Environmental Research Foundation
P.O. Box 5036, Annapolis, MD 21403
Fax (410) 263-8944; Internet: firstname.lastname@example.org
Anyone who reads beyond the daily newspaper must be aware
that the environment is in deepening trouble worldwide. For example,
year after year, Lester Brown and his colleagues at the Worldwatch
Institute in Washington, D.C., quietly catalog the world's deteriorating
environmental conditions:  clean water growing scarcer, forests
dwindling, marine mammals declining, indigenous human populations
disappearing, the oceans' fisheries collapsing, protein shortages
emerging, productive topsoil diminishing, contamination by pesticides
and industrial chemicals steadily growing, species loss accelerating,
chronic diseases rising throughout the industrialized world...
And this short list only brushes the surface.
Increasingly, citizens are searching for root causes of the
world's environmental decline, seeking pressure-points where focused
attention might make a fundamental difference. Here we examine
the legal entity called the corporation.
Corporations are legal fictions created by law to engage in
business for the purpose of returning a percentage on investors'
capital. This legal purpose requires that sufficient growth must
occur each year (on average) to produce a surplus that can be
returned to investors; and it requires that costs must be "externalized"
(passed along to outside parties, such as workers or the general
public) to the extent possible. As a former Ronald Reagan economist,
Robert Monks, has said, "Despite attempts to provide balance
and accountability, the corporation as an entity became so powerful
that it quickly outstripped the limitations of accountability
and became something of an externalizing machine, in the same
way that a shark is a killing machine--no malevolence, no intentional
harm, just something designed with sublime efficiency for self-preservation,
which it accomplishes without any capacity to factor in the consequences
to others." 
Individuals who make decisions for corporations are not free
to do what they personally believe is right. They must do what
will externalize costs and promote sufficient growth to provide
a decent return on investment. If corporate decision-makers make
decisions contrary to these narrowly-and legally-defined corporate
goals, they can be sued by shareholders for breach of fiduciary
trust. Suppose Dow Chemical, or DuPont, decided to use a significant
portion of its assets to reverse environmental damage. How long
would it be before they found themselves in court for breach of
fiduciary trust? These corporations are chartered to pump out
chemicals profitably; legally, that is about all they can do.
A corporation's narrow financial purposes strictly limit the
range of decisions possible within corporate culture. The legal
framework of the corporation strongly favors decisions that foster
short-term gain over decisions that protect public trust resources
upon which humanity depends for sustenance, such as the oceans
or the atmosphere.
Finally--and this is the most important aspect of the corporation--individual
investors and managers are legally protected from liability for
the corporation's actions. Indeed, limiting individual liability
was the purpose for which the corporation was invented. Furthermore,
as a matter of U.S. law, since 1886 corporations have been accorded
many of the rights and Constitutional protections of an individual,
without the responsibilities of an individual.  In addition,
of course, modern corporations have perpetual life, and can accumulate
assets and influence on a scale that no individual could ever
hope to acquire. Many international corporations have annual budgets
larger than the annual budgets of many developing nations. (See
REHW #467, RHWN #308 and #309.)
Because corporations cannot feel pain when the corporation
hurts someone or damages the environment, the fundamental constraint
on human behavior (personal pain) is missing from the corporate
This is a point worth emphasizing. It is principally through
pain that humans learn to control themselves and civilize their
behavior. A baby tries to crawl through a solid door; the resulting
bump on the forehead teaches something fundamental about limits
imposed by the external world. Later, the baby wants someone else's
ice cream cone, takes it, and gets punished--a painful but important
lesson on the limits of personal behavior. As we grow, we develop
an individual conscience; antisocial behavior begins to hurt us
because we feel guilt and remorse. Thus do we learn to control
our selfish impulses.
Corporations cannot feel pain. After they grow to a certain
size, no penalty or fine can effectively hurt them. They simply
pass the cost on to shareholders and customers. Even if a handful
of executives are put in jail, the corporation itself goes on,
You can think of a corporation as a smiling giant that has
perpetual life, cannot feel pain, must constantly grow larger
(doubling in size every decade or so), must deposit its excreta
in public places and do everything else it can to make its neighbors
and compatriots pay all its costs of living. Its legal form requires
the corporation to spend billions hiring armies of talented specialists
in law, public relations, media manipulation, and the science
of persuasion, all aimed at making the corporation appear as nothing
more than an ordinary concerned citizen. This smiling colossus
is a frightening alien indeed.
We have many thousand such creatures among us now. Legally
prohibited from sharing in the milk of human kindness, and increasingly
free of social (regulatory) constraints because of modern "free
trade" legislation (NAFTA and GATT --see RHWN #303, #304,
and #305), corporations are now poised to transform the planetary
ecosystem on a scale and at a pace unimaginable just 30 years
There seems little doubt that the majority of corporate decision-makers
are well meaning people, as individuals. Nevertheless, the need
for constant growth (on average), and the need to externalize
costs, combined with an enforced freedom from personal responsibility
and liability for the corporation's actions, add up to a corporate
culture that is prone to cut corners, shrug off responsibility
toward its neighbors, and exhibit behavior that could only be
called, at best, selfish and antisocial and, at worst, sociopathic.
Humanity is clearly endangered, and we face two hard paths:
business as usual, or real change adopting pollution prevention
with its attendant dislocations. Down the one path very likely
lies the eventual destruction of our species. Down the other,
at least a hope of salvation.
Naturally corporations will not sit by while fundamental controls
are imposed upon their behavior. It is their nature that they
must fight to retain their present privileges. They have to. Corporate
managers are not bad people. On the contrary, they are, most of
them, good people. But they are ethically imprisoned by the corporate
form. Even if a majority of decision-makers inside American corporations
agreed that they were destroying the planet, industry would not
be able to make the needed shifts. Existing incentives are simply
Now, therefore, the time has come to liberate our friends
and compatriots trapped inside the ethical perdition of the corporate
form. They know what is right, just like the rest of us. Like
the rest of us, they understand some of what must be done. Yet
they are powerless to do the right thing and make the needed changes.
We could liberate our compatriots from the corporate form
by providing corporations with at least two key changes, to give
them real incentives to curb their own worst tendencies: 
One: we could remove from corporations the Constitutional
protections of a natural person (for clearly they are nothing
Two: we could revoke the corporate charters of those that
insist on doing major harm. "Three strikes and you're out,"
is the current phrase advocated for individual criminals, and
it could be applied to corporations. Three felony convictions
and you lose your corporate charter. The corporate charter is
the paper, issued by state legislatures, that bestows upon any
corporation the privilege of doing business. Denying a corporation
the full Constitutional protections enjoyed by a natural person
is only logical. Natural persons can go to jail or face fines
that bring ruin. But corporations cannot go to jail or even be
effectively fined. Corporations cannot feel embarrassment, guilt
or remorse. To restore to corporations some human dimension, they
could be denied the Constitutional protections of the individual
Legal historian Carl Mayer suggests a new amendment to the
U.S. Constitution, as follows: 
THIS AMENDMENT ENSHRINES THE SANCTITY OF THE INDIVIDUAL AND
ESTABLISHES THE PRESUMPTION THAT INDIVIDUALS ARE ENTITLED TO A
GREATER MEASURE OF CONSTITUTIONAL PROTECTIONS THAN CORPORATIONS.
FOR PURPOSES OF THE FOREGOING AMENDMENTS, CORPORATIONS ARE
NOT CONSIDERED "PERSONS," NOR ARE THEY ENTITLED TO THE
SAME BILL OF RIGHTS PROTECTIONS AS INDIVIDUALS. SUCH PROTECTIONS
MAY ONLY BE CONFERRED BY STATE LEGISLATURES OR IN POPULAR REFERENDA.
The second reform --allowing for revocation of the corporate
charter --would permit corporations to mold their behavior in
response to a real threat of capital punishment, counterbalancing
the short-term need to externalize costs and make a profit. Charter
revocation spells corporate death. Such a threat would give everyone
in the corporation an enormous incentive to check corporate crimes
and harms before they got out of hand.
Outfitting corporations with a perpetual threat of death would
concentrate the minds of management, shareholders and workers
wonderfully, providing a strong, continuing incentive for ethical
behavior. Such a perpetual threat would humanize and civilize
the corporate form, which in recent years has arguably emerged
as our most rogue and dangerous institution.
Peter Montague, Ph.D.
 Lester R. Brown and others, STATE OF THE WORLD 1994 (New
York: W.W. Norton, 1994); Lester R. Brown and others, VITAL SIGNS
1993 (New York: W.W. Norton, 1993).
 Robert A.G. Monks and Nell Minow, POWER AND ACCOUNTABILITY
(New York: HarperCollins, 1991), pg. 24.
 Richard Grossman and Frank T. Adams, TAKING CARE OF BUSINESS;
CITIZENSHIP AND THE CHARTER OF INCORPORATION (Cambridge, Mass.:
Charter, Inc., 1992). For a copy, send $5.00 plus self-addressed,
stamped envelope containing 52 cents postage to: Charter, Inc.,
P.O. Box 806, Cambridge, MA 22140.
 For 50 ways to reform corporations see Russell Mokhiber,
CORPORATE CRIME AND VIOLENCE (San Francisco: Sierra Club Books,
1988), pgs. 38-65.
 Carl J. Mayer, "Personalizing the Impersonal: Corporations
and the Bill of Rights," HASTINGS LAW JOURNAL Vol. 41 No.
3 (March 1990), pgs. 577-667.