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Why Corporations Are Psychotic

These "people" are not healthy

Senator Bernie Sanders echoed the sentiments of many last week when he called for a constitutional amendment to repeal the notion of corporate personhood. This issue jumped into public consciousness last year after the Supreme Court, in its Citizens United decision, effectively allowed unrestrained corporate influence in American politics, based partially on the idea that corporations are legally "persons" with constitutional rights. Sanders, in calling for the constitutional amendment, declared: "This is an enormously important issue, and how it is resolved will determine, to a significant degree, the future of American democracy."

What is it about corporate personhood that so concerns Sanders and many others? That question could be answered many ways, but perhaps this is most concise: Corporations are psychotic.

If corporations are indeed "persons," their mental condition can accurately be described as pathological. Corporations have no innate moral impulses, and in fact they exist solely for the purpose of making money. As such, these "persons" are systemically driven to do whatever is necessary to increase revenues and profits, with no regard for ethical issues that might nag real people.

But, you say, corporations are owned and managed by real people, so surely immoral corporate actions might be inhibited by them? Well, not really. First of all, the officers and directors who run corporations are actually duty-bound to act in the corporation's best financial interest, and that means they are obliged to do whatever they can within the law to make money. Thus, this fiduciary duty requires corporate management to set aside ethical niceties when they get in the way of corporate profits. This is why tobacco companies market their products to kids when they can - only laws prohibiting such conduct will keep them from doing so.

This is especially true when we are dealing with large, publicly traded corporations. Whereas a small corporation could have local ownership, management, and community roots that might resist the drive for profit in certain situations, publicly traded corporations almost always answer to institutional investors and have tremendous pressure to produce short-term profits. The management chain in a publicly traded corporation is necessarily geared for profit, not ethics.

Thus, the entity is a "person" with a totally self-absorbed psyche, a narcissistic "person" that has enormous resources to advertise and market itself to the public, to hire professionals of all types to influence public opinion, to litigate and lobby as needed, to ruthlessly pursue its goal of revenue and profit, and to join other corporations and industry associations in crushing any opposition posed by mere individuals or public interest groups.

But hasn't it always been this way? Isn't that what capitalism is all about - corporate interests driving the economy?

Actually, no. Corporate libertarians would have you believe that somehow corporate dominance is entirely consistent with the values and vision of the Founding Fathers, but this is pure myth. The framers believed in limited government and free markets, but corporations were almost non-existent in the early days of the Republic. Unlike today, one could not form a corporation simply by filing a few papers with a government office; instead, permission from the government was needed (usually via an act of the Legislature) and was granted only upon a showing that the proposed corporation would be in the public interest. When corporate formation was allowed, strict terms and limitations were demanded.

Corporate formation was viewed skeptically in those days because corporations were correctly recognized as dangerous. Unlike sole proprietorships or partnerships, corporations allow investors to pool huge sums of capital and pursue profits while remaining immune from personal liability. Thus, if I own shares of XYZ Corporation and the company breaches a $10 million contract obligation, there is no chance that I will be personally liable on the contract. If I own a sole proprietorship or partnership that breaches such a contract, my personal assets are at risk.

This immunity makes the corporate structure extremely attractive to investors, even absentee investors, which means publicly traded corporations can attract enormous amounts of capital, which in turn results in their wielding great economic power. In modern society where corporations are widespread and commonplace, this economic power enables them to have great social and cultural influence, defining to a large degree how we live our lives and even the values we hold as a society. And of course economic power easily translates to political power as well.

It wasn't until the latter half of the Nineteenth Century, long after the framers were dead, that corporate interests began to reshape the social, legal, and political environment so that their interests became paramount, far more important to politicians than the interests of ordinary citizens. Corporate personhood was a key part of this scheme.

Thus, while corporate libertarians are quick to point out that the framers and other intellectuals of the founding era were wary of excessive governmental power, they conveniently neglect to mention that concentrated corporate power was also viewed skeptically. In fact, Adam Smith, whose "Wealth of Nations" is often cited by corporate apologists as validating "free markets," warned against unrestrained, concentrated corporate power and instead encouraged small-scale, local economic activity. Published in 1776, "Wealth of Nations" predates the rise of corporate power, and suggestions by corporate libertarians that the book somehow supports the notion of corporate dominance are either mistaken or outright dishonest.

It's worth noting that libertarians have no right to claim that a laissez-faire environment would allow unregulated corporate power. Since corporations themselves are a fictitious creation of government, a true libertarian environment (with minimal government) would find them unnecessary and somewhat repugnant. Thus, ironically, at their essence corporations are a creation of government meddling.

The pathological and narcissistic nature of corporate "persons" is reason enough to deny them fundamental constitutional rights that should be reserved for flesh-and-bone persons, but the fact that they also wield economic resources far in excess of those available to real persons magnifies the need to restrain them. Author David C. Korten calls the claim by corporations for constitutional rights equal to those of humans a "legal perversion," saying that "corporations should obey the laws decided by the citizenry, not write those laws."

Korten's statement alludes to why this issue is so critical to effective democracy. Because corporate interests have immense resources that enable them to participate in lobbying and litigation, they effectively control the governmental machine. If individual citizens today feel powerless and cynical about politics and government, who can blame them? Participatory democracy is not alive and well in America, because pathological corporate interests have complete control of the system. This is why Sanders's declaration, that the future of American democracy may rely on the outcome of this issue, is not an overstatement. What kind of "persons" will control democracy - corporate or human?

The Tea Party and Corporate Power

The call by Sanders for a constitutional amendment cries out for popular support, and any mention of populism nowadays calls to mind the Tea Party. Progressives tend to dismiss Tea Party activists as ignorant and/or deluded, but we should realize that the Tea Party has a few (very few) valid points. At a minimum, the Tea Party is correct in saying that American democracy today would be unrecognizable to the framers.

In their speculation of what the framers would think about today's America, however, Tea Party activists make the mistake of not considering the question fully. They focus almost exclusively on the singular issue of downsizing government, completely ignoring other aspects of modern America that would grab the framers' attention. Surely, if Adams, Jefferson and Madison could be magically transplanted to modern America, their actual assessment of society would be much more comprehensive than critiquing the tax system and size of government.

For example, surely the aspect of modern society that would first preoccupy the framers would be our advanced technology, not our governmental structure. Only after marveling for days or weeks about modern technology, from flying in airplanes to sending emails, would the framers' attention eventually turn to government. Then, of course, in analyzing government, they would certainly assess its expanded role in the proper context, in light of today's much more complex technological, economic, and social realities.

Would they feel that government has gotten too big? Perhaps - especially the military. But it's just as likely that they would conclude that much government expansion - the FDA, the FCC, the FAA, the EPA, Social Security, etc. - are logical results of technological and social development. Of course, all we can do is speculate.

But what the Tea Party ignores is that the framers would surely be aghast at the enormous power that Americans have ceded to private corporate institutions. The time-traveling framers would most likely assess American democracy as being ineffective and Americans themselves as being largely uninformed, passive, distracted by petty consumption, and incapable of critical thinking. They would see American politics and society as overtaken by corporate interests that dictate public and social policy to the private citizenry.

If only the Tea Party could see beyond its simple "limited government" mantra to consider such matters, its populist energy and enthusiasm might be put to good use in challenging the corporate "persons" who own and control American democracy and society. By fully considering their own hypothetical, Tea Party activists would find a new outlet for their angst.

You can bet Sanders will be met with much opposition in his call for a constitutional amendment. Much of that opposition will have roots, overtly or covertly, in the corporate establishment that he seeks to tame. Time will tell which type of "persons" - human or corporate - win this struggle.

Text copyright 2011 Dave Niose


Joel Bakan: The Corporation - The Pathological Pursuit of Profit and Power

David C. Korten: When Corporations Rule the World

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