Saturday Links for the Week — September 8, 2007 — The Anti-Corporatist Edition

Corporate Crime Reporter has a fascinating review of Robert Reich’s new book Supercapitalism. It’s good to see a mainstream politician (Reich was Clinton’s Secretary of Labor) who gets why corporations are inherently pathological, and what to do about it. Excerpt:

As I’ve reported before, the courts made a huge mistake decades ago when they gave corporations ‘personhood’, the rights of persons under the law without commensurate responsibility (their liability is limited by law). When you give anyone (or anything) rights without responsibilities you are asking it to behave irresponsibly.

I agree completely with Reich that corporations should have no standing whatsoever under the law — they are fictions, constructions of convenience that were designed for one purpose, the raising of money for collective enterprise. They were never designed or intended to be lobbyists or litigants, or to do anything other than hold and disburse collective moneys in accordance with the needs of the enterprise while protecting investors from financial liability beyond the amount of their investment.

On the one hand, that means that they should not have any legal standing in court — no right to sue or to hear ‘their’ arguments. As non-persons they should not be allowed to disburse funds or to lobby for political purposes.

The quid quo pro, as Reich argues, is that they should not be allowed to be sued, nor should they pay taxes. You don’t sue the corporation, you sue the executives, the directors, and (to the extent they vote for measures that cause injury) the shareholders. Since the corporation is a fiction, a financial holding instrument, no one should be allowed to hide behind the corporation, and corporations as non-persons should not be allowed to indemnify anyone from litigation. When any decision you make exposes you to direct personal liability for the consequences of that decision, you’re going to act responsibly in making that decision.

Likewise, corporations should not pay taxes. Today, corporations act as tax shelters, because corporation taxes are lower than personal taxes. Stripped of its personhood, corporations would not be able to shelter shareholders from tax, because the income would flow through to the shareholders and be taxed in those individual shareholders’ hands. It then makes no difference whether profits are distributed as bonuses, share options, or dividends, or are retained in the corporation for reinvestment. The individuals, real people have earned the profit, and they should pay tax on it. Corporations were designed to be, and should be, completely transparent.

The removal of personhood, of identity to corporations has other implications as well. What happens when the executives, directors and shareholders need to decide between two courses of action, one of which will benefit the shareholders and the other of which will benefit the employees or the community or the environment? Today, executives and directors can be sued or dismissed for failure to resolve such conflicts uncompromisingly in favour of maximizing profit accruing to shareholders. The argument is that it is ‘unfair’ for executives and directors to be liable for balancing conflicting needs and wants. Yet we all have to do this every day of our lives — e.g. we balance our personal needs and values against those of our employer and those of our employer’s customers, which are often in conflict. Why should executives and directors be treated differently?

I believe every corporation should have a charter, developed and approved by shareholders, that stakes out their collective philosophical position and guides directors and executives in their actions. If it says damn the employees and the environment, let’s ravage the planet and offshore all the jobs to Asia to line shareholders’ pockets, that’s up to them. As investors, community members, and members of watchdog agencies, we will then be able to determine whether we want to ‘take any stock’ in such a corporation, and how much attention we should be paying to the actions of that corporation’s people and, when necessary, suing them personally for violation of the law. If the charter says social and environmental responsibility are paramount, and rank ahead of the financial interests of shareholders, then shareholders will have no cause to complain if short-run profit growth (and share price) suffers in the interests of creating longer-term sustainability.

This is all about personal responsibility for one’s actions, including one’s actions as a so-called ‘agent’ of a corporation, and as someone who gives their money to those who run corporations, in the knowledge that that money can be used in a variety of ways, ways that have consequences. It includes the responsibility to be informed and to take an active part in understanding what those consequences are.

(a tip of the hat to Common Dreams, in my view the best aggregator of what’s happening that’s important in the world)

What Else Is New This Week:

• Zane Parker at Lichenology talks about what happens when corporations do not feel any responsibility to communities, employees or the environment, when their people hide behind corporate indemnity and single-minded pursuit of profit. 
• Naomi Klein’s new book The Shock Doctrine goes further, arguing that corporations blatantly exploit (and sometimes even provoke) human misery and suffering to ‘maximize shareholder value’ and to squeeze governments to ‘privatize’ functions that have huge public accountability and replace that accountability with accountability only for profit.
• Sharon Astyk reviews scientist Stewart Staniford’s exhaustive analysis of market vulnerabilities to peak oil, and the very real risk that overextended debt levels and peak oil together could easily pitch us into the next Great Drepression. 
• Jim Kunstler agrees, and reminds us that as long as we keep looking for ‘fixes’ to keep the current unsustainable economy going just a littlelonger, the harder we will fall and the more difficult it will be to create a sustainable economy from the ruins of today’s.