Challenging Corporate Power

An interview with Richard Grossman

by David Barsamian

Z magazine, January 2000



Richard Grossman is co-director of the Program on Corporations, Law and Democracy. He is co-author of Taking Care of Business: Citizenship and the Charter of Incorporation. He lectures widely on issues of corporate power, law, and democracy.


BARSAMIAN: You write in an essay, "Giant corporations govern. In the Constitution of the United States they are delegated no authority to make our laws and define our culture. Corporations have no constitutions, no bills of rights. So when corporations govern, democracy flies out the door." What do you mean by that?


GROSSMAN: On one level, it's that corporations are making the fundamental decisions that shape our society. They determine essentially what work we do, which technologies get developed, which production methods are used. They are constantly pushing the concept that production has to expand, and from that comes wealth, liberty, and freedom. Most of the decisions they make are essentially beyond the public's ability to interfere with. In terms of having this fundamental authority to shape our society, to get the law to reflect their position.

The federal courts, and the Supreme Court in particular, have bestowed the equivalent of human rights on these artificial entities. They now have the protection of law and the Constitution, which means the protection of the police and the military, to interfere in our elections and in our lawmaking. They're able to field 50 to 1,000 lobbyists. They're able to take politicians to dinner, to buy all kinds of advertising, to shape the culture. Increasingly over this century even citizen activists and activist organizations, have not challenged the claimed authority of corporations to make the fundamental decisions. What's happened is, we've been channeled into regulatory administrative agencies, like the Federal Communications Commission, the Environmental Protection Agency, the Securities Exchange Commission and the National Labor Relations Board, where we try to make the best of the worst of a bad situation.

We're saying that if we are to be a self-governing people, which is what the American Revolution is about, then we have to be in charge of everything. There can be no realm of decision-making that should be considered private, beyond our authority.

The conventional wisdom would have it that we are governed by local, state, and federal governments.

Look at the Multilateral Agreement on Investment, the MAI. It would grant to property, to corporations, to artificial concentrations of wealth the authority to go into other countries, and exercise the same kind of so-called private rights of decision-making that they have exercised in this country.

If you go back and look at populist and other public resistance to increasing corporate power in the 1880s and 1890s, you find a vigorous societal debate, about what the role of the state is in creating corporations. It's our states that charter corporations and are supposed to define them and keep them subordinate. What happened was, towards the end of the l9th century corporate leaders realized that they needed to get away from the authority of the states to define them. They ran to the federal government and said, This is unconstitutional. This interferes with the interstate commerce clause, our property rights, and our freedom of contract. And the federal courts helped them. They stripped the states of their ability to define the corporation.

Here's something that comes out of the whole mythology, that jobs, progress and the good life come from giving these corporation a free hand and saying, Do whatever you want because we're incapable as people of creating jobs, of figuring out how to grow our food, of arranging our affairs. We need you. The politicians say, We have to create a good business climate. We have to give the corporations whatever they want, including all kinds of subsidies and special privileges. All the money goes to them. They have the law on their side. We as the people are left with, well, if anything bad happens to this corporation, what will happen to jobs, to taxes? How can we possibly compete with the rest of the world? The whole gamut of mythologies that the corporations have created in our culture means that at the local level we have very little control.


You emphasize redefining democracy and law.

And in the process redefining us. What's happened is that corporations have defined human beings as consumers. We're told we can vote with our dollars and with our feet and not buy. That's crap. If we're a self-governing people, then our main job is to nurture the democratic process. That's a job that has been entrusted to us by previous generations and that we want to help empower future generations to do.

One of the things to stress is that corporations don't have rights. Rights are for people. Corporations only have privileges, and only those that the people bestow on them.

A New York Times editorial recently applauded a court decision granting to people due process rights dealing with HMO corporations on medical care issues. Think about that. The corporation already has due process rights because the courts have made clear that they think the corporation is a legal person. But on company property workers don't have First Amendment rights. They don't have due process rights. On issues that are concerned with these insurance companies, these medical companies, it's not just generally assumed that all human beings have due process rights. It's nuts.

Over the last 15 years. There have been a number of cases where the Supreme Court has expanded the privileges of free speech to corporations. One of them came out of a case in Massachusetts. The Commonwealth of Massachusetts passed a law saying that in referendum elections corporations don't have the right to spend money to sway the vote one way or the other. Corporations took that all the way to the Massachusetts Supreme Judicial Court, the highest court in the Commonwealth. It approved the law. The corporations then took it to the U.S. Supreme Court. The Supreme Court sort of changed the question and said, When is democracy the most helped? When all voices are heard. These corporate voices need to be heard. Therefore this law is unconstitutional. They refused to acknowledge the finding of the Massachusetts legislature and courts that great concentrations of wealth and power that are considered private in our society are a menace to the functioning of democracy and that the state has the total right to say, For corporations to use shareholder money to sway votes without having even polled the shareholders is inappropriate. What the Supreme Court did was totally throw out the logic and say, Democracy means all voices, and since corporations are persons, they have voices. Let them be heard, even if they're going to outspend humans a billion to one.

Critics sympathetic to your argument might say that state and federal legislatures are largely dominated and controlled by corporate money and interests and to go that route for some kind of change is totally futile. You're asking the fox to police the hen house.

I don't know what other mechanisms to seek. We're not naive. Our near-term approach over the next few years is to provoke a different debate and discussion about this. These issues have been off the agenda for a century. We're taught in a knee-jerk way if we have a problem to look for justice, for resolution, to go into the EPA or the NLRB or the FCC. They don't have the authority to deal with what we're talking about, which is the constitutional question of who's in charge. Maybe after ten years a community group knows how to shut a toxic dump or make it a little more safe or a little less harmful or get rid of a particular toxic chemical. But we don't have time to be going one chemical at a time, one forest at a time, one assault on liberty at a time.

If we don't have a revolution in consciousness , <` among enough people, then there's no way we're going to ever end up going to our legislators and our courts and where we're supposed to go, the mechanisms of self-governance, in order to get redress.

People are starting to address this issue and understanding that we have to move into different areas as organizers, as educators, as activists. It would ,,- ~ be a very different organizing task and a very different struggle if groups that have been dealing with, say, trying to stop toxic chemicals in food, instead of trying to get one more regulatory law passed giving the EPA ten years to write a code of regulations to limit how many chemicals can be used and set up a system of fining corporations if they use a little too much of X or Y, to go into the state, amend the state corporate law to say, a corporation will not be allowed to do business in this state if it emits any poisons into the air or the water. A corporation will not be allowed to operate in this state if it claims the rights of persons. A corporation operating in the state does not have free speech. Workers on corporate property in this state will have free speech and free assembly.

Every privilege that a corporation has means a right denied to human beings. The courts in particular have had a special responsibility to undo this because they caused a lot of this. If you compare in the 19th century, for example, the extent to which the federal courts and some state courts kept granting more privileges to capital to organize and denying the privilege of workers to organize, you can make a chart. Every time they gave capital another privilege, they took something away from workers.) So you have an incredibly uneven fight.


How can some of the issues and concerns that you're raising be injected into the mainstream discourse if that discourse is largely driven, shaped, and formed by corporate-controlled media?

We have to understand that from an organizing educational strategy the media corporations are the adversary, more than the adversary, they're part of the whole structure of corporate dominance and governance. However, there's an enormous, incredible alternative, grassroots media. When we first came out with our early publications, like the pamphlet Taking Care of Business in 1993, none of the mainstream corporate media would touch it. We were forced to go to the grassroots. We got hundreds of reviews and excerpts in print, newsletters, magazines, radio, some videos. The word spread in a very effective way. The base we've been building is much stronger because people have had to grapple with this stuff. I think that the opportunities are there. In a couple of years, when there are challenges to corporate privilege even the corporate press is going to be forced to grapple with this.


What are your views on the notion of socially responsible corporations?

I think it's a terrible and dangerous diversion. If all we're going to do is create organizations and develop materials and educate people to come-together in order to say to corporations, Please, you have a responsibility not to be so destructive. Please be a little less harmful. Please be nicer. What you're doing is reinforcing the corporate worldview that they have ultimate authority, like petitioning a king to be a little nicer or a little less bad. Some of the groups have invested ten years into these voluntary codes, an incredible amount of time and energy getting their members involved, and when they win, what do they get? Pretty much codes without teeth and no law backing them up.

A principal purpose of a business corporation is to ~) shield decision-makers from responsibility. That's why there are limited-liability corporations. The corporation can be doing all sorts of horrible things, assaulting democracy, destroying property, taking people's future income, and nobody's responsible. What happens when a corporation is brought before a regulatory body or even into court on a criminal case? The worst thing is it's fined. Maybe it's declared a felon and the corporation is fined. But that's not going to have a deterrent effect. A corporation doesn't think. It doesn't have feelings, a soul. It doesn't have a conscience. It's playing games to think that these minor fines, which by the way are usually tax deductible, have any real impact on the corporation.


What is your response to the corporate chieftains who argue that they are creating jobs, creating wealth, this is a capitalist economy?

There's nothing in the Constitution that mentions corporations or capitalism. There's nothing in the Constitution, other than protecting contracts, that sets up a system that is so overly competitive and not cooperative. There are a lot of people throughout our history who believed that everything doesn't have to be cutthroat, that people can cooperate. I would say that the smartest corporate leaders from the 1870s on have always understood that what they wanted was the ability to cooperate among the top corporations and make everybody else compete.

There was a piece in the New York Times by Walter Goodman that quoted James Randall, the president of Archer Daniels Midland Corporation. ADM was caught in some scam in which they were fined $100 million, peanuts. Randall was secretly taped saying to some of his associates, "Our competitors are our friends and our customers are our enemies." I think that's how big corporations have felt for 100 years. They created the regulatory system and laws to minimize competition among themselves but maximize competition among workers and the community so they could play one community off against another and one country off against another. Of course corporations bring some jobs. That's where all our money goes, our subsidies, our wealth. With all these privileges they have, they damn well should be creating some jobs. But the question is, Is that the only source and the appropriate source of getting things done? Are we so helpless that if we didn't have these giant corporations we wouldn't have wholesome food, we couldn't build our own houses, we couldn't have newspapers and radio and television and magazines, we couldn't heat our homes and create electricity? If people and communities had any fraction of the vast authority and the public wealth that has been channeled into these corporations, we would be able to do what's needed to be done.

I was involved in a major anti-nuclear effort in California in the early 1970s that led to a statewide initiative on nuclear power. In 1975 the utility corporations were saying they were planning to build 50 nuclear plants in California. The government was planning to build 1,000 nuclear plants around the whole U.S. We came up with another scenario for California showing that for the next 30 years you wouldn't have to build a single central station power plant, nuclear, coal, oil, whatever, in order to meet energy needs. You could do it with energy efficiency, solar, wind, conservation. They called us crazy, Communists, nuts, Luddites, whatever. By the early l990s, the Pacific Gas and Electric Company, the dominant utility in California, essentially adopted our position. They were saying, We don't have to build any central station power plants over the next generation because we're using efficiency and solar and wind. They've since backed off on that. But if we had had access to the money that they had in 1975, which after all was rate-payer money, we could have made the decisions to start installing solar and conservation and doing that. They chose to squander billions of dollars of rate-payer money into building nuclear and coal plants and investing in other countries. So of course they're creating jobs. They've also destroyed ten million jobs over the last 15 years, taking production overseas. It's totally based on their whim.

CEOs would argue that their obligation is to their shareholders, not to the larger society. They need to generate profits in order to give shareholders dividends. If they don't they're out.

I noted at a recent GE shareholder meeting that the CEO, Jack Welch, kept saying to the shareholders, This is your corporation. Well, I'd like to see some shareholders go onto company property and say, I want to see the books. I'd like to see some shareholders start exercising some of their authority. The fact is that over the last 25 years, through courts and legislation, the rights of shareholders have been decreased enormously. They have very little authority any more in the running of these corporations. It's the self-perpetuating boards, the people like Jack Welch of GE, who are running them as dictators. This line that the obligation of the corporation is to maximize profits for the shareholders came out of another federal court decision dealing with the Dodge Motor Company in the early part of this century. It's not written in federal law. It was a court decision saying it was the obligation of the corporation to maximize profits for the shareholders. However, many states have put into their state corporation codes that the directors can take into account the impact of the corporation on the environment, on workers, on future generations. So in 15 or 20 states the law is clear that there are much broader criteria. The most important value in this country that drives everything is, The economy must expand. We must increase production. Efficiency is defined as production per person. That's productivity. In order to have high productivity to please Wall Street you have to have people working in China or India or Malaysia making Nike sneakers and being paid nothing. Where did those values come from? Can we say we can have a society where production doesn't always have to expand?


Could you elaborate a little more on the environmental consequences of the current path that we're on?

We have a number of environmental laws, toxic chemical laws, clean air and water laws, that have been passed since the 1970s. These are laws regulating what the corporations can put out. Despite these laws, the amount of toxic chemicals produced every day by corporations is increasing. The amount of harm that people and other species are suffering is increasing. If you go back and look at these regulatory laws, what they do is legalize the corporations' ability to put out poisons. They channel us, as activists and environmentalists, into trying to deal with one poison at a time rather than saying to the corporations, It's illegal for you to be poisoning in the first place. So we have poisons in the air and the water, in the food.

From an ecological standpoint, from an equal distribution of wealth standpoint, from a justice standpoint the rule by giant corporations has brought us problems. It's certainly brought us a lot of raw wealth. There's a lot of production. We are the masters at producing things in this country. We produce more than anybody else in the world, more poisons and more garbage and more crap than anybody else in the world.

We and other organizations have been producing materials over the last six years or so. Those can be very helpful to people, to read the history that they didn't know, and see how other folks in other generations have been addressing this.


Talk about practical things that people can do in to reframe the debate.

We and other organizations have been producing materials over the last six years or so. Those can be very helpful to people, to read the history that they didn't know, and see how other folks in other generations have been addressing this. We're suggesting that folks who are interested form some kind of study group, read and start thinking and talking about this. We have to start using a different language, thinking about ourselves in a different way. People who belong to activist civic organizations need to bring these debates into churches, academic institutions, professional societies, or in places like town meetings. We need to start bringing these discussions into the body politic.

For example, in the little town of Arcata in northern California, a group of people formed Democracy Unlimited. They qualified a petition, an initiative for the ballot which called on the city hearings to commission a report on the ways that the city could begin to take back its authority from the giant timber corporations that dominate northern California. They're creating a public debate and using some of the resources of their own government.


In 1994 you helped establish the Program On Corporations, Law And Democracy. Its mission statement is "instigating democratic conversations and actions that contest the authority of corporations to govern. "

I think that says it in a nutshell. We're saying that the norm of giant corporations is to usurp the governing authority of the people. With that authority, given their values and their own internal needs, they're going to make the wrong decisions. Most people don't recognize that corporations are governing illegitimately, we're trying to help create that debate. Out of that debate will come, we hope, a different kind of citizen organizing in the 21st century, which is about taking these powers and privileges away from corporations and saying: We are the sovereign people, we come together to form this government, to protect the general welfare, to preserve our posterity. We create these corporations. We define them. When they have exceeded their authority, we must say, We're in charge. Here's how we want things to be run.

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