The People’s Business

Controlling corporations and restoring democracy

BY Lee Drutman and Charlie Cray

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One does not have to look far in Washington these days to find evidence that government policy is being crafted with America’s biggest corporations in mind.

For example, the Bush administration’s 2006 budget cuts the enforcement budgets of almost all the major regulatory agencies. If the gutting of the ergonomics rule, power plant emissions standards and drug safety programs was not already enough evidence that OSHA, EPA and FDA are deeply compromised, the slashing of their enforcement budgets presents the possibility—indeed, probability—that these public agencies will become captives of the private corporations they are supposed to regulate.

This should come as no surprise to anybody familiar with the streams of corporate money that flowed into Bush campaign coffers (as well as the Kerry campaign and all races for the House and Senate) in the 2004 election. The old “follow the money” adage leads us to a democracy in thrall to giant corporations—a democracy that is a far cry from the government “of the people, by the people, and for the people” that Lincoln hailed at Gettysburg.

At a time when our democracy appears to be so thoroughly under the sway of large corporations, it is tempting to give up on politics. We must resist this temptation. Democracy offers the best solution to challenging corporate power. We must engage as citizens, not just as consumers or investors angling for a share of President Bush’s “ownership society.”

The problem of corporate power

Unfortunately, the destructive power of large corporations today is not limited to the political sphere. The increasing domination of corporations over virtually every dimension of our lives—economic, political, cultural, even spiritual—poses a fundamental threat to the well-being of our society.

Corporations have fostered a polarization of wealth that has undermined our faith in a shared sense of prosperity. A corporate-driven consumer culture has led millions of Americans into personal debt, and alienated millions more by convincing them that the only path to happiness is through the purchase and consumption of ever-increasing quantities of material goods. The damage to the earth’s life-supporting systems caused by the accelerating extraction of natural resources and the continued production, use, and disposal of life-threatening chemicals and greenhouse gases is huge and, in some respects, irreversible.

Today’s giant corporations spend billions of dollars a year to project a positive, friendly and caring image, promoting themselves as “responsible citizens” and “good neighbors.” They have large marketing budgets and public relations experts skilled at neutralizing their critics and diverting attention from any controversy. By 2004, corporate advertising expenditures were expected to top $250 billion, enough to bring the average American more than 2,000 commercial messages a day.

The problem of the corporation is at root one of design. Corporations are not structured to be benevolent institutions; they are structured to make money. In the pursuit of this one goal, they will freely cast aside concerns about the societies and ecological systems in which they operate.

When corporations reach the size that they have reached today, they begin to overwhelm the political institutions that can keep them in check, eroding key limitations on their destructive capacities. Internationally, of the 100 largest economies in the world, 51 are corporations and 49 are nations.

How Big Business got to be so big

Corporations in the United States began as quasi-government institutions, business organizations created by deliberate acts of state governments for distinct public purposes such as building canals or turnpikes. These corporations were limited in size and had only those rights and privileges directly written into their charters. As corporations grew bigger and more independent, their legal status changed them from creatures of the state to independent entities, from mere business organizations to “persons” with constitutional rights.

The last three decades have represented the most sustained pro-business period in U.S. history.

The corporate sector’s game plan for fortifying its power in America was outlined in a memo written in August 1971 by soon-to-be Supreme Court Justice Lewis F. Powell Jr. at the behest of the U.S. Chamber of Commerce. The “Powell Memorandum,” drafted in response to rising popular skepticism about the role of big business and the unprecedented growth of consumer and environmental protection laws, was intended as a catalytic plan to spur big business into action. Powell argued that corporate leaders should single out the campuses, the courts and the media as key battlegrounds.

One of the most significant developments that followed Powell’s memo was the formation of the Business Roundtable in 1972 by Frederick Borch of General Electric and John Harper of Alcoa. As author Ted Nace has explained, “The Business Roundtable … functioned as a sort of senate for the corporate elite, allowing big business as a whole to set priorities and deploy its resources in a more effective way than ever before. … The ’70s saw the creation of institutions to support the corporate agenda, including foundations, think tanks, litigation centers, publications, and increasingly sophisticated public relations and lobbying agencies.”

For example, beer magnate Joseph Coors, moved by Powell’s memo, donated a quarter of a million dollars to the Analysis and Research Association, the forerunner of the massive font of pro-business and conservative propaganda known today as the Heritage Foundation. Meanwhile, existing but tiny conservative think tanks, like the Hoover Institute and the American Enterprise Institute for Public Policy Research, grew dramatically in the ’70s. Today, they are key players in the pro-business policy apparatus that dominates state and federal policymaking.

According to a 2004 study by the National Committee for Responsive Philanthropy, between 1999 and 2001, 79 conservative foundations made more than $252 million in grants to 350 “archconservative policy nonprofit organizations.” By contrast, the few timid foundations that have funded liberal causes often seem to act as a “drag anchor” on the progressive movement, moving from issue to issue like trust fund children with a serious case of attention-deficit disorder.

From analysis to action

The vast majority of people, when asked, believe that corporations have too much power and are too focused on making a profit. “Business has gained too much power over too many aspects of American life,” agreed 82 percent of respondents in a June 2000 Business Week poll, a year and a half before Enron’s collapse. A 2004 Harris poll found that three-quarters of respondents said that the image of large corporations was either “not good” or “terrible.”

Corporations have achieved their dominant role in society through a complex power grab that spans the economic, political, legal and cultural spheres. Any attempt to challenge their power must take all these areas into account.

There is a great need to develop a domestic strategy for challenging corporate power in the United States, where 185 of the world’s 500 largest corporations are headquartered. Although any efforts to challenge corporations are inevitably bound up in the global justice movement, there is much to do here in the United States that can have a profoundly important effect on the global situation.

By understanding the origin of the corporation as a creature of the state, we can better understand how we, as citizens with sovereignty over our government, ultimately can and must assert our right to hold corporations accountable. The task is to understand how we can begin to reestablish true citizen sovereignty in a country where corporations currently have almost all the power.

Developing the movement

To free our economy, culture and politics from the grip of giant corporations, we will have to develop a large, diverse and well-organized movement. But at what level should we focus our efforts: local, state, national or global? The answer, we believe, is a balance of all four.

Across the country, many local communities continue to organize in resistance to giant chain stores like Wal-Mart, predatory lenders, factory farms, private prisons, incinerators and landfills, the planting of genetically modified organisms, and nuclear power plants. Local communities are continuously organizing to strengthen local businesses, raise the living wage, resist predatory marketing in schools, cut off corporate welfare and protect essential services such as water from privatization. Local struggles are crucial for recruiting citizens to the broader struggle against corporate rule.

Unfortunately, examples of grassroots movements that have succeeded in placing structural restraints on corporations are not as common as they should be. One of the ways we can accelerate the process is by organizing a large-scale national network of state and local lawmakers who are interested in enacting policies that address specific issues or place broader restraints on corporate power.

Just as the corporations have the powerful American Legislative Exchange Council (ALEC) to distribute and support model legislation in the states, so we need our own networks to experiment with and advance different policies that can curb and limit corporate power. The National Caucus of Environmental Legislators—a low-budget coalition of state lawmakers established in 1996 in response to the Republican takeover of Congress and several state legislatures—is a model that could be used to introduce and advance innovative legislative ideas at the state level. The New Rules Project has also begun to analyze and compile information on these kinds of laws. Additionally, the U.S. PIRG network of state public interest research groups and the Center for Policy Alternatives have worked to promote model progressive legislation, as has the newly founded American Legislative Issue Campaign Exchange (ALICE).

Moving the movement

Despite their many strengths, many major movements of the past few decades (labor, environmental, consumer) have all suffered from internal fractures and a lack of connection to the broader society. The result is that they have been increasingly boxed into “special interest” roles, despite the fact that the policies they advocate generally benefit the vast majority of people.

Cognitive linguist George Lakoff puts it this way: “Coalitions with different interest-based messages for different voting blocks [are] without a general moral vision. Movements, on the other hand, are based on shared values, values that define who we are. They have a better chance of being broad-based and lasting. In short, progressives need to be thinking in terms of a broad-based progressive-values movement, not in terms of issue coalitions.”

If there is one group at the center of the struggle to challenge corporate power, it is organized labor. As a Century Foundation Task Force Report on the Future of Unions concluded, “Labor unions have been the single most important agent for social justice in the United States.”

Labor is at the forefront of efforts to challenge excessive CEO pay, corporate attempts to move their headquarters offshore to avoid paying their fair share of taxes, and the outsourcing of jobs. Labor also has played a leading role in opposing the war in Iraq and exposing war profiteers benefiting from Iraq reconstruction contracts.

As AFL-CIO President John Sweeney has written, unions need to start “building social movements that reach beyond the workplace into the entire community and offer working people beyond our ranks the opportunity to improve their lives and livelihood.” This is beginning to occur more frequently. Union locals and national labor support groups like Jobs With Justice have been a key force in building cross-town alliances around economic justice battles such as living wage campaigns and the new Fair Taxes for All campaign.

These union-led, cross-community alliances have in turn supported some of the strongest union organizing campaigns, including the nearly two-decades-old Justice for Janitors campaign that the Service Employees International Union (SEIU) and its allies successfully organized in Los Angeles and other cities across the country.

Clearly, labor unions, along with community-based organizations and churches, will be central to the construction of lasting local coalitions that can serve as organizing clearinghouses to challenge corporate rule.

Constructing a new politics

To challenge corporate power we must also value and rebuild the public sphere, and draw clear lines of resistance against the expansion of corporate power, such as the current push by Bush to convert Social Security into individual investment accounts that will allow Wall Street to rake off billions of dollars in annual brokerage fees. Most importantly, we must work to change the rules instead of agreeing to play with a stacked deck.

In our hyper-commercialized culture, we spend far more time and energy thinking about what products we want to buy next instead of thinking about how we can change our local communities for the better, or affect the latest debates in Washington, D.C. or the state capitol. And when so much energy is spent on commercial and material pursuits instead of on collective and political pursuits, we begin to think of ourselves as consumers, not citizens, with little understanding of how or why we are so disempowered.

The restoration of democracy requires us to address the backstory behind this process of psychological colonization. It requires us to address the public policies and judicial doctrines that treat advertising as a public good—a tax-deductible business expense and a form of speech protected by the First Amendment. It’s been so long since we have seriously addressed such fundamental questions that, as a result, the average American is now exposed to more than 100 commercial messages per waking hour. As of October 2003, there were 46,438 shopping malls in the United States, covering 5.8 billion square feet of space, or about 20.2 square feet for every man, woman and child in the United States. As economist Juliet Schor reports, “Americans spend three to four times as many hours a year shopping as their counterparts in Western European countries. Once a purely utilitarian chore, shopping has been elevated to the status of a national passion.”

A consequence of the hyper-commercialization of our culture is that instead of organizing collectively, we often buy into the market-based ideology of individual choice and responsibility and assume that we can change the world by changing our personal habits of consumption. The politics of recycling offers a minor but telling example of how corporations manage to escape blame by utilizing the politics of personal responsibility. Although recycling is a decent habit, the message conveyed is that the onus for environmental sustainability largely rests upon the individual, and that the solutions to pollution are not to be found further upstream in the industrial system.

The personal choices we make are important. But we shouldn’t assume that’s the best we can do. We need to understand that it can’t truly be a matter of choice until we get some more say in what our choices are. True power still resides in the ability to write, enforce and judge the laws of the land, no matter what the corporations and their personal-choice, market-centered view of the world instruct us to believe.

Rebuilding the public sphere

With increased corporate encroachment upon our schools and universities, our arts institutions, our houses of worship and even our elections, we are losing the independent institutions that once nurtured and developed the values and beliefs necessary to challenge the corporate worldview. These and other institutions and public assets should be considered valuable parts of a public “commons” of our collective heritage and therefore off limits to for-profit corporations.

“The idea of the commons helps us identify and describe the common values that lie beyond the marketplace,” writes author David Bollier. “We can begin to develop a more textured appreciation for the importance of civic commitment, democratic norms, social equity, cultural and aesthetic concerns, and ecological needs… . A language of the commons also serves to restore humanistic, democratic concerns to their proper place in public policy-making. It insists that citizenship trumps ownership, that the democratic tradition be given an equal or superior footing vis-à-vis the economic categories of the market.”

Changing the rules

Much citizen organizing today focuses on influencing administrative, legislative and judicial processes that are set up to favor large corporations from the very start. Put simply, many of the rules are not fair, and until we can begin to collectively challenge this fundamental unfairness, we will continue to fight with one hand tied behind our backs. Instead of providing opportunities for people to organize collectively to demand real political solutions and start asking tough questions about how harmful policies become law in the first place, many community-based organizations seem content to merely clean up the mess left behind by failed economic policies and declining social services.

The most successful organizing happens when it is focused on specific demands. Two crucial reforms have great potential to aid the movement’s ability to grow: fundamental campaign finance reform and media reform. Together, these could serve as a compelling foundation for a mass movement that challenges corporate power more broadly.

The movement for citizen-controlled elections, organized at the local level with support from national groups such as the Center for Voting and Democracy and Public Campaign, provides a useful framework for action for the broad spectrum of people who currently feel shut out of politics.

Media reform is also essential. With growing government secrecy and a corporate-dominated two-party political system, the role of independent media is more critical than ever. As Bill Moyers suggested in his keynote address at the National Conference on Media Reform in 2003, “If free and independent journalism committed to telling the truth without fear or favor is suffocated, the oxygen goes out of democracy.”

The media have always been and will continue to be the most important tool for communicating ideas and educating the public about ongoing problems. Thomas Paine wrote more than 200 years ago:

There is nothing that obtains so general an influence over the manners and morals of a people as the press; from that as from a fountain the streams of vice or virtue are poured forth over a nation.”

History is replete with examples that show how critical the media’s role has been in addressing the injustices of our society. For instance, many Progressive Era reforms came only in response to the investigative exposés of corporate abuses by muckraking journalists like Upton Sinclair and Ida Tarbell. Writing in popular magazines like Collier’s and McClure’s, these writers provided a powerful public challenge to the corruption of the Gilded Age.

Because of increased corporate consolidation of the media, coverage of all levels of government has been greatly reduced. When people are kept ignorant of what is happening in their communities, in their states, in Washington, D.C. and in the world, it becomes much easier for large corporations to overwhelm the political process and control the economy without citizens understanding what is happening. Though media reform is a complex subject, one approach bears mentioning—establishing and strengthening nonprofit media outlets.

The long-term vision

Though campaign finance reform and media reform offer useful starting points, ultimately, there is much more to be done. We need to get tough on corporate crime. We need to make sure markets are properly competitive by breaking up the giant corporate monopolies and oligarchies. We need to make corporations more accountable to all stakeholders and less focused on maximizing shareholder profit above all. We need to stop allowing corporations to claim Bill of Rights protections to undermine citizen-enacted laws.

Ultimately, we need to restore the understanding that in a democracy the rights of citizens to govern themselves are more important than the rights of corporations to make money. Since their charters and licenses are granted by citizen governments, it should be up to the people to decide how corporations can serve the public good and what should be done when they don’t. As Justices Byron White, William Brennan and Thurgood Marshall noted in 1978: “Corporations are artificial entities created by law for the purpose of furthering certain economic goals… . The State need not permit its own creation to consume it.”

The people’s business

The many constituencies concerned with the consequences of corporate power are indeed a diverse group, and although this diversity can be a source of strength, it also makes it difficult to clearly articulate a vision for the struggle. What principles, then, can unite us?

One abiding faith that almost all of us share is that of citizen democracy: that citizens should be able to decide how they wish to live through democratic processes and that big corporations should not be able to tell citizens how to live their lives and run their communities. The most effective way to control corporations will be to restore citizen democracy and to reclaim the once widely accepted principle that corporations are but creatures of the state, chartered under the premise that they will serve the public good, and entitled to only those rights and privileges granted by citizen-controlled governments. Only by doing so will we be able to create the just and sustainable economy that we seek, an economy driven by the values of human life and community and democracy instead of the current suicide economy driven only by the relentless pursuit of financial profit at any cost.

Therefore, we must work assiduously to challenge the dominant role of the corporation in our lives and in our politics. We must reestablish citizen sovereignty, and we must restore the corporations to their proper role as the servants of the people, not our masters. This is the people’s business.

Lee Drutman is the communications director of Citizen Works; and Charlie Cray is the director of the Center for Corporate Policy. They are co-authors of The People’s Business: Controlling Corporations and Restoring Democracy (Berrett-Koehler), from which this essay was adapted.

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