Fixing Corporations - Part 2:
Corporations for the Seventh Generation
by Jane Anne Morris
Environmental Research Foundation
P.O. Box 5036, Annapolis, MD 21403
Fax (410) 263-8944; Internet: email@example.com
[Note: This is second of two articles that explore strategies
for going beyond the usual calls for "corporate accountability."
The author is part of a movement, already taking root in over
a dozen states, that advocates retaking the historic right of
the sovereign people to determine and direct corporate action.]
In view of the historic provisions that used to govern corporations
(see REHW #488), their representatives must be pleased that at
least in this country, boycotts and divestment strategies are
considered radical, and "dialoging" is the preferred
mode of interaction. The rest of this paper is an exploration
of ways to restructure today's corporation so that citizen activist
efforts to eliminate corporate wrongs can amount to more than
just a few hard-won needles in a corporate haystack.
As we saw last week, corporations are a special form of business
entity given a state charter and certain privileges in exchange
for being subject to the will of the sovereign people as expressed
through state legislatures.
Over the last half a dozen generations, corporation representatives
have managed to set up barriers to insulate the corporation from
citizen influence. Several trends have made it more difficult
to direct the corporation towards serving the public interest
it was created to serve. Among them: ** Under cover of the U.S.
Constitution's "commerce" clause as interpreted by
the U.S. Supreme Court, federal regulatory agencies have usurped
many of the powers once exercised regularly by state legislatures.
Today's corporations are ideally suited to wage battles on the
regulatory front, because it is so difficult for citizens' groups
to match their resources.  (In many ways, the late 19th century
ascendance of the "commerce" argument is an eerie foreshadowing
of today's NAFTA and GATT controversies.)
** Through a series of leveraged expansions of the "diversity
clause" of the U.S. Constitution (allowing "citizens"
from two different states to be heard in federal court instead
of the presumably more biased courts of either's home state),
the U.S. Supreme Court "deemed" corporations "citizens"
and thus gave them nearly unrestricted access to federal courts.
 This saved corporations the trouble of defending themselves
in the courts of the state where they actually cause the harms.
** In 1886 the U.S. Supreme Court decreed that corporations are
"persons" under the 14th amendment, thus granting them
protection under the Bill of Rights. Such guarantees of free
speech, due process, and equal protection under the law were long
considered to apply to human persons. This ruling gave corporations
unprecedented "rights" to question almost any law applied
to them, and frustrated the ability of the people to direct corporate
action in service of the public good.
** Stockholders, who used to really run corporations, have
seen their power dramatically reduced. Today the powerful corporate
manager class is insulated from stockholder influence by a variety
of stock voting tricks and governance structures that they themselves
set up. They are protected from most liability by state corporation
codes and lax laws and enforcement. And they write their own paychecks.
In order to have a world that we would not be ashamed to bequeath
to the Seventh Generation, we must make two major changes in the
governance of the corporation. First, we must remove obstacles
to citizen control of the corporation. Second, we must reinstate
provisions such as those (enumerated in REHW #488) once governing
corporations, and add others that are particularly suited to our
"Model" provisions can become part of 1) state constitutions,
2) state corporation codes and/or 3) the actual corporate "charters,"
which are the documents states give to corporations to formally
bring them into existence. A program to institute such changes
would include areas such as the following.
People's power over corporations.
1. We the people can demand that state legislatures, the most
direct expression of the people's will, use their "reserved
power" to revoke the charters of errant domestic corporations.
(A domestic corporation is one chartered in that state.) The people
of Delaware and a few other states with "easy" chartering
policies would have a more exciting time than the rest of us here,
since the overwhelming majority of offending (U.S) multinational
corporations are chartered there.
2. In other states, citizens can demand that their attorneys
general (or whatever agent is specified in their state laws and
constitutions) revoke the permission of errant foreign corporations
to do business in their state. (A foreign corporation is one chartered
in another state in the U.S. Those chartered in other countries
are called alien corporations.) Such actions have already been
initiated against Weyerhaeuser, WMX (formerly Waste Management,
Inc.), and CSX corporations.  (See REHW #455.)
** Annul "rights" given corporations by judge-made
law. We can work for state constitutional amendments that underline
corporations' status as subservient to the people and the legislatures,
and assert that corporations are not legal constitutional "persons"
and thus are not protected by the Bill of Rights of the U.S. Constitution.
** Re-open corporate affairs to legislative scrutiny. At one
time, all corporate records and affairs were open to legislatures
or other designated state officials so that state governments,
on behalf of the people, could monitor and evaluate corporate
actions. We can reinstate such provisions in state corporation
** Reinstate stockholder/owner control over corporate management
and policy. For decades, concerned stockholders have attempted
to curb some of the worst excesses of corporate policies, only
to find their efforts thwarted by corporate management. We can
modify states' corporation codes to return a modicum of control
of corporations to their putative owners, the stockholders. Some
basic provisions might include a) a one stockholder, one vote
policy, b) prohibitions against issuing non-voting stock, c) removal
of obstacles to stockholders' access to information, initiation
of policies, and removal of unsatisfactory corporate management.
** Give state courts clear authority to hear all corporation
cases. State courts, more sensitive to local needs and conditions
and more accessible to citizens, once heard most corporation cases.
During the last years of the nineteenth century, numerous unsuccessful
attempts were made at the federal level to reinstate this practice.
Both federal legislation and federal constitutional amendments
were proposed. Either one would do the trick.
** Reinstate historic limits on corporations. State corporation
codes and/or corporate charters can be amended to include provisions
such as the following: a) Require corporations to have a specific
purpose, with a penalty of charter revocation if said purpose
is either not fulfilled or is exceeded. This would include a prohibition
on the kind of "look how ethical we are!" advertising
that currently dissipates stockholders' dollars and discombobulates
public perceptions. b) Require a percentage of stockholders to
live within the chartering state. c) Prohibit corporations from
owning stock in other corporations. d) Issue corporate charters
for only a specific term of existence, perhaps ten or twenty years.
e) Limit real estate holdings to that necessary for corporate
purposes. f) Prohibit any and all political donations by corporations.
g) Prohibit all civic, charitable, or educational donations not
specifically provided for in the corporate purpose. h) Impose
strict liability for all corporate officers and/or stockholders.
** Initiate new limits on corporate activities. We can add
provisions (to state codes, charters, and/or constitutions) that:
a) Forbid corporations from doing business under pseudonyms
or alternative names.
b) Require corporations to use earth-friendly materials in
all stages of operations, and to list all ingredients.
c) Prohibit corporations from buying up patents for the purpose
of preventing others from exploiting them.
d) Require every corporate document to be signed by a human
being who thereby takes responsibility for the veracity of statements
and the soundness of judgments therein.
e) Require a corporation to pay for periodic health, safety,
and environmental audits by independent experts selected by workers
and affected communities.
f) Require that in the event of bankruptcy, corporate management
pay and perks be withheld until all other debts and creditors
are paid, starting with workers and small businesses.
g) Require 95% recycling.
h) Prohibit corporations from seeking or accepting "incentive"
packages from any government entity.
i) Establish a maximum ratio (like 1:5) between compensation
of the lowest-paid worker and the highest-paid executive.
j) Establish a process similar to "recall" procedures
for elected officials, so that citizens can initiate revocation
referendums for corporate charters (in the case of domestic corporations)
and for certificates of authority (that allow foreign corporations
to do business in one's state).
k) Require uniformity of health benefits within each corporation
for all corporation employees (from CEOs to wage-laborers).
This is just a sampling of some of the options open to us.
Priorities might include working to revoke corporate charters,
to end the privileges granted corporations under the judicial
"corporate personhood" doctrine, and to prohibit political
contributions. Most of the obstacles we face are in the arena
of judge-made law, but historic legislation and constitutional
provisions offer us a solid body of favorable precedents. Much
debate lies ahead. But it is high time we shifted the controversy
from whether we control corporations to how we do so.
The sky's the limit. What are we waiting for?
 Jane Anne Morris is a corporate anthropologist working
on corporation issues as part of Democracy Unlimited of Wisconsin
Cooperative. [Join them: 29 E. Wilson, Ste. 201, Madison WI 53703;
phone (608) 255-6629; fax (608) 255-6643]. She is author of NOT
IN MY BACK YARD: THE HANDBOOK (San Diego: Silvercat Publications
[(888) 299-9119], 1994).
 U.S. Const. Art. I, Sec. 8.
 An excellent discussion of the difficulties of relying
on a regulatory strategy to actually regulate corporate action
can be found in Christopher D. Stone, WHERE THE LAW ENDS: THE
SOCIAL CONTROL OF CORPORATE BEHAVIOR (NY: Harper & Row, 1975.]
 U.S. Const. Art. III Sec. 2.
 See note 15 in REHW #488.
 Santa Clara County v. Southern Pac. R.R., 118 U.S. 394.
 A discussion of the historical process of taking power
from stockholders and giving it to a largely independent corporate
management can be found in Adolf A. Berle, Jr., "Historical
Inheritance of American Corporations," in Edmond N. Cahn,
editor, SOCIAL MEANING OF LEGAL CONCEPTS (New York: NYU School
of Law, 1950), pgs. 189-218.
 CORPORATE CRIME REPORTER, Vol. 9 No. 25 (June 28, 1995).