Corporations just have the political power to kill regulation and policing. As long as we don’t have the public will to keep them in control, oil spills will continue. Environmental protection will be eroded while convincing financial fellow travelers it is being done for the good of the country. And they will stupidly think someday they too will get that money that is saved by not keeping the planet clean and the air breathable.
"No, they were started by people who wanted to limit their liability and minimize any personal risk. "
I’m going to guess you have never been a stockholder with a significant ownership percentage in a start up corporation.
If you were, you signed bank loan papers for the corps loan, in which you pledged all your personal assets.
Ok.
Um, I think the argument is that corporations shouldn’t have human rights. Right to be sued? No problem. Permission to own property? Ok. Freedom of anonymous speech? Sorry: that’s inappropriate and naive.
Nice post. I would go further and say that leftist anti-corporate rhetoric has intrinsically limited appeal. Sure, fulminations will get you noticed and there’s plenty of corporate misconduct -both legal and illegal- to provide fodder. But ultimately, there at least a small degree of solidarity with the corporate tribe among vast sections of the working population. So the approach of Agnostic Pagan will always have trouble attaining electoral majorities. I suspect that he needs to think a lot harder about strategic issues.
Few give unqualified support to the corporate institution – almost everyone understands that their behavior is problematic absent strong governmental regulations, laws and controls. (Heck, they are arguably a creature of government – there’s nothing natural about limited liability.) But garnering support for appropriate regulations needs to be based on more than just attacks on personality characteristics such as greed.
Well co-ops have particular features that corps don’t have – they tend to inspire greater trust among their shareholders (who are their customers), even if they suffer from similar agency problems. They are sometimes more efficient providers of services, since they don’t have to pay dividends to third parties.
Dirty Freaking Hippies
I’m a huge supporter of cooperatives. You should be too, dear reader. Two of the best run consumer cooperatives in the nation are The Vanguard Group, founded by John Bogle and the insurance company/financial institution USAA. (Isn’t TIAA-Cref a coop as well? Credit Unions?) Interestingly, community investment financial institutions often are organized as corps, so that they can raise capital in the stock market.
ETA: And what’s wrong with drinking tea? I like tea! 
M4M…I’m not dissing co-ops, per se. Some of my biggest customers are co-ops.
The poster above cannot draw the distinction between when co-ops are a preferred alternative vs. a corporation. There are many, many value-creation possibilities in industry worldwide where a co-op arrangement would be impossible. Mostly in significantly capital-intensive industries, or where intellectual property is a primary factor. Hence, my sharply worded barb.
Tea rules. Especially when it has a shot of the hard stuff in it, to clear the nostrils.
Your error here is the equation between a corporation and a government.
Quite simply put, governments are sovereign. Corporations are not. A government exercises powers and forces greater than any corporation by orders of magnitude; within the boundaries of a sovereign state, the sovereign quite literally has the power of life and death over its residents. The impact of government is of the most fundamental and all-encompassing sort, and it affects all the residents of the sovereign territory equally.
A corporation is simply not at all comparable. It has no sovereignty, no right to a monopoly of the use of force. It is wholly subject to the decisions of government. It serves a limited purpose and to a limited number of people.
To be honest you’ve yet to make an argument for the forced democritization of corporations beyond “well, if countries are democratic corporations should be too,” but then have rejected the plainly obvious points that OTHER organizations aren’t democracies, either. It’s just not axiomatic that all organizations should be democracies of a form of your personal choosing. When it was pointed out that someone working for you would mean they should have a vote in how your house is run you dismissed that without explaining why it’s different from your own suggestion.
We make countries democratic for both a practical and a moral reason; practically, because (despite the bizarre ranting in the other thread on that subject) it works, and morally because the citizens of a country are all shareholders in the sovereign entity. Much of the history of the pursuit of social justice has been about ensuring that equality. That’s not the case with a corporation; not everyone has an equal stake, wants one, needs one, or should have one.
In what civilized country is “making money” the “only legal” reason to conduct business?
Your arguments are not well served by making up bizarre complaints that bear little relation to the real world.
I disagree. I do not see the lack of sovereignty being a decisive factor. The political power that an organization possesses should determine how they should be governed. A corporation’s purpose may be limited, but its scope is not. Government should be the most fundamental impact, but corporate interests often have far greater effects on a community than governmental action. Corporate actions have built and destroyed countless communities. While only a few corporations can rival national governments, many can and do dominate countless local and regional governments. They have shown that they have no respect for the rule of law except as it pertains to their interests. They relocate operations to avoid laws they disagree with, but want access to every market.
And corporations thankfully lack the monopoly on the use of force, but governments no longer have it as well, having granted corporations and other private groups police powers in many jurisdictions.
Yes, the only reason I think corporations should be democratic is because governments are too…not quite.
I dismissed it since I have repeatedly stated I am concerned with public commerce. The labor rights of household employees is a different issue. The governance of private firms that do not engage in public commerce is a different issue. The governance of non-commercial organizations is a different issue.
We agree on that. Not everyone should have an equal stake. We disagree on who those parties should be.
Sorry, I meant primary legal reason.
But speaking of bizarre complaints…
Do you have any evidence for this? Why would they be** impossible**? Mondragon alone operates in nearly every sector including finance, manufacturing and retail. SAIC was a successful employee-owned corporation until 2006.
As far as the United States is concerned, no I don’t expect attaining electoral majorities or achieving favorable legislation anytime soon. (My biggest complaint with Congress and the White House during, and after, the health care distraction is that it completely buried any chance of passing the Employee Free Choice Act.) Nor do I intend to try. My primary goal is to help develop the alternative system to the point that it can be completely independent. Cooperatives have to rely on too many non-coop suppliers. Not nearly enough communities have cooperative development resources comparable to other small businesses. It is also just one part of a greater program toward sustainable development and economics that includes fair trade practices, social accounting and other initiatives.
When Earth Day began in 1970, I doubt anyone in business schools noticed. Today, environmentalism and green practices are a normal part of the curriculum. Over the next generation, I see that trend continuing to where social accounting, democratic governance and the rest of that program are considered the norms, not the exceptions. Though I do expect that the US will be the last market to adopt those reforms. Maybe not. This country may surprise me. But my ‘strategy’ does not matter if it does or not.
Frankly, this country has every resource it needs to accomplish any goal it wants. It truly does. This country has achieved a level of wealth our ancestors could not even imagine. And it was achieved in no small part by the great corporations of the 20th century. And then we squander it on the some of the worst shit possible all in the name of the ‘free market’ and free enterprise, and we use those same corporations to engage in the worst of that behavior. Frankly, I don’t give a damn what this country does anymore, nor have I for some time. My concern is helping those countries that do not have the affluence of the United States, and hopefully encourage them to use their wealth on a better class of goods and services than we have. And as the United States has no problem exploiting the rest of the world to further its ends, so I have no problem exploiting this country for my ends. Because that is the American Way.
So yes, I do give into the occasional rant about greed since it is the vice that somehow has been turned into a virtue. I still see it as a vice, and have no desire to support any system that does not do the same. I firmly believe that commerce and economics in general should be about far more than increasing the GDP, quarterly returns, dividends, or other financial measures. It should be more concerned with seeking greater efficiency and productivity that lead to measurable improvements in peoples’ welfare, not just their net worth. We allowed the means to overshadows the ends, and corporations are a main reason why that occurred in my opinion. The sooner they enter the dustbin of history, the better.
Nowhere in the civilized world do corporate interests exceed the influence of government. You’re vastly, vastly, underestimating how pervasive and powerful the sovereign state is, in large part because it’s SO pervasive that we hardly notice it anymore. Corporations owe their existence to government; they play to government rules every day.
It’s certainly true that a few big corporations have some political influence but it’s a fraction of what government possesses and most corporations are small.
Look, here’s a simple question; if corporations were to be democratically governed by employees, why on earth would anyone start one? Today I was working with a small machine shop with 41 employees. Under your plan the shop would never have been started. Last week I visited three other businesses with between 20 and 100 employees; none would exist under your plan. What you’re proposing would either make it so small businesses would hardly ever be founded, or would simply result in legal end runs, such as never hiring a full time employee.
You could, I suppose, claim that co-ops will replace them - but if that were true, why aren’t half of all companies co-ops now? Employee ventures work sometimes but it’s clearly not the easiest or most common way to start a business. The usual manner is the way my customer today started it; one guy invested his money in a place, bought a few machines, and kept hiring people as he found work. Under your plan he wouldn’t have started it and those 41 jobs would not exist.
Would you be so kind as to define “public commerce”? What sort of “private firm” does not engage in “public commerce”?
You must be kidding. Corporate interests dominate governments constantly. Regulatory capture happens all too often, as we just saw this year with the BP disaster and the Mineral Management Service. Business lobbying is not a billion dollar industry because corporations are interested in better government. Ever since Dartmouth v. Woodward, this country has barely had sovereignty over corporations. We at least withheld recognizing ‘rights’ until the Santa Clara decision took care of that. Citizens United is just the latest in a long line of decisions entrenching their interests over our sovereign powers. And that is just in the United States. Most of Latin America has only recently become democracies and not oligarchies, regardless of what their constitutions may have claimed. You vastly overestimate government, and underestimate the political power of corporations.
I don’t know. For all the myriad reasons that people have ever since Rochdale, and probably before then as well. How am I the one accused of making bizarre claims?
How would ‘my’ plan prevent them from occurring? 41 people have never gathered together to start an enterprise? Hell, the majority of co-ops are less than 100 employees. There is nothing in ‘my’ plan that prevents anyone from starting a business enterprise. They can be a sole owner, a partner, or an associate. They can decide any management or ownership scheme they want as long as it is not a corporation. Commerce existed long before the joint-stock company was fabricated. I am certain commerce will continue to exist if we abolished it.
The lack of institutional support comparable to other small business models, such as SBA funding. The fact they don’t offer IPOs so that Wall Street can loot them like corporations. The lack of awareness and education. A history of being labeled ‘socialist’ or ‘communist’, and therefore evil in too many damn parts of this country. How they survived the Red scares of the '20s and '50s is the more interesting question for me. There are many reasons they lack the prevalence of corporations. I do not see how any of them are a reason why they should not become more so.
I have never claimed that it is. I only claim that it is the most equitable and that corporations are the least equitable for the most important stakeholders, which are the people who work for the firm.
Again, I don’t see how my plan would prevent that. And co-ops are not closed shops that never hire new members. I really do not understand your point here.
I have already done so twice in this thread, including my last post.
I’m not sure what there is to say if you’re getting your information from poorly understood Internet memes.
This isn’t an answer to my question. Why would anyone start a company if they were doomed to lose control over it the moment they hire employees?
Nowhere in the industrialized world do corporations of any sort (the USA is not unique in having laws concerning incorporation) operate the way you’re describing. It’s a straightforward question; why would a prospective entrepreneur start a company she would no longer have control or ownership over the moment she hires two people?
Wow, okay, this is a change in direction.
So what you’re saying is that people can do what they did before, but we’re just going to give the legal construct a different name?
What’s the point, then? What is it you’re trying to get rid of?
I don’t have time at the moment to fully explain why your previous posts about employee profit participation is wrong. Suffice to say that you base your opinion on a faulty admiration of employees’ contribution to the birth and growth of a company. It’s also strange that you wish businesses would emphasize something other than money when that’s the very same thing that employees prioritize!
Because dozens of people don’t “start” a company. The overwhelming majority are started by 1 or 2 people – sometimes a little higher with a very small group (4 or 5 people). Think of garages, dorm rooms, kitchen tables. Think of college buddies, or husband & wife. A new company is like a tiny zygote. It has to be viable before other cells (other people) attach themselves to it. Virtually all the companies on the Fortune 500 and the small local businesses in your neighborhood such as restaurants were started like this. One typical way for “41” people to start a company is if it’s a deliberate spinoff (divestiture) of an existing larger company. However, that’s an academic point and probably not what you were thinking of when you assume 41 folks could/would gather together to start a new business.
Trade and commerce will happen regardless but it will be on a smaller scale. As a society, we have evolved to want products that require larger companies with larger capital investments.
The join-stock entity is a modern invention for balancing the spread of risk with attracting capital. The typical employees mindset is about not participating in that risk. Yes, you’d like for the subsequent employee’s work effort to count as “sweat equity” but it doesn’t work that way. You may want things to change but you’re not accepting the fact that normal humans just don’t think that way. They will not give up ownership rights easily. You dismiss the previous examples of household employees and car mechanics because they’re “private” instead of “public” but the point is to look at them for examples of how people (the owners of anything) naturally think. When you hire someone, that relationship is not enough psychological pressure to give them a piece of ownership. (Except at early startup companies where the first employees choose equity over wages.) Even “employees” who want ownership in company XYZ will not give up ownership of their house or car to workers. It’s the same thought process – public vs private is not relevant. In this way, the employees are being somewhat hypocritical in claims of ownership on everything their labor touches.
If you think you can invent laws to circumvent this natural “ownership” thinking, you’re seriously underestimating what people will do to retain control their equity.
If employees are the most important stakeholders, why can’t you file a form to create a business consisting 100% employees and 0% owners? Not a single government entity on the planet grants such a charter. Even socialist Sweden doesn’t offer such a business structure. On the other hand, you can file with 100% owners and 0% employees. The very existence of any company (whether corporation or LLC) establishes the primacy of owners.
The problem with your thought process is that you think 100% like an employee which limits your diagnosis and cure to that perspective. Well, you can’t convince business owners with your ideas because most of them were also former employees. They know how they contributed as an employee and as an owner. They’ve seen both sides of it and know the true relative values of owners vs employees. You’ve only seen one side (the employee side) and assume it’s the most important.
If that were true, perhaps. But my information was acquired in business law class and independent reading outside of the internet.
Strange, I thought the question was why anyone would start democratic corporations. As far as control, why does anyone start a business when they are doomed to lose controlling interest to other investors when they wish to expand? Why do they start a business when they submit to restrictions as soon as they take out their first bank loan or sign their first lease? Because the results are potentially greater than not doing so?
No, I do not desire to just change the name. I want to abolish corporations - the legal construct that grants investors greater rights than the workers, that has been given legal rights separate from those of the investors. A legal construct that allows a very small minority to control a very large majority of assets and the political power that enables. A legal construct that was fabricated before modern democracies and has no place in modern democratic society.
Damn I need to get my notes out of storage, but suffice to say that employees have many different priorities and studies have shown several different factors that employees (and owners) emphasize over their compensation when selecting a workplace. Most workers are not mercenaries seeking the highest bidder. That is Wall Street’s purview.
And what does that have to do with corporations? There are cooperatives of every size that work in nearly every industry, and I am still waiting for evidence of what industry it would be impossible for them to operate in. IPOs and stock issuance are not the only means of financing, and are actually the least used form today.
Ok, you lost me here. ‘Typical employees’ do not want to participate in the risk of firm? Even though that is where they decide to earn the majority of their income usually. The consequences of failure are generally more severe for the ‘typical employee’ than the typical investor.
But normal humans will not give up ownership rights easily. Yet they did it everyday because the corporate system said they were not entitled to any. ESOPs are changing those attitudes at least.
I differentiate between public and private because they are different classes of ownership. What a household owns and controls have fundamentally different purposes (I hope) than the property that a commercial enterprise owns and controls. And I make a distinction between whether that firm engages in commerce with anyone or everyone, or if they are particular in who they transact with and do not offer products to the general public. I consider those fairly private transactions and have no desire to regulate them beyond general public safety.
uh, why would they have to give up personal property to anyone else? I really do not understand what you think cooperatives are and what they require of their members.
By the by, this is your straw man, not mine. Associates should have ownership of the firm they work for. Keeping perpetual control of the product is a corporate maneuver.
I do not know what you are talking about. People are subjected to hostile takeovers constantly and lose control of their equity. And most investors do not consider themselves ‘owners’ in the ‘natural’ sense, and have no interest in the active management of the company beyond how large their dividend checks are. And if those checks are insufficient, they just dump the stock and move on. Investors do not care if the firm is failing. Investors do not care if hundreds of workers will become unemployed. Owners, I hope, would, and that is more likely if those hundreds of workers are the owners.
That is plainly false. It is not what I am advocating, but several jurisdictions allow non-profit organizations that can engage in business activities. And they are structured so that no one is an owner or investor. The last I checked they even exist in that bastion of capitalism, the United States. I am fairly sure Sweden has them as well.
Yes you can. They are called co-operatives or partnerships. All owners. No employees. Wow.
That would be more than slightly creepy if you know what I have seen or how I think. I have no desire to post my resume on this board, but I have spent sufficient time on both sides of the labor divide. I have known my fair share of business owners as well as employees. And the greatest lessons I learned are that any distinctions between the two and their relative values are wholly artificial and that the capitalists (who may or may not be business owners) have very strong interests in maintaining that artificial divide.
I support co-operatives since they do remove that division. At the same time, I have no desire to make them mandatory for all organizations. But it would be an improvement if they had the preferential treatment that corporations currently have.
I have yet to see evidence that corporations are this awesome institution that represents the epitome of human achievement, and that therefore there is no purpose in trying to achieve a better model, but that is the sentiment that I keep hearing.
Personally, the burden of proof is on those that want to retain the corporate model, not on those that want to abolish it. Unfortunately, corporations have amassed too much political power for their end to occur anytime soon. Which is why I do not waste much time trying to seek their end. Again, my plan is merely to help create an independent system, so that those who do not wish to deal with corporations have the ability to do so easily.
Much like my attitudes toward religions. I think they should be abolished as well, but I do not advocate for it. I just try to ignore them as much as possible and live my life according to my philosophy. And as churches were once a dominant political power, now are corporations. As enough people learn to live without them, they will whither away and die, so there really is no need to try to ‘kill’ either of them. But I do wish it would happen sooner than later, and if steps can be taken to diminish their power, even better.
Are non-profit organizations what all of your arguments boil down to in its essence?
Basically you’re wanting a 501(c) entity for virtually any endeavor that involves multiple people? Why didn’t you just say so?
Some of us are trying to debate with you in terms of an organization that’s not a 501(c).
Agnostic Pagan has given us a hypothetical solution to a problem that only exists in his head. The issue seems to be that he thinks that large corporations have too much power and are able to act in an unethical manner or can corupt the democratic process. My question to him is how does changing the legal structure of ownership change that? Would it restrict the size a business can grow to? Would it prevent the business from acting in what it believes to be it’s own interest and the expense of others?
So you keep saying, but the Santa Clara case did not make corporations people. Corporate personage far predates that case (and, curiously, exists is every rich country on earth, despite the fact that the Santa Clara case, obviously, doesn’t apply to any of them but one.)
That is strange because nobody has asked you that question. We all know of cooperative corporations; I even named one.
So I’ll ask again; why would someone start a business they would be doomed to lose control of after they hired just two employees? Please answer the question. I work with at least 50 to 100 businesses that I believe would never have been created under your proposal. Will you or won’t you provide a straight answer?
Since you’re operating on an assumption that is flatly absurd, I guess we’re done this line of reasoning.
Indeed, I work for one. But as a worker, shouldn’t I get a “Democratic say” in it? It’s an incorporated entity.
I think the emphasis on the structure of a thing is misplaced. A corporation is not any more intrinsically inclined to evil than anything else, it is simply that a cooperative has an historical perspective that inclines toward the progressive. An entirely democratic entity devoted to greed and self-advancement above all other concerns will not be an improvement.
As I see it, the problem is not so much corporations operating as a person, but operating as a tribe, having claim to the loyalty of its members that exceeds loyalty to any other institution. Thus, when a corporation acts in an unpatriotic fashion, we shrug it off, we say “Well, thats what they are for, they exist to advance their profits, we shouldn’t expect anything else.” We excuse cynicism for a corporate entity that we might not so readily excuse in a person.
There was a time when a corporations well-being was directly connected to, and dependent upon, the well-being of the country. This time has passed, and we have yet to adjust our thinking accordingly. We offer an allegiance to “American” corporations that is not necessarily returned.
I am not sure why I am bothering to continue this discussion since people seem to only read what they want to read and to claim that I am making arguments that I specifically deny.
And where did I say that Santa Clara made corporations people? Santa Clara is what gave those fictitious ‘persons’ the same constitutional rights as living breathing citizens and why so many progressives think that it was a horrible decision.
The method how it occurred is perhaps even worse.
Per Wikipedia:
“Obiter dicta can be influential. One example in United States Supreme Court history is the 1886 case Santa Clara County v. Southern Pacific Railroad. A passing remark from Chief Justice Morrison R. Waite, recorded by the court reporter before oral argument, now forms the basis for the doctrine that juristic persons are entitled to protection under the Fourteenth Amendment. Whether or not Chief Justice Waite’s remark constitutes binding precedent is arguable, but subsequent rulings treat it as such.” Italics added.
I would ask you to rephrase the question, but it looks fairly straightforward to me. There are corporations that are democratically governed. People start them all the time (yet not nearly as often as I would like, which is why I am looking to work with a development agency). If an individual wants to start one, the first step is usually not incorporating as a sole owner, but to find others that want to be part of that enterprise and to share power from the very beginning. Similar to how other entrepreneurs look for angels or venture capital which require them to surrender a fair bit of control over the future enterprise.
In my experience it is a given, but if you think that corporations do not have excessive political power, do not engage in unethical behavior, and do not corrupt the democratic process, then fine. Ignore the ‘hypothetical solution’ that has existed since 1844. Ignore the entire fields of organizational behavior and institutional economics that have shown conclusively as far as I am concerned that legal and organizational structures do have an effect on behavior. I’ve stated several times why I think the corporations encourage less than beneficial behavior and why democratic governance creates more accountable enterprises.
If you think the current legal limits and sovereign states are sufficient to keep corporations in check, fine. If you think current corporate practices are the best method for structuring commercial enterprises and there is no need for reform, fine. I wholeheartedly disagree and I have yet to see any evidence that corporations should not be abolished.
I don’t think the emphasis is misplaced. Just the opposite. It had been sorely neglected until the research of the last generation. The results were not flattering to corporations.
Indeed, just look at the United States. Who cares about what the fuck happens in other countries unless it helps our GDP grow. If it means fucking over their GDP to do so, so be it.
Are cooperatives a panacea? No, but they generally do emphasize means and ends beyond greed and self-interest.
The OP asked why leftists oppose corporations. This leftist does so for many reasons already discussed and primarily because I feel a much better structure already exists, so there is no need to reform them, but merely to ignore them. The trick is trying to get the law to do the same instead of increasing their ‘rights’ and their power.
I continue to hope for a world where human rights have priority over property rights, where citizens are truly sovereign, and fictions are truly fictions. I continue to hope for a world where commerce is considered the least important aspect of life. This thread has not done much to increase it though.
But why would a person deliberately start a business and want to give up equity to all their employees?
On the other hand, yes they do voluntarily give up equity to attract angel investors. That’s the unavoidable aspect of growing a business. The same is not true for attracting regular employees. If the early employees have some critical skills and are willing to discount (sacrifice) their salary, the owner will naturally and voluntarily provide an equity stake as *substitute *compensation. The early startup employees gesture of sacrifice is expressing his sincerity for sharing the risks and startup owners recognize that with stock grants.
Future regular employees don’t want to participate in that risk arrangement and yet you say they deserve equity? Why? They’re getting an unfair amount of compensation in relation to their contribution. They deliberately avoid situations where they must work for free in an uncertain startup and prefer a steady paycheck at market wages.
What would cause the owner to feel right about “sharing power from the very beginning” when all the future employees didn’t share risk from the very beginning?
Yes, the key is sharing of risk. Many people don’t like to do that, but I think there is something benefitial about a business model where employees do have some share of equity. It’s a common business model used in Silicon Valley, but for most employees it’s more of a “bonus” than the paycheck they expect to use to meet the monthly expenses.
I dunno, if they had landlords that let them live in places for free, and grocers who gave them food for free, and utilities that let them have electricity, cable and so forth for free, they’d probably be more willing to take such risks. I guess we need riskier landlords, etc. Wouldnt that be great?
That’s insane. Totally insane… in the facetious sense of the word, of course. Because it makes just TOO much sense it could never become accepted by the pro-capitalist crowd.
Abolishing Corporate personhood does not mean abolishing corporations. Say that loud enough and heads will explode…