Understanding What a Corporation Actually Is Can Help Restore Democracy

“Some corporations do bad things.” “Corporations bribe politicians.” “Good corporations don’t harm people.” “Corporations are greedy.”

Almost everything we read and hear about corporations destructively misstates what corporations are and why we have them. Understanding what a corporation really is has enormous implications for our democracy.

Corporations Don’t “Do” Things

Here’s the thing: A corporation is a contract. It is a legal agreement enabled by our (“We the People”) government. That’s it.

Corporations are not sentient entities. Contracts don’t “think” or “want” or “need” or say” or “care” or “do” anything. Neither does a will, nor a lease, nor a confidentiality agreement. Corporations also can’t be “greedy” or “criminal” or “good” or “altruistic.” But people can.

When we say these things about corporations we are reinforcing misunderstanding of what a corporation is. This helps the executives running corporations get away with all kind of bad acts.

We the People Want And Need Things

People have forgotten that the United States is (supposedly) a democracy of, by and FOR We the People. We elect representatives to make laws and appropriate resources to protect us and make our lives better.

So what does this have to do with corporations? We the People want to have factories to build cars or toasters. We the People could do this – build the factory, hire the managers, organize supply chains, provide insurance. etc. – ourselves but instead we have come up with corporations as a way to “contract it out” to private investors to accomplish these jobs for us.

So We Created A Legal Construct

An individual can’t build and supply a factory or set up an insurance company, etc. So our government passed laws enabling a legal structure allowing people to pool funds and resources in order to accomplish tasks that would be difficult or impossible for an individual. (Historical example: one person could have a ship built, hire a crew, etc and send it off to trade for … maybe tea. But it quickly became obvious that groups of investors pooling their funds could get more done, and also spread out the risk. So back then government (the king) granted them a corporate charter to do that.)

In the modern corporate structure the investors pool their money. They set up a Board that hires executives to manage the process for us. The investors are rewarded in various ways for doing this for us. Those rewards include limited liability, a share of the profits, tax breaks, etc.

Suppose We the People want toasters. And for whatever reasons we decide not to just invest our money and resources to make them. But privately building and equipping a factory requires enormous funds, so we pass laws setting up a structure called a corporation to enable private investors to do this for us, for a reward. We do this to benefit us – We the People.

For Our Benefit

Here is the key point. Obviously the reason we pass these laws is to benefit us. That’s supposed to be why our democratic government does things – to benefit us: We the People; to serve our interests. Why ELSE would a democratic government of We the People have written legislation creating these agreements that create entities called corporations?

The implications of this are enormous, once we understand this basic thing: what a corporation really is and, especially, why we passed laws enabling them. We did this to benefit us – We the People.

The Implications Are Enormous

Many things fall out from common misunderstanding of what a corporation really is. Many people think corporations always existed, that they are something separate from government and owned by shareholders, and that government should not be able to tell corporations what to do. And they think of corporations as sentient entities – like they’re people – that do thing or thing things or behave certain ways.

1) Shareholders do not “own” a corporation, they have a claim on its assets. Not even a primary claim. Laws passed by We the people – not shareholders – determine what corporate executives may or may not use the corporation for. (Hint: If someone insists that shareholders “own” a corporation, ask them why shareholders don’t have to pay off a corporation’s debts or pay corporate fines.)

2) Corporations don’t “do” things, executives do. Executives have a duty to manage the corporation according the the legislated purpose and rules of corporations – which at its core are for the benefit of We the People.

3) Corporate executives do not have a legal duty to maximize profits. They have a legal duty to follow the laws and operate the corporation to benefit “stakeholders” that include the customers, the employees, the government and surrounding communities as well as the investors.

4) Corporate funds are for the purpose of operating the corporation and nothing else.

Use Of Corporate Funds

Milton Friedman famously noted that donations of corporate funds to charities, etc, is theft from the corporation. Corporate funds are supposed to be used to manage the corporations and executives are supposed to make sure that’s how they are used. When corporate executives decide to use corporate funds to benefit a cause THEY approve of that is misappropriation of corporate funds. If funds are “leaking” out of the corporation the corporation is less able to accomplish the mission that We the People approved the corporate charter to accomplish. This applies to uniforms for Little League teams, donations to local art museums and donations to political candidates or “think tanks.”

Money Is Power, Aggregated Money Is Aggregated Power

Money is power. Aggregating private funds means aggregation of power. We have allowed corporate aggregation of funds and resources to accomplish specific purposes. But history has taught us that allowing concentration of wealth enables concentration of power that threatens democracy. So these entities we created to aggregate funds and resources need to be carefully monitored and controlled.

What happens without that careful control? What happens if those aggregated funds are able to be used for anything other than running the corporation? Look around you.

Lobbying

We the People created corporate entities to accomplish tasks. They are managed by a Board that hires executives to manage the corporation. The idea that these executives could use corporate funds and resources to influence the government that created, regulates and monitors them is absurd. It clearly violates the entire purpose government had in creating the corporate entity: to serve us. Obviously the self-interest of executives using corporate resources to influence government would overcome any larger interest. This influence could only be for their own benefit.

The way to advise government about a particular industry should be to create a board of advisors including academics and other experts on the field and allow no individual corporate interests to be involved.

Political Contributions

Corporations can not “donate.” They are not sentient and don’t “do” anything. Executives do. They are hired by the Board to manage the corporation. Corporate funds are for corporate purposes. Executives using corporate funds for anything other than corporate purposes is a violation of their duty.

An argument is often made that political donations are for the benefit of the corporation. Executives give corporate money to politicians and in turn the politicians give them tax breaks, advantages over competitors, contracts, etc.

This is obviously the definition of bribery. It is necessarily a quid pro quo. It is not “speech” as the Republicans on the Supreme Court said, it is corruption. The Republicans on the Supreme Court understood WHO that corporate money was flowing to – and a lot of it was spent getting those individuals onto that court so they would rule that way.

Again, We the People created corporations to benefit us. Use of corporate funds to influence politicians or the public obviously works against that.

Destructive Language

The language we use to discuss corporations is important because language affects how we think. If we talk about corporations “doing” things, this affects how we think. It affects what we think corporations are. It causes the mind to envision a corporation as a sentient entity with agency rather than simply contracts that We the People legislated into existence. This misdirects our thinking from the real actors. It misdirects us from insisting on government enforcement of rules that describe the legal duties of the executives who manage a corporation.

In a democracy our government’s job is to protect us and make our lives better. This includes protecting us from the harms, scams, pollution, fraud, price-fixing, wage-steaking and other abuses enabled by aggregated wealth and power. Instead, because of corruption – corporate money “leaking” into our political system – the government has been captured and turned on us.

We are the boss of them (democracy) has been turned into … well, look around you.

Corporations are a great idea for times We the People decide to “contract out” certain tasks instead of doing them ourselves. But it requires us to carefully monitor and regulate. Otherwise we lose everything.

That ship obviously sailed.

See also:

The Problem of Corporate Purpose, Lynn A. Stout

The Contest on Corporate Purpose: Why Lynn Stout was Right and Milton Friedman was Wrong, Thomas Clarke

A Brief History of the Corporate Form and Why it Matters, Tyler Halloran

“Big Government” is Good

When you hear “conservatives” talk about how bad “government” is, remember that in a democracy “the government” is us. When they run down “government” substitute the words “democracy is decision-making by We the People.”

Big “decision-making by We the People” is obviously good.

Decision-making by We the People is better than by business.

When Decision-making by We the People intervenes in the economy it is bad for profits at the expense of the people and the planet.

Government (decision-making by We the People) is good because its job is protecting us and making our lives better. Government spending is by definition spending that we want because it makes our lives better.

The Radical Left

How far have fallen down the rabbit-hole of collapse? How many of the things we take for granted as ‘givens” in our society have gone away?

Imagine if the idea of libraries or public parks or, God forbid, Social Security or the Post Office were proposed today. Imagine if ANY of the “public goods” we take for granted were proposed today. Even police departments or courts.

Picture the national discourse around such “radical left” proposals.

It would be unimaginable today that our country would allow such radical leftist ideas to come to be. The government paying to have places where people can go borrow books … for FREE? Parks that don’t charge a fee?

We all know this is how it would be.

We CAN Have Nice Things

People worry a lot about “inflation.” This is when the price of goods and services money buys increases, either because the quantity of available goods and services declines or the money circulating in the economy increases faster than the goods and services increase.

People used to think by limiting the money in circulation, prices would stay where they are. So they would “base” the money on something scarce. They thought inflation came from a “debased currency” – meaning the “base” wasn’t scarce enough anymore.

The gold standard was an example of “basing” the economy on scarcity. Governments had to round up (or borrow) gold and trade the gold for the things a government wants to do (forge weaponry, hire mercenaries…) To keep track of this kings and such had to use budgeting methods that made sure they didn’t run “deficits” that drained them of their gold until they couldn’t pay off their “debts.”
Continue reading “We CAN Have Nice Things”

Lies vs Democracy

Well-funded lies are very effective.

The tobacco companies proved that with well-funded propaganda lies (a.k.a. “marketing”) you can get people to kill themselves while giving you their money.

The firearms industry proved that with well-funded propaganda lies you can convince people to allow kindergarteners to be killed while giving you their money.

Trump proved that well-funded propaganda lies (and media participation) he could convince people to kill democracy while giving him their money.

Now the oil&coal companies are proving that well-funded propaganda lies can get people to kill the planet while giving them their money.

Democracy doesn’t have an advertising agency to counter this stuff. This is why we need a Department of Democracy.

Spending Is The Purpose of Government in a Democracy

How often do we hear that “government spending is bad,” or “the government spends too much money”?

The purpose of government in a democracy is to do things for We the People to make our lives better. We the People make the decisions, and allocate resources toward making our lives better. Government spending is the point of democracy. Government in a democracy spends to make our lives better.

Here’s an experiment. When you hear the word “government” substitute the words “decision-making by We the People.”

When you hear, “Government regulation gets in the way of business” try this, “We the People are supposed to decide to regulate business activities to protect US”.

When you hear “the private sector should decide how to spend money,” try this, “In a democracy We the People decide to have roads and rail and solar power, etc.” When you hear that “taxes are theft,” try this, “We the People decide to tax the rich and their corporations so they don’t get so big that we can’t control them.”

This is not how it is today in this country. For decades we’ve been told that government – decision-making by We the People – is bad, that government spending – We the People doing things to make our lives better – is bad, that regulating – We the People protecting each other – is bad. And this has made our democracy weak.

So now many people believe anything government (democracy) does is bad and government spending is bad. That is anti-democracy, and we are living with the consequences of decades of that anti-democracy propaganda.

A Democracy Would Not Tolerate Homelessness

Richard (RJ) Eskow, writing at Absolute Zero, in A Society That Makes People Homeless Has Lost Its Humanity,

Shelter is a basic survival need, along with food, clothing and health care. But it’s even more than that. It’s also a psychic and spiritual need. As the French philosopher Gaston Bachelard wrote: “A home shelters daydreaming, a home protects the dreamer, a home allows us to dream in peace.”

We cannot experience our full humanity without a home, which is one of many reasons why housing is both a basic human need and a basic human right. It’s another reason why the US housing crisis is unforgivable.

In a decent society, nobody would have to spend a single night without a home. And people don’t ‘become’ homeless. We make them homeless, through the deliberate choices we make as a society. With half a million people already unhoused and millions more at risk, it’s time to ask: What kind of people are we? Who are we, that we allow this to happen?

Do “we” do this, or is it because We the People are not making the choices?

We Need a Department of Democracy

This post expands on 2019’s proposal for a government agency, a “Department of Democracy,” to protect and promote democracy.

Democracy doesn’t have an advertising agency, and our discourse is swamped by well-funded anti-democracy efforts — done by self-interested parties like the tobacco and fossil-fuel companies. For obvious reasons such interests want to get government and its rules that protect the public from harms (a.k.a. regulations) “off their backs.”

Our elections have become a game in which secretly-funded disinformation, spread by secretly-funded propaganda outlets, in rigged districts, with voter suppression and apathy deciding who rules. Those minority-selected elected officials perpetuate these barriers in a “doom loop” that is ending democracy.

If what’s left of self-rule survives we need a government agency to take on the role of protecting and promoting democracy. Perhaps we could call it a Department of Democracy.

Continue reading “We Need a Department of Democracy”

Stop The Voter Fraud Charade

Republicans know that no one bussed illegal voters anywhere, no one filled out other people’s ballots, no one “stuffed” ballot boxes, no ballots were printed in China on paper made from “bamboo.”

Republicans know, and everyone knows, that none of this happened. Republicans know that what happened is more people were allowed to vote and when that happens Republicans always lose.

Everyone knows what this is about.

Republicans are saying that -ANY- vote by a minority or Democrat shouldn’t count, they should be allowed to vote, shouldn’t be citizens. That is what they are very clearly saying now. That is what all their new state laws are about. It’s about only letting Republicans vote so they will win.

Republicans are a minority and they have rigged the rules for years now. Republicans win state legislative and Congressional seats through gerrymandering. Republicans are not elected president by majorities. Republicans on the Supreme Court are put there by Republicans presidents who did not win majorities, and confirmed by Republican senators who represent a minority of voters.

A filibuster allows senators who represent only 24% of the public to block everything.

Everyone knows this, especially Republicans.

So stop the charade, stop talking about “fraud,” stop pretending Republicans are doing anything other than rigging things, stop trying to refute their cover-story lies and stop letting them get away with this.

That’s all.

The Democrats’ Dastardly Plan

The Democrats have a sinister plan. They are going to trick people into voting for them by doing things to make their lives better.

They plan to use the people’s government to bribe the voters. They are strategically scheming to allocate government resources to deliver things like safety from the Covid-19 virus, health care, education, even modernized infrastructure. They plan to address problem like the climate crisis, racial injustice, even inequality, They will pass laws preventing companies from polluting, committing fraud and other things that companies have been allowed to do for so long! This hijacking of the government by Democrats for their own purposes could mean voters reward them by allowing them to do even more for them.

However the good Republicans also have a plan. To prevent the seizure of the government away from the corporations, they are passing laws to stop the voters from being able to reward the Democrats for their bribery schemes. They are gallantly making sure that it is very, very difficult for the bribed voters to get to polling places – of course prohibiting the ease of voting by mail – and if they get to voting places they will face all kinds of rules designed to keep the from the voting booths themselves.

In case voters actually do make it to the voting booths to cast votes, the districts are carefully drawn in ways that Democrat votes are concentrated into a very few districts, while the majority of districts remain under Republican control, no matter how the statewide vote turns out.

So be aware of this sinister plan by Democrats to bribe voters by making their lives better. Do not let them get away with it.