Corporate Power In America

excerpted from the book

The Ralph Nader Reader

(Originally appeared in The Nation, March 29, 1980)

Writing in the late 1950s, William Gossett, the vice president o Ford Motor Company, described the corporation as the dominant institution of American society His candor troubled some of his business colleagues who liked to diminish the impression that corporations have the power to control or condition so much behavior in this country What Mr. Gossett said over twenty years ago is even more accurate today I

The mercantile values of the modern giant corporations shape more than market forces in their image. They pervade government, politics, law, taxation, environment, education, communications, foundations, athletics and even institutions formerly believed to be outside their influence, such as the family or organized religion. The calculated penetration of children's minds by exploitative advertisements on children's television Illustrates how the mercantile thrust can undermine parental authority, as well as proper diet. Indeed, both in space and time, the large corporation is expanding its impact, as multinational activity and chemical and other technological burdens on future generations increase. Many multinational corporations' general revenues today dwarf the GNPs of dozens of foreign nations. General Motors, Exxon and ITT together took in more dollars last year than the Pentagon-which has the largest military budget in the world.

A corporate economy, a corporate society, a corporate state were not always part of the American ethos. Jefferson viewed the new representative government as curbing the excesses of "the monied interests. The pre-Civil War period reflected an established belief in the merits of a decentralized economy based on farmers and small businessmen, which culminated in the Homestead Act under President Lincoln's Administration. There was suspicion widespread during the first half of the nineteenth century about letting "legal fictions" called corporations, with limited liability to their investors, engage in production without legal constraints. Advocate Daniel Webster could thunder in court about a corporation having "no soul." Legislatures were very restrictive in their chartering of corporations.

The post- Civil War period of that century witnessed what some historians describe as a major and dramatic change in the economy and in the prevailing ethos. The Industrial Revolution was underway with large corporate capital gobbling up small competitors. The oil, steel, tobacco, sugar and other "trusts" ushered in the first wave of corporate concentration. The Horatio Alger ideology with its mercantile definition of success insinuated itself deeply in the psychology of the culture. At the same time, the restrictions on corporate chartering loosened. State legislatures delegated the functions to state agencies, and they in turn delegated more discretion about what economic pursuits corporations could follow and what were the responsibilities of company officers and boards of directors. Late in the nineteenth century, states, led by New Jersey, began to turn corporate chartering into a competitive race for state revenues by enacting more permissive chartering laws. This "race to the bottom," in Professor William Cary's words, was won by Delaware in the early 1900s, and that state remains the domicile of many of the world's largest corporations.

The Delaware corporation syndrome, which pulled other states toward a lower common denominator for chartering represented a major victory for corporate power in America. No longer would the corporate charter constitute even a pretense of being a corporate governance mechanism providing accountability to shareholders and other affected corporate constituencies Instead, the state-granted charters devolved with each succeeding weakening of the Delaware corporate law over the next eight decades. By conscious lobbying, corporations turned restrictive charter laws into instruments for further concentration of power in the hands of management. A constitutional structure for accountability rights by people inside as well as outside the corporate structure passed into history.

By contrast, the growth of various forms of corporate management power over shareholders, workers, consumers, community residents, taxpayers and governments proceeded apace-through the "Robber Barons" period into World War I (wars always increase a lasting kind of corporate entrenchment), the "business of America is business" 1920S, the "New Deal" 1930s, World War II and the massive acceleration of influence and impact during the past generation. Greater aggregations of natural resources, capital, labor and technology under more centralized management also daunted the ability of entrepreneurs, inventors and small businesses to challenge this megacorporate hegemony Small business instead survived increasingly by becoming an appendage, a franchise to corporate headquarters, economically and politically

Yet monopolies, oligopolies and giant business generally did not expand without challenge. A series of these challenges began in the I800s with the farmers' revolt out of Texas and Oklahoma, so well chronicled by Lawrence Goodwyn's The Populist Moment: A short History of Agrarian Revolts in America. The banks and railroads were the focus of this fundamental power struggle which, in weakened form, led to the populist progressive movement a few years later. The first regulatory agencies, price supports, public enterprises (grain elevators), producer cooperatives and direct democracy instruments (initiative, referendum and recall) emerged from this agrarian political and economic mobilization. This reform movement was probably the most basic and deeply rooted in our country's history For all its continuing legacies, however, it failed to stem the tide of Big Business. Four other challenges during this century have had some intermittent success in curbing some of the more egregious excesses of these large industrial and financial companies-the labor, consumer, civil rights and environmental movements.

There is a uniquely consistent pattern to the strategy of response by companies once they decide that they cannot totally defeat the reform drive. Where regulations or standards are issued by an agency for health and safety, a deliberate process of delay, attrition and political influence is initiated. That is why statutes read more promisingly than the regulations and the latter read more promisingly than the reality in the marketplace, workplace and environment. Wherever the political government is empowered to protect the interests of labor, consumer or other constituencies, the corporate government increases its financing of political elections. Where the law requires a redirection of investment to reduce the costs of pollution or consumer injury, companies find ways to transfer these costs to the victims themselves, through tax preferences or administered pricing; they often avoid internalizing these proper costs to compete against other internal cost decisions (safety versus style in cars). And because of the inordinate secrecy permitted these multinational companies, management can wildly exaggerate the costs of compliance to prod public resistance to health and safety standards while at the same time keeping secret the evidence of hazards (chemical waste dumps, automobile defects, food contamination and drug risks),

There is always a lag between the actual adverse impacts of large corporations and public knowledge of them. This is true of almost every industrial danger exposed during the past thirty years, from pesticides to nuclear power to occupational disease. There is also a great lag from corporate diagnosis to public prescription. The public consequences of these dual lags for people, nation and world are becoming more ominous with the advent of highly perilous technology in the hands of country-hopping multinational corporations. Fifty years ago an imperious utility might have cost consumers a few exorbitant dollars a year on their electric bills. Today that same utility is building or operating a nuclear plant in their community. Fifty years ago, the petrochemical industry was in its infancy; today it is flooding the human environment with carcinogens and a wide variety of other toxic chemicals. Love Canal-type dumps are being discovered all over America the Poisoned. Wherever Love Canals are revealed there are no conservatives and there are no liberals; there are only victims becoming angrier.

The contemporary challenge to giant business is quite modest compared to historical movements in our past. There is no strong demand for basic ownership changes. The furthest the contemporary critique goes is to offer alternatives such as greater self-reliance, more consumer cooperatives and a little public enterprise involving, for example, energy extraction and production on federal lands to compete with the big companies. The principal call is almost primitive in its simplicity. It is a call for corporations to stop stealing, stop deceiving, stop corrupting politicians with money, stop monopolizing, stop poisoning the earth, air and water, stop selling dangerous products, stop exposing workers to cruel hazards, stop tyrannizing people of conscience within the company and start respecting long-range survival needs and rights of present and future generations.

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