Corporations are an integral part of the fabric of modern
society. They affect nearly everything we buy as well as our jobs,
entertainment, news sources, and politics. Yet, little is known about them. What
is a corporation? Can they distort financing of political campaigns? I am writing
this series on corporations so that we may learn about them.
The need for this series is indicated by my previous
posting, “The Misguided People’s Rights Amendment.” The promoters of this
amendment are seeking to amend the U.S. Constitution to make it inapplicable to
corporations. Though these promoters are liberal democrats with good intentions,
they are going down the wrong path. They think, incorrectly, that the
disproportionate influence of wealth in the financing of political candidates
can be corrected by eliminating any legal rights corporations may have under
the Constitution. They also think, incorrectly, that the amendment will reverse
the U.S. Supreme Court decision in the Citizens
United case. (See previous post.) These promoters not only misunderstand
what Citizens United actually held
(which pertains to much more than corporations), they also misunderstand what
corporations are. Their promotion of this amendment, thus, arises from and depends
on public ignorance.
But don’t feel bad if you are among the ignorant. Corporations
are such varied and complex entities that they are not easy to comprehend. Understanding
Citizens United requires very careful
reading of a very long legal opinion. You can have a Ph.D. and know nothing
about corporations. My first introduction to corporations was in law school,
and many lawyers never took a course in the subject. I will be learning too as
I continue with this series.
Corporations are entities created by law that exist
independently of any person or group of people. Corporations cannot exist
without some sort of legal authorization from a governmental body. They have
historically been regarded as artificial persons. Unlike real people, they are
potentially immortal, though like real people, they can be born, die or be
killed. Whether a corporation is created and how long it lives, nonetheless,
depends on real natural living people.
Most of us think of corporations as huge businesses, like
General Motors or Apple or Bank of America. But there are many different kinds
of corporations. They include tiny businesses, educational and religious
institutions, and non-profit organizations. For example, Wikipedia is operated
by Wikimedia
Foundation, Inc., a non-profit charitable corporation. Thus, it is
incorrect to equate corporations with large capitalistic profit-making enterprises.
Corporations serve many purposes, some good, some not so good, depending on
your point of view. If we think of corporations as “bad,” then we do not
understand what they are. Nonetheless, there is good reason to be concerned
about the influence and power of mammoth multinational corporations. Are they a
threat to democracy?
This series of postings on corporations will give us some basic
information. The series will span many months. We will use this information
later to discuss the role that corporations should have, or not have, in a
democratic society. We will learn that corporations, for better or worse, have
played a major role in the development of modern civilization. The world
economy depends on them. This blog depends on them. So if we determine that
there is a problem with them, we need to be careful in addressing the problem.
I am glad you are taking on this topic and think you are on the right track.
ReplyDeleteI would be interested if you can do some analysis of the role of corporations in various countries and societies. Your discussion seems to apply only to the United States. Is that the case? What role do corporations play in societies that do not come out of the Napoleonic Code rather than common law traditions -- countries like France and most of Europe? I also believe there are institutions such as Guilds that function in some ways like corporations in some countries. I would particularly like to know if there are Corporations in China today -- and how they are structured and are similar to and different from this country. One of the goals of the current Five Year Plan is to list more and more enterprises on the stock exchange. The majority of enterprises -- and the essential parts of the economy -- are under public ownership -- which may mean the central government, but more likely provinces, cities and other institutions. The Army is owner of many of the main enterprises in China. I believe, but am not sure, that is the case in other countries as well -- I think that the Army owns many enterprises in Egypt which is one reason why the population saw the military as their friend, not their enemy -- at least in the initial stage.
There are other forms of associations -- such as cooperatives that have many of the characteristics of corporations. One of the largest industries in Spain is a Cooperative and cooperatives played (and still play) a major role in Canada and to a lesser extent in the U.S. I grew up in Western Kansas where Farmers Cooperatives were the most important enterprises and played a major role in the economy.And there is a small, but significant, number of corporations that are ESOP's -- companies where some or all of the stock is owned by employees.
I think you also need to point out the difference between S Corporations and C Corporations -- as well as LLC's. As a small business operator for twenty years, we operated as an S corporation and we now have an LLC for another small business. It is essential to have some kind of institution, such as an LLC or corporation to limit personal liability. Otherwise, businesses cannot really function.
I think the important point is how we have enterprises where work is controlled by communities -- and this can take many forms -- even corporations.
So, I think you are right in pointing out that simply abolishing corporations makes little sense. I look forward to your analysis.