Corporations
by Eugene McCarthy
James Kent, in his Commentaries on American Law, published early in the
19th century, observed that "the number of charters of incorporations"
was increasing in the United States with disturbing rapidity. "We are
multiplying in this country to an unparalleled extent the institution of
corporations," he wrote, "and giving them a flexibility and variety
of purpose unknown to the Roman or to the English law."
Kent's warning has gone unheeded and the drive to incorporation runs beyond
the point he feared.
The corporation is in America today not only the principal instrument for
conducting business and finance, but also is a major instrument for influencing
and managing education, religion, communications, sports, and politics.
About 80% of the measurable economic activities of the United States is
directed through corporate organizations, operating under state charters.
Corporate power is a growing force in determining United States foreign
policy and military policy and strategy. Multi-national and international
corporations are intimately involved in foreign policy, both in decisions
and in execution. This influence is more subtle and more integrated than
that of the early decades of this century. Corporations did exercise influence
over foreign policy, but that influence could usually be identified, and
usually was in some large degree subject to government direction, or at
least coincided with government policy. Corporations were to a degree agents
of the government, although in some cases, in a kind of reciprocal arrangement,
with the government becoming agent of the corporation.
Thus United Fruit carried on trade and also executed national policy, or
sustained that policy, in Central and South America. American sugar companies
controlled trade in sugar and strongly influenced national policy toward
Central American countries, especially towards Cuba, from the time of the
Spanish American War, until the time of Castro. (This relationship was noted
by Mr. Dooley, in writing of the Spanish American War, when he observed
that he would rather be subject to a Spanish nobleman than to an American
vegetable (the sugar beet).
The power of the multinational, or supra-national corporations, goes beyond
that exercised by companies like United Fruit in earlier times. Multinationals
are not agents, but carry the attributes of sovereign countries. For example,
when President Reagan undertook to prevent or discourage Dresser Industries
from selling high technology pipeline equipment through its multinational
connection to builders of the gas line from Russia to Europe, he found that
he was without power to intervene.
The involvement of private industry in providing equipment and material
for World War II established a relationship between the military and the
private suppliers, which in the Post War period became the military-industrial
complex which we were warned of by President Eisenhower in his farewell
address.
The complex, which had not quite come together at the end of the War, and
was threatened by defense budget cuts in the years between the end of the
war and the Korean War, defense budgets being cut back in the Truman years
to less than 20 billion dollars, was in place when the Korean War ended.
Defense budgets have continued to climb ever since. And the "establishment"
was protected by the change of the name of the military department of the
U.S. government from "War Department" to "Department of Defense"
(wars are limited and historically defense is forever and unlimited) by
the establishment of the Air Force, which emerged as the popular, heroic,
and romantic service, after World War II and the establishment of the Air
Force Academy to sustain its separateness; the substitution of the voluntary
(mercenary) army, for a draft army for military service, and a budget providing
nearly $300 billion in annual appropriations is firmly in place.
Weapons plans conceived in corporate engineering, research and development
departments can become the basis for both military tactics and for strategic
changes and weapons systems and strategic projections by the military, dependent
on corporate potential to manufacture.
The influence of corporations on culture and education too is growing. Dow
Chemical cut off its support of a Michigan university because of student
protests against the use of napalm. In Minnesota a number of corporations
have organized a special committee that meets with governors, archbishops,
heads of universities and colleges, etc. to determine who will receive grants
and for what purpose. Corporate heads act much like the nobles of England,
sitting down with the king or the archbishop.
The corporation has developed into a separate center of power. It is one
which was not anticipated by or provided for in the Constitution. It is
one which has not been subject to the general laws dealing with business
and financial practices. And it is one which has assumed functions that
go far beyond its original economic purposes.
What we have allowed to develop is a kind of corporate feudalism, one that
fits the schoolboy definition of feudalism as a system in which everybody
belongs to someone and everyone else belongs to the king. In its modern
form, nearly every worker belongs to some corporation. Everyone else - in
civil service, on welfare, on workmen's compensation or social security
- belongs to the government.
A great corporation might be viewed as a self-contained feudal manor or
barony. General Motors, for example, has its own financial institutions,
its own distribution system, its own labor policy and social welfare program,
its own security system and special investigators, even its own foreign
policy. And the foreign policy of ITT in the case of Chile included an effort
to have the United States government prevent the election of a certain presidential
candidate in that country. Other multinational corporations run their own
foreign policies.
I hesitate to make a direct comparison between today's corporation employees
and the serfs of the Middle Ages, yet there are disturbing similarities.
Many people become economic captives of the corporations for which they
work. Pension programs, family health plans, seniority rewards, vacation
and sick leave all limit the freedom of employees to move to other corporations
and other types of work. This is true not only of blue-collar workers but
also of executives and people in professional fields. I have talked with
newspaper people who say, "I can't quit this newspaper and take another
job because I would lose my pension program, or my family medical plan.
I'm an indentured servant. I'm caught." An indentured servant may be
a few steps above a serf, but that is not much consolation.
The loss of freedom that goes with working for a corporation is not always
accompanied by security, something that serfs in the Middle Ages did have.
Many corporations, particularly those in the military and aerospace industries,
stockpiled engineers and other professionals during the boom period of the
1960s. When the corporations faced financial difficulty, or when they no
longer needed the professionals, they simply cut them loose to become displaced
persons in our society. In recent years, a relief pitcher in the minor leagues
has had more security than a Ph.D. in physics who works for a major corporation.
Feudal lords had certain obligations toward the poor, something that cannot
be said of our corporations. America's poor and minorities, its undereducated
and underfed, are not even the serfs of corporate feudalism. They are its
outcasts.
The feudal analogy also hold when one considers the relations between the
federal government and large corporations. In case after case of confrontation
between the two in the last fifteen to twenty years, the issues have been
settled by negotiation. When the question of sending an ambassador to the
Vatican was raised in 1960, I suggested that there were other centers of
power at which we were unrepresented and which were far ahead of the Vatican
in terms of influence. For example, a President might first send an ambassador
to the Pentagon and then to several of the giant corporations: General Motors,
du Pont, General Electric, U.S. Steel, some of the oil companies. The relationship
was not formalized that way, but negotiation has been the rule.
When du Pont was ordered to divest itself of improperly acquired General
Motors stock, existing antitrust laws and penalties were not applied. The
Congress passed special legislation to lessen du Pont's economic distress.
The company thus avoided the imposition of the law and the attendant corporate
stresses, which would have been applied to a smaller corporation under the
same circumstances.
Taxation of insurance companies is settled more by negotiation than by public
determination. The same was true of the oil-depletion allowance for many
years.
Such actions as the award of the TFX-airplane contract to General Dynamics
in the Kennedy administration and the loan guarantees for Lockheed and Penn
Central in the Nixon administration were special concessions to corporate
power, political or economic.
The dealings of the government with the steel industry illustrate the feudal
character of the corporation-government relationship even more clearly.
During the Korean war, President Truman tried to prevent a steel strike
by ordering his Secretary of Commerce to take over and operate the steel
mills. The case was taken to the Supreme Court, which held that the order
was unconstitutional. Subsequent challenges to the industry were handled
differently. The Kennedy administration responded to a major price increase
not by law or by appeal to courts but by public denunciation, the threat
of shifting military purchases to steel companies that had not raised their
prices, and even some use of the FBI.
The Johnson administration called presidents of steel companies to the White
House for "jaw-boning sessions." The message was that prices should
be kept down. It seemed that if the steel executives fixed prices in the
White House, it was quite all right, but if they fixed them in Pittsburgh,
they might go to jail. It was as though the king had called in the barons
and said to them, "If you agree to these things in my presence, they
are sanctioned. But if you do it by yourselves in Wales, you are in trouble."
Corporate influence on sports is clearly manifest in the Olympics, winter
and especially those of summer, and evident in the summer Olympics just
ended.
It seems that the old saying "Who pays the piper, calls the tune,"
is again proved true, or as Nelson Rockefeller is reported to have said
to Diego Rivera, who objected to making changes in the mural he was painting
in the Rockefeller Center, "It's my wall."
It is not that the Olympics have been pure and free of outside influence.
The seeds of commercialism and of professionalism were present at the first
meeting of the Greek athletes at Olympia in 776 B.C. Winning athletes were
given not only wreaths and trophies, but free meals and a lifetime exemption
from taxation. This latter reward could be a powerful motivation if given
to U.S. athletes today.
Three hundred years after the establishment of the Olympic games, Euripides,
poet, playwright and athlete wrote that "out of the tens of thousands
of ills in Greece, none is worse than the tribe of professional athletes."
In the modern version of the Olympics, after their revival in 1896, political
rather than commercial and economic forces appear to have influenced the
games in selection of events, eligibility of participants, choice of referees,
equipment, location, etc.
We have come a long way since the 1896 revival which was limited principally
to classical contests of speed, endurance, and strength of individual athletes.
Since then sailing, kayaking, wind-surfing and judo were included in the
competitions. No one of these sports is likely to last long in Olympic meetings
unless it provides photo opportunities, and popular support from the television
watchers. Otherwise they are likely to go the way of some of the events
which have been included in past games, for example, fishing, the firing
of large caliber cannon, musical composition, and even poetry. On the other
hand contests which have been tried in the past, and dropped, may be brought
back because of their commercial viability - Indian club swinging, one-handed
weight lifting, tug of war, and holding one's breath under water, an event
included only once and won by a Frenchman who stayed submerged in the Seine
for 68 seconds.
The latest addition of corporate power came in consequence of the Federal
Election legislation of 1975-76. In that Legislation, sponsored by Common
Cause and liberals, corporations were given authority to set up corporate
political action units. The result has been growing corporate influence
over both parties, a homogenizing of the two parties, in the corporate image,
and a great increase in campaign spending.
The recently passed amendments to the Federal Communication Act, giving
one corporation the right to own up to 35% of television licenses, creates
a potential to have practically all such means of communication controlled
by three corporations, leaving business, finance, communications, entertainment
and sports almost wholly subject to the rule or governance of "the
bottom line." Ethics, education and even religion in great measure
will be subject to the same dominance.
Eugene J. McCarthy was a Democratic-Farmer-Labor Senator from Minnesota
from 1959 through 1970. His campaign for the Presidency in 1968 forced incumbent
Lyndon B. Johnson out of the race. He ran again in 1976 and in 1992. He
is the author of 17 books.
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