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Mike Hoy on Corporations

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  • Dan Clore
    News & Views for Anarchists & Activists: http://groups.yahoo.com/group/smygo Why Corporations Are Not People, And The Unsavory Consequences of Pretending That
    Message 1 of 1 , Jan 22, 2006
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      News & Views for Anarchists & Activists:
      http://groups.yahoo.com/group/smygo

      Why Corporations Are Not People,
      And The Unsavory Consequences
      of Pretending That They Are
      by Mike Hoy

      A Challenge to "Libertarians"

      Libertarianism is a philosophy based on individual rights.
      It recognizes that the individual is the fundamental unit of
      society, and that society is better off if individual people
      can act in their own benefit. Laissez faire economics
      (literally "hands off" -- meaning the government) is derived
      from individual rights. Free individuals making whatever
      voluntary exchanges they want with each other will result in
      a free and prosperous society. Individual freedom is the
      basis of the United States of America. It is what our
      "Founding Fathers" risked their lives, their fortunes, and
      their sacred honor, to create.

      Libertarianism is a philosophy based on individual rights.

      But what happens if *groups* of people, i.e., collectivist
      entities, form together for the purpose of getting the
      government to grant unearned special privileges to them? How
      will this affect the marketplace? Well, this has actually
      happened in America, and the result is that these
      collectivist entities with their government-bestowed
      privileges have taken over our economy, in some particular
      cases to the benefit of some particular individuals, but to
      the overall detriment to individuals in general. These
      collectivist entities are known as "corporations," and it is
      initially puzzling as to why they are lionized by
      "Libertarians," who proclaim themselves the defenders of
      *individual* rights.

      By deliberately obscuring the boundaries between individuals
      and corporations, "Libertarians" have caused themselves to
      treat corporations as if they *were* individuals, thereby
      assisting in the corporate takeover of America, and the
      McDonaldization of practically everything and practically
      everyplace, all over the globe -- "Globalization."

      Plainly put, corporations are anti-American. They are
      anti-individual. The word "corporation" does not appear in
      our Constitution.

      Plainly put, corporations are anti-American. They are
      anti-individual. The word "corporation" does not appear in
      our Constitution. Large institutions of all kinds (both
      government and business) were suspect in colonial and early
      America. In fact, the Boston Tea Party was not a protest
      against taxes, but direct action taken against the East
      India Company, which represented the commercial interests of
      the British elite.

      It was not until 1886, after a series of cases brought by
      lawyers representing the expanding railroad interests, that
      the Supreme Court ruled that corporations were "persons" and
      entitled to the same rights (actually more) granted to
      *individual people* under the Bill of Rights. This sinister
      ruling, discussed by Thom Hartmann in his 2002 book Unequal
      Protection: The Rise of Corporate Dominance and The Theft of
      Human Rights (Rodale Press) has led to the corporate
      dominance of the individual -- a thoroughly un-American
      state of affairs. As Hartmann points out, the largest
      transnational corporations fill a role today that has
      historically been filled by kings. They control most of the
      world's wealth and exert power over the lives of most of the
      world's citizens. And they pretty much own the U.S.
      government: the revolving door between corporate boardrooms
      and the top echelons of all recent administrations is no secret.

      Why are "Libertarians," self-styled promoters of
      *individual* rights and interests, such mindless boosters of
      corporations?

      But why, then, are "Libertarians," self-styled promoters of
      *individual* rights and interests, such mindless boosters of
      corporations? Why in the world do "Libertarians" vehemently
      insist that corporations are *market* entities, when even a
      cursory examination of the matter reveals that they are
      actually *government* entities?

      I'll say it again: corporations are not *market* entities --
      they are *government* entities. This was proven by the
      libertarian/objectivist Robert Hessen in his 1979 book,
      ironically titled In Defense of The Corporation (Hoover
      Institution). This is a very funny book, because he states
      in his prologue: "In this book, the belief that corporations
      require government permission to exist and that they are the
      recipients of special privileges will be challenged. I will
      present an alternative known as the 'inherence theory':
      i.e., corporations are created and sustained entirely by
      exercise of individual rights, specifically freedom of
      association and freedom of contract."

      Now, the essential distinguishing characteristic of the
      corporate form of enterprise is limited liability for torts.
      If Hessen (or anybody else) is going to show that
      corporations are contractual entities, he is going to have
      to demonstrate that limited liability for torts can be fully
      accounted for as resulting from voluntary agreements between
      consenting individuals. Here is where Hessen then proves the
      exact opposite of what he said he was going to prove. He
      openly admits that limited liability for torts *cannot* be a
      part of the market order! He says:

      "Thus far, the inherence theory -- the idea that corporate
      features are created by contract -- has been applied to
      entity status, perpetual duration, and limited liability for
      debts. But how can limited liability for torts be explained
      by a contractual theory, since tort victims do not consent
      to limit their claims to the assets of the corporation?
      Surely, limited liability for torts would seem to be a
      state-created privilege. . . .

      "How, if at all, can limited liability for torts be
      integrated into a *contractual* theory of corporations? The
      answer is that it can't . . . either limited liability for
      torts is a state-created privilege or it is contractual
      (which it obviously is not)."

      So there, by the time the guy is only on page 19, he has
      already admitted that he cannot do what he said he was going
      to do: show that corporations are the result of voluntary
      agreements between individuals. He then adds: "Regardless of
      one's view about limited liability for torts, the whole
      issue is irrelevant to giant corporations, which either
      carry substantial liability insurance or possess sizable net
      assets from which claims can be paid." (You know, like Enron.)

      So after admitting in the first 19 pages In Defense of The
      Corporation that the essential distinguishing characteristic
      of corporations (limited liability for torts) cannot result
      from market forces, he then red herrings away for another
      120 pages or so, mostly bashing Ralph Nader (big deal). This
      book was praised by such libertarian/objectivist luminaries
      as F.A. Hayek, David Kelley and D.T. Armentano. It is not
      some obscure lunatic fringe screed that nobody ever heard
      of. Those are some libertarian heavy hitters there.

      Managers of corporations have more in common, as a class,
      with government bureaucrats than they do with individual
      entrepreneurs.

      I wonder how many rank-and-file "Libertarians" are aware of
      this. Reading "Libertarian" propaganda indicates either that
      they are unaware of the statist *nature* of corporations, or
      are deliberately avoiding the issue. They *always* write as
      if corporations are the *same* as individuals. In fact,
      because of the separation of "ownership" and control,
      managers of corporations have more in common, as a class,
      with government bureaucrats than they do with individuals.

      The corporate *form* of enterprise encourages short-term
      thinking. Instead of thinking how to preserve and maximize
      the benefits of the assets under their control for, say, the
      next thirty years, the corporate manager is concerned with
      beefing up the bookkeeping profits on a quarterly basis --
      just look at how many giant corporations in the last few
      years have had to "readjust" past "earnings," and take
      "charges" against current "earnings" for manipulative
      accounting.

      In their book Natural Resources: Bureaucratic Myths and
      Environmental Management (Pacific Institute, 1983),
      libertarians Richard L. Stroup and John Baden state: "The
      appropriate focus in analyzing public sector behavior is the
      individual decision maker. It is the individual bureaucrat,
      the professional public servant, who makes most of the
      decisions about governmental operations." . . . "Salary,
      position in the bureaucracy, amount of discretionary budget
      control, workplace amenities, and office perquisites all
      contribute to the bureaucrat's well-being. If an agency is
      expanding its budget and authority, these components of the
      bureaucrat's welfare improve also. On the other hand, a
      decrease in the agency's size and budget are generally
      accompanied by fewer benefits to the bureaucrat. Thus,
      bureaucrats face strong incentives to increase their
      agencies' authority and areas of responsibility."

      *Exactly. Very well put.* That is why governments are so
      inefficient, and why the bigger the government, the more
      inefficient it is. *Excellent point, libertarians.*

      But these highly educated libertarians fail to point out
      that exactly the same thing is true of corporate managers --
      and that if "the appropriate focus in analyzing public
      sector behavior is the individual decision maker," then the
      appropriate focus in analyzing corporate behavior is the
      individual corporate bureaucrat -- and he, like his
      government counterpart, faces strong incentives to thinking
      the short run.

      Stroup and Baden say, "Unconstrained by the need to generate
      profits, bureaucrats may ignore or exaggerate the economic
      efficiency of the projects they administer." True, but so is
      this: *Constrained by the need to generate the appearance of
      profits every quarter, corporate bureaucrats may ignore or
      exaggerate the economic efficiency of the projects they
      administer*. Precisely because they are entities which
      literally cannot exist without a special privilege granted
      by the government, virtually any criticism "Libertarians"
      make of government, could also be made of corporations --
      but "Libertarians" do not do this. Why?

      "Libertarians" stick the "Market" label on corporations and
      then respond to the label as if it were the thing.

      Well, "Libertarians" are obsessed with *labels*. The thing
      that distinguishes "Libertarian" analysis is their
      State/Market dichotomy. All the major "Libertarian"
      propaganda outlets are *non-profit* organizations. That is,
      they have gone to the government and asked to be exempt from
      the forces of the marketplace. You would think that a bunch
      of people who according to themselves understand economics
      and the marketplace better than anyone else on Earth would
      be able to manage to, say, publish a newsletter without
      losing money, but the "Libertarians" won't even have a go at it.

      Since "Libertarians" avoid the marketplace like the plague,
      how, then, are they to be "for" the "Market" and "against"
      the "Government?" Answer: they sit on the sidelines and
      *root* for the "Market," like fans rooting for a major
      league baseball team. Since the actual marketplace (food
      co-ops, mom & pop groceries, auto repair shops, etc.) isn't
      very glamorous, (you hardly ever see it on TV)
      "Libertarians" stick the "Market" *label* on prominent
      non-market entities (corporations) and then respond to the
      label as if it were the thing.

      Thus, we see "Libertarians" rooting for corporations, and
      that is how they reconcile their State/Market dichotomy with
      reality. But, as Robert Hessen demonstrated in In Defense of
      The Corporation, corporations actually belong on the
      *government* side of that dichotomy. "Libertarian" followers
      have been taught numerous thought-stopping techniques by
      "Libertarian" leaders, so that anyone who attempts to
      discuss the non-market reality of corporations is slapped
      with a negative label ("anti-corporate," "anti-trade," etc.
      -- there are lots), and then any questions raised by that
      person are literally unthinkable to "Libertarians."

      "Libertarian" leaders use an intellectual sleight-of-hand to
      get "Libertarian" followers to cheer for corporations. They
      present their pro-corporate (i.e., pro-government entity)
      blather *as if they are talking about individuals*. Let's
      look at a real-world example. Here is a blurb for the book
      Why Globalization Works by Martin Wolf from the Laissez
      Faire book catalog: "The foes of international buying and
      selling don't like to admit that if it's bad for a New York
      grocer to trade with a Timbuktu grocer, it's also bad for
      the New Yorker to trade with a New Jerseyite. Or that the
      end-of-the-line of such anti-market logic requires you to
      survive on what you can grow in your backyard, without ever
      trading your turnips for your neighbor's corn."

      Notice the use of thought-stopping labels ("foes of . . .
      buying and selling," "anti-market"), and the false
      assumption that what is going on with "Globalization" is "a
      New York grocer" "trading with" "a Timbuktu grocer." No
      particular person who allegedly holds these views is named.
      It is implied that everyone who questions whether
      "Globalization" is actually a good thing is such a dirty
      rotten busybody that he would try to stop you from "trading
      your turnips for your neighbor's corn."

      Now, I have read some books questioning "Globalization," and
      I cannot recall a single author who is opposed to an
      *individual* in "New York" trading with any *individual*
      anywhere else. Since the questioners of "Globalization" have
      never made any statement even resembling this, why do
      "Libertarians" pull the wool over their own eyes and pretend
      that anyone who doesn't swallow "Globalization" as willingly
      as they do is against *individuals* trading with *individuals*?

      As far as I can figure out, it is because they have been
      trained to insert the State/Market dichotomy into their
      minds as their fundamental grid for perceiving reality. All
      incoming signals from the outside universe must be filtered
      through the State/Market dichotomy, and the State/Market
      dichotomy of the "Libertarians" has been doctored so that
      corporations are on the "Market" side, when even prominent
      libertarians have confessed that they belong on the "State"
      side.

      The recently released book Confessions of an Economic Hit
      Man: The Inside Story of How America Built an Empire on
      Third-World Debt, by John Perkins, reveals what
      "Globalization" is really all about -- and it ain't "a New
      York grocer" "trading" with another individual. The
      publisher's blurb for the book states that for years John
      Perkins "worked for an international consulting firm where
      his job was to convince underdeveloped countries to accept
      enormous loans, much larger than what was really needed, for
      infrastructure development -- and to make sure that the
      development projects were then contracted to U.S.
      multinationals. Once these countries were saddled with huge
      debts, the American government and the international aid
      agencies allied with it were able, by dictating repayment
      terms, to essentially control their economies." Gee, I don't
      see where "a New York grocer" figures into it, do you?

      Contrary to "Libertarian"-spewed horseshit, "Globalization"
      is not Joe Doakes, New York grocer trading his turnips for
      the corm of Sam Smith, Timbuktu grocer.

      And speaking of "the American government and the
      *international aid agencies allied with it*," (emphasis
      mine), Martin Wolf, author of Why Globalization Works is
      described as "a former senior economist at the World Bank."
      Contrary to "Libertarian"-spewed horseshit, "Globalization"
      is *not* Joe Doakes, "New York grocer" trading his turnips
      for the corn of Sam Smith, "Timbuktu grocer."

      It takes some heavy-duty thought-stopping and unending
      label-slapping to pretend that it is. If the "Libertarians"
      are so right about "Globalization," and other people are so
      wrong, then why do "Libertarians" find it necessary to
      deliberately misrepresent opposing views? Why can't they
      deal with something somebody actually said, instead of
      pretending that anyone who questions their
      corporatation-promoting is against individual trade? And why
      are the "Libertarian" rank-and-file so eager to choke these
      falsehoods down?

      It is long past time that "Libertarians" wake up and admit
      that corporations are not individual people, and that there
      is nothing in libertarianism that calls for pretending that
      they are, let alone preferring them over individuals.

      So, what is to be done? Damned if I know. I don't have any
      platform or program, except to honestly admit that
      corporations are not people, and that it is as insane to
      pretend they are as it is to pretend that a coat hanger is a
      vacuum cleaner. It is "Libertarians," the self-styled
      defenders of individual rights who ought to be taking the
      lead in formulating "what is to be done."

      Most of the books pointing out the just plain *wrongness* of
      pretending that corporations are "persons" are written by
      people who are considered to be on the "Left" politically.
      And their "solutions" to corporate dominance of the
      individual are so naïve as to be almost frightening -- they
      seem to honestly believe that somehow "government" (the same
      government that is owned by corporations) can pass laws that
      will restore corporations to whatever proper place they
      might have in a society based on individual rights. They
      seem to be blissfully(?) unaware of what the
      Marxist-oriented writer Gabriel Kolko demonstrated in his
      1967 book The Triumph of Conservatism: that government
      regulatory bodies *inevitably* become controlled by the very
      industries that they are supposed to be "regulating."

      I maintain that it is up to "Libertarians" to take the lead
      in questioning the corporate form of enterprise, and come up
      with "solutions" to restore economic power in America to its
      rightful practitioners: *individual people*.

      I maintain that it is up to "Libertarians" to take the lead
      in questioning the corporate form of enterprise, and come up
      with "solutions" to restore economic power in America to its
      rightful practitioners: *individual people*.

      So how about it, "Libertarians?"

      --
      Dan Clore

      Now available: _The Unspeakable and Others_
      http://www.wildsidepress.com/index2.htm
      http://www.amazon.com/exec/obidos/ASIN/1587154838/thedanclorenecro
      Lord Weÿrdgliffe & Necronomicon Page:
      http://www.geocities.com/SoHo/9879/
      News & Views for Anarchists & Activists:
      http://groups.yahoo.com/group/smygo

      As the Government of the United States of America is not, in
      any sense, founded on the Christian religion; as it has in
      itself no character of enmity against the laws, religion, or
      tranquillity, of Mussulmen; and, as the said States never
      entered into any war, or act of hostility against any
      Mahometan nation, it is declared by the parties, that no
      pretext arising from religious opinions, shall ever produce
      an interruption of the harmony existing between the two
      countries.
      -- The Treaty of Tripoli, entered into by the USA under
      George Washington
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