Friday, February 24, 2012

Towards—Or Away From—American Theocracy?

Here’s an article I recommend on the dangers of theocracy—not in Iran—IN AMERICA: Timothy Egan’s blog in the New York Times online edition (not the print edition) titled “Theocracy and Its Discontents” (2/23-24/2012). 

The candidacy of Rick Santorum stands for Theocracy in America. Pro-theocracy is perhaps the biggest danger democracy faces today throughout the world. Pro-theocracy is responsible for the “personhood” legislation being considered by some states. Make the fetus a person, and reduce the pregnant woman to servitude. This is not an exaggeration. I explained this in Chapter 5 of my book, How We Are Our Enemy—And How to Stop. Personhood for the fetus is a fundamentalist proposition. The current debate over the funding of contraception is the result of a related fundamentalist intrusion into the political and social realm. These propositions would reduce all women to servitude under fundamentalist ideology.

Put simply: Democracy and theocracy are incompatible.

As for the religion of the Founders, they had their heads on straight. Not only does the U.S. Constitution contain the First Amendment, it also contains Article 6, clause 3, that states, “[N]o religious test shall ever be required as a qualification to any office or public trust under the United States.” 

As I explained in Chapter 4 of How We Are Our Enemy—And How to Stop, separation of religion and government is essential to democracy. The current crew of Republican candidates do not believe in this separation. Accordingly, they are a threat to democracy. A terribly lot is at stake in the coming election.

Saturday, February 18, 2012

II. Corporations: Their Early Beginnings

[This is the second of a series. Why this series on corporations?]

Beyond the individual, the family, the church and the state, there have always existed associations of people who act as a group. In early times, such associations may have been hunting parties, harvesting groups, gangs, villages, tribes and the like. Somewhere during the development of civilization, some of these associations evolved into today’s corporations.

When did this evolution begin? (Hint: It was long before the nineteenth century.)

To even attempt to answer that question, we first need to have an idea of what a corporation is so that we know what to look for.

In essence, a corporation is an entity that (1) holds and expends resources of monetary value (capital), (2) has a legal existence independent of any natural person or group of natural people living at any particular time, and (3) has a management that is different from the providers or owners of its capital.

A private business corporation is only one kind of corporation. Corporations may be towns, educational institutions, religious institutions, religious communities, and charitable organizations, as well as profit-making businesses. A key feature of a corporation is its independent existence apart from living people. (One historian traces the origin of the corporation to the family, which has a continued existence beyond the family members living at a particular time—Ancient Law, pp. 178 ff; see “References” below. However, a family is not a corporation; the latter has additional characteristics.)

A consequence of this independence and structure is that people or entities that provide capital to the corporation are protected from any of the corporation’s liabilities that may exceed the capital provided to it. That is, the providers of the capital (investors or owners) have “limited liability.” In practical terms, that means that a corporation may go bankrupt without bankrupting the investors or owners.

Thus, a corporation is not like a family or any ordinary organization of people. If all of the participants of an ordinary organization die, the organization dies. A corporation would continue to have a legal existence (though it may die for other reasons). Historically, before there was a corporate option to form a business, businesses were run by individuals and teams of individuals (partnerships). If all of these individuals died, the business died. In addition, if the business was sued because its products were harmful (assuming such suits were possible in those days), each of these individuals would be liable to pay the damages, even if it took everything these individuals owned. But if these individuals could have instead formed a corporation, the damages owed would not exceed the amount of capital the individuals had contributed to the corporation. The rest of their assets could not be used to pay the damages. (There is an exception if the corporation is too completely tied to one or two people.)

An advantage of the corporate structure, therefore, is that a corporation can obtain and use capital and risk failure without risking the economic survival of those who provided the capital.

When and where in history did such an entity begin to exist?

Unlike specific historical events, it cannot be said that corporations began on a specific date. If there was a “first” corporation, we may never know when it happened or what it was, although there are some informed guesses. Suffice it to say, as two writers noted:

In the early Middle Ages, jurists, elaborating on Roman and canon law, slowly began to recognize the existence of “corporate persons”: loose associations of people who wished to be treated as collective entities. These “corporate persons” included towns, universities, and religious communities, as well as guilds of merchants and tradesman. Such associations honeycombed medieval society. . . .

(Quoted from The Company, p. 12; cited in full in “References” below.)

Prior to the Middle Ages, the concept of corporate entities can be found in Roman law, dating back to the late third century B.C. (The Company, p. 4.)

So the concept of the corporation developed very gradually beginning even prior to the Middle Ages. Corporations set up for private commercial purposes developed later. A commercial corporation, Aberdeen Harbour Board (Scotland), was set up in 1136. (The Company, p. 12.) Some believe the first European private business corporation still in existence was Stora Kopparberg of Sweden, which was issued a royal charter in 1347 and is the predecessor of today’s Finish company, Stora Enso Oyj. (The Company, p. 12; supplemented by information on Wikipedia.) 

The importance of this historical background is to know that corporations and corporate personhood did not just come into existence in modern times. It’s an ancient idea that continued to grow and develop into the modern corporation. The next few posts in this series will briefly outline this development. That will help us understand the corporation today.

And tomorrow? We would be short-sighted to believe that this process of historical change has ended. 



Joseph Stancliffe Davis, Essays in the Earlier History of American Corporations, Vol. 1, (New York, 1965; originally published 1917)

Melvin A. Eisenberg, The Structure of the Corporation (Boston and Toronto, 1976)

Robert W. Hamilton, The Law of Corporations, 4th ed. (St. Paul, MN, 1996)

Henry Sumner Maine, Ancient Law, 10th ed. (Gloucester, MA, 1970; originally published 1861)

John Micklethwait and Adrian Wooldridge, The Company: A Short History of a Revolutionary Idea (New York, 2003) (used with caution; it contains errors)

Monday, February 13, 2012

The Republican Policy “Gerrymandering” of the Right to Vote

Republicans today, as they have historically, are advancing policies to limit the number of people who can vote. Similar to geographical gerrymandering, where electoral district lines are drawn to reduce the ability of minority voters to elect officials whom they favor, voting policy “gerrymandering” is not politically neutral but designed to disproportionately reduce the number of voters who vote for Democrats. It is happening now and may change the outcome of the 2012 national elections, not only for President but also for Congress.

Please read this February 12th New York Times article by Alexander Keyssar, “The Strange Career of Voter Suppression.” His article concludes, “Even a cursory survey of world events over the last 20 — or 100 — years makes plain that democracies are fragile, that democratic institutions can be undermined from within. Ours are no exception.”

 As I pointed out in my book, How We Are Our Enemy—And How to Stop:

 “The failure of the electoral process in Florida in 2000 was not a one-time failure but a portent of the future. The flaws were structural. Our failure to correct the flaws is a continuing national failure. This failure due to our inaction is partly how we are the enemy of the values we profess.”—p18.

Friday, February 3, 2012

Corporations (Part I of series): Introduction—Why We Need to Know About Them

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.