The Rights of Living Persons
excerpted from the book
The Post-Corporate World
Life After Capitalism
by David Korten
Kumarian Press, 1999, paper
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.
Human rights secure our freedom to live fully and responsibly
within life's community. We are finding, however, that as corporations
have become increasingly successful in claiming these same rights
for themselves, they have become increasingly assertive in denying
them to living people. For example ... they use property rights
as an instrument to deny the economically weak the most fundamental
of all human rights-the right to live-by denying them the right
of access to a means of living. The conflict between the person's
right to a means of living and the presumed right of the corporation
to the security of its property and profit is perhaps the ultimate
confrontation between the natural rights of living people and
the rights that the institutions of capitalism have presumed for
themselves, but it is only one of many.
Supported by legions of corporate lawyers and sympathetic
judges, corporations have worked through the courts to acquire
ever more of the rights and freedoms that living persons gained
only through long and difficult political struggle. They have
in turn used the rights so acquired to extend their control over
the institutions of democracy and the material, communications,
and knowledge resources on which people depend to secure their
living. Now, in a further move to consolidate their power, the
institutions of money are well on their way to declaring themselves
owners of the whole of life through the systematic effort to expand
the private patenting of genetic materials.
There seems to be an ironclad relationship. The stronger the
rights of corporations, the weaker the rights of persons to live
fully and well with freedom, responsibility, and dignity. Thus,
to restore human rights and dignity we must establish clearly
the principle that human rights reside solely in living persons.
From Property Rights to the Rights of Property
In the American colonies the vote was reserved for the owners
of real property-a mechanism widely favored by the landed aristocracy
in the early days of democracy to confine political control to
the presumably more diligent landed classes. In effect, that law
connected political rights to property rather than to the person,
an idea that to this day carries the seed of democracy's undoing.
When a person's rights are recognized only in proportion to his
or her property, it is as though rights reside in the property
rather than in the person.
We have since vested the vote in personhood rather than propertyhood
and assumed that all is right with democracy. Meantime, in other
spheres of political and economic life, the rights of property
and the propertied have steadily expanded at the expense of the
rights of the person. Of special significance was a decision by
the U.S. Supreme Court to name the corporation, which is created
by government and claimed by its shareholders as property, an
honorary person entitled to the rights thereof.
In the United States the natural rights of persons are enshrined
in the first ten amendments to the U.S. Constitution, known as
the Bill of Rights. Indeed, the individual states approved the
Constitution only once assurances were given that a Bill of Rights
would be added through amendment. Each provision was thoroughly
contested, publicly debated, and subject to ratification by all
of the state legislatures. Since the time of ratification all
other U.S. laws have been subject to the test of consistency with
these constitutionally guaranteed human rights. The U.S. Constitution,
however, does not use the term "human" rights. It speaks
rather of the rights of persons, which most people would take
to be the same thing.
In 1886, however, in the case of Santa Clara County v. Southern
Pacific Railroad, the U.S. Supreme Court decided that a private
corporation is a person and entitled to the legal rights and protections
the Constitution affords to any person. Because the Constitution
makes no mention of corporations, it is a fairly clear case of
the Court's taking it upon itself to rewrite the Constitution.
Far more remarkable, however, is that the doctrine of corporate
personhood, which subsequently became a cornerstone of corporate
law, was introduced in this 1886 decision without argument. According
to the official case record, Supreme Court Justice Morrison Remick
Waite simply pronounced before the beginning of argument in the
case of Santa Clara County v. Southern Pacific Railroad that
The court does not wish to hear argument on the question of
whether the provision in the Fourteenth Amendment to the Constitution,
which forbids a State to deny to any person within its jurisdiction
the equal protection of the laws, applies to these corporations.
We are all of opinion that it does.
The court reporter duly entered into the summary record of
the Court's findings that:
The defendant Corporations are persons within the intent
of the clause in section 1 of the Fourteen [sic] Amendment to
the Constitution of the United States, which forbids a State to
deny to any person within its jurisdiction the equal protection
of the laws.
Thus it was that a two-sentence assertion by a single judge
elevated corporations to the status of persons under the law,
prepared the way for the rise of global corporate rule, and thereby
changed the course of history.
The doctrine of corporate personhood creates an interesting
legal contradiction. The corporation is owned by its shareholders
and is therefore their property. If it is also a legal person,
then it is a person owned by others and thus exists in a condition
of slavery-a status explicitly forbidden by the Thirteenth Amendment
to the Constitution. So is a corporation a person illegally held
in servitude by its shareholders? Or is it a person who enjoys
rights of personhood that take precedence over the presumed ownership
rights of its shareholders? So far as I have been able to determine,
this contradiction has not been directly addressed by the courts.
Without addressing this question directly, the courts have
moved persistently, however, in the direction of expanding corporate
rights and increasing the autonomy of corporate management, even
from intervention by the corporation's titular owners. Corporations
now enjoy unlimited life; virtual freedom of movement anywhere
on the globe; control of the mass media; the ability to amass
legions of lawyers and public relations specialists in support
of their cause; and freedom from liability for the misdeeds of
wholly owned subsidiaries. They also enjoy the presumed right
to amass property and financial resources without limit; engage
in any legal activity; bring liability suits against private citizens
or civic organizations that challenge them; make contributions
to individual candidates, political parties, and political action
committees and deduct those contributions from taxable income
as business expenses; withhold potentially damaging information
from customers; and avoid restrictions on the advertising of harmful
but legal products in the name of commercial free speech. Although
their owners hold the ultimate decision-making power and the corporation
is obliged to manage its affairs for the sole benefit of its owners,
these owners bear no accountability for corporate misdeeds or
liability beyond the loss of value of their shares. Step-by-step,
largely through judge-made law, corporations have become far more
powerful than ever intended by the people and governments that
To Restore the Rights of the Living
Those concerned with curbing the excesses of the corporation
have generally focused on one of two losing strategies. The first
is to appeal to the conscience of the corporation to act more
responsibly. As Robert Monks reminds us, however, in The Emperor's
Nightingale, Corporations are not people; they have no conscience.
Although corporate acts are carried out by individuals, even individuals
with high moral standards often find themselves caught up in a
corporate action that is beyond their control-or even, in some
cases, their knowledge.
The corporation is a legal instrument and the people of conscience
who work for it are legally obligated to set aside their own values
in favor of the financial interests of the institution and its
A further barrier to corporate responsibility resides in the
extent to which the existence and profitability of many corporations
depend on successfully promoting harmful products and encouraging
behaviors damaging to one's self and society. Could the R. J.
Reynolds corporation, for example, really commit itself to discouraging
anyone under twenty-one years of age from smoking, knowing this
would virtually eliminate its future market for tobacco products?
Could the Coca-Cola corporation decide to stop encouraging children
to consume large amounts of flavored sugar water and encourage
them to substitute clean tap water and fresh fruit juices? Could
the General Motors corporation become a serious advocate of urban
growth boundaries and improved public transportation to limit
dependence on the automobile?
When the Monsanto corporation announced it was divesting itself
of most of its industrial chemicals production to concentrate
on genetic engineering, its stock price doubled in anticipation
of major increases in earnings. Can the management of the Monsanto
corporation now afford to hold a new genetically engineered product
off the market until it is certain there is no serious possibility
of harmful environmental or health consequences? In each instance,
making the socially responsible choice would be equivalent to
corporate suicide and surely cost the CEO his job.
The second losing strategy is to oppose corporate misdeeds
corporation by corporation and deed by deed. The victories are
costly, few, and generally only temporary because they do nothing
to change the nature of the corporation or reduce its staying
power. A major case in point is the legendary citizen boycott
of the Nestle corporation demanding that it stop encouraging poor
mothers in Third World countries to favor bottle feeding over
breast feeding-a practice responsible for untold numbers of infant
deaths. To end the boycott, Nestle agreed to change its practices.
Meanwhile, other infant formula producers continued similar promotions,
and Nestle itself was soon back to doing the same. On the other
hand, the losses are often permanent, as when children die, or
when citizens lose the battle to keep a Wal-Mart out of their
town or to stop the clear-cut of an ancient forest by a timber
Any initiative that raises public consciousness of corporate
misdeeds makes a useful contribution and we must surely oppose
corporate abuses with all the means at our disposal. However,
although we may win some battles, we will continue to lose the
war so long as capitalism's dysfunctional structures remain in
place. To restore the rights and powers of the living we must
eliminate the autonomous rights and powers of money and its institutions
through a six-fold agenda aimed at restoring political democracy;
ending the legal fiction of corporate personhood; establishing
an international agreement regulating international corporations
and finance; eliminating corporate welfare; restoring money's
role as a medium of exchange; and advancing economic democracy.
Each of these six agenda items defines an important goal for
citizen action. Although the agenda has universal relevance and
is already being advanced by citizen initiatives in a number of
countries, most of the examples I will use center on the United
States. Our government and our corporations have been the major
architects of the global capitalist system and hold the major
levers of power. We therefore bear greater responsibility than
any other country for the global crisis and for taking steps to
dismantle the system that has created it.
Each agenda item defines an important initiative in its own
right requiring the development of specific legislative proposals,
programs of direct action, and political mobilization strategies.
The purpose here is only to identify the critical focal points
for citizen action aimed at transforming the existing system of
AGENDA ITEM 1: RESTORE POLITICAL DEMOCRACY
To raise the money required to wage successful campaigns,
politicians must spend a large portion of their time courting
favor with and tending to the interests of the biggest corporations
and wealthiest investors. It has become a vicious cycle. The more
the politicians bend the rules to channel an ever greater share
of society's real wealth to the already rich, the more money the
rich can channel to politicians to gain further advantage.
There are few issues in America on which public consensus
is so clear and unanimous. Eighty-six percent of Americans believe
campaign contributions influence the policies supported by public
officials moderately or a great deal. Seventy-nine percent favor
"putting a limit on the amount of money candidates for the
U.S. House and Senate can raise and spend on their political campaigns."
Eighty-one percent favor "limiting the total amount of money
which business and industry can contribute to U.S. House and Senate
campaigns each election." Sixty-four percent believe it would
be a good idea for the federal government to provide a fixed amount
of money for the election campaigns of candidates for Congress
and prohibit all private contributions. And 48 percent think they
are more likely to see Elvis Presley in person than to see the
U.S. Congress pass real campaign finance reform.
Increasingly of the opinion that political bodies have become
too corrupt to reform themselves, citizens in the United States
are turning to state ballot measures. In November 1996, voters
in the state of Maine passed a clean-money campaign-reform initiative
by a 56 to 44 percent vote after the state legislature had rejected
more than forty reform proposals during the previous decade. Eleven-hundred
grassroots volunteers collected more than sixty-five thousand
signatures on Election Day 1995 to place the measure on the ballot.
The initiative, passed in 1996, did what no state or federal legislative
body had ever done-offered full public financing to candidates
for state office who reject special-interest contributions and
agree to campaign-spending limits. Spurred to action by the Maine
initiative, Vermont's state legislature passed a similar measure
by a wide majority. By mid-1998, diverse grassroots coalitions
and reform-minded legislators were pursuing similar measures in
fourteen other states. Although state-level measures change the
election rules only for state-level offices, the spreading and
strengthening of these efforts sends a powerful signal to national-level
politicians that the voters care.
No issue is more central to restoring the rights of living
people than serious campaign finance reform. If a democracy of
people based on one person, one vote is to be restored, then we
must have strict limits on political giving and spending and get
corporations out of the political process.
Meaningful reform will necessarily include a combination of
public financing of political campaigns and provision of free
television and radio time to qualified candidates as a public
service obligation of those licensed to use the public airwaves,
and a prohibition on any effort by a corporation to influence
the outcome of an election, legislation, or referendum, or the
negotiation of an international agreement or treaty.
The matter of excluding corporations from political participation
merits elaboration. The authority by which a government issues
a corporate charter is derived from the sovereign authority of
its people. It is appropriate that those who have created the
corporation determine the rules under which it will exist and
function and that the corporation accept those rules or relinquish
its charter and operate as an unincorporated entity. Barring the
corporation from politics affirms the principle that political
rights and freedoms reside in the person, not in properties or
artificial legal entities.
AGENDA ITEM 2: END THE LEGAL FICTION OF CORPORATE PERSONHOOD
The legal fiction that the corporation is a natural person
is a major lever by which corporations have acquired the rights
they now use to deny the right of living people to a means of
living. Similarly, this legal fiction is used by corporations
to claim free speech rights for themselves in promoting their
products without public oversight and in seeking to influence
public policy, while they use a combination of speech and property
rights to prohibit the exercise of the right to free speech by
real people. Thus union members are barred from engaging in organizing
activities on company property. Citizen activists are barred from
exercising their speech rights in shopping malls. The corporations
that control the mass media reserve the right to decide whose
voices will and will not be heard on the public airwaves.
Step-by-step, a small number of corporations are privatizing
ever more of our public spaces and reserving them solely for the
exercise of their own speech rights to the exclusion of the speech
rights of real persons. In these and other ways the doctrine of
corporate personhood actively endangers the rights of people and
presents a barrier to citizen efforts to hold corporations accountable
to a larger public interest.
The time has come to launch a serious challenge against the
legal fiction of corporate personhood on the principle that the
natural rights of persons belong only to living persons. Although
the longer-term goal is to eliminate the for-profit, publicly
traded corporation as we know it, the interim objective is to
restore the doctrine that a corporation enjoys only those privileges
specified in its charter to facilitate the conduct of a business
in the public interest and that these privileges are subject to
periodic public review and withdrawal. Furthermore, the privileges
extended are exclusive to the jurisdiction of the governmental
entity that issued the charter and do not extend to any other
jurisdiction except by the explicit action of the appropriate
governmental authorities in that jurisdiction. This doctrine would
place strict limits on corporate privileges, without in any way
restraining or limiting the recognition and exercise of the universal
rights of living persons.
There are few actions we might contemplate with comparably
far-reaching positive consequences than the elimination of corporate
personhood. Progress on this issue in any country would be a positive
step, but it is especially important that we engage the cause
in the United States, for it is here that the doctrine originated.
AGENDA ITEM 3: ESTABLISH AN INTERNATIONAL AGREEMENT REGULATING
INTERNATIONAL CORPORATIONS AND FINANCE
International trade and investment agreements such as GATT,
NAFTA, APEC, and the others have become the favored venues for
further extending corporate rights at the expense of democracy
and the right of people to govern their own economic affairs.
Created largely outside any democratic process, these agreements
override democratically enacted laws protecting human and environmental
interests. So deeply have our governments aligned with the interests
of global capitalism that, following the Uruguay Round of the
GATT negotiations that established the World Trade Organization,
there was a flurry of initiatives led by the United States to
put in place agreements on international investment and finance,
including a Multilateral Agreement on Investment (MAI) that would
preclude virtually any governmental regulation of the free international
flow of speculative money and require governments to guarantee
foreign investors against any losses they might incur from the
subsequent introduction of environmental or health and safety
A number of trade disputes between the United States and Europe
brought to or resolved by the World Trade Organization (WTO) show
how these agreements and institutions are used to thwart the ability
of democratic governments to respond to the wishes of their citizens
for responsible laws on social goals, food security, and food
safety. Consider two cases in which the WTO ruled in favor of
the United States and against the European Union. One was a U.S.
complaint against Europeans for giving preference to bananas produced
in the Caribbean over those grown in Latin America. The bananas
from the Caribbean were being produced largely on small family
farms and were one of the only foreign exchange earners of several
small Caribbean island economies. The bananas from Latin America
were being grown by U.S. agribusiness corporations-Chiquita, Dole,
and Del Monte, which together control almost two-thirds of the
world's banana market-on large plantations that have displaced
hundreds of small farmers from their lands. The United States
thus used the WTO to force Europe to end its preference for the
small producers and open its markets to unrestricted access by
global megacorporations. Government and company representatives
maintain that political donations of $1.1 million to the Democratic
Party and $1.4 million to the Republican Party by the Chiquita
corporation and its chairman had no influence on the U.S. government's
interest in the case.
The second case involved a U.S. complaint against a European
ban on the import of beef from cows treated with hormones. As
the use of hormone supplements is routine in U.S. beef production,
the United States complained that the ban discriminated against
U.S. producers. The WTO agreed with the United States, ignoring
the widespread concern in Europe that the hormones may involve
health risks and a strong consumer preference to avoid eating
meat from hormone-treated cows. " The U.S. corporations involved
in the production and use of the hormones argue that such concerns
are groundless and unsupported by scientific data and therefore
should be disregarded-claims similar to those long made by cigarette
companies regarding concerns about the dangers of tobacco smoke.
On a third issue, Europe yielded voluntarily to U.S. pressure
to relax restrictions on the import of furs from the United States
obtained by use of leg-hold traps, restrictions many feel were
fully justified on humanitarian grounds. Unresolved was a U.S.
threat to bring a WTO action against France for blocking imports
of genetically engineered corn on the grounds that it was simply
a measure to protect French corn farmers. Here again many European
consumers are concerned about the implications of genetically
altered food in relation to health, ethics, and the environment,
but such concerns are likely to carry little weight with the WTO
unless backed by conclusive scientific findings. Even if there
were no health issue, from a human interest perspective there
is a strong case to be made that national governments have an
obligation to both their own and the world's people to maintain
food production capacity and national food security in a world
likely to be threatened by severe food shortages in the near future.
But there is no sympathy for such concerns in the WTO if they
lead to the restriction of trade.
Managed borders are essential to the very existence of life
- a principle that applies to economies as well as to cells and
organisms. To create mindful markets people must be able to protect
the coherence and integrity of their domestic and local economies,
which is virtually impossible if their borders are wide open to
foreign corporations and financial institutions they are forbidden
to control. If we are to take economic democracy seriously, decisions
regarding economic policies and choices must be firmly in the
hands of a country's citizens.
Citizen groups have become increasingly active in opposing
trade agreements that undermine the democratic rights of people.
It is important that these resistance efforts continue. We must
block further efforts to use trade agreements to circumvent democracy.
The time has come, however, for a citizen-led initiative to demand
that our governments put in place an entirely different kind of
international agreement aimed at holding global corporations and
finance accountable to the human interest.
This may logically begin with an international alliance of
citizen groups joining to draft a prototype international agreement
affirming the rights of people to set their own health, safety,
employment, and environmental standards and to establish standards
and mechanisms for regulating international corporations and financial
flows. The document should establish mechanisms to discourage
financial speculation, break up international concentrations of
corporate power, and phase out the World Trade Organization, the
World Bank, the International Monetary Fund, and other international
agencies whose primary mission is to advance the interests of
transnational capital. It should also recognize and secure the
right of each individual country to set its own economic priorities
and standards and determine the terms under which it will trade
with others and invite others to invest in its economy. The process
of drafting such an agreement should be designed to engage the
broadest citizen participation and build a significant citizen
political constituency demanding that our governments sign and
enact the agreement as a replacement for existing corporate-sponsored
trade and investment agreements.
AGENDA ITEM 4: ELIMINATE CORPORATE WELFARE
Corporate welfare is not limited to direct public subsidies
and tax breaks. It includes a much wider range of externalized
costs relating to such things as substandard wages and working
conditions, worker health and safety, environmental damage, and
dangerous and defective products. Chapter 2 noted the estimate
by Ralph Estes that in the United States alone corporations annually
externalize more than $2.6 trillion in costs per year, roughly
five times the amount of corporate profits. The global figure
may be on the order of $10.7 trillion. There is a strong case
to be made that corporations provide handsome returns to their
top managers and shareholders only at an extraordinary cost to
the rest of society. Many would surely go out of business if required
to pay their own way as market principles dictate.
An obvious starting point toward the elimination of corporate
welfare is to eliminate direct public subsidies and tax breaks
for corporations, because these are direct financial transfers
from taxpayers to corporate managers and shareholders. The next
step is to charge environmental use fees for the full public costs
of natural-resource extraction and the release of pollutants into
the environment. Such action would align with current tax-shift
proposals that call for reducing or eliminating taxes on employment,
basic incomes, and essential consumption and making up the lost
income through fees for resource extraction and pollution. Such
a shift from employment and consumption taxes to environmental
fees would encourage employment, eliminate the most regressive
sales taxes, reduce pollution and resource extraction, and encourage
recycling-all highly beneficial outcomes. If the environmental
fees reflect actual costs to society, it would also be a significant
step toward eliminating market-distorting public subsidies.
A third step would be to establish procedures for estimating
the amount of other indirect subsidies enjoyed by individual corporations
and assessing a public facilities fee in that amount. The fee
would recover idle costs to society of corporations that fail
to provide a living wage adequate to support a family, health
insurance, pension contributions, and safe working conditions
for their workers on the grounds that these costs are thus borne
by the larger society. Similarly, it would recover the public
costs of harmful and defective products such as cigarettes and
unsafe automobiles. For example, cost-recovery fees would be assessed
on the basis of actuarial experience with the health costs of
smoking-related diseases in the case of cigarettes and accident
rates and consequences in the case of automobiles.
Ideally, all countries would choose to move toward the elimination
of corporate subsidies in unison. Given, however, that there is
almost no prospect of this happening, it is important to establish
the principle that each nation has the right to protect its own
producers from predatory competition from subsidized producers
by imposing compensating tariffs.
AGENDA ITEM 5: RESTORE MONEY'S ROLE AS A MEDIUM OF EXCHANGE
Money serves a useful social function as a medium of exchange.
In the hands of speculators, however, it becomes an anti-democratic,
anti-market instrument of instability and unjust extraction. A
central goal of economic policy should be to eliminate financial
speculation and restore money's primary role as a medium of exchange.
Nearly $2 trillion now changes hands in the world's currency
exchange markets each day. Perhaps 2 percent of that money is
related to trade in real goods and services. The rest, which is
largely pursuing speculative profits, creates massive international
financial instability while serving little if any public purpose.
The following are reforms that merit consideration.
Prohibit banks from financing speculators.
... the financial speculation that destabilized the Asian
economies in 1997 was fueled by reckless bank lending that financed
the creation of large stock and real estate bubbles. The 1998
collapse in the United States of a single highly leveraged hedge
fund, Long-Term Capital Management, that made bad bets on the
Russian ruble posed such a threat to the U.S. banking system that
the Federal Reserve stepped in to arrange a private bailout. LongTerm
Capital's gambling habit was financed with $25 in bank loans for
every dollar of equity. There are an estimated 4,000 hedge funds
in the world. Some have as much as $100 in loan financing for
every dollar in equity. Bear in mind these bank loans represent
money that banks created out of nothing and you begin to see how
the enormous speculative overhang in the global money system is
being created. This lending is a key source of speculative bubbles
and the related financial instability that has been rocking the
Gambling with borrowed money is a bad idea under any circumstances.
When it is done on a scale that threatens the integrity of national
financial systems, there is a compelling rationale for strong
public measures to eliminate it. Appropriate measures include
prohibiting banks from accepting financial assets as loan collateral
and from lending to hedge funds and other financial institutions
for the purpose of leveraging the purchase or sale of financial
securities or derivatives. Buying stocks on margin should be similarly
Tax short-term capital gains at rates substantially higher
than earned income.
Giving a tax advantage to those who live from speculative
gains over those who do productive work for a living is unjust
and bad policy. It is appropriate to tax away virtually all gains
from capital assets held less than a month as they are almost
certainly speculative in nature. It is appropriate that gains
from assets held for longer periods of time enjoy more favorable
treatment, but in general gains from an asset held less than five
years should not enjoy a tax advantage over earned income. This
should be true for corporations as well as for individuals.
Encourage the use of local currencies.
Money's value is based solely on a social contract-an agreement
among a group of people that they will accept a particular tender
in the payment of debts. A common currency not only facilitates
exchange but also defines a community with a mutual interest in
productive exchange among its members. The community thereby affirms
its own existence and creates a natural preference for its own
products. Bernard Lietaer estimates that fifteen hundred communities
around the world have issued their own local currencies to facilitate
local commerce. The idea is not to eliminate national currencies
but rather to supplement them with local currencies that necessarily
stay in the community that issues them so that local workers and
assets need never stand idle for a simple lack of the money to
Make the creation of national currencies a public function.
A nation's money supply is created by either government's
spending new money into existence or a bank's loaning it into
existence. The former approach allows a government to pay for
public services beyond the amount of its tax revenues. The latter
generates large profits for private bankers. Though it's not generally
recognized by the public, virtually all money is now loaned into
existence by private banks, which means a nation's money supply
and the stability of its money system depend on continuously expanding
debt to create enough money to repay the old debts and avoid bankruptcy-a
primary reason why capitalist economies are prone to collapse
if they do not grow exponentially. Placing a 100 percent reserve
requirement on demand deposits in the banking system and returning
the function of creating national currencies to government would
largely eliminate the federal government's need to borrow, reduce
the power of the banking system, and eliminate an important source
of the money world's growth imperative.
Place a demurrage charge on money.
Holding virtually any real asset involves a cost to the holder.
Forests, factories, farmland, and buildings must be protected
and maintained. Personal skills and technologies must be updated.
Even holding gold involves costs for secure storage. Only those
who hold money as a future claim against the wealth that others
are creating and maintaining expect a secure, cost-free interest
return with no effort on their part. This feature of money encourages
the conversion of real wealth to money to be held in inflating
financial assets, though the interests of society are best served
by encouraging the creation, stewardship, and augmentation of
real wealth. Money expert Bernard Lietaer suggests that the resulting
distortions be corrected by charging a small demurrage fee for
holding financial assets-say a quarter of a percent a month or
3 percent a year. This might, for example, make it more profitable
to invest in growing trees than to hold money in a bank account.
Banks would continue to pay interest on savings accounts and charge
interest on loans as they do now. The government, however, would
levy the demurrage fee against any outstanding financial balances.
Restore the concept of community banking.
At one time the United States had what is known as a unitary
banking system, which means that each bank was individually owned
and functioned as a community institution. Local savings were
deposited and the money was loaned back to the community for local
housing and business investment. It is appropriate to restore
this concept by using antitrust rules to break up banking conglomerates
and limiting federal deposit insurance to funds deposited with
community banks that lend locally.
Restrict the conversion of national and local currencies for
purposes other than tourism and trade in real goods and services.
Beneficial foreign investment necessarily involves the importation
of real capital goods, skills, and technologies that increase
a country's future productive potential. Purely speculative foreign
investment involves no such transfer. It simply creates financial
instability, transfers ownership of productive assets to absentee
owners, and increases foreign claims against the country's future
foreign exchange earnings. As speculative investment flows create
public hardship without increasing public welfare, governments
have both the right and the obligations to regulate, and even
to prohibit, them in the public interest.
AGENDA ITEM 6. ADVANCE ECONOMIC DEMOCRACY
The previous elements of the agenda focus on constraining
the power of global corporations and finance in order to open
economic spaces within which people can create the institutions
of economic democracy and a true market economy. In addition to
such defensive measures, there is room for public policy to be
proactive in promoting human-scale, stakeholder-owned enterprises
to displace the subsidized megacorporations whose hold the earlier
measures are intended to weaken.
Many such enterprises already exist in the form of family
businesses, cooperatives, community-owned businesses, worker-owned
enterprises, and others. New ones are being formed each day. Here
the need is to acknowledge the central role of these enterprises
as the foundation of the new economy and expand the spaces in
which they can flourish as the corporate superstructure is cleared
We can also salvage much from existing corporate structures
by breaking down megacorporations into human-scale, stakeholder-owned
firms. The measures already suggested, such as getting corporations
out of politics, restoring the integrity of national economic
borders, and eliminating corporate welfare, will likely make most
megacorporations unprofitable and thereby increase the receptivity
of their managers and shareholders to selling off their component
businesses to stakeholders at appropriately depreciated prices.
Measures to support stakeholder ownership might include requiring
that before a major corporation is allowed to close a plant or
undertake a sale or merger of significant assets, the affected
workers and community must be given first option to buy out the
assets on preferential terms. There might be preferential tax
treatment for shareholders who sell their shares to stakeholders
under an organized stakeholder buyout program. Similarly, relief
on estate taxes might be used to encourage the conversion of larger
family-owned corporations to stakeholder ownership on the death
of their founders. Procedures could be established for converting
worker pension funds into meaningful worker ownership programs.
Banks might be given incentives to provide loans on preferential
terms to finance stakeholder buyouts. Financing might also be
mobilized by what Jeff Gates calls a user fee on personal financial
accumulations in excess of $10 million "for the privilege
of utilizing the nation's private property tradition as a vehicle
for accumulating assets totally disproportionate to any conceivable
notion of need." This would be a wealth redistribution initiative
addressed directly to the need to redistribute asset ownership.
Efforts to move toward stakeholder ownership must take into
account the history of worker ownership schemes that have not
led to meaningful worker participation and empowerment. As noted
in Chapter 9, many employee stock ownership plans (ESOPs) in the
United States place the control of employee shares in the hands
of management. The result is a perversion of the concept of stakeholder
ownership that gives the titular stakeholder owner less power
and say in management than an ordinary absentee owner. Our goal
should be exactly the opposite-a much larger and more meaningful
role in management by stakeholder owners than by absentee owners.
There is need to reform the legal framework and mechanisms
of ESOPs to enable and encourage ESOP owners to engage in real
ownership participation. Consideration might also be given to
expanding existing employee ownership plans to facilitate broader
participation by other nonfinancial stakeholders. Significant
investment will be needed in educational programs designed to
prepare workers and other stakeholders for meaningful and responsible
participation. An imaginative and reinvigorated labor union movement
could take the lead in advancing stakeholder ownership and providing
educational support as part of an agenda to secure the rights
of working people and create people-friendly working environments.
It will be appropriate to supplement these initiatives in
support of stakeholder ownership with the rigorous application
of antitrust legislation revamped to establish the presumption
that smaller is better until proven otherwise. Thus, mergers and
acquisitions would be approved only in those rare instances in
which their proponents make a compelling case that the combination
would significantly advance the public interest. Any firm with
more than a 10 percent share in a major market might be required
every five years to make a compelling case in a public regulatory
hearing as to why it would not be in the public interest to break
it up into more human-scale stakeholder-owned firms.
The proposed six-fold agenda attacks the foundation of unaccountable
financial and corporate power and opens the way to a radical redistribution
of economic wealth and power by returning human rights to living
persons. Although the agenda is based on solid, conservative principles
of individual responsibility and local control, it does require
a frontal assault on the institutional and intellectual underpinnings
of our present system of elite privilege. One might for that reason
expect a massive backlash against such ideas from within the establishment.
But although such a backlash must be expected, the unanimity of
the present power holders should not be assumed. There is evidence
of deep and growing concern among thoughtful corporate leaders,
bankers, and even economists, that they may be sitting atop an
increasingly unstable system on the brink of collapse.
Seeds of a New Citizen-Led Politics
As we look to the formidable task ahead, we should remember
that slavery was once legal in the United States, as was discrimination
based on race. There was once a Roman Empire, later a Soviet Empire,
a Berlin Wall, and until recently, apartheid in South Africa.
Corrupt and unjust regimes have a way of falling once ordinary
people decide their time has come.
In Silent Coup: Confronting the Big Business Takeover of Canada,
Tony Clarke, a leader of Canada's growing citizen movement against
corporate rule, points to the need to build a political movement
that sets the end of corporate rule as one of its top priorities.
Corporate rule is the megaton gorilla in the middle of the room
that most discussions of political and economic failure have too
long avoided mentioning. Acknowledging the gorilla is an essential
step toward action.
The depth and seriousness of the massive dysfunctions of global
corporations and the contemporary capitalist economy have only
recently gained prominence in the public mind. Already, new initiatives
are emerging that draw attention to the need for serious structural
mechanisms to hold corporations accountable to the public interest.
Indeed, the seeds of a new popular movement toward serious reform
are emerging from across the political spectrum. A few of those
centered in the United States are mentioned in the following paragraphs.
They merit broad and enthusiastic public support from those who
are seeking ways to participate in the creation of a post-corporate
The New Party, a grassroots citizen-led political party working
under the banner of "A Fair Economy. A Real Democracy. A
New Party," is systematically building a citizen-led politics
around an agenda that centers on strengthening the rights and
capacities of people to self-organize democratically in both political
and economic affairs. It is racially diverse; works m alliance
with labor, community, environmental, feminist student, gay, and
lesbian groups; and is built around values rather than personalities.
Its strategy is to build political strength by winning local elections
while concentrating on problems that can be addressed at the local
level. It is taking a serious and systematic approach to building
what ~t hopes may one day become a new majority party. As of 1997,
152 of the 231 candidates it had supported in election contests
had won their races Roughly half of New Party candidates are women
and more than a third are people of color.
A former corporate executive and staunch Republican who held
a number of high-level appointments in the Reagan and Bush administrations,
Robert Monks has for some years been organizing retirement and
other investment funds to exercise their shareholder voting rights
to oust and replace complacent managers who take more interest
in increasing their personal compensation and entitlements than
producing returns for shareholders. Now he is taking on the larger
issue of the corporation's social performance. Monks believes
that pension funds are the key to increasing corporate responsibility,
because they serve a broad clientele with a long-term interest
in the health of society as well as the health of the corporations
in which their money is invested. He is thus organizing pension
funds to take the lead in advancing shareholder resolutions holding
corporate executives accountable to shareholders for (1) obeying
the law; (2) fully disclosing in their financial reporting what
they know or strongly suspect regarding the costs imposed by their
firms on the function of society; and (3) minimizing their involvement
in political processes. These ideas are radical only in the extent
to which they depart from current practice. Ideally, his proposals
will become a centerpiece of the socially-responsible-investing
The Politics of Meaning is a grassroots nonparty political
movement with chapters in ten major U.S. cities promoting a value-oriented
politics based on ideas articulated by Michael Lerner, editor
and publisher of Tikkun magazine, and lawyer and educator Peter
Gabel. It has announced two major initiatives to increase the
integrity of economic life. The first is a model resolution for
adoption by city, county, and state governments committing them
to take into account the history of social responsibility of corporations,
as measured by an "Ethical Impact Report," in awarding
public contracts. Its second initiative is a proposed "Social
Responsibility Amendment" to the U.S. Constitution. It would
require every corporation with annual revenues of $20 million
or more to apply for renewal of its charter every twenty years.
To secure its charter renewal, the corporation would be required
to "prove that it serves the common good, gives its workers
substantial power to shape their own conditions of work, and has
a history of social responsibility to the communities in which
it operates, sells goods, and/or advertises." Each five years
the corporation would have to prepare and make public an Ethical
Impact Report with one section prepared by management, another
by its employees, and another representing community stakeholders.
The Alliance for Democracy is a progressive populist movement
with forty-nine local chapters around the United States. Following
in the footsteps of the populist movement of the late 1800s, it
aims to provide a vehicle for citizen action to end government-corporate
collusion against the public interest and expose the antidemocratic
nature of rule by global capital. The Alliance is carrying out
long-term citizen education on issues of corporate governance
and campaigning for legislative action to increase corporate accountability.
It is considering a campaign in support of an amendment to the
U.S. Constitution to establish that corporations are not persons
and not entitled to the rights thereof. Related efforts center
on redefining the processes and requirements for corporate chartering
and charter revocation. The Alliance is also drafting a model
international treaty on the responsibilities of international
investors as an alternative to corporate-sponsored agreements
aimed at freeing global investors from regulatory restraint.
The international NGO Taskforce on Business and Industry,
under the leadership of Jeff Barber of the Integrative Strategies
Forum, is a citizens' alliance that functions within the framework
of the United Nations Commission on Sustainable Development. It
is working to counter initiatives from the corporate sector aimed
at keeping issues of corporate accountability off the U.N. agenda.
The Taskforce is also helping make visible within the U.N. system
the consistent failure of voluntary codes of corporate conduct.
The Program on Corporations, Law, and Democracy (POCLAD),
a national alliance of individuals concerned with corporate rights
co-directed by Richard Grossman and Ward Morehouse, is spearheading
a campaign to restore the concept that corporate charters are
limited and revocable and to pursue a wide range of legal initiatives
intended to restrict corporate rights and increase corporate accountability.
These and related initiatives too numerous to list are still
new and small. Each, however, is growing in size and momentum,
carried forward by the concern and commitment of citizens who
are fed up with political corruption and the abuse of corporate
power. The most prominent barrier to turning the widespread disgust
into a powerful political movement is the lack of credible and
well-articulated alternatives and of an awakening to the belief
that change is possible.
Those to whom a living-world politics offers potential appeal
come from all classes and segments of society: working people
concerned with job security, respect, and honest pay for honest
work; religious groups seeking to bring moral values back into
everyday life; members of the women's movement concerned with
equity and the balancing of work with family and community life;
minority group members who advocate a political and economic agenda
that meets the needs of all; members of environmental groups working
to restore and protect the health of living systems; peace and
human rights groups concerned with equity and the possibility
of replacing global competition with global cooperation.
Other constituents for change include small business owners
and managers struggling to survive as the backbone of community
economies; the growing ranks of ecological economists who are
providing intellectual leadership in challenging the hegemony
of neoliberal economists; heads of business seeking to make business
more responsible and humane; socially responsible investors, community
bankers, community development foundation leaders; and the members
of groups such as the Social Ventures Network, Business for Social
Responsibility, and the World Business Academy.
Then there are the downsized whom capitalism has discarded
and the disaffected who remain within the corporate establishment
while longing for alternatives. There are the retired executives
who know the system from the inside and are deeply concerned for
the future they leave their children. There are the youth who
are rightly concerned about their own futures. There are the journalists
concerned that the integrity of their profession suffers from
concentrated corporate control of the media. There are the teachers
concerned about the integrity of the educational process as corporate
advertising and propaganda infiltrate the classroom. There are
the farming households that are committed to stewardship of the
earth and the production of healthful foods.
The goals of stakeholder ownership and individual responsibility
affirm the values of conservatives. The emphasis on one person,
one vote democracy and the recognition of government's dear and
necessary role affirm the values of political liberals. It all
adds up to a substantial and potentially unstoppable constituency
behind the politics of a post-corporate world.
There is no more powerful expression of a society's values than
its economic institutions. In our case, we have created an economy
that values money over all else, embraces inequality as if it
were a virtue, and is ruthlessly destructive of life. The tragedy
is that for most of us the values o global capitalism are not