Corporate Serfdom: The Tyrannical Nature of Corporations

Until relatively recently in our species’ history, human communities were not sufficiently numerous to require rulers and governments. It is only during the past few thousand years that cultural practices like agriculture have begotten populations that are sufficiently large to require some sort of hierarchical order and control. We lack the innate organizing abilities of other social creatures like ants, bees, wasps, and termites, all of which, despite the large numbers of thousands or even millions of individual organisms in a single colony, exhibit a marvelous synchronization in the individuals’ concerted actions for the good and survival of the colony to which they belong. This is because, unlike human beings, they have lived in these multitudinous colonies for many millions of years, and so they have developed, during this long time period, an innate organizational capacity.

The experience of the recent past, when human populations have increased to more than a few hundred or thousand persons in one social group, is that when some individuals are able to gain power over other individuals who have no say in or ability to influence their decisions, the results were sometimes tyrannical and unjust. It is for this reason that democracy has been adopted in more and more countries around the world, to correct, or at least mitigate, the common human selfishness and myopia that are the causes of these problems.

An important exception to this general democratizing trend is corporations, which are based on a model of rigid centralized control that has much in common with the rigid centralized control that existed in the past in monarchies and oligarchies, or in communist countries during the last century, where the people had no say in or influence on the decisions that were made by their rulers. Of course, this undemocratic structure is based on the belief in the inviolability of private property, the fact that those who work for a corporation have invested no money, and hence have taken no financial risks, in the enterprise they work for. The result of this dichotomy between democratic governments and undemocratic corporations is to have let loose within the borders of democratic societies many powerful, ruthless, and rapacious entities that have both the financial means and the fierce determination to do whatever is necessary to protect their interests and pursue their very narrow economic goals, which are to maximize sales and profits for their owners, and which goals they increasingly pursue on an international scale.

This has led to a power struggle between corporations and everyone else. In this struggle, it is the mighty corporations that are winning the battle because they are better organized, have vast amounts of money with which to accomplish their goals, which goals they pursue with single-minded focus and, in some cases, ruthlessness. This outcome is not at all surprising, since armies comprised of professional soldiers who are equipped with the latest weapons technology will almost always defeat a disorganized group of bedraggled, unmotivated, poorly-trained, and unequipped or poorly-equipped adversaries.

Increasingly, corporations are encroaching on areas that previously were considered to be the exclusive domains of democratically-elected governments. These include safety, such as food safety, laws, regulations, education, public health care, and tax rates. Another recent development is that, due to their increased national and international mobility, some corporations are able to exact large subsidies and other concessions, such as reduced tax or electricity rates, from local governments before they agree to build a factory there. In other words, like pirates and buccaneers in past ages, they are using their power and mobility to expropriate as much as they can of the wealth of others for their selfish ends.

International trade increases competition, and competition reduces costs. But competition can reduce costs in two ways: by increasing efficiency or by lowering standards. A firm can save money by lowering standards for pollution control, worker safety, wages, health care, and so on — all choices that externalize some of its costs. Profit-maximizing firms in competition always have an incentive to externalize their costs to the degree that they can get away with it.

For precisely that reason, nations maintain large legal, administrative, and auditing structures that bar reductions in the social and environmental standards of domestic industries. There are no analogous international bodies of law and administration; there are only national laws, which differ widely. Consequently, free international trade encourages industries to shift their production activities to the countries that have the lowest standards of cost internalization — hardly a move toward global efficiency.[1]

In poorer countries, the harmful effects of corporate serfdom are more obvious because the government and people are weaker and therefore less able to withstand the predatory actions of corporations; but even the inhabitants of wealthy democratic countries are being increasingly reduced to a state of corporate serfdom and tyrannical corporate control over their lives. Nowhere is this trend more visible today than in the United States, where many Americans have surrendered, whether knowingly or not, more and more of their liberties to powerful corporations in the mistaken belief that this will make them better off, since private corporations operate in the “free” market, while governments, being monopolies, do not.

First, they mean acknowledging and eliminating the sources of remote tyranny in our time. In contrast to the [U.S. Constitution’s] framers’ expectations, power has steadily gravitated from the people and elected governments to corporations, an entity they did not anticipate. Subsequently, the courts have been wonderfully kind to corporations, making them fictionalized persons protected by the rights accorded to real people in the Bill of Rights. Congress and various administrations have become highly indebted to them, thereby giving monied interests an undeserved advantage over the public interest. The public is losing, or has already lost, control over much of the public commons, capital, information, airwaves, land, health care, employment, genetic information, and, if the acolytes of free trade have their way, the power to control our own economic affairs. Further, we the people are excluded from fundamental decisions about war and peace, nuclear weapons policy, and the growing number of decisions about technology in which there is some probability of infinite disaster.[2]

By seeking to diminish, weaken, and impoverish their various governments, whether municipal, state, or federal, Americans have very foolishly debilitated the sole defense that any people has against these powerful corporate entities. And even where governments have not been thus weakened, the widespread contempt that Americans feel towards their governments and their mistrust of politicians reduces the latter’s ability to legislate against corporations in order to protect the common people from corporate machinations and depredations. Another important development is that corporations have figured out how to use the large sums of money they possess in order to influence or manipulate both the legal and political system in their favour. In other words, they have become highly adept at using their financial resources to control governments and the judicial system to their narrow advantage.

For nearly a half century, government at all levels has been under constant attack by the extreme right wing [in the United States] with the clear intention of eroding our capacity to create collective solutions to national and global problems. The assumption is now common that markets are “moral” but that publicly created political solutions are not. The result is a continuation of what a Republican president, Teddy Roosevelt, once described as “a riot of individualistic materialism, under which complete freedom for the individual . . . turned out in practice to mean perfect freedom for the strong to wrong the weak”.[3]

How did this very troubling infringement of democracy and the abrogation of people’s liberties come about? The present dominant system of economic behaviour, together with its many undesirable consequences, is neither innate in human nature nor inevitable. It is due to certain features of modern societies that are in turn due to the widespread adoption or imposition of a certain model of economic production and ownership, specifically the no-responsibility stock corporation, along with assumptions about the beneficial effects of free-market principles like privatization, free trade, unbridled competition, and deregulation, or minimal government interference in the market. In other words, all of these harmful consequences are the result of erroneous economic theories, beliefs, and practices.

In the past, doctors bled their patients and prescribed other useless or harmful remedies for their patients’ problems because they didn’t understand how the human body functions and the true causes of sickness and disease. Today, there exists a group of individuals called economists who prescribe remedies that are comparable to the discontinued practice of bleeding because they too, like their ignorant medical predecessors, fail to understand what is really going on in the world. Instead of studying the real world, they prefer to theorize, and make logical deductions, about their idealized world of perfect competition, perfect knowledge, perfect labour mobility, individual rational utility maximizers, and so on, which many of them have mistaken for the real world. Like quack doctors in the past, many of whom did more harm than good to their patients because they were wedded to their false theories about the human body, these economic quack doctors likewise do more harm than good to the large groups of people to whom they administer because they are wedded to their false theories about human and economic behaviour.

The way out of this morass is clear: just as the development of modern medicine liberated sick people from the dangers of false medical theories and practices, we need urgently to acquire a correct understanding of human behaviour in order to liberate ourselves from the dangers of false economic theories and practices. For only then will we be able to free ourselves from the growing and increasingly alarming state of corporate tyranny that is spreading its tentacles, like a giant, rapacious octopus, over the entire world.

[1] The Case Against the Global Economy: And for a Turn Toward the Local, pp. 232-233 (“Free Trade: The Perils of Deregulation” by Herman E. Daly). Edited by Jerry Mander and Edward Goldsmith. Sierra Club Books, San Francisco, 1996.

[2] Hope is an Imperative: The Essential David Orr by David W. Orr, p. 137. Island Press, Washington, DC, 2011.

[3] Ibid, p. 59.