Dave Hartley
http://www.Asheville-Computer.com
http://www.ioa.com/~davehart
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last modified: June 15, 1999
Ending Corporate Governance
We The PeopleRevoking Our Plutocracy
Seeing The Post-Corporate World: Life After Capitalism
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Nowadays, although more and more of us understand the fact that we live, not in a democratic republic (as we were taught in school), but under a plutocracy, most still suffer from what Richard Grossman and Ward Morehouse call the "colonization of our minds[1], [2]", the corollary of which is the "TINA" (There Is No Alternative) phenomenon. The fact is, there are alternatives to this evermore distintegrative "way of life". But in order to change this society so the seventh generation yet unborn may, once more, have the opportunity to live their lives to the fullest, each one of us must transform our own conditioned thinking from that of programmed consumer into liberated citizen.
Today, people forget that U.S. corporations, or "corpses", as this ratitor thinks of them, were extremely limited in their powers and influence prior to the Civil War. We have much to re-learn regarding the facts of how citizens, at the time of the revolution of 1776 and afterwards, gave state legislatures the power to control the "crown corporations" they had had painful, personal experience of and suffered under, from the likes of the original American "Crown Colonys" -- which were companys -- of the King of England, as well as the Hudson's Bay Company and the East India Trading companies of Europe.In the detailed and highly recommendable 32-page booklet, Taking Care of Business, Citizenship and the Charter of Incorporation, the authors lay out how citizens, in the early days of this system of governance, constitutionalized the legal standing of "We The People" as a fundamental mechanism for controlling and limiting the destructive influence created by unbridled and unlimited concentrations of wealth:
When we look at the history of our states, we learn that citizens intentionally defined corporations through charters--the certificates of incorporation.But throughout the 1800s, especially after the Civil War, "[u]nder pressure from industrialists and bankers, a handful of 19th century judges gave corporations more rights in property than human beings enjoyed in their persons."(Ibid):In exchange for the charter, a corporation was obligated to obey all laws, to serve the common good, and to cause no harm. Early state legislators wrote charter laws and actual charters to limit corporate authority, and to ensure that when a corporation caused harm, they could revoke its charter. . .
Our right to charter corporations is as crucial to self-government as our right to vote. Both are basic franchises, essential tools of liberty. . .
The colonists did not make a revolution over a tax on tea. They fought for many reasons, but chiefly to create a nation where citizens were the government and ruled corporations. . .
They knew that English kings chartered the East India Company, the Hudson's Bay Company and many American colonies in order to control property and commerce. Kings appointed governors and judges, dispatched soldiers, dictated taxes, investments, production, labor and markets. . .
Having thrown off English rule, the revolutionaries did not give governors, judges or generals the authority to charter corporations. Citizens made certain that legislators issued charters, one at a time and for a limited number of years. They kept a tight hold on corporations by spelling out rules each business had to follow, by holding business owners liable for harms or injuries, and by revoking charters.
The biggest blow to citizen constitutional authority came in 1886. The US Supreme Court ruled in Santa Clara County v. Southern Pacific Railroad, that a private corporation was a "natural person" under the US Constitution, sheltered by the 14th Amendment [(even though that amendment had been written and ratified in 1868 to protect the rights of freed slaves)[3]] , which requires due process in the criminal prosecution of "persons." Following this ruling, huge, wealthy corporations were allowed to compete on "equal terms" with neighborhood businesses and individuals. "There was no history, logic or reason given to support that view," Supreme Court Justice William 0. Douglas wrote 60 years later.[4]Once corporations were legally defined as "natural persons", they automatically were endowed with the same "Bill of Rights" as human beings, and so came to possess and then exploit with devastating consequences, the same "rights" of the freedom of speech, and the ability to participate in elections and lobby elected officials.It is essential to understand how corporations prior to the Civil War were legislatively defined, so we may better appreciate what we can discover and make use of today, using the sections still present in our state constitutions -- as well as reinstating and strengthening in favor of nature, citizens, and communities, many sections that have been repealed by corporate groups seeking to make incorporation laws more "corporate friendly" -- to overthrow corporate authority, and reinstate the authority of we the sovereign people. Up to the mid-1800s,
Today, is it critical for all of us to "examine the fundamental difference over what is a decision for the civil society that needs to be conducted in an open way, through the constitutionalized process, and what are decisions that are the private domain of the corporation?" [6]
- Corporations had limited duration, 10 years, 20 years, 30 years -- they were not given forever, like corporate charters are given today.
- The amount of land a corporation could own was limited.
- The amount of capitalization a corporation could have was limited.
- The corporation had to be chartered for a specific purpose -- not for everything, or anything.
- The internal governance was very different --
shareholders had a lot more rights than they have today, for major decisions such as mergers; sometimes they had to have unanimous shareholder consent.
- There were no limitations protections on liability -- managers, directors, and shareholders were liable for all debts and harms and in some states, doubly or triply liable.
- The states reserved the right to amend the charters, or to revoke them -- even for no reason at all.[5]
Ward Morehouse, speaking in Palo Alto this past January 29th, spoke of "The Seven Challenges" we face in order to get out of the mess we are currently in:
I think the first challenge we have to come to grips with is how to overcome this colonization of our minds and to recognize that there are alternatives to a society dominated by giant corporations.
He then went on to discuss,
- Our second challenge involves taking a lesson from the play book of the corporations who ... have spent the last century or more consolidating their power and insulating themselves from meaningful democratic control. And we need therefore to try to change a body of legal doctrine rather than fight case after case after case of corporate transgression.
- Our third challenge is to resist the temptation for co-optation and accommodation and not to accept as "victories" those which leave corporate power unchallenged and intact.
- Our fourth challenge is to recognize the myth of American democracy and to overcome the plutocracy with which we live. All societies have myths about themselves. Ours is no exception.
- The fifth is to understand that we will never win in this struggle if we play by their rules because they wrote the rules.
- Our sixth is to determine how we know when we really have won in the struggle against corporate power, and I would submit to you that we only really win when there is a fundamental shift in power from corporations back to the people where it was in the first place, and should be again. . . .
- The seventh challenge is to take to heart the big lessons of 20th century history, and not to be discouraged by the challenges that indeed do confront us. It was said no where better or more eloquently than by Howard Zinn in one of his recent books, when he wrote that, "[t]he struggle for justice should never be abandoned because of the apparent overwhelming power of those who have the guns and the money, and who seem invincible in their determination to hold onto it. That apparent power has again and again proved vulnerable to human qualities less measurable than bombs and dollars: moral fervor, ingenuity, courage, patience. Whether by blacks in Alabama and South Africa, peasants in El Salvador, Nicaragua, and Viet Nam, or workers and intellectuals in Poland, Hungary and the Soviet Union itself. No cold calculation of the balance of power need deter people who are persuaded that their cause is just." [7]
one of Clinton's throwaway lines in his speech [when he said] "The era of big government is over". . . And you will recall that there was a round of applause on both sides of the isle. I would submit to you that here, this evening, the era of the Giant Corporation is over and that it is time for us to take the offensive in the struggle to establish democratic control over corporations.Here is an eleven-point program for doing just that:
We can start by revoking the charters of especially harmful corporations who have inflicted mass harm on innocent people. As Richard indicated, there are provisions for the revocation of charters in 49 of the 50 states. They have some provisions similar to that in the New York Business Corporation Law, Section 1101, which specifies that corporations that act contrary to the public policy of the state are subject to dissolution.
- We can recharter corporations to limit their powers and make them entities subordinate to the sovereign people. For example by granting charters (as used to be the case) for limited time periods, requiring that there be a conscious, deliberate act of approval by communities and workers for corporations to continue beyond the initial time in which they have been chartered. For making corporate managers and directors liable for the harms done by corporations.
- We can address what I think is a fundamental obstacle to democratic control over corporations, which is their sheer size. I think many of you are well aware that the largest corporations today are larger than most nation-states. General Motors has gross income greater than the gross domestic product of Denmark. So we need to reduce the size of corporations by breaking them into smaller units with less power to undermine democratic institutions.
For those of you who think this is a wild flight-of-fancy, I would remind you that as an issue in public policy, this has historical precedence in the Public Utility Holding Company Act of 1935 which did just that: it said certain public utility companies will divest themselves because they may not be larger than a given set of criteria determined through a democratic process.
- We need to establish effective worker and community control over production units in order to protect the "reliance interest", an important, if not fully developed, legal doctrine which workers and communities acquire over time in the actions, the activities, and indeed the assets of corporations.
This could be done in a variety of ways including prohibitions in the charter of the corporation in the future, prohibitions for the hiring of replacement workers (scabs in other words), requiring independent health and safety audits by experts chosen by workers in the affected communities, and so on.
- We can initiate referendum campaigns, or take action through state legislatures and the courts, to end constitutional protections for corporate persons. As Richard indicated, we are, in a certain sense, in the belly of the beast here in Santa Clara County, because that is where all this terrible mischief of corporations being persons before the law, began.
- We can prohibit corporations from making campaign contributions to candidates in any elections, and from lobbying any local, state, and federal government bodies.
And if you think this is off-the-wall, you should be aware that in the state of Wisconsin, up until a couple of decades ago, it was a felony for corporations to make political contributions.
- We can stop subsidy abuse and extortion by corporations through which large corporations rake off billions of dollars from the public treasury. Please let us not call it "corporate welfare". Welfare should be a positive concept. This is extortion and subsidy abuse and we need to stop it.
- We need to launch campaigns to cap salaries of corporate executives, and tie them to a ratio of average compensation for production workers (say, five or ten to one). I'll return to this subject in a moment, as the reality is much different today as all of you know.
- We can encourage worker and community-owned and -controlled cooperatives and other alternatives to conventional limited liability profit-making corporations. They need not be the only game in town, in fact they are not the only game in town. But we need to work hard to expand alternative types of enterprises that will subject themselves to genuine democratic control.
- We can prepare model state corporation codes based on the principle of citizen sovereignty, and begin the campaign for their adoption, state-by-state.
- (and I'm sorry Richard didn't have more opportunity to talk about this important subject, but perhaps we can explore it further in the discussion) We can invigorate, from the grassroots up, a national debate on the relationship between public property and private property -- including future value -- and the rights of natural persons, communities, and other species when they are in conflict with those corporations.
This whole subject of how we define property rights is at the heart of much of the accumulation and codification of corporate power.
So there is an eleven-point agenda to get you started on this challenging task. A Canadian friend of ours, who has given a lot of thought to how we develop a dynamic for dealing with corporations and corporate power, has suggested that we need to follow what he calls "the 5 D's of Action": We need first to define corporate power, then to dissect it, then to denounce it, then to disrupt it, and finally to dismantle it. And I would submit to you that that is the challenge before all of us here this evening.[8]Under the form of ownership, known to us today as "the corporation," the legal act of incorporation creates a `person' or `corpus'. For over the past 100 years these legal entities have been exercising more and more of their powers to recreate the circumstances of their own existence. This is exactly what the first citizens of this country feared the most, and attempted to prevent the occurence of by defining the subordinate nature of such legal ficticious entities to that of flesh-and-blood human beings. They implemented this through the legal mechanism of charters -- the certificates of incorporation.
Richard Grossman drove home this point in Palo Alto when he said,
In most states a lot of the language from the early days, that reflected the subordinate nature of corporations is still on the books (including California). Some of that language is gone. But we still have the authority, in California, and other states, to define the corporations through their charters; we still have the authority to amend the charters; we still have the authority to revoke the charters -- the language is there. We still have the authority to rewrite the state corporation codes in order to order corporate executives to do what the sovereign people want to do.A sovereign people do not negotiate with subordinate legal fictions. We instruct them. We define them. We don't regulate them about the edges so they can poison here and poison there, but not more than the acceptable amount. We say, You can't operate if you poison. That is what a sovereign people should do. And you may say, given the power of corporations, this could not be possible.
I happened to look up the Constitution of California of 1879, which was the constitution that you had when you joined the Union. Article 12, which runs several pages, is called "Corporations". There are 24 sections in Article 12 defining the corporation. 20 of them have been repealed, the last set in 1972. I'd like to close by reading you some of the sections of your constitution from 1879 that have been repealed.
As I read these I urge you to think about how, in those years, there were people who came together, as we are coming together today, who had concerns about the banking corporations and the railroad corporations and the insurance corporations -- many of whom had come from other states, and other territories -- and when they said, as we are going to form our own constitution and our own state, we have to preserve our political authority over this fiction. They were strong enough and mobilized enough and educated enough to force these articles to be put into their constitution despite the power of the railroad magnates and the other magnates here who are honored all over San Francisco and California. . .
I'll close by suggesting that just those sections alone -- and there is more in your constitution of 1879 -- reinforce the concept that people of other eras, over 100 years ago, understood the vital importance that the fiction of the corporation was the subordinate entity to the sovereign people. If we are going to have pretense to a democracy, we cannot give political rights and powers to a private entity. We cannot let that private entity get so strong that it rewrites the laws, that it shapes the culture, that it shapes the education.
As people are looking into the histories of their states they are finding very similar histories. Although it may be difficult to imagine a country that's not dominated by giant corporations, other people before us have imagined that, and they've taken big steps toward that, and there is no reason why we can't continue that struggle. Because they also left us many important mechanisms that we can use.[9]
The reason the ratitor uses the term "corpses", is to convey the idea that although these entities are in fact seen by people today as being like and having the same qualities as that of human persons (the language people use is a "dead" giveaway: corporate "arms" reaching into our lives, `cutting off corporations at their "knees"', etc.), they are NOT LIVING PERSONS -- they are, more accurately, like dead bodies that have not been given a proper burial.May we all be inspired, with gobs of creativity and enthusiam, to carry us forward in our collective endeavor to re-establish a form of self-governance, and a manifestation of we the sovereign people, that was begun on this continent over 200 years ago when those people were inspired by the democratic forms of participatory governance that had been conducted by the HAU DE NO SAU NEE People, since before Columbus bumped into the Bahama Islands and mistook the Arawak people for "Indians".
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- plutocracy, n. 1. government by the wealthy 2. a government or state in which the wealthy rule 3.a group of wealthy people who control or influence a government 4.a controlling class of rich men - plutocrat.
- plutocrat, n. 1. a member of a wealthy ruling class; hence, 2. a person whose wealth gives him control or great influence. 3. [Colloq.], any wealthy person.
Richard Grossman &. Ward Morehouse, ASSERTING DEMOCRATIC CONTROL OVER CORPORATIONS: A CALL TO LAWYERS, The NATIONAL LAWYERS Guild Practitioner, volume 52, number 4, fall 1995, p. 101.
http://www.ratical.org/corporations/Call2Lawyers.html#coom1 Ibid,
http://www.ratical.org/corporations/Call2Lawyers.html#coom2 Grossman & Wardhouse, Minorities, the Poor & Ending Corporate Rule, Poverty & Race, September/October, 1995, Volume 4: Number 5, p. 1.
http://www.ratical.org/corporations/MPEndCRule.html#fourtA Richard Grossman & Frank Adams, Taking Care of Business: Citizenship and the Charter of Incorporation, Earth Island Journal, Spring 1993, p. 34.
http://www.ratical.org/corporations/TCoBeij.html#SCvSPR
Revoking The Corporation, a discussion with Richard Grossman & Ward Morehouse, transcribed by rat haus reality press, 1996.
Ibid.
Ibid.
Ibid.
Ibid.
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