How Corporations Came to Have So Much Power
Inventing Ethical Institutions
Reclaiming Government

excerpted from the book

Myth America

Democracy vs. Capitalism

by William H. Boyer

Apex Press, 2003. paper


The central American myth is that democracy is the American way of life. Democracy, however, requires an educated public. The sad reality we face is that the prospect of a public educated to issues and alternatives is perceived as threatening to the privileges of the minority that hold most of our wealth and power, so virtually all of our institutions work to disarm this threat. Operating with an effective confusion of "information" with propaganda, our media, our schools, our corporations, and our government support information technology and produce an increasing flood of its product. Through what I call "the strategic use of trivia," members of the public are under the illusion that the "information" they receive is educating them on subjects that matter. In fact they are by and large being fed what the institutions that perpetuate the power of corporate America wish to feed them.

Robert Reich, former Secretary of Labor

"There's no longer any countervailing power in Washington. Business is in complete control of the machinery of government."



Many of the original 13 colonies were actually corporations created (chartered) by the King of England to extract timber, animal pelts, and precious metals to benefit England. The charters of these colonies were not written to create democracy or to promote the welfare of the colonial communities, and abuses of power were widespread. The power of non-colony corporations was also a problem for the colonists: the "Boston Tea Party" was a protest over how the British East India Tea Company had pressured the King to raise the tea tax. The tea tax forced colonial merchants to raise their prices so they could not compete with this tea corporation and it was not hard for the colonists to see how a corporation could control their economy.

After the Revolutionary War, citizens of each state (via their legislatures) issued not-for-profit charters to establish such community ventures as firehouses, libraries, and colleges. Legislatures also chartered profit-making corporations to work on such infrastructure projects as the construction of bridges and canals. In exchange for the charter, a corporation was obligated to obey all laws, serve the common good, and cause no harm. Chartering by the legislatures was a privilege-not a right-and charters automatically expired after five to 30 years unless renewed. In the first few decades after the War, very few charters were granted and the citizens of this new country made sure that the abuses they had suffered as colonies were not repeated (Grossman and Adams 2001, 62).

In those days, people were very cautious about creating institutions which could overpower them. There were many limitations written into corporate charters and state constitutions. Corporations had limits on capitalization, debts, land holdings, and sometimes profits. They could not own stock in other corporations nor could they keep their financial books closed to public representatives. They were prohibited from making political contributions. In dramatic contrast to the situation today, corporate stockholders and directors were held personally responsible for crimes and harms committed and debts incurred by the corporation (Grossman and Adams 2001, 61-2).

As David Korten points out, the Civil War changed all this. Public scrutiny of corporations was difficult to keep up during the Civil War when the states were warring among themselves. State legislators took bribes from corporate executives to loosen legal restrictions, grant lucrative business contracts, and to have the government subsidize their businesses (Korten 1995, 58).

President Abraham Lincoln was moved to use these stunningly strong words to describe the situation in 1864:

I see in the near future a crisis approaching that un-nerves me and causes me to tremble for the safety of my country. As the result of the War, corporations have been enthroned .... An era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people .... until wealth is aggregated in a few hands... and the Republic is destroyed (Wasserman 1983, 89-90).

Following the Civil War, a battle of a different nature emerged as states competed against each other with weakened chartering requirements designed to attract corporations and their money. This bidding war reached such a magnitude that President Rutherford issued the following striking statement in 1876:

This is a government of the people, by the people, and for the people no longer. It is a government of corporations, by corporations, and for corporations (Wasserman 1984, 291).


This slackening of legal restraints on corporations culminated in a U.S. Supreme Court decision in 1886 known as Santa Clara County vs. Southern Pacific Railroad. It opened the floodgates for the accumulation and consolidation of corporate power. Without even any allowance for discussion or debate, the Supreme Court accepted the Santa Clara decision that corporations are "persons." Even though they are artificial entities, they were grant-

ed the same legal status as real human beings and were entitled to all the same Bill of Rights protections including freedom of speech. In one fell swoop, essentially all pretense of meaningful control over corporations was abandoned for the corporations since they can use the First Amendment provision for "freedom of speech" as the basis for making contributions to political candidates. The result, as we know too well, has been to transfer the economic power of the corporation into control of the political system.

From 1886 onward, corporations have used their court-conferred wealth to overwhelm the democratic process. Having now the same rights as real people, they were allowed to participate in the political process. Their unlimited spending in elections permitted them to gain majorities in legislatures and eliminate all remaining troublesome language in state constitutions. Any attempts at control were defeated as "unconstitutional" infringements on their right to "free speech."

The Supreme Court used the Fourteenth Amendment to rationalize its decision by saying that it "forbids a State to deny to any person within its jurisdiction the equal protection of laws." (Santa Clara County v. Southern Pacific Railroad Company, 118 U.S. 394 (1886), available at The logic was inescapable once the corporation was deemed a "person."

Corporations increasingly use their economic power to influence government and consider this a normal part of the costs of doing business. Campaign money for political candidates, lobbying in the halls of Congress, soft money to political action committees and political parties often helps provide the kinds of legislation which serves the corporations. This rapidly expanding private power of corporations is often at such variance with the public interest, that the phrase that we now "have the best government money can buy" is understood by the general public. People know that money now buys government.

Back in the 1930s, when Thurman Arnold, an astute political philosopher, wrote The Folklore of Capitalism, he saw the effect of "personhood" and stated: "The idea. that a corporation is endowed with the rights and prerogatives of a free individual is as essential to the acceptance of corporate rule in temporal affairs as was the ideal of the divine right of kings in an earlier day (1937, 185)." And he also pointed out that "Institutions once formed have the persistency of all living things. They tend to grow and expand. Even when their utility both to the public and their own members has disappeared, they still survive (395)."

His prediction is accurate for our present day. As soon as a "legal" right was established to use corporate money to control the political system the contest between capitalism and democracy had a pre-determined outcome. Corporate power was greatly increased when television became crucial in elections for it is so expensive that the preponderant wealth of corporations over individuals made the personhood fiction exactly what was needed to use money as speech. Once political candidates got most of their campaign money from corporations the tax benefits and access to public resources soon followed. Those same legislators could also make sure that the right people were put in the Federal Communication Commission to keep television under private control and out of reach of the public. When the major nation in the world is under de-facto control of the major corporations, their power will reach everywhere on this planet (Nader 2002, 156,161-162, 239).

So as corporations have grown into multinationals they have gained massive power on a global scale. Corporations are taking the further step of establishing international agreements (such as the North American Free Trade Agreement (NAFTA), the General Agreements on Tariffs and Trade (GATT), and the Multilateral Agreement on Investment (MAT)) through which they are attempting to gain even more power by insulating themselves from all meaningful legislative oversight. Although states still technically retain the legal authority to revoke corporate charters, the exercise of this right has languished virtually to zero as corporations gained more wealth and power to corrupt government officials.

As William Greider points out, NAFTA was adopted in 1993, and ... "has enabled multinational corporations to usurp the sovereign powers of government, not to mention the rights of citizens" (2001, 5).

Mexico, Canada, and the United States forfeited sovereign immunity when they signed NAFTA, which means countries cannot control their own resources. Corporations and "free trade" override nations. Corporate investors from other countries even override the laws created through national elections.

Few people, even among college graduates, know that corporation power was initially usurped in 1886 when the corporation became a "person" and could use the first Amendment of the Constitution as the basis for "money is speech." The lives of ordinary Americans are controlled substantially by the power that resulted from personhood.

Understanding how we lost control and what to do about it is of the utmost importance for the American future and, because of American corporate dominance, for the rest of the world as well. There are steps that can be undertaken to reverse this usurpation of American democracy and various groups have been developing and testing strategies. Since corporations are chartered in States, the responsibilities of corporations can be defined at that level. Changes usually involve a Catch 22, for corporations will use their economic power to protect their privileges. Yet the contest between democracy and oligarchy involves potential power that has not yet been mobilized.




Eric Fromm

The danger of the past was that men became slaves. The danger of the future is that people may become robots.


The political power of television is enormous and now eclipses religion as the true "opiate of the masses." It represents the ultimate in "deflection politics." Appealing to the worst part of human nature, programs have provided enough violence, sensationalism, and silliness to keep people attentive even during repeated soporific commercials that try to turn them into unthinking consumers. t is an example of technology in the service of the corporate system, providing symbols that show us that (1) people are fools and willing to behave stupidly in commercials, (2) that the system is willing to engage in any manner of deceit to obtain profits, and (3) that putting balls into hoops is central to the meaning of life.)

One channel, public television, has been reserved to serve an educational role and to help create an informed citizenry. In its early days, it was exemplary. In the 1980s, the Reagan administration reduced the budget and forced PBS to use commercial sponsors. Within 20 years, public television has gone largely in the direction of commercial television. A safe group of commentators is repeatedly used to respond to a safe set of questions. However, nature and cultural films (including good music) are available through corporate sponsorship because they are non-controversial. Programming on politics, history, and economics, however, is usually so weak that it provides little basis for developing an informed public. Wall Street Week and The Nightly Business Report, appropriate only to commercial television, have been on public television for decades.

Legally and technically, however, the reform of television is far easier than the rehabilitation of the press. The airways are public property that is leased by corporations. The public has the legal power to impose any requirement for content or commercials. For the commercial stations to distort the political system during elections by becoming the most expensive element of campaigns is entirely unnecessary. Conditions of licensing should include free political time to candidates on both PBS and commercial TV.

PBS should be financed by public money and run by a board directly elected by the public. Statutory law could mandate Congress to allocate guaranteed funding and ensure that the standards for program content are guided by a statement of purpose to be followed by the elected board. Commercial television could be charged license fees high enough to support public television. The entire plan is simple and logical, but it first requires the public to know the truth about current public ownership of the airways.

The same principles apply to radio, which is at least as dismal on commercial stations that usually offer perpetual commercials in place of public education. But since radio is less costly, there is a greater variety of stations. Some have provided the most intellectually and politically useful information available to the public. The Pacifica Network stations are among the most well known. Some public radio stations are reaching out and broadcasting local lectures-an outstanding example is an organization called Alternative Radio (located in Boulder, Colorado) that supplies penetrating taped speeches, often recorded at universities. Many of these speeches have a strong social justice and anti-corporate emphasis-the kind of material that fits the social ethics goal that should be driving twenty-first century institutions in a transition from the twentieth century.

Low costs of transmission have allowed radio to achieve this desirable educational objective. Television is inherently expensive and uses the subsidy of public property rights through free licensing. The potential power of public ownership of the airways needs to be fully utilized to make sure that television actually serves the public interest. The public owns the airways and should control them. Radio and television models in other countries such as Germany, which have avoided much commercial corruption, should be examined for policy suggestions.

In light of its long-stated commitment to upholding human rights at home and in its foreign policy, the U.S. government today poses a threat to the universality of human rights.

Human Rights Watch 1999

Jimmy Carter 2002

There is a sense that the United States has become too arrogant, too dominant, too self-centered, proud of our wealth, believing that we deserve to be the richest and most powerful and influential nation in the world ...




In 1976 a U.S. Supreme Court case, Buckley vs. Valeo, ruled that the first Amendment of the Constitution permits all forms of free speech and that the use of corporate money to influence elections is a legitimate example of "speech."

In 1886 the courts had ruled that corporations are entitled to the same First Amendment-freedom of speech-protection as real "natural" persons by ruling that corporations are also "persons." This personhood status has been used by corporations to defeat the votes of real people, for grass roots organizations are usually overwhelmed by massive and expensive disinformation campaigns that corrupt the democratic process.

... The important goal of shifting power back to the public is tied largely to overthrowing Buckley vs. Valeo since this decision by the Supreme Court supports corporations in their use of funds as "free speech" to buy campaign ads on television and often control the outcome of an election. This distortion of "speech" means we have created "the best government money can buy."

Myth America

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