The Uncooling of America

The History of Corporations in the United States

by William Kalle Lasn

Morrow/Eaglebrook, 1999

(excerpted from Culture Jam)


The history of America is the one story every kid knows. It's a story of fierce individualism and heroic personal sacrifice in the service of a dream. A story of early settlers hungry and cold, carving a home out of the wilderness. Of visionary leaders fighting for democracy and justice, and never wavering. Of a populace prepared to defend those ideals to the death. It's the story of a revolution (an American art form as endemic as baseball or jazz) beating back British Imperialism and launching a new colony into the industrial age on its own terms.

It's a story of America triumphant. A story of its rise after World War II to become the richest and most powerful country in the history of the world, "the land of the free and home of the brave," an inspiring model for the whole world to emulate.

That's the official history, the one that is taught in school and the one our media and culture reinforce in myriad ways every day.

The unofficial history of the United States is quite different. It begins the same way -- in the revolutionary cauldron of colonial America -- but then it takes a turn. A bit-player in the official history becomes critically important to the way the unofficial history unfolds. This player turns out to be not only the provocateur of the revolution, but in the end its saboteur. This player lies at the heart of America's defining theme: the difference between a country that pretends to be free and a country that truly is free.

That player is the corporation.

The United States of America was born of a revolt not just against British monarchs and the British parliament but against British corporations.

We tend to think of corporations as fairly recent phenomena, the legacy of the Rockefellers and Carnegies. In fact, the corporate presence in prerevolutionary America was almost as conspicuous as it is today. There were far fewer corporations then, but they were enormously powerful: the Massachusetts Bay Company, the Hudson's Bay Company, the British East India Company. Colonials feared these chartered entities. They recognized the way British kings and their cronies used them as robotic arms to control the affairs of the colonies, to pinch staples from remote breadbaskets and bring them home to the motherland.

The colonials resisted. When the British East India Company imposed duties on its incoming tea (telling the locals they could buy the tea or lump it, because the company had a virtual monopoly on tea distribution in the colonies), radical patriots demonstrated. Colonial merchants agreed not to sell East India Company tea. Many East India Company ships were turned back at port. And, on one fateful day in Boston, 342 chests of tea ended up in the salt chuck.

The Boston Tea Party was one of young America's finest hours. It sparked enormous revolutionary excitement. The people were beginning to understand their own strength, and to see their own self-determination not just as possible but inevitable.

The Declaration of Independence, in 1776, freed Americans not only from Britain but also from the tyranny of British corporations, and for a hundred years after the document's signing, Americans remained deeply suspicious of corporate power. They were careful about the way they granted corporate charters, and about the powers granted therein.

Early American charters were created literally by the people, for the people as a legal convenience. Corporations were "artificial, invisible, intangible," mere financial tools. They were chartered by individual states, not the federal government, which meant they could be kept under close local scrutiny. They were automatically dissolved if they engaged in activities that violated their charter. Limits were placed on how big and powerful companies could become. Even railroad magnate J. P. Morgan, the consummate capitalist, understood that corporations must never become so big that they "inhibit freedom to the point where efficiency [is] endangered."

The two hundred or so corporations operating in the US by the year 1800 were each kept on fairly short leashes. They weren't allowed to participate in the political process. They couldn't buy stock in other corporations. And if one of them acted improperly, the consequences were severe. In 1832, President Andrew Jackson vetoed a motion to extend the charter of the corrupt and tyrannical Second Bank of the United States, and was widely applauded for doing so. That same year the state of Pennsylvania revoked the charters of ten banks for operating contrary to the public interest. Even the enormous industry trusts, formed to protect member corporations from external competitors and provide barriers to entry, eventually proved no match for the state. By the mid-1800s, antitrust legislation was widely in place.

In the early history of America, the corporation played an important but subordinate role. The people -- not the corporations -- were in control. So what happened? How did corporations gain power and eventually start exercising more control than the individuals who created them?

The shift began in the last third of the nineteenth century -- the start of a great period of struggle between corporations and civil society. The turning point was the Civil War. Corporations made huge profits from procurement contracts and took advantage of the disorder and corruption of the times to buy legislatures, judges and even presidents. Corporations became the masters and keepers of business. President Abraham Lincoln foresaw terrible trouble. Shortly before his death, he warned that "corporations have been enthroned . . . . An era of corruption in high places will follow and the money power will endeavor to prolong its reign by working on the prejudices of the people . . . until wealth is aggregated in a few hands . . . and the republic is destroyed."

President Lincoln's warning went unheeded. Corporations continued to gain power and influence. They had the laws governing their creation amended. State charters could no longer be revoked. Corporate profits could no longer be limited. Corporate economic activity could be restrained only by the courts, and in hundreds of cases judges granted corporations minor legal victories, conceding rights and privileges they did not have before.

Then came a legal event that would not be understood for decades (and remains baffling even today), an event that would change the course of American history. In Santa Clara County vs. Southern Pacific Railroad, a dispute over a railbed route, the US Supreme Court deemed that a private corporation was a "natural person" under the US Constitution and therefore entitled to protection under the Bill of Rights. Suddenly, corporations enjoyed all the rights and sovereignty previously enjoyed only by the people, including the right to free speech.

This 1886 decision ostensibly gave corporations the same powers as private citizens. But considering their vast financial resources, corporations thereafter actually had far more power than any private citizen. They could defend and exploit their rights and freedoms more vigorously than any individual and therefore they were more free. In a single legal stroke, the whole intent of the American Constitution -- that all citizens have one vote, and exercise an equal voice in public debates -- had been undermined. Sixty years after it was inked, Supreme Court Justice William O. Douglas concluded of Santa Clara that it "could not be supported by history, logic or reason." One of the great legal blunders of the nineteenth century changed the whole idea of democratic government.

Post-Santa Clara America became a very different place. By 1919, corporations employed more than 80 percent of the workforce and produced most of America's wealth. Corporate trusts had become too powerful to legally challenge. The courts consistently favored their interests. Employees found themselves without recourse if, for example, they were injured on the job (if you worked for a corporation, you voluntarily assumed the risk, was the courts' position). Railroad and mining companies were enabled to annex vast tracts of land at minimal expense.

Gradually, many of the original ideals of the American Revolution were simply quashed. Both during and after the Civil War, America was increasingly being ruled by a coalition of government and business interests. The shift amounted to a kind of coup d'tat -- not a sudden military takeover but a gradual subversion and takeover of the institutions of state power. Except for a temporary setback during Franklin Roosevelt's New Deal (the 1930s), the US has since been governed as a corporate state.

In the post-World War II era, corporations continued to gain power. They merged, consolidated, restructured and metamorphosed into ever larger and more complex units of resource extraction, production, distribution and marketing, to the point where many of them became economically more powerful than many countries. In 1997, fifty-one of the world's hundred largest economies were corporations, not countries. The top five hundred corporations controlled forty-two percent of the world's wealth. Today corporations freely buy each other's stocks and shares. They lobby legislators and bankroll elections. They manage our broadcast airwaves, set our industrial, economic and cultural agendas, and grow as big and powerful as they damn well please.

Every day, scenes that would have seemed surreal, impossible, undemocratic twenty years ago play out with nary a squeak of dissent from a stunned and inured populace.

At Morain Valley Community College in Palos Hills, Illinois, a student named Jennifer Beatty stages a protest against corporate sponsorship in her school by locking herself to the metal mesh curtains of the multimillion-dollar "McDonald's Student Center" that serves as the physical and nutritional focal point of her college. She is arrested and expelled.

At Greenbrier High School in Evans, Georgia, a student named Mike Cameron wears a Pepsi T-shirt on the day -- dubbed "Coke Day" -- when corporate flacks from Coca-Cola jet in from Atlanta to visit the school their company has sponsored and subsidized. Mike Cameron is suspended for his insolence.

In suburban shopping malls across North America, moms and dads push shopping carts down the aisle of Toys "R" Us. Trailing them and imitating their gestures, their kids push pint-size carts of their own. The carts say, "Toys 'R' Us Shopper in Training."

In St. Louis, Missouri, chemical giant Monsanto sics its legal team on anyone even considering spreading dirty lies -- or dirty truths -- about the company. A Fox TV affiliate that has prepared a major investigative story on the use and misuse of synthetic bovine growth hormone (a Monsanto product) pulls the piece after Monsanto attorneys threaten the network with "dire consequences" if the story airs. Later, a planned book on the dangers of genetic agricultural technologies is temporarily shelved after the publisher, fearing a lawsuit from Monsanto, gets cold feet.

In boardrooms in all the major global capitals, CEOs of the world's biggest corporations imagine a world where they are protected by what is effectively their own global charter of rights and freedoms -- the Multinational Agreement on Investment (MAI). They are supported in this vision by the World Trade Organization (WTO), the World Bank, the International Monetary Fund (IMF), the International Chamber of Commerce (ICC), the European Round Table of Industrialists (ERT), the Organization for Economic Co-operation and Development (OECD) and other organizations representing twenty-nine of the world's richest economies. The MAI would effectively create a single global economy allowing corporations the unrestricted right to buy, sell and move their businesses, resources and other assets wherever and whenever they want. It's a corporate bill of rights designed to override all "nonconforming" local, state and national laws and regulations and allow them to sue cities, states and national governments for alleged noncompliance. Sold to the world's citizens as inevitable and necessary in an age of free trade, these MAI negotiations met with considerable grassroots opposition and were temporarily suspended in April 1998. Nevertheless, no one believes this initiative will remain suspended for long.

We, the people, have lost control. Corporations, these legal fictions that we ourselves created two centuries ago, now have more rights, freedoms and powers than we do. And we accept this as the normal state of affairs. We go to corporations on our knees. Please do the right thing, we plead. Please don't cut down any more ancient forests. Please don't pollute any more lakes and rivers (but please don't move your factories and jobs offshore either). Please don't use pornographic images to sell fashion to my kids. Please don't play governments off against each other to get a better deal. We've spent so much time bowed down in deference, we've forgotten how to stand up straight.

The unofficial history of America, which continues to be written, is not a story of rugged individualism and heroic personal sacrifice in the pursuit of a dream. It is a story of democracy derailed, of a revolutionary spirit suppressed, and of a once-proud people reduced to servitude.

Corporate watch

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