REVOLUTIONIZING CORPORATE LAW
by Richard L. Grossman
co-founder, PROGRAM ON CORPORATIONS, LAW & DEMOCRACY
from Defying Corporations, Defining Democracy (2001), pp. 300-303
The following is reproduced with permission of the author.
Copyright © 2001 by Richard L. Grossman. This is an edited transcript of his
panel presentation at the National Lawyers Guild convention, in Boston, MA
(November 2000).
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THE TITLE OF this session is "Revolutionizing Corporate Law." But
I believe that rather than revolutionizing corporate law, we must
revolutionize the Constitution. Let me explain.
Corporations have successfully claimed an enormous array of human
rights, of people's constitutional rights -- such as freedom of
speech, due process, equal protection. And law and culture treat
corporations as private entities.
There are two consequences: first, corporate managers wield our
Bill of Rights -- which means they use the Constitution to turn
the coercive force of our local, state and federal governments
against us. Second, defining the corporation is removed beyond the
authority of the American people -- outside the reach of public,
democratic processes.
What IS the corporation which governs us today? The corporation is
not a market mechanism, but a political force. Its purpose is to
concentrate wealth and power, in order to define work; to dictate
investment; to choose technologies, to design whole systems for
production and delivery of people's basic needs (for example,
energy, health care, transportation, and food); to fashion the
nation's relations with other countries, the nation's role around
the world.
In other words, corporations define this society and,
increasingly, the Earth. Giant corporations govern.
That's what they DO. Their managers and directors make private
decisions which in an authentic democracy would be made by the
people through democratic processes not dominated by a wealthy,
propertied few. Corporations which usurp the rights of persons and
function as private governments are, by definition, denying
people's basic rights, including the right to govern ourselves.
This is what giant corporations are designed to do, and they do it
well.
So asking corporate leaders to be less oppressive does not undo
what corporations are designed for. Investing years in regulatory
struggles to set "acceptable" levels of corporate poisoning does
not undo what corporations are designed for. Regulating corporate
buying of elected officials or union activity, or establishing
voluntary "codes of corporate conduct" or "patients' bills of
rights," does not undo what corporations are designed for. In
fact, all such efforts keep more people from seeing that property
rules, not people.
What should we NOT do?
If we focus on one harmful corporate behavior at a time we miss
seeing that such behavior is not an isolated thing, but part of
the broad corporate invasion into our self-governance, enabled and
validated by our culture. For example, when corporations inject
great sums of money into our elections and law-making, when they
make sure a policy debate has been framed long before it comes
before the public, they are using the tools of corporate rule that
are protected by law.
What we should do is be intentional about understanding the
essence and purpose of corporations, and craft goals and
strategies accordingly.
Let me describe two examples.
The Abolitionists did not spring from out of the blue in the 1820s
with a clear understanding of how to frame their work. They could,
after all, have ended up demanding a slavery protection agency --
you know, the equivalent of today's Environmental Protection
Agency -- to make slaves' conditions a little less bad. They could
have persuaded their supporters to back a slave owners' voluntary
"codes of conduct." They could have sought authority for defenders
of slaves to bring lawsuits on slaves' behalf.
Over the course of two generations, from 1820 to 1860, the many
people who considered themselves Abolitionists engaged in an
extraordinary, vigorous process towards defining their goal. They
invested time and energy defining the problem and then fashioning
appropriate remedies. And here's how they ended up.
* They defined slavery as a fundamental denial of basic human
rights.
* They accused the United States Government and public
officials of complicity in this denial of rights.
* They denounced the Constitution, and openly violated federal
and state laws by aiding runaway slaves.
* Slaves themselves revolted and escaped. Judges and juries
openly supported the growing Abolitionists' defilement of the
law of the land.
In other words, their ideas of "remedy" centered around changing
how the nation understood slavery so that popular organizing could
challenge not only slave owners but also the makers and enforcers
of law, and change the Constitution.
By the time the bloody Civil War offered the opportunity, they had
built a political movement skilled at and characterized by
defiance, and with the clout to get their three constitutional
amendments enacted.
A generation later saw the flowering of the Populist movement.
Farmers had organized around the reality that they were beholden
to the merchants who sold them seeds and who bought their crops,
and to the banks that loaned them money. So they started off
forming cooperatives, pooling their resources to borrow money, buy
supplies and market their products. As they gained power, the
banks refused to lend them money. Realizing that they did not
understand money, they undertook to study it.
What they came up with were not lending regulations which banks
and merchants had to obey; not voluntary or compulsory codes of
conduct, but something else. Their investigations and discussions
revealed that their government printed money and gave it to the
banks, which then sold it to the people. Their solution was to
eliminate the banks, so that people could, for example, go down to
the post office and get loans at pretty much no interest. They
said: it's our government, it's our money. Why can't we decide
what to do with our money?
Provoked by the oppression they were experiencing in their
communities which they had traced back to banking and other
corporations, they set out to challenge the corporate state which
had been making the rules of property, contracts, commerce and
money. They realized that they wanted to define the system, and no
longer let the system define them.
For this purpose, they built what historian Lawrence Goodwyn
called "the largest democratic mass movement in U.S. history."
My purpose in offering these two examples is to indicate that
there have been occasions when people came together to analyze
their common problems, and came up with solutions designed not to
just make their conditions a little less bad, which did not just
ask their oppressors to be a little less oppressive.
Instead, people mobilized to eliminate the source of their
problems and their oppression.
Let's return to the title of this panel: "Revolutionizing
Corporate Law." Corporate law, as far as I can tell, refers to
internal corporate governance. So when lawyers and politicians
talk about corporate law they are not talking about the
relationship between corporations and the sovereign people in a
democracy. They are talking about the relations among corporate
directors, managers and shareholders. And maybe sometimes with the
suppliers also. Not about the workers, because workers are
basically a cost, a liability, and anyway, workers have no
constitutional rights a corporate employer is bound to respect.
Not about the broader community, for the same reason.
Just pick up some corporate law books. One of my favorites is
Easterbrook and Fischel's The Economic Structure of Corporate Law.
They are pretty clear:
. . . a corporation is a complex set of explicit and
implicit contracts. Corporate law enables the
participants to select the optimum arrangement for the
many different set of risks and opportunities that are
available in a large economy.
Here is another quote from the same book:
The corporate code in almost every state is an
"enabling" statute. An enabling statute allows managers
and investors to write their own tickets, to establish
systems of governance without substantive scrutiny from
a regulator. The handiwork of managers is final in all
but exceptional or trivial instances. Courts apply the
"business judgment rule," a hands-off approach that
judges would not dream of applying to the decisions of
administrative agencies.
Elected legislators write these enabling statutes, [1] like they
write labor, environmental, tax, health and other laws. They live
in this corporate culture, so they are shaped and driven by the
culture's underlying assumptions and values about how things must
work. And they are instructed by the rule of law; by judicial
interpretations of the Constitution regarding property and
personhood, contracts and commerce. These interpretations have
turned the corporation into a private entity, defined
"decision-making" as a corporation's private property; and enabled
corporations to deny the rest of us our most fundamental rights.
Elected officials -- along with newspaper publishers and other
pillars of our communities -- have been taught that the people who
run corporations have the constitutional authority to direct
"their" resources, to dictate "their" investments, to choose
"their" technologies, to order "their" workers, to fix elections,
to write laws -- to do pretty much what they want, however they
want it. That's what this "enabling" stuff means. That's "the
handiwork of managers" which judges are not to trample upon.
So the work of people today yearning to be free and self-governing
is to challenge the basic nonsense and distortions masquerading as
eternal truths -- as slaves and Abolitionists did with slavery, as
Populists did with money and banks. Today we must challenge the
nonsense that the corporation is private, that the corporation
legitimately wields any rights, much less We the People's
constitutional rights.
We need to see that if an artificial entity -- a mere creation of
law -- is empowered with the constitutional rights of human
persons, then we human persons will simply not be able to govern
ourselves. That when corporations are empowered with the
constitutional rights of human persons, there can be no consent of
the governed. No democracy.
And we need to see that our public officials are complicit in this
generations-old usurpation by men of property and their
corporations.
If we define our problem as men of property using the
Constitution, and therefore public officials, the courts, police
and armed forces, to deny us our fundamental rights, then the
solution is clear. We the People must defy the illegitimate
authority of corporations to govern. We must contest and replace
public officials who enable corporations to compel our obedience.
Where can we look for help? Well, the courts have played a major
role in denying human rights, worker rights, self-governing
rights, and in bestowing power and authority on property and
wielders of property. Our state and national legislators have also
been denying or giving away the people's authority since 1787. A
powerful corporate culture and a rule of law have been
miseducating people, misdirecting the nation's labor and wealth,
colonizing people abroad and destroying the Earth's natural
systems.
So our collective task is to create a lively ferment throughout
our culture, and characterized by defiance to unjust laws. Our
task is to educate and organize ourselves to such an extent that
people can force legislators and judges, mayors and presidents, to
change the law of the land. The way to do this is not by
legitimating regulatory law by pretending it can solve our
problems; not by asking more corporate leaders to please cause a
little less harm; not by tinkering around the margins of corporate
behaviors.
We need to launch escalating challenges to illegitimate corporate
authority and to the public officials complicit in corporate
usurpations.
As Guild lawyers, you represent individuals, unions and other
organizations in disputes with corporations and with governments.
You can help your institutional and individual clients contest
corporate claims to rights; and challenge public officials'
complicit in the corporate-plus-government denial of your clients'
rights.
You can work with many different people and organizations to
nurture a political movement to strip property of its power to
deny fundamental human rights, and to elect public servants
trained by this movement to understand that in a democracy, the
people -- not property organized in the corporate form -- must
govern.
NOTES
1. See "Corporations for the Seventh Generation," "Wrong Turn in
Ohio," "The Corporate Crunch in Vermont," and "A Quick Look
at What Happened in New Mexico" for more information on
corporation codes.
http://www.ratical.org/corporations/RevCorpLaw.html (hypertext)
http://www.ratical.org/corporations/RevCorpLaw.txt (text only)
http://www.ratical.org/corporations/RevCorpLaw.pdf (print-ready)