Becoming a self-governing people
Betsy Barnum, March 29, 2003
It is really great to see all of you here today, willing to spend an
entire day at this very difficult time looking at some of the root causes
of the many problems that we see around us. Before we hear from our
keynote speaker, John Nichols, who’s going to help us make some
connections between the power of corporations and some of those problems,
I’m going to talk about some of the legal history of corporations
and how they came to have so much power.
The analysis I’m about to give you comes from the Program on Corporations,
Law and Democracy, a think tank whose members have been researching,
writing and doing workshops about corporate rule for the last 15 years.
I’ve been privileged to attend several of these, including a week-long
training just a year ago. POCLAD has collaborated with WILPF, the Women’s
International League for Peace and Freedom, to develop a study circle
course on the history of corporate power, a national campaign to abolish
corporate personhood, which you’ll hear more about later today,
and an upcoming Democracy Caravan which plans to take education about
corporate rule on the road later this year.
POCLAD and WILPF would like to reframe the way we think about corporate
power and the role that corporations play in our society. We have, over
time, come to accept that corporations are a given, that they must be
powerful, and that in their pursuit of profits they will do many things
we don’t like -- things that are harmful to the Earth and human
health, like emitting toxic poisons, things that are inhumane, like
exploiting workers, and things that are destructive of communities,
like closing plants and laying off thousands of people. We usually don’t
even consider whether we could challenge their right to do these things.
Instead, we define our role as citizens as trying to curb these destructive
impulses -- to say, you can only pollute this much, you have to pay
workers at least this much, and have this minimum of safety standards.
When they don’t, we try to pass more laws, enforce them better,
or put citizen pressure on corporations through boycotts, letters to
the editor, or moral persuasion.
In resigning ourselves to the belief that we have to let corporations
define their role in society, and try what we can do to make them “behave”
better, we have in effect turned over our authority as self-governing
people to corporate owners. We are allowing our democracy to vanish.
In doing research into the history of corporate rule, the members of
POCLAD discovered something that most people today find quite surprising.
In the early days of the United States, right after the American Revolution,
corporations did not have power. People back then saw the corporation
as a tool that existed to accomplish something for the public good.
It had no inherent right to exist, or to do anything outside of what
the people wanted it to do. Corporations were granted charters by the
people, through their elected representatives in the state legislatures.
And those charters had sunset dates, usually somewhere between five
and 30 years. At that time the corporation would automatically dissolve
unless its charter was renewed by an act of the legislature. Sometimes
they were dissolved before their charter sunset date. This could happen
if they exceeded the authority granted to them in their charter, or
if they failed to fulfill their purpose -- or for no reason all. And
many did lose their charters. Here’s an example. This is from
the ruling in a case against the North River Sugar Refining Corporation
by the New York State Court of Appeals, Justice Finch, in 1890.
“The judgment sought against the defendant is one of corporate
death…The life of a corporation is, indeed, less than that of
the humblest citizen…Corporations may, and often do, exceed their
authority only where private rights are affected. When these are adjusted,
all mischief ends and all harm is averted. But when the transgression
has a wider scope, and threatens the welfare of the people, they may
summon the offender to answer for the abuse of its franchise or the
violation of its corporate duty. The [North River Sugar Refining] coporation
has violated its charter, and failed in the performance of its corporate
duties, and that in respects so material and important to justify a
judgment of dissolution…All concur.”
The people didn’t take North River Sugar Refining Corporation
to court to get it fined. They took it to court to dissolve it. Corporate
And besides having a limited lifespan, corporations were limited in
many other ways. They were not allowed to own property other than what
they needed for their purpose. They were not allowed to give campaign
donations or to lobby legislatures or Congress. They were not allowed
to give charitable donations. Their owners, including stockholders,
were personally liable for the debts and harms of the corporation. All
of their records were public. They weren’t allowed to buy or sell
each other, or to have interlocking boards of directors. Violation of
these could result in charter revocation--corporate death.
Restrictions like these were put into the state laws because the people
who lived in the British colonies -- the wealthy and the poor both --
had had enough of the abusive rule of corporations by 1776. Crown corporations
formed during the colonial period existed to exploit resources and dominate
commerce in various products, such as tea or spices. They also founded
and ruled colonies--Virginia, Carolina, Maryland, and others. Their
authority to govern was in their charters. In 1776, the colonists rebelled
against King George as king -- and King George as CEO.
With this experience, the framers of the federal and state constitutions
were careful to keep the chartering of corporations at the state level,
where it would be closer to the people, and to include the list of restrictions
I read earlier, and many others, to make sure corporations had no power,
and particularly not the power to govern. They were, in a sense, going
against the historical trend of corporate power up until then -- of
the use of the corporate form as a way of pooling investments and organizing
business activity while protecting the individual investors from liability.
The corporation has a long history as a form of business organization
-- and a long history of being used by wealthy people to accumulate
more wealth and power. Many of the people making decisions in the new
nation in the late 18th century wanted to change this, to make the corporation
serve the people in keeping with the principles of democracy that shaped
the governing documents of the U.S. -- ideas from the French Enlightenment,
as well as from Native American governance such as the Iroquois Confederacy.
I want to take a slight detour here and say just one or two things about
the U.S. Constitution, and the people who wrote it and adopted it. In
those days, “we the people” meant white males with property
-- less than 10 percent of the population. The rest were not considered
competent to govern. John Jay, one of the framers, has a famous quote:
“The people who own the country ought to govern it.” Alexander
Hamilton: “The people are turbulent and changing; they seldom
judge or determine right. Give therefore to the first class a distinct,
permanent share in the government.” We think of the U.S. Constitution
as a document that protects our rights, and it is, but it also protects
property and the people who own it. My point is that the Constitution
is not a sacred text, and we shouldn’t be starry-eyed about it.
When it was written and adopted, it primarily served the needs and interests
of the small class of propertied white men who were considered “people.”
Nevertheless, its principles, particularly those embodied in the Bill
of Rights, are valuable and strong, and the proof is that they have
stood up to being stretched and expanded again and again. Even though
most people were not legal persons in 1787, they took to heart that
phrase “we the people,” and thought it ought to include
them, and began a heroic and still-unfinished struggle to extend the
rights and freedoms guaranteed in the Constitution to all people.
And even though the people in these social movements like abolition,
women’s suffrage, labor, mostly were people who had not yet gained
recognition as persons, they knew that the rights and protections in
the Constitution were for people, not for corporations. They knew that
corporations were tools, with no inherent right to exist but only the
privilege to serve the public good as long as their charters lasted
or as long as they continued to do something useful. To them, corporations
were by definition subordinate to the people, all the people--even those
who weren’t yet “people.”
In other words, the corporation was a tool. Like a toaster. Created
to fulfill a particular function. The people of those times, both the
framers and ordinary folks, would have been appalled by the idea that
a corporation could have constitutionally protected rights. Not only
would this be a direct contradiction of democratic principles -- but
a complete absurdity. Imagine a toaster having constitutional rights!
What do you do when your toaster doesn’t toast the way it’s
supposed to? Do you lobby the legislature to pass a law requiring it
to toast properly? Do you sue your toaster, boycott it, beg it to behave,
negotiate with it? Of course not--it’s absurd to think of doing
such things. Our ancestors in the 19th century would find it just as
absurd that we try to deal with corporate harms in these ways. We don’t
treat destructive corporations as broken tools, and fix them--or discard
them. We have learned to accept, however reluctantly, that we must try
to persuade them to be less destructive, but we can’t demand that
they do what we want them to do. We have forgotten that they once were
the people’s tools, with no right to exist and certainly no right
to do any amount of harm.
Even though strong sentiment existed after the American Revolution to
keep corporations from becoming powerful, the ink was hardly dry on
the Constitution before the corporate owners were looking for ways to
do just that. Through the legal system, they sought reinterpretation
of contract law in their favor. Through corrupt state legislatures,
they got many charter restrictions removed. And through taking opportunistic
advantage of the crisis created by the Civil War and the political corruption
that followed it, they consolidated significant political and economic
power by the mid-1860s.
But they were still subordinate to the people, still subject to democratic
control. They continued to look for a way out of this, and they saw
their big opportunity in 1868, when the 14th amendment was passed prohibiting
any state from denying equal protection and due process of law to any
person. This was, of course, added to the Constitution to protect the
rights of freed slaves. The corporate attorneys immediately began to
bring cases seeking to have corporations designated as persons protected
by this amendment. It took several tries, but in 1886, a federal court
in California ruled in the case of Santa Clara County vs. the Southern
Pacific Railroad that corporations were persons under the law. The U.S.
Supreme Court heard the case and did not rule on personhood, but a court
clerk who was a railroad shareholder (as were some of the California
judges), added language to the case header stating that the justices
did not rule on whether corporations are persons because they were already
of the opinion that they were.
This precedent, illegitimate as it was, opened the way for a flood of
cases cementing corporate personhood on every level. In the last two
decades of the 19th century, the 14th amendment was used less than 20
times to protect the rights of formerly enslaved persons. It was used
almost 300 times to secure personhood rights for corporations. This
was before the majority of human beings had full personhood --women
got the vote in 1920, native Americans in the 1930s, and African-Americans,
though technically persons after 1868, were not able to claim their
rights until the past 40 years and arguably they still can’t.
After this, through more cases, the corporate attorneys won for corporations
all the specific rights in the Bill of Rights that they wanted--most
importantly, due process, free speech and press, and protection from
search and seizure. They achieved the protection for their commercial
speech and advertising, as well as campaign donations, as first amendment
rights. They also secured the right not to speak, not to say what they
didn’t want to say, such as an energy company not being required
to put conservation information in with its bills. Right now they are
seeking the right to lie in a case about Nike Corporation being heard
very soon in the Supreme Court. They stopped surprise visits by government
regulators such as the EPA or OSHA by claiming protection from search
and seizure without due process. Of course, by the time the inspectors
arrive with a warrant, everything’s just fine.
These protections that corporations have achieved through their status
as legal persons exercising individual rights are definitely outrageous,
and it’s easy to see how they violate democracy. But it gets worse.
The reason I used the phrase “corporate rule” is because
corporations don’t just have too much power -- they have de facto
governing authority through these rights that they claim under the Constitution.
This is not an explicit governing authority such as what the crown corporations
had. Rather it is what results when corporations are accorded rights
intended for you and me, and are given a place and a voice in the political
Primarily through the rights of due process and equal protection, corporate
owners and attorneys have succeeded in defining almost everything corporations
have and do, including non-tangible things like their ideas and their
decisions, as property, protected by these rights. Giant corporation
owners make decisions that create the conditions of our lives, that
establish how we will do things, that determine what choices we will
have both in the marketplace and in terms of things like jobs, entertainment,
food, information. Here are some of the corporate decisions that are
private property and “none of our business.”
+ The owners of corporations decide what
to produce-- things like sugary drinks and Lunchables, things like nuclear
warheads and instruments of torture, violent video games and toys made
+ These same people decide how to produce
those products--with toxic chemicals, with huge amounts of fresh water,
paying their work
ers as little as possible.
+ It is a business decision, made by this
same small group of owners, how they will treat workers--denying their
civil rights in the workplace, paying them less than a living wage,
requiring mandatory overtime.
+ These same people making business decisions
create the jobs available in the economy-- service jobs with low pay,
factory work in dangerous conditions, construction jobs using scarce
+ It’s a business decision for these
same people to determine how food is produced -- food sprayed with poison
pesticides is called “conventional,” even though no food
was grown that way for all of human history until the last 70 years.
+ These same people make business decisions
about our transportation system --undoubtedly you’ve heard about
how the auto-related companies bought up the trolley systems that served
many US cities including Minneapolis, tore out the tracks and burned
the cars so we’d have to buy their autos, and car company executives
are still deciding to make and market gas-guzzling vehicles, and are
still keeping efficient technologies on the shelf--it’s a business
+ The same group of corporate decisionmakers
are allowed to determine, as a business decision, what new enterprises
can get loans--it’s easy for a giant corporation, not so for a
small business person who doesn’t have collateral, or who plans
to do something that this group of owners wishes to discourage.
+ It’s also a corporate business
decision, made by this handful of people, what information we will have
access to -- what is “news,” what songs get played on the
radio, what books are published.
None of this is any of our business.
Now, we are so used to this, it may seem like, sure, business owners
have to make decisions about their operations, what they make, how they
make it, how their business runs. We can’t be making all those
decisions. Yes, these are business decisions. But they are also governing
decisions. They are decisions that create the structures of our common
life, the parameters within which we must live, as well as making choices
for us about use of resources that are our common heritage, use of public
space that is our social commons, restricting information, the lifeblood
of democracy, and generating pollution that we all must live with and
pay to clean up.
From the founding of the nation for more than a century, ordinary people
knew that the owners of corporations should not be allowed to make such
decisions for society. In the 1880s, the farmers of the Farmers Alliance
wanted to free themselves from the cycle of increasing debt to the company
store, which they were forced to rely on for seed and tools and to sell
their cotton. The merchants charged a lot for seed and paid little for
the cotton. So the farmers began to set up cooperatives, but they needed
a whole network of them to make their vision work. The corporate bankers
closed ranks and would not lend money to establish something that they
could see would reduce the hold of corporations on the economy. Those
farmers, dirt-poor and without formal education, knew that it was undemocratic,
against the principles of the nation, for the corporate banks to refuse
them, so they developed a plan for a parallel banking system. Of course,
this also failed. By then the corporations were too strong, and the
farmers were too poor, and they weren’t able to build enough solidarity
with urban workers to challenge the corporations for control of the
The populist movement, which grew out of the farmers alliance and had
some electoral success for a few years, was the largest democracy movement
in American history, a movement of millions of people who still understood
that corporations were meant to serve the people, not the other way
around. As the populist movement faded, the Progressives rose and established
the regulatory system which we have relied on for a hundred years to
keep corporate power under control. Has it worked?
The premise of the regulatory system is that corporations cannot be
required to act in the public good, but only to comply with specific
laws. The regulatory system allows corporations as much free rein as
possible, as long as they don’t behave too badly, produce too
much pollution, or be too hard on their workers. Only if a corporation
is violating a law can regulatory pressure be applied, which means there
must be laws passed about each thing that corporations might do that
is harmful. They can’t be regulated for, for example, destroying
a community and creating homelessness by moving a manufacturing plant
to another country and leaving thousands of people out of work. There’s
no law against that, and there can’t be such a law. If a toxic
chemical isn’t regulated -- risk assessment hasn’t been
done, safety standards haven’t been established -- then no corporation
can be penalized for emitting it. Out of the over 80,000 chemicals now
in use, less than 30 percent have even been tested for toxicity or carcinogenicity.
The other 56,000 in effect aren’t regulated.
The Progressives did manage, through establishing regulation, to limit
some of the worst of corporate activities in the early 20th century,
price gouging and such. But they also succeeded in helping people to
forget that corporations started out as tools, and that they are supposed
to serve the public good. Regulation effectively made routine and legal
a huge amount of harm done by corporations. The Progressives, although
their legacy is a word that has a positive meaning today for people
who work for social change, did great harm to democracy by putting an
end to efforts of people like the populists to keep corporations subordinate,
and by substituting regulatory penalties like fines for penalties like
corporate death. These changes in how corporate harms were dealt with
added the final touch to corporate owners’ century-long efforts
to get out from under the people’s control, and finished off our
last shreds of sovereignty while helping to create our 20th-century
belief that the best we can hope for is to prevent corporations’
worst offenses while we submit to being ruled by them.
The world has changed a great deal since corporations began to rule.
We can’t, and don’t want to, “go back.” At the
time corporations gained personhood, most humans still weren’t
persons. Even though people in the 1880s understood the true nature
of corporations in spite of the legal maneuvering that made them persons,
most weren’t able to participate as sovereign people in the system
of self-government set up in the US Constitution.
And so we don’t know how the amazing and rapid industrialization
and technological progress of the last two centuries would have been
different if “we the people” had been in charge, making
careful decisions about how to manage the new developments for the common
good, meet everyone’s needs and preserve the commons for the benefit
of all. How we the people might have used the corporations as tools
for progress we defined, rather than allowing their owners to direct
it for their benefit.
We can’t go back; but we can learn from our ancestors as we determine
how to go forward.
We must learn from them to look at corporations a different way, not
through the lens of regulation, but through the lens of sovereignty.
We must learn again what the poor farmers of the Farmers Alliance knew:
We are sovereign. We the people govern. Corporations are our creations
and exist at our say-so. Defining the conditions of their existence
is our job, not theirs--and defining the conditions of our existence
is also our job, not theirs.
What if we the people really were in charge, and corporations were our
tools to build and operate the kind of world we want to live in? When
polls show that 80 percent of people in this country want stronger environmental
laws, significant percentages would like to avoid buying items made
in sweatshops and large numbers support the international declaration
on human rights, it’s evident that we the people would design
a much more sustainable and humane society than the one being designed
for us by the owners and managers of corporations.
I’m going to leave you with some questions to ponder as you listen
to John and attend the rest of the sessions today. What would it mean
for us to stop trying to deal with corporations’ harms through
regulation, stop acknowledging their claims to personhood and individual
rights, stop allowing them to rule over us? What would it look like
for us to take up our sovereignty, make governing decisions ourselves
and instruct our corporate creations how we want those decisions carried
out? What would be different if we recovered our vanishing democracy
and became for real, maybe for the first time, a self-governing people?
This talk was given at a conference entitled Vanishing Democracy:
Challenging Corporate Power on March 29, 2003, in Minneapolis, Minn.,
by Betsy Barnum, a member of the Alliance for Democracy, the Women’s
International League for Peace and Freedom, and the Program on Corporations,
Law and Democracy. She can be reached at
email@example.com, or by mail through the Great River Earth Institute,
P.O. Box 6021, Minneapolis, MN 55406.