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.
At
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.