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An excellent history on how corporations have risen to power, now threatening not only the well being of the environment and our communities, but democracy itself.
Gangs of America
The Rise of Corporate Power
 And the Disabling Of Democracy

By Ted Nace

Corporations are the dominant force in modern life, surpassing even church and state. The largest are richer than entire nations, and courts have given these entities more rights than people. To many Americans, corporate power seems out of control. According to a Business Week/Harris poll released in September 2000, 82 percent of those surveyed agreed that “business has too much power over too many aspects of our lives.” And the recent revelations of corporate scandal and political influence have only added to such concerns.

Where did this powerful institution come from? How did it get so much power? In Gangs of America: The Rise of Corporate Power and the Disabling of Democracy, author Ted Nace probes the roots of corporate power, finding answers in surprising places.

A key revelation of the book is the wariness of the Founding Fathers toward corporations. That wariness was shaped by rampant abuses on the part of British corporations such as the Virginia Company, whose ill-treatment killed thousands of women and children on forced-labor tobacco plantations, and the East India Company, whose attempt to monopolize American commodities led to the merchant-led rebellion known as the Boston Tea Party.

Because of such attitudes, the word corporation does not appear once in the United States Constitution. At the Constitutional Convention, all proposals to include corporations in that document were voted down by delegates. Corporate attorneys persisted in seeking legal protections for their clients by means of sympathetic court rulings, but until the Civil War such attempts largely failed.

After the Civil War, the tide quickly turned, as lobbyists secured key changes in corporate law and as corporate attorneys won a series of decisions from an increasingly pro-corporate Supreme Court. Nace recounts the key figures who engineered the “corporate bill of rights,” in particular two brilliant strategists: railroad baron Tom Scott and Supreme Court Justice Stephen Field. The book explores in depth the bizarre intrigues that resulted in the infamous “corporations are persons” ruling of 1886, and how that ruling affected the subsequent development of Supreme Court doctrine.

Nace charts the growth of corporate power through the Gilded Age, including the bloody repression of organized labor and the rise of social Darwinist thinking among American elites. He recounts how that expansion came to a halt under the New Deal, as organized labor gained legal protections, social Darwinism fell into disrepute, and Franklin Roosevelt asserted a vision of American society that placed democratic limits on corporate power. To many observers, it seemed that the corporate Frankenstein had finally been tamed by “countervailing power.”

According to Nace, that optimistic view was dashed in the final decades of the twentieth century, as Big Business mounted a remarkable comeback. The corporate political resurgence began with a 1971 memorandum written by Lewis Powell, Jr., shortly before Powell was appointed to the Supreme Court by Richard Nixon. In the memorandum, Powell urged corporate America to apply its full organizational and strategic resources to politics, a course of action that proved highly successful.

Gangs of America describes the expansion of corporate legal empowerment onto the global stage through international agreements such as the North American Free Trade Agreement, which boosted the legal powers of corporations to the level of sovereign nations. The book pays special attention to recent events, including campaign finance reform, the financial scandals of 2002, and the growing movement to redefine the corporation and limit corporate power.

t times, those corporate efforts seemed almost transparently opportunistic–any national crisis provided the excuse for more PR.  An example is the corporate response to a speech by Franklin Roosevelt in early 1941 advocating increased American support for Britain against Nazi Germany.  To underlie his vision of what was at stake, Roosevelt outlined four freedoms: freedom of speech, freedom of religion, freedom from want, and freedom from fear.  The speech inspired Norman Rockwell to paint a famous series of illustrations, one for each of the freedoms, and Rockwell’s sentimental imagery eventually helped sell over $133 million in U.S. war bonds.

But corporate executives also saw an opportunity to make headway in their private “war within a war” to defeat New Deal interference in the economy and align their interest with the country’s aroused patriotic sentiments Moving quickly in response to Roosevelt’s speech, public relations agencies launched an ad campaign that promoted a “fifth freedom”–free enterprise.  Armour and Company led the charge with a series of editorials explaining how the “modern corporation works for the nation as a whole–not merely for its own stockholder.”  According to the ads, such a system “exalts the individual, recognizes that he is created in the image of God, and gives spiritual tone to the American system.”  Other ads extolled “the simple economics of our American way of life.”

Since World War II, this sort of attempt to link corporations with the imagery of American Patriotism has become virtually routine.  And it has been successful to such an extent that today its almost sounds absurd to say something like, “One of the basic reasons for the American Revolution was colonial opposition to corporate power.”  (Bolded emphasis added, Chapter Four, pages 38-39)

So what was the lesson of the crime wave of 2002?  First, it should be clear what the lesson wasn’t.  Personal corruption, conflicts of interest at accounting firms, the weakening of investor lawsuit remedies, the accounting standards applying to stock options, the definition of Generally Accepted Accounting Principles, or whether the Financial Standards Accounting Board should be independent or federally controlled–all these were merely symptoms.  The deeper problem was overwhelming corporate influence in democratic government, which had become so pervasive that the lines separating corporate power and government power had become blurred.

Consider the decision to go to war against Iraq.  In it public statements justifying the attack, the Bush Administration cited the heightened national security concerns since September 11, 2001.  Yet ideas such as “regime change” and “preemptive war” had actually been developed by corporate-supported policy development groups even before the 2000 election.  The founders of one such think tank, the Project for a New American Century (PNAC), included a number of men who later became top members of the Bush Administration:  Donald Rumsfeld, Dick Cheney, Paul Wolfowitz.  Indeed, former executives , consultants, and shareholders of top defense contractors fairly peppered the policymaking ranks.  Eight came from Northrop Grumman, the third largest defense contractor.  One investigator of the relationship between the Bush administration and the defense industry described it as a “seamless web.”  Yet aside from a few allegations of conflict of interest, that web did not appear to depend on any actual illegalities.  In that regard, the defense industry followed a pattern that can be seen in any number of other areas where corporate influence has an overriding effect on public policy:  energy, finance, pharmaceuticals, telecommunications, media, agriculture, tobacco, high tech, criminal justice, and many more.  (Chapter 15, pages 185-186)

Ted Nace worked as a researcher on electric utility policy for the Environmental Defense Fund and as staff director of the Dakota Resource Council, a grassroots group seeking to protect farms and ranches from strip mines and other energy projects. In 1985, he founded Peachpit Press, the world’s leading publisher of books on computer graphics and desktop publishing. After selling Peachpit Press to British publishing conglomerate Pearson, Nace felt driven to understand the historical roots of corporate political power. Gangs of America, the result of that quest, features Nace’s engaging, personal, and complex voice that of a writer, a businessman, and an activist.