In this essay, I review the history of the institution of the corporation, how it came into existence, and how it has come to be not only the economic engine but also a propelling cultural force in our society. This essay is not exhaustive in its coverage of the subject, but rather it intends to alert the reader to a wide range of socio-political issues in today’s America. Readers seeking more in-depth analysis and specific examples should refer to the sources cited throughout the essay.

*****

A corporation is a legal entity separate from its owners who provide it with risk capital (shareholders), and from those who manage its business (directors and officers/managers). It is created by one or more persons under the authority of the laws of the state. A corporation comes into existence as of the time its articles of incorporation or charter are filed with and certified by the state. Having a juristic personality, a corporation is endowed with many of the same legal attributes and rights of a natural person. For example, a corporation can own property, enter into contracts, to sue and be sued in its own name, is liable to pay tax on its own income, and is liable for its own debts.

The corporation allows a group of individuals to pool their resources and act through a single entity to achieve their business objectives. The duration or life of the corporation is not dependent on the life of any individual participating in the enterprise. The corporation may exist in perpetuity, thus, allowing a succession of individuals to continue the corporation’s business.

All modern corporations have five basic attributes. A corporation:

It is the state and its laws that endow the corporation with those attributes. The corporation, in the words of Chief Justice Marshall, is "an artificial being, invisible, intangible, and existing only in contemplation of law."² On that basis, many view the corporation as a legal fiction created by law, and thus, beholden to the state.³

In the nineteenth century, the corporation, the legal creation, was viewed as something separate and distinct from the economic venture. In the words of Bayless Manning, the corporation was seen as "three dimensional, virtually alive, a little bit sacred because of its ‘immortality’ and connection with the ‘sovereign,’ and withal terribly important."⁴ By the mid-twentieth century, the view of the corporation as a privilege, and the role of the state were de-emphasized. "The commercial image of the business organization … emerged to overshadow the concept of the ‘corporation,’ leading to the death of corporation law as a subject of intellectual endeavor."⁵

Corporate attributes have evolved over a long period of time reflecting contemporary economic demands and socio-economic policies.⁶ Scholars disagree regarding the significance of early business organizations and their influence on the evolution of the modern corporation. Some find the roots of the modern corporation in the early trading customs of the Assyrians and Europeans, or the Church’s recognition of a collective entity as a juristic personality, while others place greater emphasis on English trading practices. Early English corporate law covered ecclesiastical, municipal and charitable entities providing those bodies with a device for holding property,. The corporate status of those bodies could only be conferred by a grant of the Crown.

The commercial use of the corporation began to develop in the medieval era when many merchant guilds began to obtain special trading privileges by obtaining a royal charter. Such royal charters have been found to exist as early as the fourteenth century but did not become common until the sixteenth century. The guilds did not have the legal attributes of the modern corporation. For example, guild members were individually liable for the acts of the guild, and only traded for their own account. Their main purpose was to regulate trade by their members and to protect their monopoly against non-members. While the royal charter bestowed certain trading privileges upon its holder, the chartered guilds also served the political interests of the sovereign by facilitating solidification of authority over divisive local groups and governments.

The joint stock company was developed in the sixteenth and the early seventeenth centuries to facilitate joint commercial undertakings, and the pooling of funds that was necessary to finance costly foreign ventures. By 1692, England had three joint stock companies, the East India Company, the Royal African Company, and the Hudson’s Bay Company. Joint stock companies were created by grant of a royal charter. The joint stock company developed to possess at least two of the attributes of the modern corporation: limited liability and transferability of interest. It appears that the East India Company also possessed the attribute of perpetual life. Those attributes were granted in the charter of those companies.

Those joint stock companies were granted a monopoly in their particular trade. Essentially, the companies were treated and acted as an extension of the government by being allowed to perform significant public functions, such as setting the terms of trade, forming local governments, and controlling customs. In effect, those monopolies were authorized to make foreign policy in their designated areas while the sovereign retained power over those areas of the companies through the royal charters. Merchants who combined to carry on foreign ventures without royal sanction risked criminal prosecution for acting against national interests. However, as the volume of trade grew those public functions became secondary, and by the late eighteenth century lawmakers and businessmen alike came to view the corporation as a vehicle for private trading.

In the United States, there was some resistance to the corporation which was perceived as a privilege derived from the Crown and hostile to the principles of economic equality. Thomas Jefferson wrote: "I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country."⁷ Nevertheless, the idea and the use of the corporation gained grounds throughout the eighteenth century. While the earliest corporations in the United States were formed for non-commercial purposes such as promotion of charitable, religious or governmental aims; banks, navigation, and turnpike businesses followed. At that time, the corporation’s charter had to be obtained through a grant from the state legislature. However, corrupt practices arose from the legislature’s monopoly over granting of the charter causing the business community to assert that incorporation was a right and not a privilege and that equal opportunity should exist for acquiring a corporate charter. In addition, incorporation became a business necessity as industrial growth demanded extensive financial resources that could only be met by combining the capital of several persons. Although, in the early nineteenth century the states may have participated in the corporate enterprise to provide financial support and some accountability, state participation declined later in the century as corporate activity came to be viewed more and more as a private enterprise. In response to those developments, the states began to enact corporation statutes that permitted any group of persons to organize themselves as a corporation if they satisfied certain conditions.

Initially, corporate statutes imposed certain limitations on the corporation, for example, the nature and scope of the corporation’s activity, or its duration, had to be specified in its charter thus limiting the corporation’s activities and potentially its growth. But, those limitations were eroded over time. In 1899, in order to generate franchise tax revenues, the state of Delaware passed an enabling statute allowing any number of persons to form a corporation and without imposing many of the restrictions that were imposed by other states on size, scope, and duration. Thus, Delaware became the state of choice for incorporation of the modern corporation and currently is the legal domicile of more than half of the Fortune 500 corporations. Delaware’s move engendered competition among the states to attract franchise revenues by relaxing their corporate statutes, that race was aptly described by Justice Brandeis as one "not of diligence but of laxity."⁸ Therefore, corporate shareholders and managers were enabled to utilize the corporate vehicle without governmental restraints. By mid-twentieth century uniform enabling statutes became the prevalent norm and the conclusive authority on corporate law.

In addition to development of statutory law, in the nineteenth century, case law developed the scope of constitutional rights accorded to corporations. Chief Justice Marshall wrote: "The great object of a corporation is to bestow the character and properties of individuality on a collective and changing body of men."⁹ As such, corporations have successfully asserted several constitutional rights such as equal protection, due process of law, and protection from unreasonable searches and seizures.

One of the most significant rights later asserted by corporations is the right to free speech.

The language of the first amendment is broad and clear: "Congress shall make no law … abridging the freedom of speech …." The language of the amendment is a negation of governmental authority to regulate speech rather than guarantee a right to a particular class of persons. The right is framed by reference to the act of speech rather than by reference to the actor. As such, the protection provided is very broad. The Supreme Court has held that speech that is otherwise protected by the first amendment does not lose its protection because "its source is a corporation."¹⁰

Regulation of political campaigns impacts political speech, and must withstand "exacting scrutiny" under the Supreme Court’s interpretation of the first amendment . Regulation of campaign finance impacts quantity of speech because large sums of money are necessary for communication through the mass media which is the contemporary medium of communication. In striking a balance between Congress’ interest in preventing corruption and the corporations’ right to free speech, the Court drew a fundamental distinction between campaign expenditures and contributions. Expenditures are expenses incurred by an individuals or association (e.g., political action committees) to effect political communication, and any law limiting political expression will be subject to "exacting scrutiny" by the Court. In contrast, contributions to individual candidates are viewed as an "undifferentiated expression" of support and thus, Congress’s interest in reducing corruption is sufficient to support limitation on the amount of contributions. However, as a practical matter, this distinction does not limit corporations’ ability to influence elections, or the laws and policies promulgated and implemented by the government, and the democratic principle of fair representation.¹¹ The Court did not consider that corporate wealth can effectively minimize the speech of the less wealthy members of society, contradicting the Court’s own standard that no one’s right to speak includes the right to "drown out" another’s speech.¹²

Such legal developments inescapably lead us to more expansive questions about the nature and the role of the corporation, and the question of corporate accountability. The argument against the current state of the modern corporation was expressed succinctly:

[W]e are all aware that we live not only in a corporate society but a society of large corporations. The management-that is, the control-of these corporations is in the hands, at most, of a few thousand men. Who selected these men, if not to rule over us, at least to exercise vast authority, and to whom are they responsible? The answer to the first question is quite clearly: they selected themselves. The answer to the second is, at best, nebulous. This, in a nutshell, constitutes the problem of legitimacy.¹³

This role and responsibility of the corporation was debated in early twentieth century by two noted legal scholars, Merrick Dodd and Adolf Berle, Jr. Dodd believed that the corporation had a social function as well as an economic one,¹⁴ while Berle argued that the corporation was trusted with powers to act solely for the benefit of its shareholders.¹⁵ A level of consensus came about in the 1970s that the corporation’s board of directors has the responsibility to ensure achievement of business objectives and take into account their social impact. But the facts that corporations have interlocking boards, that directors are largely chosen from the same socio-economic circle and basically serve as amicable advisors to one another and to management, were not evaluated. Not surprisingly, the boards have not proven to be an effective monitor of the corporation’s social responsibility, but the debate itself has been papered over, and profit maximization remains the predominant corporate objective.

The legal duties of a corporation’s management are largely concerned with the relationship between the shareholders and the corporation’s directors, and not with the role of corporation in society. Directors and officers of a corporation can be held liable by the corporation’s shareholders for breach of their duties, which can be broadly categorized as the duty of diligence in managing the corporation, the duty of loyalty which requires undivided and unselfish devotion to the interests of the corporation, and the duty to carry out responsibilities in accordance with all applicable laws.

The shareholders right to vote to elect corporate directors, to approve or disapprove certain corporate policies, and the right to sue the directors for breach of duties are the means provided for corporate accountability. It is assumed that shareholders will exercise those powers to set broad policies that will factor in all the consequences of corporate behavior, as if the modern corporation were a larger version of the corner convenient store. In the case of most public corporations, however, ownership is so widely dispersed that it diffuses the concept of control by owners; large corporations are controlled by their management. Ownership no longer implies control as it did at the inception of capitalism. The shareholders’ rights to elect directors and to direct corporate policies are rather illusive in practice, because shareholders are a dispersed group of individuals and institutions, and their choice is limited to voting for or against proxies chosen by management.

Another theoretical form of corporate accountability is market self-regulation, the classical economist’s view that the greatest common good is achieved by every one pursuing their self-interest. In other words, the consumer can direct corporate policies by the consumption choices it makes. That type of open and competitive market, however, is limited to small industries. Corporate operations that require a vast amount of capital and advanced technology exercise greater control over the factors that affect their market. That control is displayed through manipulation of consumer preferences and by eliminating competition, which in turn limits consumer choice. Therefore, the market is not an effective tool for holding corporations accountable for the social consequences of their actions.

The law, generally, does not prevent management from making decisions that take into consideration the impact of corporate operations on community and participants other than shareholders. In fact, several states have enacted "constituency statutes", with a varying scope of application, that provide broad latitude to corporate boards to consider the common good in their decision making.¹⁶ But corporate boards mostly rely on those provisions to defend against a hostile take-over. In general, corporate boards have demonstrated unwillingness to strike a balance between business, consumer and community interests. The profit maximization paradigm has become ingrained in the deep culture of corporate managers and directors. Therefore, the government is the last arbiter of the balance between corporate interests and the public good. But how effective of an arbiter is the government?

By the late nineteenth century, Congress already had become concerned about the concentration of wealth in hands of a few individuals or large corporations and saw the monopolies as "a menace to republican institution themselves."¹⁷ To address those concerns, in 1890, the first anti-trust statute, the Sherman Act, was enacted. Additional laws were introduced since that time, most notably, the Clayton Act in 1914, and the Federal Trade Commission Act. However, the terms of those of statutes are not precise and clear in a way that can guide corporate activity. They are statements of economic philosophy reflecting contemporary ideology, which become specific when applied by the courts. As such antitrust laws are ever evolving against an unfolding conceptual background.

Initially, anti-trust laws had the objective of limiting the number of economic, social, and political harms that could result from a disproportionate concentration of economic power. However, many economists, notably Joseph Schumpeter, rejected the need for antitrust laws and questioned the economic justification for its enforcement. By the 1970s, the anti-trust debate had been narrowed to its economic consequences and the courts came to adopt the application of emerging economic views in applying antitrust provisions. The focus of the antitrust has become refinement of enforcement approaches to reflect the best current theoretical economic models, which do not encompass a reality based study of the economics that we experience. The narrowing of the anti-trust focus to theoretical analysis of economic efficiency has obfuscated the original purpose of preventing disproportionate accumulation of wealth, and has rendered those statutes impotent in protecting our republican institutions from corporate subversion.

As discussed above, initially, corporations were formed to serve the interests of the state, and thus, the state promoted and protected corporate interests. During that initial period, the social structure was largely feudalistic, in the sense that political, economic, and religious institutions and powers were not contained in separate bodies, and the common man had not yet acquired abstract political rights independent of his economic status. As the government became an entity distinct from private persons and activities, and political rights were acquired by the larger society, the relationship of the corporation to the state changed. The corporation became more private and less of a privilege. Corporate owners and managers became more clever and organized, demanded and received more legal rights from the state. Most significantly, in more recent history, the corporations successfully asserted and received the right to make political campaign contributions. Thus, they acquired significant control over the political process. The corporations’ vast wealth and their ability to organize effectively make them a much more powerful player in the political arena than any individual. They have effectively "drown out" the voice of their opposition in the political process. Consequently, the corporation’s influence is eroding the role of the state as a representative of people and is transforming the state into a corporate instrument of socio-political power. Robert Reich, U.S. Secretary of Labor (1993-1997), wrote: "Business is in complete control of the machinery of government."¹⁸ This blatant consolidation of political and economic power is reminiscent of the feudal period.

The democratic system as envisioned by the founding fathers is rapidly degenerating into the type of "Caesarism" that was described by Oswald Spengler in his book Decline of the West.

We have a republican government with built-in checks and balances. We have regulatory agencies with the aim of protecting the public interest. We have the right to free speech, which should engender an independent press that covers a wide range of events and views. But once we look beneath the form, we find that our government’s policies are heavily influenced by campaign contributors. We also find that a small number of corporations own nearly all daily newspapers, magazines, radio, and television stations, which view journalism as a commodity devoid of any social responsibility.¹⁹ The form of our government has become meaningless, it is those with money, the Caesars, who can access government officials and lobby them to implement laws and policies that advance their interests. Furthermore, the same players control our sources of information and our cultural messengers.

"What Sort of Despotism Democratic Nations Have to Fear?" asked Tocqueville in his book Democracy in America. A subtle and dangerous form, that Tocqueville could not name, but described as a system that "debases men without tormenting them." Tocqueville astutely speculated:

[M]en, all alike and equal, turned in upon themselves in a restless search for those petty, vulgar pleasures with which they fill their souls. Each of them, living apart, is almost unaware of the destiny of all the rest. …. Above these men stands an immense and protective power which alone is responsible for looking after their enjoyments and watching over their destiny. ... It works readily for their happiness but it wishes to be the only provider and judge of it. … Thus, it reduces daily the value and frequency of the exercise of free choice; it restricts the activity of free will within a narrow range and gradually removes autonomy itself from each citizen. … Thus, the ruling power, having taken each citizen one by one into its powerful grasp and having molded him to its own liking, spreads its arms over the whole of society, covering the surface of social life with a network of petty, complicated, detailed, and uniform rules through which even the most original minds and the most energetic of spirits cannot reach the light in order to rise above the crowd. … finally it reduces each nation to nothing more than a flock of timid and hardworking animals with the government as shepard.

The conditions described by Tocqueville are astonishingly similar to the conditions of life in the United States. Today, in America, we roam around like strangers, disregard the common good, and distrust common sense. Most Americans work an excessive number of hours, enjoy too little leisure time, or reflective time. They largely know more about celebrities than about their government representatives, they shop as a pastime, engage in "speed dating," work passively, do not appear outraged by any wrong done to others, and have some one hundred TV channels but no independent news reporting. They live, every day, with the fear of losing their jobs, cannot figure out the maze of laws that affect them, and do not feel empowered to effect any meaningful change in their society.

We have choices and free speech, but we cannot question management speak lest we lose our job. We have the right to express ourselves, but have no time, inspiration, or capacity to think. We have a choice of forty breakfast cereals in the supermarket, but we do not have a meaningful choice of banks, newspapers, or political office candidates. How meaningful is choice when the object is insignificant? Do we have a choice about significant matters in our lives, like having real options about our job conditions, education, retirement plans, or health care?

We have become complacent and passive in the face of the system. We do not think critically or engage in meaningful public debate. We wander around like strangers, rugged individualists, each responsible for our own destiny, again, notwithstanding, the meaninglessness of the choices that purport to determine our destiny. But the system is very effective in perpetuating itself culturally and psychologically. Observe the entire industry has sprung up to help unemployed white collar workers find a job. What do they advise? They preach that each individual is the source of his or her own economic woes, that becoming unemployed was good for the person, that the person ought to develop the right attitude, i.e., become a cheerful and devoted corporate servant devoid of any personal preferences, treat finding a job as a full time job itself even if it entails engaging in wasteful activity, and not socialize with other unemployed people for they cannot be useful in the job search! What is the hidden message in all that? That the person should strip away their own individuality, disconnect from similarly situated persons, view other people only as a tool, and make busy work to avoid taking the time to think about their situation in its socio-economic context. This social phenomenon was documented by Barbara Ehrenreich in her book, Bait & Switch: The Futile Pursuit of the American Dream. Similar messages are sent to employed workers too so that they understand what is required of them psychologically: cheerfulness, submissiveness, and singular devotion. That atmosphere creates a type of individuality that has no form, the person’s mind, values, and preferences take on a water-like quality that can change shape depending on the shape of its container. The individual is psychologically dismantled.

Social culture is closely linked with the society’s economic, legal and organizational culture. The origins of today’s cultural conditions in America may be traced to three socio-cultural phenomenon: (1) the Puritan myth of the Chosen Nation, (2) the advancement of the idea of value neutrality in the twentieth century; and (3) the post-1970 organized public relations campaign by the corporations to manipulate the public opinion to hold the corporate point of view as their own. I will first discuss the two twentieth century phenomenon, and then explain the older and deeply rooted myth of the Chosen Nation and how it has sustained the later developments.

Value neutrality was advanced by putting to practice two theories: (1) the notion of "scientific management" which was formulated by Frederick Winslow Taylor in the early twentieth century, and (2) the legal doctrine, born after the civil war, that justice should be neutral. The impact of those ideas on American society is documented and discussed extensively by Philip Howard in his book The Collapse of the Common Good.

Taylor believed that the detailed instruction of tasks contributed much greater value to the efficient functioning of the organization than the wisdom and judgment of the individual worker. The imposition of so-called objective standards on work conduct not only limited the opportunity and the ability of workers to engage their minds by making judgments, it also purified the workplace of all emotional elements and value judgments. The basis for all decisions had to be calculated and proven. This principle permeated the American workplace in various forms and eventually impacted all aspects of American life. Its influence has resulted in detailed regulation of all governmental conduct, which severely limits the ability of government workers to exercise their best judgment in serving the public; and individuals who demonstrate little common sense in conducting themselves, but will readily shift blame to others through lawsuits.

Similarly, some leading legal scholars questioned the principle that the judges’ role is to interpret the law to support and reflect the needs and the mores of society, and advanced the view that justice should be neutral in order to protect society from abuse of authority by judges. One goal cannot be adjudged more legitimate than another, and judges should not make value ridden decisions. The judicial system is trapped by the delusion of neutrality as an ideal and thus, plagued by the fear of making judgments lest it appear subjective. To ensure protection from such abuse, procedural correctness and value neutrality became the criteria for measuring the quality of justice dispensed by the courts. Therefore, fairness is determined not through the quality of the interpretation of legal principles but through following procedures, and manipulative and adversarial debate in the court room where the most persuasive party wins.

The combination of those two ideological influences has had two consequences: (1) a society that mistrusts governmental authority to the extent that impedes the government’s ability to serve the common good; and (2) creation of a "dehumanized" system. As Max Weber observed in his book Economy and Society, the higher the efficiency and standardization of processes, the more "dehumanized" the system becomes by purging all incalculable elements, such as emotions and values, from the decision making process. Those conditions have engendered a misconception of freedom, contempt for authority, and impairment of individuals’ ability to develop and exercise good judgment.

The corporations play on the society’s mistrust of government by playing victim, a victim of excessive government regulation, as such they put themselves on the same footing as the common man, both victims of the government’s bad judgment. So the two must unite against government authority, and hence, against government regulation of corporate activity. Corporations point out that excessive governmental regulation, particularly in the area of public services, has led to inefficiency, therefore the government is inept and should not regulate corporate conduct. At the same time, corporations promote the view that all incalculable elements should be removed from decision making to create business efficiency. The message is clear: the government is not competent to regulate business, and business cannot be judged by subjective standards. That message has permeated American popular thinking, notwithstanding, the ironic contradiction embedded in that view.

The government has become ineffective in carrying out public services precisely because it has taken away from its employees the authority to exercise judgment and make decisions that consider situations in addition to regulations. The effect of this trend is even felt in government agencies with more sensitive and complex tasks such as security and intelligence, where in many instances excessive reliance on the use of technological and scientific tools has trumped human intelligence and judgment, or is wasting resources.²⁰

But the inability to exercise judgment and the ensuing sense of powerlessness are useful conditions in pacifying the public vis-à-vis the corporation. The central theme of this cultural message is to mistrust authority because the exercise of authority ultimately requires an exercise of judgment. Furthermore, the focus is on governmental authority and not the amorphous authority of corporations that is exercised most undemocratically to coerce certain social conditions upon society. Consequently, the prevalent view is that freedom from governmental authority constitutes freedom while disregarding the power of the corporation. As Hannah Arendt astutely has observed we cannot know the meaning of freedom if we do not know the meaning of authority.

Individuals now demonstrate their power and freedom by suing others over issues that range from falling on hard earth on the playground to falling out of a swivel chair! Such lawsuits have come to define individual rights in lieu of evaluating the risks of our actions, acting responsibly, and reflecting on ourselves and our communities. The absence of reflection leads to ignorance of how unrestrained market forces determine the quality of individual rights. They view authority and coercion as governmental attributes and their rights as something to be asserted against other members of their community in a lawsuit, but the corporate coercion of conformity, excessive working hours, geographical moves, reduction in pay, termination at will, and other impositions are seen as necessities the tolerance of which is on par with patriotic duties. The role of economic power in the exercise of political choice is extensively overlooked, and absent from public discourse. The focus conveniently remains on the institution of government, notwithstanding, that the government’s ability to serve the public is impaired by the power of capital. In that way, the real authority in our society escapes scrutiny and accountability. The excessive mistrust of governmental authority and the disregard of economic power have led to public and private unaccountability, and to confusion about the meaning of rights, responsibility, freedom, and authority. The depth and the breadth of the unaccountability and the confusion limit individual choice, freedom, and autonomy in the most subtle way.

Once the individual’s value system is neutralized and his ability to think critically is impaired, his mind becomes receptive to the doublespeak that democracy is synonymous with rugged individualism and unfettered capitalism. This message is well received by an uncritical public, notwithstanding, that the object of capitalism is accumulation of a fortune, while the object of democracy is the welfare of the people, the community of the people, whether rich or poor.

Ironically, the notion and practice of rugged individualism itself erodes the value and the significance of the individual, because the concept of the individual can only exist in relation to a community. As Richard Kennington concluded: "Personal individuality in the modern period, having emancipated itself from nature, from every whole, every principle, within which, or to which, it must acknowledge subordination, finds itself in a void from which it cannot extricate itself.  It lacks community with being without which there is no dialectical articulation of its individuality."²¹ Rugged individualism sits at the extreme point of the spectrum representing the ideal of freedom, where it meets its opposite extreme, the totalitarian ideal requiring complete individual conformity. The two opposites converge because neither model provides the individual with meaningful choices.

Psychologically, rugged individualism is promoted by tying it to the American ideals of democracy. Economically, the message is promoted by providing some opportunity for economic advancement and encouraging consumerism. In this way the meaning of individual rights is merged with property rights, at the expense of non-property rights and values. Everything, including the individual, becomes a commodity, notwithstanding, that the object of the individual is the realization of his/her human potential, the object of culture is the ethos of society, and the object of business is trading and profit making.

The psychological manipulation is manifested differently depending on the economic station of the worker. The high achieving workers, usually professionals, are cuffed in with their egos, high material rewards, and the fear of losing both. The ones in the middle are fed hope, and are chained by debt and diminishing wages. The ones at the bottom simply deserve their fate.

The realization of economic success and excess by a visible portion of the workers, despite the widening of the income gap, has helped solidify corporate power in American society. The self-aggrandizement felt and expressed by the new comers is just what is needed to roil in individuals into corporate servitude. Individuals who exchanged their conscious for inflated bank accounts with egos to match do not question the corporation’s purpose, or its affect on themselves or on society. Those individuals work long hours and usually lack the time to reflect. After a while they don’t want to reflect, because they are cuffed with golden hand cuffs. Imagining a different life would take too much courage and creativity, and would come with a substantial price tag. It is easier to go along, to say yes, and find consolation in the glitter of the cuffs. They must continue to jump through hoops to preserve their position. They stay focused on the bottom line, the corporation’s and their own. They do not ask questions, or show initiative or originality; those traits are widely known to be career limiting. They do not feel bound by any code of conduct as long as they can get away with it, a significant career enhancing trait. They believe in the survival of the fittest, and a sacred right to generate profits at the expense of others. They believe in their own superiority and in the inferiority of those who have not matched their achievements. Those beliefs justify their continued participation in a deceitful system that grows by impoverishing others. The corporations and their managers then make charitable contributions to soothe their conscious, and ever more hypocritically express their care for the less fortunate members of their society.

A single minded focus on monetary worth has permeated all aspects of life in the United States. Every tangible and intangible aspect of life, including love and integrity, has become a commodity to be evaluated in market terms. Nothing is immune from the application of accounting concepts. Management gurus advise that relationships are like a balance sheet with debit and credit columns. Professionals are no longer judged by professional standards of competence and conduct, but rather based on the bottom line and participation in group think. Friends are not judge by their character but by their status, wealth, and connections. Even if personal relationships escaped the claws of accounting concepts, no one really has the time to consider the deeper human aspects of their relationships. Human relationships require a genuine effort, but the corporation leaves its workers with little time to make meaningful efforts in other areas of their life. Slaves did not have the circumstances and the opportunity to develop meaningful personal relationships, and nor do a significant number of corporate workers. However, corporations reward the abandonment of their soul in material terms, and those workers are held out as having achieved the American Dream. They are the examples to follow.

Those who do not play along are excluded, and labeled as socially inept, or worse as professionally incompetent. Those at the bottom who are not even given the opportunities for advancement are just lazy or stupid, and deserve their fate. They are manipulated to loath themselves by repeatedly being told that they are offered equal opportunity for advancement making each individual responsible for his or her own destiny and station in life.

The Americans who fall in the middle are psychologically hostage to the American Dream, because they see it as a possibility for themselves. But in reality, mostly, they are chained by a high debt to income ratio, diminishing real wages, rising costs of housing, education, retirement and health care, job insecurity, and the consumer culture. Those attributes appear astonishingly similar to the condition of certain developing countries that were given large loans to purchase American services, but whatever benefit they reap from those services returns to the American economy to pay American firms for their services, and to service their debt.²² Those countries were also deceived by the American Dream. The corporate operating procedure is the same domestically and internationally.

The corporate invasion of our culture has occurred over a period of time and through a concerted effort to control our government and media, to loosen legal limitations on corporate conduct, and to manipulate people psychologically by merging cultural values with business values. In his book Coporateering, Jamie Court has documented the numerous ways the corporation asserts itself over the individual by disregarding the individual’s needs, time, and privacy; and the tactics that the corporations use to get their values etched in the American psyche. Court traces the subtle, manipulative, and effective tactics of the corporation to a strategy devised by a corporate lawyer, Lewis F. Powell, Jr., who was later appointed a Justice of the United States Supreme Court. In 1971, Powell wrote a "Confidential Memorandum" to the U.S. Chamber of Commerce asserting that corporations are tolerating too much criticism, and to maintain competitiveness, each corporation should appoint a vice president of public relations to counter public criticism. Powell went further by warning that efforts by individual corporations are not sufficient, that the effort must be organized, and carefully planned and implemented over an "indefinite" period of time. He also urged the Chamber to collaborate with business. Among the targets identified for the project were schools, universities, media, and scholarly publications. It took no longer than a decade before the corporations came to dominate the socio-political life of American society through their financing of schools, media, university projects, think-tanks, lobbying firms, and trade associations. By the early 1980s, corporate critics were in retreat, and their power has been diminishing ever since. Through a sustained and carefully orchestrated public relations campaign, the corporation has solidified its power over the whole of American society. Its grip is so tight that it is suffocating any reminiscence of democracy or non-business values, and when we gasp for air we can only inhale the green haze of the dollar.

Given the omnipresent nature of the corporation in our society, everyone is susceptible to mirroring the corporate culture, or what Professor James Scott called "neurosis" in his book Seeing Like a State. The corporate "neurosis is marked by apathy, withdrawal, lack of initiative and spontaneity, uncommunicativeness and intractability. The neurosis is an accommodation to a deprived, bland, monotonous controlled environment that is ultimately stupefying." Those psychological conditions combined with the economic insecurity that most Americans face disables their meaningful participation in the political process. As Zygmunt Bauman observed in Liquid Modernity, political participation requires the ability to reflect and consider the future, "but projecting into the future is unlikely to appear in people who lack hold on their present." The spread and acceptance of the corporate "neurosis" and the struggle with insecurity makes the use of police force in defense of capital unnecessary, therefore, the system can be despotic without appearing as such.

Tocqueville could not name the new form of benign despotism. One may call it a culture of illusion, but the word illusion conveys a simpler form of deceit. I believe that we are facing a more complex form of deceit, which may be more accurately described as bullshit! Professor Harry Frankfurt in his book On Bullshit wrote: "One of the salient features of our culture is that there is so much bullshit." Bullshit is distinct from lying in that a lie is an intentional falsity, whereas bullshit not only is false it is also "phony." Bullshit is promulgated with total disregard for what is true or false, except as it may affect the aim of attaining a certain result. Truth and falsehood are "particular", but bullshit is "panoramic". As such bullshit is not constrained by the truth, it is more amorphous and in some way absolves the bullshitter from responsibility toward the truth. It can be sensed but it is hard to define because it has a slippery quality and cannot be analogized or contrasted with something particular and fixed. Bullshit is flexible and formless by nature and it shifts as necessary to achieve its objective. Hence, bullshit is more pernicious than a lie.

The bullshit lies in the juxtaposition of the American myth, the American creed, and the American reality created by the corporate creed. The bullshit manifests itself in the dominance of the Puritan myth of the Chosen Nation that is justified and promoted through the Deist principle of equality, notwithstanding, the irreconcilable differences between the two. The history and sociology of American myths are extensively discussed by Richard Hughes in his book Myths America Lives By. The American myth of the Chosen Nation, which has its roots in the theology of William Tyndale, drew a parallel between England and ancient Israel, and between Protestants and Jews. It held that Protestant England had a covenant with God that it would be rewarded if it "meeked" itself to God. The Puritans who settled in America believed that they were God’s Chosen Nation and America was their promised land, but they stripped away the covenant of responsibilities that came with it. The stripping occurred early on as the Puritans set out to annihilate Native Americans, viewing them as the agents of Satan. The myth of the Chosen Nation became ingrained in American culture as the belief in a nation that is preordained to be powerful and privileged with no duty to respect others. Today’s version of that belief is the prevalent political and corporate attitude of might is right.

The American myth of the Chosen Nation directly contradicts the American creed of natural rights, which has its roots in Deism. The Deist beliefs formed the basis of the American republic and its underlying principle that "all men were created equal and endowed by their creator with certain inalienable rights." But, the Puritans won the culture war, today the American modus operandi is the myth of the Chosen Nation with the most fabulous lip service given to the principles of equality and democracy.

The myth of the Chosen Nation was also instrumental in justifying the wealth of the North and the poverty of the South after the end of the Civil War. Wealth is God’s reward for righteousness, and poverty is God’s punishment for immorality. That historical role of the myth is important because it imprinted that message even deeper into the American psyche. As such wealthy people came to be admired as moral while the poor came to be despised as immoral and lazy deserving of their suffering. Those beliefs were later secularized through the advancement of social Darwinism and the economic law of competition. Equating wealth with goodness has deep roots in American culture, and thus, it is not surprising that most Americans determine a person’s worth by that person’s wealth instead of that person’s character, happiness by material wealth instead of peace of mind, and treat consumerism as patriotism.

Those deep rooted myths converge with the socio-cultural needs of the corporation, and the two strengthen one another, thus, enabling the corporation to reach deep into every aspect of our lives. This is one of the reasons corporate power is invisible and is hard to grasp. The power of the corporation is not only economical in nature, but also psychological.

The corporate creed of self-centeredness and greed, empowered by the myth of the Chosen Nation, stands in direct opposition to the principles that formed the basis of the American Constitution and the republic. "The corruption of each government begins with that of its principles," wrote Montesquieu in The Spirit of the Laws. And if we are to prevent further corruption of our republic, then we must reclaim the American creed of egalitarianism and true representative government, and restructure the role of the corporation in our society. We could begin by reforming our electoral system, our anti-trust laws, our labor laws, our legal standards for corporate conduct, and by making the Constitution applicable to corporate conduct.

While legal reform can be an effective tool in returning political power to the people, it does not address the underlying cultural delusions that have carried us to this juncture. Democracy is not an abstract idea that is practiced periodically at voting polls. A democratic society cannot be created through hollow political form, democracy is a way of life. It can be taught and learned, but it cannot be imposed by law. Democracy is a culture. Democracy should be experienced everyday in the way we live and the way we interact with others. If we do not live democracy, then we cannot preserve it. Ultimately, for any society to be vital, it must empower its individuals to have values and to exercise judgment, to reflect and have a vision for the future. But those traits do not blossom and take hold in a nation that is hardworking, insecure, unquestioning, and struggling to keep up with the daily demands of life. As Tocqueville wrote: "no one will be convinced that a liberal, energetic, and prudent government can ever emerge from the voting of a nation of servants."

The ever increasing power of corporations combined with the passivity of the American nation puts America on a collision course with itself. In 1864, Abraham Lincoln warned in a letter to Col. William F. Elkins: "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country….. corporations have been enthroned and an era of corruption in high places will follow, and the money power will endeavor to prolong its reign by working on the prejudices of the people until wealth is aggregated in a few hands and the republic is destroyed."²³

Endnotes

[1] Although a corporation may exist indefinitely, it can be dissolved by a resolution of its board of directors, and as provided by applicable corporate statutes.

[2] Trustees of Dartmouth College v. Woodward, 17 U.S. 518, 644 (1819).

[3] In contrast, some economists have adopted Ronald Coase’s view that a corporation is not an entity, but rather it represents a “nexus of contracts.”   In that view, the corporation is the aggregation of an interconnected set of relationships that collectively produce goods and services, and the directors play the central role of coordinating these relationships.  The charter, in effect, constitutes a contract among the shareholders of the corporation, between the shareholders and the corporation, and between the corporation and the state.  In addition, relationships with creditors, managers, suppliers, and employees contribute to the existence and development of the corporation.  It is the relationship with all those parties that is the corporation.

[4] Manning, Bayless, The Shareholder’s Appraisal Remedy: An Essay For Frank Coker, 72 Yale L.J. 223, 245 (1962).  It is worth noting that not all legal minds viewed the corporation’s immortality in those vivid and sacred terms.  Chief Justice Marshall wrote that corporation’s “immortality no more confers on it political power, or a political character, than immortality would confer such power or character on a natural person.” Supra note 2 at 636-37.  Query what powers would immortality bestow upon an individual?!

[5] Id.

[6] For a detailed study of the history of the corporation see James Willard Hurst, The Legitimacy of the Business Corporation in the History of the United States (1970).

[7] Letter to George Logan, November 12, 1816.

[8] Liggett Co. v. Lee, 288 U.S. 517, 546 (1933).

[9] Providence Bank v. Billings and Pittman, 4 Pet. 514, 561 (1830).

[10] First National Bank of Boston v. Bellotti, 435 U.S. 765, 784 (1978).

[11] Id.  Buckley v. Valeo, 424 U.S. 1, 16 (1976). 

[12] Kovaks v. Cooper, 336 U.S. 77 (1949).

[13] Edward Mason, ed., The Corporation in Modern Society (1959).

[14] E. Merrick Dodd, For Whom are Corporate Managers Trustees?, 45 Harv. L. Rev. 1145, 1148 (1932).

[15] Adolf A. Berle, Jr., Corporate Powers as Powers in Trust, 44 Harv. L. Rev. 1049 (1931).

[16] See, e.g., Ohio Rev. Code Ann. 1701.59(E), which provides: “[A] director, in determining what he reasonably believes to be in the best interests of the corporation, shall consider the interests of the corporation’s shareholders and, in his discretion, may consider any of the following: (1) The interests of the corporation’s employees, suppliers, creditors, and customers; (2) The economy of the state and the nation; (3) Community and societal considerations; ….”

[17] See the Sherman Act debates.

[18] Robert B. Reich, Corporate Power in Overdrive, The New York Times, March 18, 2001.

[19] The media has a crucial role in preservation of a democratic system as it is responsible for the dissemination information and stirring of public debate.  But our media is owned by a handful of corporations that determine the content of the news by popularity, low cost, and advertising revenues, not to mention the political preferences of their owners.  Consequently, we have trivial news about crime, sports, and celebrities, information spun by public relations professionals (original investigative reporting is too costly), and no genuine debate about issues of public interest, and the social role of corporation.  Robert W. McChesney, Corporate Media and the Threat to Democracy (1997).

[20] See Robert Baer, See No Evil (2002).  Jonathan David Farley, The NSA’s Math Problem, The New York Times, May 16, 2006.

[21] Kennington, Richard, Political v. Personal Individuality in Modern Thoughts, in, Carroll, William J., et. al., The Quest for the Individual: Roots of Western Civilization (1990).

[22] John Perkins, Confessions of an Economic Hit Man (2004).

[23] Archer Shaw, The Lincoln Encyclopedia (1950).

About the Author

Mitra N. Forouhar is a recovering tax lawyer who structured many international transactions for the Fortune 500 and the FTSE 100 corporations. Over the past couple of years, she has been detoxifying her mind, and is now rehabilitating into a humanitarian lawyer.

Copyright 2006 - Journal of Globalization for the Common Good - www.commongoodjournal.com