Corporations have a huge influence in the world. They have negative effects on our democracy, the environment and global economies. One of the main issues spawns from the fact that corporations have been legally recognized to have certain rights. They are legally permitted to financially support politicians, they usually evade serious punishment from criminal activity and they exploit cheap foreign labor. Before diving into this discussion, I find it useful to define the term “corporation”. A corporation is created when a group of people decides to invest its money in a company. This corporation “operates legally as an individual person,” and can now buy and sell property, ask for loans, sue and be sued (The Corporation). Unlike partnerships, corporations can exist even if a “partner” dies. Most importantly, shareholders cannot be sued individually, only the corporations can (Totenberg).
It is important to know that corporations not always wielded as much power as they do today. In the mid-19th century, corporations were mainly private-public partnerships and served the purpose of “building or creating something the government could not do on its own” for the public (Riley). These corporations had unambiguous conditions in their state-issued contracts. The charters determined for how long corporations could work on a project, the quantity of capitalization and exactly what to do, create or maintain (The Corporation). In fact, it was noted in The Corporation that “in both law and the culture the corporation was considered a subordinate entity that was a gift to the people in order to serve the public good.” Yet, when the 14th Amendment passed in 1868 to grant the newly freed slaves equal rights and protection, the corporations started demanding for inclusion under the security of the Amendment. This allowed corporations to be involved in federal election campaigns. In the early 1900s, however, there was a corporate corruption scandal regarding past presidential campaigns. This led Congress to forbid corporate engagement in federal election campaigns. This ban persisted until 1978, when the 1st Amendment was extended to include corporations and gave them the right to spend on state ballot initiatives (Totenberg). This right was further expanded to allow corporations to spend money as they see fit on local, state and federal candidate elections as of the 2010 Citizens United act (Totenberg).
There are various problems that have come along with the fact that the Supreme Court awarded corporations legal status. For one thing, corporations exist for longer than one lifetime, so they can save more money and influence more people over a longer period of time than physical human beings. Thus, the fact that they have legal recognition offers them unbalanced power compared to human legal recognition. Additionally, corporations can spend millions to support politicians that have viewpoints favorable to the company’s long-term interests. So, technically, a corporation, as well as group of people constituting it, can support and supply financial means to a favorable politician or party. This means that the people in a corporation can spend money from their own bank account as well as from the corporation’s on politics they approve of. Most people cannot afford to play this kind of game just to have political influence. Mander argues that to permit a corporation to “operate on the scale that it does, and to dominate society and governments, and to gain nearly dictatorial control over electoral processes, acting solely on behalf of its own built-in self-interest, is suicidal for human societies and murderous to the natural world” (69). This deeply corrupts the democratic system. Finally, corporations do not always even engage in legal behavior. The greater problem with this is that, because shareholders are not individually liable, the punishment is exerted on the corporation as a whole. It was noted in The Corporation that many corporations view fines on environmental health violations or lawsuits on worker safety simply as business decisions: if the fine/lawsuit is expected to cost less than fixing the problem at the source, then corporations decide to carry on just as they are and pay the fine. Additionally, in cases of health hazards or the death of workers or unaffiliated people living near an industrial accident, corporations can be sued and/or fined and someone in the leadership may be jailed, but the corporation keeps on existing. In this sense, it has super-human legal rights. If a person were to engage in such criminal activity, (s)he would be separated from society and restrained from any further action. These rules simply do not apply to corporations.
I would like to clarify that, in my opinion, capitalism and corporations are not one and the same. I think that, although there may be other applications of capitalism, this type of corporation I have been focusing on (one whose actions are dictated by the thirst for greater profits) is a product of the type of capitalism experienced in the United States. Moreover, there exist not-for-profit corporations that are fundamentally different from the ones discussed above. Both Mander and Totenberg argue that these nonprofit corporations are not the real issue. The profit-driven corporations that are the problem may, however, be reformed. In fact, there is already at least one organization working to persuade corporations to have other motivators in addition to profit. Benefit “B” Corporation is a certification that is bestowed on companies and businesses that pledge to “meet comprehensive social and environmental performance standards, higher accountability standards and to build constituency for public policies that support sustainable business models” (Riley). This movement prompts corporations to pursue not only profits, but also environmental sustainability and social well-being.
Mander, Jerry. The Capitalism Papers: Fatal Flaws of an Obsolete System. Berkley: Counterpoint, 2012. Print.
Riley, Theresa. “What is a Benefit (B) Corporation?” Moyers & Company. 2012. Retrieved from: http://billmoyers.com/content/what-is-a-benefit-b-corporation/
The Corporation. Episodes 1-23. 2007. Retrieved from: http://www.youtube.com/channel/UCahIgg3kjLVwvGyQbjbxYAA
Totenberg, Nina. “When Did Companies Become People? Excavating The Legal Evolution.” National Public Radio. 2014. Retrieved from: http://www.npr.org/2014/07/28/335288388/when-did-companies-become-people-excavating-the-legal-evolution