Buying Out Democracy

excerpted from the book

When Corporations Rule the World

by David C. Korten

published by Kumarian Press, 1995


U.S. corporations entered the 1970s besieged by rebellious anti-consumerist youth culture, a mushrooming environmental and product safety movement, and a serious economic challenge from Asia. Not only was their dream of global hegemony in tatters, they even risked losing control of their own home turf. In response, they mobilized their collective political resources to regain control of the political and cultural agenda. Their methods included a combination of sophisticated marketing techniques, old-fashioned vote buying, funding for ideologically aligned intellectuals, legal action, and many of the same grassroots mobilization techniques that environmental and consumer activists had used against the corporations during the 1960s and 1970s. Their campaigns were well funded, involved sophisticated strategies, and were professionally organized. The major goals were deregulation, economic globalization, and the limitation of corporate liability-in short, to enlarge corporate rights and reduce corporate responsibilities. And their campaign continues in full force.

Mobilizing Corporate Political Resources

In 1971, the U.S. Chamber of Commerce sought the advice of Virginia attorney and future Supreme Court Justice Lewis Powell about the problems facing the business community. Powell produced a memorandum entitled "Attack on American Free Enterprise System" that warned of an assault by environmentalists, consumer activists, and others who "propagandize against the system, seeking insidiously and constantly to sabotage it." He argued that it was time "for the wisdom, ingenuity and resources of American business to be marshaled against those who would destroy it." This set the stage for an organized effort by a powerful coalition of business groups and ideologically compatible foundations to align the U.S. political and legal system with their ideological vision.

Among Powell's recommendations was a proposal that the business community create a business-organized and -funded legal center to promote the general interests of business in the nation's courts. This led to the formation of the Pacific Legal Foundation (PLF) in 1973. Housed in the Sacramento Chamber of Commerce building, it was the first of a number of corporate-sponsored "public-interest" law firms dedicated to promoting the interests of their sponsoring corporations. It specialized in defending business interests against "clean air and water legislation, the closing of federal wilderness areas to oil and gas exploration, workers' rights, and corporate taxation." Some 80 percent of its income was from corporations or corporate foundations.

In a 1980 speech, PLF's managing attorney Raymond Momboisse turned reality on its head by attacking environmentalists for their "selfish, self-centered motivation . . .; their ability to conceal their true aims in lofty sounding motives of public interest; their indifference to the injury they inflict on the masses of mankind; their ability to manipulate the law and the media; and, most of all, their power to inflict monumental harm on society."

Business interests funded the establishment of law and economics programs in leading law schools to support scholarly research advancing the premise that the unregulated marketplace produces the most efficient-and thereby the most just-society. Business funded all-expense-paid seminars at prestigious universities such as George Mason and Yale to introduce sitting judges to these economic principles and their application to jurisprudence.

Before the 1970s, business interests were represented by old-fashion, corporate lobbying organizations with straightforward names: Be Institute, National Coal Association, Chamber of Commerce, or American Petroleum Institute. As aggressive public-interest groups succeed' in mobilizing broad-based citizen pressures on Congress, business decided that another approach was needed.

Corporations began to create their own "citizen" organizations with names and images that were carefully constructed to mask their corporate sponsorship and their true purpose. The National Wetland Coalition, which features a logo of a duck flying blissfully over a swam was sponsored by oil and gas companies and real estate developers fight for the easing of restrictions on the conversion of wetlands in drilling sites and shopping malls. Corporate-sponsored Consumer Alert fights government regulations on product safety. Keep America Beautiful attempts to give its sponsors, the bottling industry, a are. image by funding anti-litter campaigns, while those same sponsors < tively fight mandatory recycling legislation. The strategy is to convin the public that litter is the responsibility of consumers-not the packaging industry.

The views of these and similar industry-sponsored groups-thin six of them are documented in Masks of Deception: Corporate Front Groups in America-are regularly reported in the press as the views of citizen advocates. The sole reason for their existence is to convince the public that the corporate interest is the public interest. The top funders of such groups include Dow Chemical, Exxon, Chevron USA, Mob DuPont, Ford, Philip Morris, Pfizer, Anheuser-Busch, Monsanto, Procter & Gamble, Phillips Petroleum, AT&T, and Arco.

Business interests funded the formation of new conservative poll think tanks such as the Heritage Foundation and revived lethargic pro-establishment think tanks such as the American Enterprise Institute which experienced a tenfold increase in its budget. In 1978, the Institute for Educational Affairs was formed to match corporate funders with sympathetic scholars producing research studies supportive of corporate views on economic freedom.

In 1970, only a handful of the Fortune 500 companies had public affairs offices in Washington, but by 1980, more than 80 percent did In 1974, labor unions accounted for half of all political action committee (PAC) money used to provide special-interest campaign support for politicians. By 1980, the unions accounted for less than a fourth this funding.!' With the inauguration of U.S. President Ronald Reagan in 1981, the ideological alliance of corporate libertarians consolidated its control over the instruments of power.

Although many of those involved in these campaigns truly believe that they are acting in the public interest, what we are seeing is a frontal assault on democratic pluralism to advance the ideological agenda of corporate libertarianism. Though advanced in the name of freedom and democracy, this massive abuse of corporate power mocks them both.

Building Business Lobbies

Business roundtables are national associations of the chief executive officers (CEOs) of the largest transnational corporations. Whereas more inclusive business organizations such as national chambers of commerce and national associations of manufacturers include both large and small firms representing many different interests and perspectives, the members of business roundtables are all large transnational corporations aligned with the economic globalization agenda.

The first Business Roundtable was formed in the United States in 1972. Its 200 members include the heads of forty-two of the fifty largest Fortune 500 U.S. industrial corporations, seven of the eight largest U.S. commercial banks, seven of the ten largest U.S. insurance companies, five of the seven largest U.S. retailers, seven of the eight largest U.S. transportation companies, and nine of the eleven largest U.S. utilities. In this forum, the CEO of DuPont chemical company sits with the CEOs of his three major rivals: Dow, Occidental Petroleum, and Monsanto. The head of General Motors sits with the heads of Ford and Chrysler-and so on with each major industry. In this forum, the heads of the world's largest U.S.-based corporations put aside their competitive differences to reach a consensus on issues of social and economic policy for America. The U.S. Business Roundtable describes itself as:

"an association of chief executive officers who examine public issues that affect the economy and develop positions which seek to reflect sound economic and social principles. Established in 1972, the Roundtable was founded in the belief that business executives should take an increased role in the continuing debates about public policy.

The Roundtable believes that the basic interests of business closely parallel the interests of the American people, who are directly involved as consumers, employees, investors and suppliers.

. . . Member selection reflects the goal of having representation varied by category of business and by geographic location. Thus, the members, some 200 chief executive officers of companies in all fields, can present a cross section of thinking on national issues."

The Roundtable, surely one of America's most exclusive and least diverse membership organizations, has an unusually narrow notion of what constitutes a "cross section" of thinking on national issues. With few, if any, exceptions, its membership is limited to white males over fifty years of age whose annual compensation averages more than 170 times the U.S. per capita gross national product. Its members head corporations that disavow a commitment to national interests and stand to gain substantially from economic globalization. Once positions are defined, the Roundtable organizes aggressive campaigns to gain their political acceptance, including personal visits by its member CEOs to individual senators and representatives.

The Roundtable took an especially active role in campaigning for the North American Free Trade Agreement (NAFTA). Recognizing that the public might see free trade as a special-interest issue if touted by an exclusive club of the country's 200 largest transnationals, the Roundtable created a front organization, USA*NAFTA, that enrolled some 2,300 U.S. corporations and associations as members. Although USA*NAFTA claimed to represent a broader constituency, every one of its state captains was a corporate member of the Business Roundtable. All but four Roundtable members enjoyed privileged access to the NAFTA negotiation process through representation on advisory committees to the U.S. trade representative. Using the full range of communication resources available, Roundtable members bombarded Americans with assurances through editorials, op-ed pieces, news releases, and radio and television commentaries that NAFTA would provide them with high-paying jobs, stop immigration from Mexico, and raise environmental standards.

Nine of the USA*NAFTA state captains (Allied Signal, AT&T, General Electric, General Motors, Phelps Dodge, United Technologies, IBM, ITT, and TRW) were among the U.S. corporations that, according to the Inter-Hemispheric Resource Center, had already shipped up to 180,000 jobs to Mexico during the twelve years prior to the passage of NAFTA. Some among the NAFTA captains were corporations that had been cited for violating worker rights in Mexico and for failing to comply with worker safety standards. Many were leading polluters in the United States and had exported to or produced in Mexico products that were banned in the United States. Washington's major growth industry consists of the for-profit public relations firms and business-sponsored policy institutes engaged in producing facts, opinion pieces, expert analyses, opinion polls, and direct-mail and telephone solicitation to create "citizen" advocacy and public-image-building campaigns on demand for corporate clients. William Greider calls it "democracy for hire.'' Burson Marsteller-the world's largest public-relations firm, with net 1992 billings of $204 million-worked for Exxon during the Exxon Valdez oil spill and for Union Carbide during the Bhopal disaster. The top fifty public relations firms billed over $1.7 billion in 1991.

In the United States, the 170,000 public-relations employees engaged manipulating news, public opinion, and public policy to serve the interests of paying clients now outnumber actual news reporters by about 40,000-and the gap is growing. These firms will organize citizen letter-writing campaigns, provide paid operatives posing as "housewives" to present corporate views in public meetings, and place favorable news items and op-ed pieces in the press. A 1990 study found that almost 40 percent of the news content in a typical U.S. newspaper originates from public-relations press releases, story memos, and suggestions. According to the Columbia Journalism Review, more than half of the Wall Street Journal's news stories are based solely on press releases. The distinction between advertising space and news space grows less distinct with each passing day.

While the Republicans have long been known as the party of money, the Democratic Party was historically the party of the people, with strong representation of working-class and minority interests. The Democrats once depended heavily on their strong grassroots political organization-on people more than money-to deliver the votes on election day. These structures in turn forced politicians to maintain some contact with the grassroots and ensured a degree of local accountability. Ties to the party were strong. With the growing role of television in American life and the decline in the U.S. Iabor movement, costly television-based media campaigns have become increasingly central in deciding election outcomes. As a consequence, the grassroots organization that was once the foundation of the Democratic Party structure has disintegrated, causing it to lose its populist moorings and leaving those who once constituted its political base feeling unrepresented.

With the breakdown of this structure, those who run for office under the Democratic Party banner have become increasingly dependent on developing their own fund-raising organizations. This has left them more vulnerable to the influence of monied interests and greatly strengthened the hand of big business in setting the policy agendas of both parties. William Greider maintains that the policy directions of the Democratic Party are now largely set by six Washington law firms that specialize in selling political influence to monied clients and in raising money for Democratic politicians. Working closely with Republicans as well, these firms are in the business of brokering power to whomever will pay their fees. This is the sorry state of American democracy.

The Republican Party has responded most handily to the new circumstances, expertly adapting sophisticated techniques of mass marketing to the task of winning elections. With these techniques, it has accomplished the improbable task of exploiting the alienation of powerless citizens to build a populist political base in support of an elitist agenda.

As men of commerce, Republicans naturally understood marketing better than Democrats, and they applied what they knew about selling products to politics with none of the awkward hesitation that inhibited old-style politicians. As a result, voters are now viewed as a passive assembly of "consumers," a mass audience of potential buyers. Research discovers through scientific sampling what it is these consumers know or think and, more important, what they feel, even when they do not know their own "feelings." A campaign strategy is then designed to connect the candidate with these consumer attitudes. Advertising images are created that will elicit positive responses and make the sale.

American democracy isn't for sale only to America's transnational corporations. The Mexican government spent upwards of $25 million and hired many of the leading Washington lobbyists to support its campaign for NAFTA. In the late 1980s, Japanese corporations were spending an estimated $100 million a year on political lobbying in the United States and another $300 million building a nationwide grassroots political network to influence public opinion. Together, the Japanese government and Japanese companies employed ninety-two Washington law, public-relations, and lobbying firms on their behalf. This compared with fifty-five for Canada, forty-two for Britain, and seven for the Netherlands. The purpose is to rewrite U.S. Iaws in favor of foreign corporations-and it often works.

Corporate libertarianism-an ideology whose claims and promises are as false and self-serving as the claims of cigarette companies that nicotine is non-addictive and cigarette smoke poses no health hazard-has become the dominant philosophy of our political culture and of our most powerful institutions. This is the accomplishment of a persistent campaign that uses the most sophisticated techniques yet developed by the masters of mass marketing and media manipulation. It is one element of a larger campaign to globalize their markets and to embed corporate libertarianism and consumerism in a homogenized global culture.

When Corporations Rule the World