 500 boards of directors, we’re talking about 7,000 people. You add in the people who run the universities, and major politicians, and you’re not talking about a huge amount of people. And if you compare that to the wealth concentrations, you see it’s very parallel.
JM: What would you say about the late, great Paul Wellstone having said: “Why do we rely on multinational corporations that make decisions halfway across the world over martinis that could make or break rules lives in our communities?”
RG: Well, there’s a very powerful corporate culture that tells us we have very important people always – whether they’re politicians or educators or newspaper editors or in some cases, union leaders, or in some cases, environmental leaders – who basically put forward the concept that there really is no alternative; that corporations, especially the giant ones, are the most efficient engines for creating jobs and making progress in bringing security and liberty, and as they’re not perfect, we can make them a little “less bad,” but there is no alternative. A lot of us have been trained to think that way.
We have to start asking questions like, Who really does the work in this country? It’s people that do the work; it’s people that have the skills. Corporations are a fiction; it’s a mechanism for concentrating money and running a large organization. Why would we give them Constitutional powers?
JM: Just to clarify, when mom and pop run a business, they do not have nearly the power that is granted to corporations?
RG: Well, there are thousands of “non-Fortune 500” corporations. Some mom and pop businesses are, of course, corporations. They theoretically have the same constitutional rights and powers that Walmart Corporation or General Motors Corporation has. But, when you’re Walmart Corporation and you have almost $300 billion a year passing through your coffers, that makes your power pretty significant. But there’s no reason for a mom and pop store to have Constitutional rights, either.
JM: Are there good alternatives to doing business – you know, creating products, marketing them, selling them, etc. – without the corporate structure? Is that a simple step if we chose to take it?
RG: Well, I think it’s self-evident that are tons of different kinds of formations that people can use, but you can still call it a corporation and yet not have it clothed in the Constitution.
I am discussing corporations, law, and democracy with POCLAD founder Richard Grossman on Values and Ethics: from Living Room to Boardroom, broadcast live by World Talk Radio and stored forever on www.ValuesoftheWise.com.
JM: Would you say that the American corporation is the right system, or needs to be changed from the very bottom up?
RG: Well, I would actually reframe the question: I think it’s our self-governance that has to be changed from the bottom up. That’s the context in which this discussion in the work of citizens takes place. It’s We the People who are supposed to be the source of all governing authority; if that is not the case, with the change was going on in our municipalities, our states, and the federal government. Part of that will be, in fact, redesigning what responsibilities and what directive we give to concentrated power – when people put their money together to do something.
But it’s We who have to change. That’s one of the big things that I wasn’t happy with about the film The Corporation – it was all about corporations, rather than us – the people who are complicit in it, or a part of it, or just taking orders. So that means we need to talk about American history, we need to talk about/explore/ask questions like: What is the Constitution? What’s the Supreme Court?
I mean, given that so much of the constitutional powers that have been bestowed upon corporations in the last 150 years has come from the Supreme Court. We need to ask, What’s that about? And Why are they doing that? And Why, when a Supreme Court nominee is floated, you don’t hear a word about, “What will be his or her position on corporate constitutional rights?” That’s not a subject that even gets into the speculation pages of punditry and the press at all that.
We can study corporations to death, and that won’t mean anything unless we know, in fact, about our own country and our government and how we got to this place here. Change has to come from the public sphere— people driving new laws into the Legislature. Change has to come from the culture so that no judge will stand up and say, “Of course a corporation has a Constitutional right to exist.” That would be laughable when the culture changes. Of course, nature must have rights; nature now has no rights. Workers at work must have Constitutional rights.
JM: Ok. Let me read you a quotation by Peter Singer, a philosopher and ethicist, and tell me what you think, if I could. “The tendency to form hierarchies shows itself in petty ways in corporations and bureaucracies, where people placed enormous importance on how big their office is and how many windows it has. None of this shows that hierarchy is good or desirable, or even inevitable. But it does show that getting rid of it is not going to be as easy as previous revolutionaries have thought.”
RG: He’s on the mark. I think we live in a corporate state that is governed by a corporate constitution and we’re surrounded by/immersed in a corporate culture. To think about revealing it and exposing it and challenging it and contesting it and changing this culture/corporate system – well, I certainly wouldn’t suggest that that’s an easy thing to do. Hierarchy is a part of all this; a few people are more important than millions and millions of people; a few people make the decisions for everybody. That has to go, also.
JM: Let me give you another one, what I imagine is a “slow pitch.” This is by Richard Watts. “Corporate social responsibility is the continuing commitment by business to behave ethically and contribute to economic development, while improving the quality of life of the workforce and their families, as well as the local community and society at large.”
RG: It’s a total diversion, and I put the phrase corporate accountability in the same category. Corporations are creatures of law; they are creations of the State. Corporations have the responsibility to do what they are directed to do; up until about 1900, corporations were chartered for very singular purposes – to build a canal, to construct a building, to create a certain product. Once things began to change, corporations are charted for what’s called any legal purpose. Because they have all these powers to invade the public sphere – to get into elections, lobbying, lawmaking, propaganda, and education – they are, in fact, polluting the body politic.
So, it’s our public officials who have to be responsible; it’s our public officials who have to be accountable; and it’s we the people who have to be responsible; and we have to be accountable. Then, we give orders: we’re going to have the state charter a corporation, and this is its purpose: to grow tomatoes. It’s purpose is not to shape tax law; its purpose is not to shape labor law; its purpose is not to educate us or propagandize us about “What’s the proper energy policy?” or “What’s the proper foreign policy?” or to teach us about economics. Individuals have free speech — the individuals do that. The role of corporations is to take orders and to do what society in general wants done, not the other way around.
JM: I like the idea of, Let’s take back the power; have it be between the People and their Representatives. Indeed, If a corporation wants to get together to grow tomatoes – let them do that, but that’s as far as they’re going to go. That was really crystal clear to me and I want to punctuate it.
Do we need to start a “grass-roots” revolution at the curriculum level at the university – at MBA programs and such – to get this new idea of government by the people, for the people, and of the people clear in the minds of future business leaders from the get-go? I believe that upwards of 60-70% of students at elite institutions want to get into the business world, including the dubious sector termed “financial services.” So this is probably critical, no?
RG: Mother Nature bless you for that, if you can do it! I mean, right now the schools, whether they are state schools or private schools, law schools, economic schools, journalism schools etc., are teaching just the opposite. If you can crack that, by all means!
I’m now with The Community Environmental Legal Defense Fund. We have started what we call “Democracy Schools” and we are teaching them in 15 different places around the country, on weekends, for 10-15 folks. We are starting to take this information out into the communities. There are two municipalities here in Pennsylvania that passed laws stating that within their jurisdiction, corporations have no Constitutional rights.
JM: I always hear when I listen to Noam Chomsky that change is usually effected by the people.
RG: And usually not the politicians or the presidents of universities, either.
JM: This is reminiscent of Margaret Mead’s popular and important quotation: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it’s the only thing that ever has.”
JM: Mr. Grossman, I thank you heartily for your contribution and I think that folks who have an open mind are either willing to hear what you have to say, and deal with the reality that you’re describing, or they’re going to disagree with you just as dispassionately. It’s been an interesting dialogue and I thank you for calling in.
RG: Great, thank you very much.
JM: Author David Callahan, Ph.D., wrote: “Enron broadcast its ethics code – which is Respect, Integrity, Community, and Excellence – on everything from coffee mugs to T-shirts to workplace banners, while Kenneth Lay gave speeches at conferences on corporate ethics.” That was in his book, The Cheating Culture: Why More Americans are Doing Wrong to Get Ahead, because I think Callahan is onto something there when he points out that corporations can say that they’re ethical – that they’re doing this or doing that – but I think this really puts the lie to that, when you think about what Enron was involved in, and you think about how spectacularly it collapsed and ruined a lot of people’s retirements, cheated and harmed a lot of Californians in regard to electricity, destroyed many peoples’ stock portfolios, and sent shockwaves through the financial system.
I will end with a trenchant thought from Richard:
“You want sanity, democracy, community, an intact Earth? We can’t get there obeying Constitutional theory and law crafted by slave masters, imperialists, corporate masters, and Nature destroyers. We can’t get there kneeling before robed lawyers stockpiling class plunder precedent up their venerable sleeves. So isn’t disobedience the challenge of our age? Principled, inventive, escalating disobedience to liberate our souls, to transfigure our work as humans on this Earth.” ~ Richard L. Grossman