Challenging Corporate Power
Grossman is co-director of the Program on Corporations, Law and Democracy. He is
co-author of Taking Care of Business: Citizenship and the Charter of
Incorporation. He lectures widely on issues of corporate power, law, and
write in an essay, "Giant corporations govern. In the Constitution of the
United States they are delegated no authority to make our laws and define our
culture. Corporations have no constitutions, no bills of rights. So when
corporations govern, democracy flies out the door." What do you mean by that?
GROSSMAN: On one
level, its that corporations are making the fundamental decisions that shape
our society. They determine essentially what work we do, which technologies get
developed, which production methods are used. They are constantly pushing the
concept that production has to expand, and from that comes wealth, liberty, and
freedom. Most of the decisions they make are essentially beyond the publics
ability to interfere with. In terms of having this fundamental authority to
shape our society, to get the law to reflect their position.
courts, and the Supreme Court in particular, have bestowed the equivalent of
human rights on these artificial entities. They now have the protection of law
and the Constitution, which means the protection of the police and the military,
to interfere in our elections and in our lawmaking. Theyre able to field 50
to 1,000 lobbyists. Theyre able to take politicians to dinner, to buy all
kinds of advertising, to shape the culture. Increasingly over this century even
citizen activists and activist organizations, have not challenged the claimed
authority of corporations to make the fundamental decisions. Whats happened
is, weve been channeled into regulatory administrative agencies, like the
Federal Communications Commission, the Environmental Protection Agency, the
Securities Exchange Commission and the National Labor Relations Board, where we
try to make the best of the worst of a bad situation.
that if we are to be a self-governing people, which is what the American
Revolution is about, then we have to be in charge of everything. There can be no
realm of decision-making that should be considered private, beyond our
conventional wisdom would have it that we are governed by local, state, and
Look at the
Multilateral Agreement on Investment, the MAI. It would grant to property, to
corporations, to artificial concentrations of wealth the authority to go into
other countries, and exercise the same kind of so-called private rights of
decision-making that they have exercised in this country.
If you go back
and look at populist and other public resistance to increasing corporate power
in the 1880s and 1890s, you find a vigorous societal debate, about what the role
of the state is in creating corporations. Its our states that charter
corporations and are supposed to define them and keep them subordinate. What
happened was, towards the end of the 19th century corporate leaders realized
that they needed to get away from the authority of the states to define them.
They ran to the federal government and said, This is unconstitutional. This
interferes with the interstate commerce clause, our property rights, and our
freedom of contract. And the federal courts helped them. They stripped the
states of their ability to define the corporation.
something that comes out of the whole mythology, that jobs, progress and the
good life come from giving these corporation a free hand and saying, Do whatever
you want because were incapable as people of creating jobs, of figuring out
how to grow our food, of arranging our affairs. We need you. The politicians
say, We have to create a good business climate. We have to give the corporations
whatever they want, including all kinds of subsidies and special privileges. All
the money goes to them. They have the law on their side. We as the people are
left with, well, if anything bad happens to this corporation, what will happen
to jobs, to taxes? How can we possibly compete with the rest of the world? The
whole gamut of mythologies that the corporations have created in our culture
means that at the local level we have very little control.
redefining democracy and law.
And in the
process redefining us. Whats happened is that corporations have defined human
beings as consumers. Were told we can vote with our dollars and with our feet
and not buy. Thats crap. If were a self-governing people, then our main
job is to nurture the democratic process. Thats a job that has been entrusted
to us by previous generations and that we want to help empower future
generations to do.
One of the things
to stress is that corporations dont have rights. Rights are for people.
Corporations only have privileges, and only those that the people bestow on
A New York
Times editorial recently applauded a court decision granting to people due
process rights dealing with HMO corporations on medical care issues. Think about
that. The corporation already has due process rights because the courts have
made clear that they think the corporation is a legal person. But on company
property workers dont have First Amendment rights. They dont have due
process rights. On issues that are concerned with these insurance companies,
these medical companies, its not just generally assumed that all human beings
have due process rights. Its nuts.
Over the last 15
years. There have been a number of cases where the Supreme Court has expanded
the privileges of free speech to corporations. One of them came out of a case in
Massachusetts. The Commonwealth of Massachusetts passed a law saying that in
referendum elections corporations dont have the right to spend money to sway
the vote one way or the other. Corporations took that all the way to the
Massachusetts Supreme Judicial Court, the highest court in the Commonwealth. It
approved the law. The corporations then took it to the U.S. Supreme Court. The
Supreme Court sort of changed the question and said, When is democracy the most
helped? When all voices are heard. These corporate voices need to be heard.
Therefore this law is unconstitutional. They refused to acknowledge the finding
of the Massachusetts legislature and courts that great concentrations of wealth
and power that are considered private in our society are a menace to the
functioning of democracy and that the state has the total right to say, For
corporations to use shareholder money to sway votes without having even polled
the shareholders is inappropriate. What the Supreme Court did was totally throw
out the logic and say, Democracy means all voices, and since corporations are
persons, they have voices. Let them be heard, even if theyre going to
outspend humans a billion to one.
sympathetic to your argument might say that state and federal legislatures are
largely dominated and controlled by corporate money and interests and to go that
route for some kind of change is totally futile. Youre asking the fox to
police the hen house.
I dont know
what other mechanisms to seek. Were not naive. Our near-term approach over
the next few years is to provoke a different debate and discussion about this.
These issues have been off the agenda for a century. Were taught in a
knee-jerk way if we have a problem to look for justice, for resolution, to go
into the EPA or the NLRB or the FCC. They dont have the authority to deal
with what were talking about, which is the constitutional question of whos
in charge. Maybe after ten years a community group knows how to shut a toxic
dump or make it a little more safe or a little less harmful or get rid of a
particular toxic chemical. But we dont have time to be going one chemical at
a time, one forest at a time, one assault on liberty at a time.
If we dont
have a revolution in consciousness among enough people, then theres no way
were going to ever end up going to our legislators and our courts and where
were supposed to go, the mechanisms of self-governance, in order to get
starting to address this issue and understanding that we have to move into
different arenas as organizers, as educators, as activists. It would be a very
different organizing task and a very different struggle if groups that have been
dealing with, say, trying to stop toxic chemicals in food, instead of trying to
get one more regulatory law passed giving the EPA ten years to write a code of
regulations to limit how many chemicals can be used and set up a system of
fining corporations if they use a little too much of X or Y, to go into the
state, amend the state corporate law to say, a corporation will not be allowed
to do business in this state if it emits any poisons into the air or the water.
A corporation will not be allowed to operate in this state if it claims the
rights of persons. A corporation operating in the state does not have free
speech. Workers on corporate property in this state will have free speech and
that a corporation has means a right denied to human beings. The courts in
particular have had a special responsibility to undo this because they caused a
lot of this. If you compare in the 19th century, for example, the extent to
which the federal courts and some state courts kept granting more privileges to
capital to organize and denying the privilege of workers to organize, you can
make a chart. Every time they gave capital another privilege, they took
something away from workers. So you have an incredibly uneven fight.
How can some
of the issues and concerns that youre raising be injected into the mainstream
discourse if that discourse is largely driven, shaped, and formed by
We have to
understand that from an organizing educational strategy the media corporations
are the adversary, more than the adversary, theyre part of the whole
structure of corporate dominance and governance. However, theres an enormous,
incredible alternative, grassroots media. When we first came out with our early
publications, like the pamphlet Taking Care of Business in 1993, none of
the mainstream corporate media would touch it. We were forced to go to the
grassroots. We got hundreds of reviews and excerpts in print, newsletters,
magazines, radio, some videos. The word spread in a very effective way. The base
weve been building is much stronger because people have had to grapple with
this stuff. I think that the opportunities are there. In a couple of years, when
there are challenges to corporate privilege even the corporate press is going to
be forced to grapple with this.
What are your
views on the notion of socially responsible corporations?
I think its a
terrible and dangerous diversion. If all were going to do is create
organizations and develop materials and educate people to come together in order
to say to corporations, Please, you have a responsibility not to be so
destructive. Please be a little less harmful. Please be nicer. What youre
doing is reinforcing the corporate worldview that they have ultimate authority,
like petitioning a king to be a little nicer or a little less bad. Some of the
groups have invested ten years into these voluntary codes, an incredible amount
of time and energy getting their members involved, and when they win, what do
they get? Pretty much codes without teeth and no law backing them up.
purpose of a business corporation is to shield decision-makers from
responsibility. Thats why there are limited-liability corporations. The
corporation can be doing all sorts of horrible things, assaulting democracy,
destroying property, taking peoples future income, and nobodys
responsible. What happens when a corporation is brought before a regulatory body
or even into court on a criminal case? The worst thing is its fined. Maybe
its declared a felon and the corporation is fined. But thats not going to
have a deterrent effect. A corporation doesnt think. It doesnt have
feelings, a soul. It doesnt have a conscience. Its playing games to think
that these minor fines, which by the way are usually tax deductible, have any
real impact on the corporation.
What is your
response to the corporate chieftains who argue that they are creating jobs,
creating wealth, this is a capitalist economy?
in the Constitution that mentions corporations or capitalism. Theres nothing
in the Constitution, other than protecting contracts, that sets up a system that
is so overly competitive and not cooperative. There are a lot of people
throughout our history who believed that everything doesnt have to be
cutthroat, that people can cooperate. I would say that the smartest corporate
leaders from the 1870s on have always understood that what they wanted was the
ability to cooperate among the top corporations and make everybody else compete.
There was a
piece in the New York Times by Walter Goodman that quoted James Randall,
the president of Archer Daniels Midland Corporation. ADM was caught in some scam
in which they were fined $100 million, peanuts. Randall was secretly taped
saying to some of his associates, "Our competitors are our friends and our
customers are our enemies." I think thats how big corporations have felt
for 100 years. They created the regulatory system and laws to minimize
competition among themselves but maximize competition among workers and the
community so they could play one community off against another and one country
off against another. Of course corporations bring some jobs. Thats where all
our money goes, our subsidies, our wealth. With all these privileges they have,
they damn well should be creating some jobs. But the question is, Is that the
only source and the appropriate source of getting things done? Are we so
helpless that if we didnt have these giant corporations we wouldnt have
wholesome food, we couldnt build our own houses, we couldnt have
newspapers and radio and television and magazines, we couldnt heat our homes
and create electricity? If people and communities had any fraction of the vast
authority and the public wealth that has been channeled into these corporations,
we would be able to do whats needed to be done.
I was involved in
a major anti-nuclear effort in California in the early 1970s that led to a
statewide initiative on nuclear power. In 1975 the utility corporations were
saying they were planning to build 50 nuclear plants in California. The
government was planning to build 1,000 nuclear plants around the whole U.S. We
came up with another scenario for California showing that for the next 30 years
you wouldnt have to build a single central station power plant, nuclear,
coal, oil, whatever, in order to meet energy needs. You could do it with energy
efficiency, solar, wind, conservation. They called us crazy, Communists, nuts,
Luddites, whatever. By the early 1990s, the Pacific Gas and Electric Company,
the dominant utility in California, essentially adopted our position. They were
saying, We dont have to build any central station power plants over the next
generation because were using efficiency and solar and wind. Theyve since
backed off on that. But if we had had access to the money that they had in 1975,
which after all was ratepayer money, we could have made the decisions to start
installing solar and conservation and doing that. They chose to squander
billions of dollars of ratepayer money into building nuclear and coal plants and
investing in other countries. So of course theyre creating jobs. Theyve
also destroyed ten million jobs over the last 15 years, taking production
overseas. Its totally based on their whim.
argue that their obligation is to their shareholders, not to the larger society.
They need to generate profits in order to give shareholders dividends. If they
dont theyre out.
I noted at a
recent GE shareholder meeting that the CEO, Jack Welch, kept saying to the
shareholders, This is your corporation. Well, Id like to see some
shareholders go onto company property and say, I want to see the books. Id
like to see some shareholders start exercising some of their authority. The fact
is that over the last 25 years, through courts and legislation, the rights of
shareholders have been decreased enormously. They have very little authority any
more in the running of these corporations. Its the self-perpetuating boards,
the people like Jack Welch of GE, who are running them as dictators. This line
that the obligation of the corporation is to maximize profits for the
shareholders came out of another federal court decision dealing with the Dodge
Motor Company in the early part of this century. Its not written in federal
law. It was a court decision saying it was the obligation of the corporation to
maximize profits for the shareholders. However, many states have put into their
state corporation codes that the directors can take into account the impact of
the corporation on the environment, on workers, on future generations. So in 15
or 20 states the law is clear that there are much broader criteria. The most
important value in this country that drives everything is, The economy must
expand. We must increase production. Efficiency is defined as production per
person. Thats productivity. In order to have high productivity to please Wall
Street you have to have people working in China or India or Malaysia making Nike
sneakers and being paid nothing. Where did those values come from? Can we say we
can have a society where production doesnt always have to expand?
elaborate a little more on the environmental consequences of the current path
that were on?
We have a number
of environmental laws, toxic chemical laws, clean air and water laws, that have
been passed since the 1970s. These are laws regulating what the corporations can
put out. Despite these laws, the amount of toxic chemicals produced every day by
corporations is increasing. The amount of harm that people and other species are
suffering is increasing. If you go back and look at these regulatory laws, what
they do is legalize the corporations ability to put out poisons. They channel
us, as activists and environmentalists, into trying to deal with one poison at a
time rather than saying to the corporations, Its illegal for you to be
poisoning in the first place. So we have poisons in the air and the water, in
ecological standpoint, from an equal distribution of wealth standpoint, from a
justice standpoint the rule by giant corporations has brought us problems.
Its certainly brought us a lot of raw wealth. Theres a lot of production.
We are the masters at producing things in this country. We produce more than
anybody else in the world, more poisons and more garbage and more crap than
anybody else in the world.
practical things that people can do in to reframe the debate.
We and other
organizations have been producing materials over the last six years or so. Those
can be very helpful to people, to read the history that they didnt know, and
see how other folks in other generations have been addressing this. Were
suggesting that folks who are interested form some kind of study group, read and
start thinking and talking about this. We have to start using a different
language, thinking about ourselves in a different way. People who belong to
activist civic organizations need to bring these debates into churches, academic
institutions, professional societies, or in places like town meetings. We need
to start bringing these discussions into the body politic.
For example, in
the little town of Arcata in northern California, a group of people formed
Democracy Unlimited. They qualified a petition, an initiative for the ballot
which called on the city hearings to commission a report on the ways that the
city could begin to take back its authority from the giant timber corporations
that dominate northern California. Theyre creating a public debate and using
some of the resources of their own government.
In 1994 you
helped establish the Program On Corporations, Law And Democracy. Its mission
statement is "instigating democratic conversations and actions that contest
the authority of corporations to govern."
I think that says
it in a nutshell. Were saying that the norm of giant corporations is to usurp
the governing authority of the people. With that authority, given their values
and their own internal needs, theyre going to make the wrong decisions. Most
people dont recognize that corporations are governing illegitimately, were
trying to help create that debate. Out of that debate will come, we hope, a
different kind of citizen organizing in the 21st century, which is about taking
these powers and privileges away from corporations and saying: We are the
sovereign people, we come together to form this government, to protect the
general welfare, to preserve our posterity. We create these corporations. We
define them. When they have exceeded their authority, we must say, Were
in charge. Heres how we want things to be run.