When Corporations Rule the World

Date: 25 Apr 1995 | posted in: From the Desk of David Morris, The Public Good | 0 Facebooktwitterredditmail

When Corporations Rule the World

by David Morris

April 25, 1995

The title of a new book by David Korten, “When Corporations Rule the World” aptly describes the way things will be in the very near future if the new Republicans get their way. Newt Gingrich is willing to pull out all the stops when it comes to curbing the power of big government. But when it comes to curbing the more ominous power of big corporations, he not only refuses to do anything; he tells the corporations, “Full speed ahead”.

We need to remember that although businesses have been around forever, the modern corporation is a relatively new invention. Until the late 19th century corporations were chartered for specific purposes and for specific time periods. The people who owned them were personally liable for their actions. The general purpose, perpetual lived, limited liability business corporation is a human invention. Designed as a device to allow businesses to amass the capital necessary to finance the large factories and equipment of an industrial age, this social invention succeeded beyond the wildest imaginings of its creators.

By the end of the 20th century a handful of corporations have grown so large that they, not nations, have become the world’s primary decisionmakers. Of the 100 largest economic units on the planet, including nations, half are corporations. More than a third of all international trade no longer occurs between nations but within the branches and subsidiaries of the same corporation.

U.S. corporations bluntly tell us they feel no loyalty to the nation that birthed them. Cyrill Stewert, Chief Financial Officer at Colgate Palmolive Company told the New York Times, “There is no mindset that puts this country first”. The head of NCR Corporation added, “I was asked the other day about United States competitiveness and I replied that I don’t think about it at all.”

This unprecedented concentration of economic power in private hands, coupled with the divorce of that power from a sense of community creates an extremely dangerous situation. “Human beings need a landscape, a province or a city to call their home”, writes former Volvo CEO Pehr G. Gyllenhammar. “It is the same with corporations; otherwise, they become monsters.”

Today one person can make decisions that affect thousands, even hundreds of thousands of people in other cities and countries. Corporations close branch plants that are profitable but not as profitable as they would like. The increase in local crime and family violence, the broken lives and loss of revenue to local schools and other services that comes with the closure of these plants is not included in the cost-benefit analysis corporations use to make their decisions.

Republicans would expand the rights of giant corporations and restrict the rights of citizens to control these powerful creatures. Their Contract With America would abolish the small business administration, abolish the minimum corporate income tax, limit citizens’ ability to sue corporations, pre-empt state laws regarding product liability standards and curb the federal government’s authority to regulate corporations.

Giant corporations would have us believe they’re just like any other business. They’re not. Over 90 percent of business enterprises are small. Their owners live in the communities their businesses serve. These kinds of businesses enrich the civic life of their communities.

Locally owned small businesses are not only the foundation for strong communities; they are the driving force of strong economies. Small businesses are our engines of innovation and job creation.

I thought about the distinction between planetary corporations and local businesses the other day when I heard for the one millionth time a Republican tell the story about the jury that awarded $2.9 million to a woman burned by a cup of coffee. Republicans think the tale symbolizes a legal system gone berserk. I think the moral of that story is quite different. McDonalds, a planetary corporation with tens of thousands of branches, served an 81 year old woman coffee heated to 180-190 degree, far above the 140 degrees needed to make a perfectly good cup. She was hospitalized for 8 days and underwent skin graft operations for third degree burns. The jury was told that some 700 patrons over the past 10 years had burned themselves with this super heated coffee. Only after the jury verdict did fast food chains re-evaluate their practice of unnecessarily subjecting patrons to this potential injury.

Now consider what might have happened if your neighborhood mom and pop eatery served coffee that scalded people. How many residents do you think would have had to be burned before customers talked to the owner, probably the person behind the cash register, and demanded that he or she turn the damn temperature down? Big corporations require a legal system that allows the average citizen to force them to pay for their mistakes and mend their ways. Local businesses more easily hear the voice of their customers.

We should oppose giantism in all its forms, not just in government but in the business sector. We allowed government to get too big. Now we’re cutting it down to size. We also allowed businesses to get too big . We need to curb their awesome power and cut them down to size as well.

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David Morris

David Morris is co-founder of the Institute for Local Self-Reliance and currently ILSR's distinguished fellow. His five non-fiction books range from an analysis of Chilean development to the future of electric power to the transformation of cities and neighborhoods.  For 14 years he was a regular columnist for the Saint Paul Pioneer Press. His essays on public policy have appeared in the New York TimesWall Street Journal, Washington PostSalonAlternetCommon Dreams, and the Huffington Post.