To Save the Modern Corporation You Must First Destroy It
American corporations used to be legally required to be responsible. If the United States wants to ensure the long-term health of its corporations it needs to enact new laws similar to the ones of the past, according to CIO.com blogger Constantine von Hoffman.
By Constantine von Hoffman, CIO
The modern corporation serves mainly as a conduit for money and power to the hands of a select few. These institutions have so many resources at their command that it is now a simple matter for them to undermine government. This is not the opinion of a wild-eyed socialist but of a lawyer who used to work for these entities.
Abraham Lincoln, who is mostly famous for other things, wrote:
“Corporations have been enthroned. An era of corruption in high places will follow…until wealth is aggregated in a few hands…and the Republic is destroyed.”
Does this ring a bell?
Today Americans take it for granted that corporations are the only way for them to exist. Few people even question the idea that what’s good for business is good for America, even though there is plenty of evidence to the contrary. This idea is so ingrained that Presidents Obama and Bush and their heads of the Treasury, Federal Reserve, SEC and more all put the best interests of giant banks and investment firms ahead of the people and everything else. It is easy to believe these people enriched Goldman et al. because they were corrupt, but the sadder truth may be that they genuinely believed what they were doing was best for the people of the nation.
The Founding Fathers never imagined the modern corporation. There is no mention of them in the Constitution because at the time of Independence there were only seven chartered business corporations in the entire nation. And these were nothing like the today’s corporations.
“The first corporations in the Western tradition were monasteries, boroughs, guilds, and the like. They were vehicles of community and social cohesion; they sought to restrain the tendencies toward self-seeking—not provide an institutional amplifier for them. By the time of the American Revolution, this form had evolved into a kind of franchise, chartered by the legislature to perform a specific public function, such as running a toll road or a bridge.”
That’s why corporations aren’t mentioned in the Constitution. The Founding Ones thought corporations were groups of people making money by performing public functions. They were extensions of government that would be restrained by the same checks and balances applied to the country’s other governing bodies. Imagine the Judiciary corrupting the Executive branch.
“That assumption fell apart in the period that came to be described as “Jacksonian Democracy.” The practice of granting charters one by one through legislation had given rise to corruption and abuse, and the Jacksonians opened up the corporate form to all comers, through general incorporation laws.”
The intent was to end monopolies not release corporations from their responsibilities to the community.
“While the rights of private property are sacredly guarded,” wrote Jacksonian Chief Justice Roger Taney in 1837, “we must not forget that the community also has rights.”
At the time the laws governing corporations all included limits on size and scope. They also couldn’t buy stock in other corporations, though a number of presidents, including JamesMadison, Teddy Roosevelt, William Howard Taft and Woodrow Wilson all called for federal chartering of large corporations. In order to lure the companies they got in a race to the bottom, with each one imposing fewer legal requirements than the one before. That’s how Delaware became the corporate capital of America. Pay your fee, file your papers and you are left alone.
That’s how America got where it is today with Goldman Sachs, Citizens United and the long-term well-being of the nation being sold off in exchange for wealth for the few.
So what to do? I am going to go along with Madison, Roosevelt, Taft and Wilson (you have no idea how much it hurts to write that) and the idea of Federal charters for corporations that actually require them to be responsible.