Kalle Lasn- Grounding the Corporation

A corporation has no heart, no soul, no morals. It cannot feel pain. You cannot argue with it. That’s because a corporation is not a living thing, but a process – an efficient way of generating revenue. It takes energy from outside (capital, labour, raw materials) and transforms it in various ways. In order to continue ‘living’ it needs to meet only one condition: its income must equal its expenditures over the long term. As Iong as it does that, it can exist indefinitely.

A corporation has no heart, no soul, no morals. It cannot feel pain. You cannot argue with it. That’s because a corporation is not a living thing, but a process – an efficient way of generating revenue. It takes energy from outside (capital, labour, raw materials) and transforms it in various ways. In order to continue ‘living’ it needs to meet only one condition: its income must equal its expenditures over the long term. As Iong as it does that, it can exist indefinitely.

When a corporation hurts people or damages the environment it will feel no sorrow or remorse because it is intrinsically unable to do so. (It may sometimes apologise, but that’s not remorse that’s public relations.) Buddhist scholar David Loy of Tokyo’s Bunkyo University puts it this way: “A corporation cannot laugh or cry; it cannot enjoy the world or suffer with it. Most of all, corporations, cannot love.” That’s because corporations are legal fictions. Their ‘bodies’ are just judicial constructs, and that, according to Loy, is why they are so dangerous. “They are essentially ungrounded to the Earth and its creatures, to the pleasures and responsibilities that derive from being manifestations of the Earth. Corporations are in the most literal and chilling sense ‘dispassionate.’

We demonise corporations for their unwavering pursuit of growth, power and wealth. Yet, they are simply carrying out genetic orders. That’s exactly what corporations were designed – by us – to do. Trying to rehabilitate a corporation, urging it to behave responsibly, is a fool’s game. The only way to change the behaviour of a corporation is to recode it; rewrite its charter, reprogramme it. When a corporation like General Electric, Exxon, Union Carbide or Philip Morris breaks the law, causes an environmental catastrophe or otherwise undermines the public interest, the usual result is that nothing very much happens. The corporation may be forced to pay a fine, revamp its safety procedures, face a boycott. At worst – and this is very rare – it is forced into bankruptcy. The shareholders lose money and the employees lose their jobs. Usually, though, the shareholders move on to other investments, and company executives find work elsewhere. In fact, it’s often the public and low-level employees who suffer the most when a corporation dies.

What if there was another, more serious, potential outcome, one that would lay responsibility where it belongs? What if each shareholder was deemed personally responsible and liable for ‘collateral damage’ to bystanders, or harm to the environment? Why shouldn’t it be so? If you’re a shareholder, a part-owner of a corporation, and you reap the rewards when the going is good, shouldn’t you be held responsible for that company when it becomes criminally liable?

If we re-wrote the rules of incorporation so that every shareholder assumed partial liability, financial markets would immediately undergo dramatic change. Fewer shares would be traded. Instead of simply choosing the biggest cash cows, potential shareholders would carefully investigate the backgrounds of the companies they were about to sink their money into. They would think twice about buying shares in Philip Morris Inc. or R. J. Reynolds or Monsanto. Too risky. They would choose resource companies with good environmental records. They would stay away from multinationals that use child workers or break labour laws overseas. In other words, the shareholders would be grounded – forced to care and take responsibility. Stock markets would cease to be gambling casinos. Our whole business culture would heave.

We made an enormous mistake when we let shareholders off the legal-liability hook. But it’s not too late to rectify that mistake. We, the people, created the corporate charter and the rules for buying stocks and shares, and now, we, the people, must change those rules.

The same approach can be extended to corporate crime. When a human being commits a major crime – gets caught trafficking cocaine or robbing a store – society metes out harsh justice. The felon automatically loses his political rights (to vote and hold office) and if the crime is serious enough, he does hard time. When he gets out of jail he’s marked for life. Employers won’t hire him. People who know his background won’t trust him. He cannot travel freely across borders. He is a marked man.

Compare that to the worst that might happen to a corporation caught flagrantly breaking the law. The public is outraged. The CEO loses his job. There’s a shake-up in the boardroom. The company faces a class-action suit and pays out a lot of money. But, at the end of the day, the executives of a criminal corporation really don’t have so much to worry about. Their chances of ending up in jail are next to zero. And the corporation itself loses none of its political or legal rights to continue doing business, lobby congress or participate in elections. The corporation hires a new CEO, settles the suit, launches a PR campaign to regain public confidence. This is often seen as just the price of doing business. That’s why the executives of rogue corporations like Philip Morris can keep lying to us, hiding information and otherwise flouting the law with impunity year after year after year. There is no penalty they fear.

We must find ways to instil that fear. We must enact tough new corporate criminal liability laws. Repeat offenders should be barred for a specified number of years from selling things to the government. They should be ineligible to hold government contracts and licenses for television stations. They should not be allowed to finance political campaigns or lobby congress, and they should forfeit their legal rights just as individual criminals do.

We must rewrite the rules of incorporation in such a way that a company caught repeatedly and wilfully dumping toxic wastes, damaging watersheds, violating anti-pollution laws, harming employees, customers or the people living near its factories, engaging in price fixing, defrauding its customers, or keeping vital information secret, automatically has its charter revoked, its assets sold off and the money funnelled into a superfund for its victims.

In America, the home of probably the world’s biggest, most powerful corporations, there are historical precedents for this kind of action, though you have to go back a century to find them. In 1884, the people of New York City, citing a wilful pattern of abuse, asked their attorney general to revoke the charter of the Standard Oil Trust of New York (and they succeeded). The state of Pennsylvania revoked the charters of a number of banks that were found to be operating against the public interest. Michigan, Ohio and New York revoked the charters of oil, sugar and whiskey trusts. In 1890, the highest court in New York State revoked the charter of the North River Sugar Refining Corporation with these words: “The judgement sought against the defendant is one of corporate death. The state, which created, asks us to destroy, and the penalty invoked represents the extreme rigor of the law. The life of a corporation is, indeed, less than that of the humblest citizen.”

Warnings about corporate consolidation have also come out of even more recent US court decisions. In 1976, US Supreme Court Justices White, Brennan and Marshall noted that “the special status of corporations has placed them in a position to control a vast amount of economic power by which they may, if not regulated, dominate not only the economy but also the very heart of our democracy, the electoral process.”

Today, after 100 years of inaction, American corporate charters are once again being challenged, and these challenges are setting an example for those across the world who understand the need to rein in the power of corporations.

In May 1998, New York Attorney General Dennis Vacco revoked the charters of the Council for Tobacco Research and the Tobacco Institute, on the grounds that they are tobacco-funded fronts that serve “as propaganda arms of the industry”.

In Alabama, the only state in the US where a private citizen can file a legal petition to dissolve a corporation, Judge William Wynn did just that. In June 1998, acting as a private citizen (and comparing his actions to making a citizen’s arrest), Wynn named five tobacco companies that, he asserted, have broken state child-abuse laws and should be shut down. “The grease has been hot for a year now, and it’s time to put the chicken in,” he said.

On September 10, 1998, in what may be the largest corporate charter revocation effort in a century, 30 individuals and organisations (including the National Organisation for Women, Rainforest Action Network and National Lawyers’ Guild) petitioned California Attorney General Dan Lungren to pull the plug on Unocal Corporation, which, they claim, engages in environmental devastation, unethical treatment of workers and gross human rights violations. And on Tuesday, November 3, 1998, in the fiercely political university town of Arcata, California, citizens, in the first ballot initiative of its kind in US history, voted 3,139 to 2,056 to “ensure democratic control of all corporations conducting business within the city.” Now, in town hall meetings and an ongoing city-wide conversation, the people of Arcata will decide what role they want corporations to play in their community.

The 1886 Santa Clara County versus Southern Pacific Railroad decision in the US Supreme Court declared that corporations were “natural persons” under the US constitution. Suddenly, corporations ‘came to life’ among us, and started enjoying the same rights and freedoms as we, the citizens who created them. One of the ultimate long-term strategies for jammers is to revisit that judgement, have it overturned, and ensure that the corporate ‘I’ will never again rise up in our society.

It will be a long and vicious battle for the soul of America and the outcome is far from clear. In the next century, will America evolve toward a radical democracy or an even more entrenched corporate state? And what example will it set to the rest of the corporate world? Will more and more of the world economy be “centrally planned by global megacorporations? Will we live and work on Planet Earth, or Planet Inc.? The only way to avoid this latter, nightmare scenario is for people to start thinking and acting as sovereign, empowered citizens.

One way to jumpstart this ‘vital process’ is to make an example of one of the world’s biggest corporate criminals – Philip Moris Inc. Launch a TV campaign that tells the horrifying truth about that company’s long criminal record. Organise a massive boycott of its food products, collect a mind-addling number of petition signatures, keep applying the pressure and simply never let up until he attorney general of the state of New York revokes the company’s charter.

Author: Kalle Lasn

News Service: The Ecologist

URL: http://www.theecologist.org/