Conghaileach
18th July 2002, 22:48
Published on Thursday, July 18, 2002 in the Washington Post
'Corporate Socialism'
by Ralph Nader
The relentless expansion of corporate control over our political
economy has proven nearly immune to daily reporting by the mainstream
media. Corporate crime, fraud and abuse have become like the weather;
everyone is talking about the storm but no one seems able to do
anything about it. This is largely because expected accountability
mechanisms -- including boards of directors, outside accounting and
law firms, bankers and brokers, state and federal regulatory agencies
and legislatures -- are inert or complicit.
When, year after year, the established corporate watchdogs receive
their profits or compensation directly or indirectly from the
companies they are supposed to be watching, independent judgment
fails, corruption increases and conflicts of interest grow among
major CEOs and their cliques. Over time, these institutions,
unwilling to reform themselves, strive to transfer the costs of their
misdeeds and recklessness onto the larger citizenry. In so doing, big
business is in the process of destroying the very capitalism that has
provided it with a formidable ideological cover.
Consider the following assumptions of a capitalistic system:
1) Owners are supposed to control what they own. For a century, big
business has split ownership (shareholders) from control, which is in
the hands of the officers of the corporation and its rubber-stamp
board of directors. Investors have been disenfranchised and told to
sell their shares if they don't like the way management is running
their business. Nowadays, with crooked accounting, inflated profits
and self-dealing, it has proven difficult for even large investors to
know the truth about their officious managers.
2) Under capitalism, businesses are supposed to sink or swim, which
is still very true for small business. But larger industries and
companies often have become "too big to fail" and demand that Uncle
Sam serve as their all-purpose protector, providing a variety of
public guarantees and emergency bailouts. Yes, some wildly looted
companies that are expendable, such as Enron, cannot avail themselves
of governmental salvation and do go bankrupt or are bought. By and
large, however, in industry after industry where two or three
companies dominate or presage a domino effect, Washington becomes
their backstop.
3) Capitalism is supposed to exhibit a consensual freedom of
contract -- a distinct advance over a feudal society. Yet the great
majority of contracts for credit, insurance, software, housing,
health, employment, products, repairs and other services are standard-
form, printed contracts, presented on a take-it-or-leave-it basis.
Going across the proverbial street to a competitor gets you the same
contract. Every decade, these "contracts of adhesion," as the lawyers
call them, become more intrusive and more insistent on taking away
the buyers' constitutional rights to access to courts in favor of
binding arbitration or stipulate outright surrender of basic rights
and remedies. The courts are of little help in invalidating these
impositions by what are essentially private corporate legislatures
regulating millions of Americans.
4) Capitalism requires a framework of law and order: The rules of the
economic game are to be conceived and enforced on the merits against
mayhem, fraud, deception and predatory practices. Easily the most
powerful influence over most government departments and agencies are
the industries that receive the privileges and immunities, regulatory
passes, exemptions, deductions and varied escapes from responsibility
that regularly fill the business pages. Only those caught in
positions of extreme dereliction ever have reason to expect more than
a slap on the wrist for violating legal mandates.
5) Capitalist enterprises are expected to compete on an even playing
field. Corporate lobbyists, starting with their abundant cash for
political campaigns, have developed a "corporate state" where
government lavishes subsidies, inflated contracts, guarantees and
research and development and natural resources giveaways on big
business -- while denying comparable benefits to individuals and
family businesses. We have a government of big business, by big
business and for big business, even if more of these businesses are
nominally moving their state charters to Bermuda-like tax escapes.
"Corporate socialism" -- the privatization of profit and the
socialization of risks and misconduct -- is displacing capitalist
canons. This condition prevents an adaptable capitalism, served by
equal justice under law, from delivering higher standards of living
and enlarging its absorptive capacity for broader community and
environmental values. Civic and political movements must call for a
decent separation of corporation and state.
In 1938, in the midst of the Great Depression, Congress created the
Temporary National Economic Committee to hold hearings around the
country, recommend ways to deal with the concentration of economic
power and promote a more just economy. World War II stopped this
corporate reform momentum. We should not have to wait for a further
deterioration from today's gross inequalities of wealth and income to
launch a similar commission on the rampant corporatization of our
country. At stake is whether civic values of our democratic society
will prevail over invasive commercial values.
Ralph Nader is the founder of Public Citizen.
© 2002 The Washington Post Company
'Corporate Socialism'
by Ralph Nader
The relentless expansion of corporate control over our political
economy has proven nearly immune to daily reporting by the mainstream
media. Corporate crime, fraud and abuse have become like the weather;
everyone is talking about the storm but no one seems able to do
anything about it. This is largely because expected accountability
mechanisms -- including boards of directors, outside accounting and
law firms, bankers and brokers, state and federal regulatory agencies
and legislatures -- are inert or complicit.
When, year after year, the established corporate watchdogs receive
their profits or compensation directly or indirectly from the
companies they are supposed to be watching, independent judgment
fails, corruption increases and conflicts of interest grow among
major CEOs and their cliques. Over time, these institutions,
unwilling to reform themselves, strive to transfer the costs of their
misdeeds and recklessness onto the larger citizenry. In so doing, big
business is in the process of destroying the very capitalism that has
provided it with a formidable ideological cover.
Consider the following assumptions of a capitalistic system:
1) Owners are supposed to control what they own. For a century, big
business has split ownership (shareholders) from control, which is in
the hands of the officers of the corporation and its rubber-stamp
board of directors. Investors have been disenfranchised and told to
sell their shares if they don't like the way management is running
their business. Nowadays, with crooked accounting, inflated profits
and self-dealing, it has proven difficult for even large investors to
know the truth about their officious managers.
2) Under capitalism, businesses are supposed to sink or swim, which
is still very true for small business. But larger industries and
companies often have become "too big to fail" and demand that Uncle
Sam serve as their all-purpose protector, providing a variety of
public guarantees and emergency bailouts. Yes, some wildly looted
companies that are expendable, such as Enron, cannot avail themselves
of governmental salvation and do go bankrupt or are bought. By and
large, however, in industry after industry where two or three
companies dominate or presage a domino effect, Washington becomes
their backstop.
3) Capitalism is supposed to exhibit a consensual freedom of
contract -- a distinct advance over a feudal society. Yet the great
majority of contracts for credit, insurance, software, housing,
health, employment, products, repairs and other services are standard-
form, printed contracts, presented on a take-it-or-leave-it basis.
Going across the proverbial street to a competitor gets you the same
contract. Every decade, these "contracts of adhesion," as the lawyers
call them, become more intrusive and more insistent on taking away
the buyers' constitutional rights to access to courts in favor of
binding arbitration or stipulate outright surrender of basic rights
and remedies. The courts are of little help in invalidating these
impositions by what are essentially private corporate legislatures
regulating millions of Americans.
4) Capitalism requires a framework of law and order: The rules of the
economic game are to be conceived and enforced on the merits against
mayhem, fraud, deception and predatory practices. Easily the most
powerful influence over most government departments and agencies are
the industries that receive the privileges and immunities, regulatory
passes, exemptions, deductions and varied escapes from responsibility
that regularly fill the business pages. Only those caught in
positions of extreme dereliction ever have reason to expect more than
a slap on the wrist for violating legal mandates.
5) Capitalist enterprises are expected to compete on an even playing
field. Corporate lobbyists, starting with their abundant cash for
political campaigns, have developed a "corporate state" where
government lavishes subsidies, inflated contracts, guarantees and
research and development and natural resources giveaways on big
business -- while denying comparable benefits to individuals and
family businesses. We have a government of big business, by big
business and for big business, even if more of these businesses are
nominally moving their state charters to Bermuda-like tax escapes.
"Corporate socialism" -- the privatization of profit and the
socialization of risks and misconduct -- is displacing capitalist
canons. This condition prevents an adaptable capitalism, served by
equal justice under law, from delivering higher standards of living
and enlarging its absorptive capacity for broader community and
environmental values. Civic and political movements must call for a
decent separation of corporation and state.
In 1938, in the midst of the Great Depression, Congress created the
Temporary National Economic Committee to hold hearings around the
country, recommend ways to deal with the concentration of economic
power and promote a more just economy. World War II stopped this
corporate reform momentum. We should not have to wait for a further
deterioration from today's gross inequalities of wealth and income to
launch a similar commission on the rampant corporatization of our
country. At stake is whether civic values of our democratic society
will prevail over invasive commercial values.
Ralph Nader is the founder of Public Citizen.
© 2002 The Washington Post Company