Corporate Power
A headline’s been making the rounds the last couple days, “US corporate profits surge to record as worker payouts wilt.” Not that it's news, certainly not in the last fifty years. Really, you could go back to the beginning, the British East India Company, and depending on how you account….
Coincidentally, the NYT has a piece worth reading on the British East India Company. The Company was basically the model for the modern industrial corporation and the corporate global economic system since created. More than a little late, the Times warns against the concentration of corporate power. I think even the US intelligentsia, such that there is such a thing, are coming to understand even they are powerless against our rising Tech Lords. How much has been stolen?
Of course there’s no new political thinking in the Times, in fact, the piece ends saying to take on corporate power, “The instruments still exist. What is lacking is the political nerve to use them.” This simply isn’t true.
The corporations control government. The need for democratic political, corporate, and government reform are all essential. All need to happen together. We need more than political nerve, we need active democratic political will. This isn’t going to be accomplished with protest politics or through our present electoral politics, but only with a restructuring and revitalization of democracy, beginning by creating democratic organization, a whole lot of education, and necessary new thinking. Over the last few years, I’ve written a lot about how that might look.
Below is a past piece I wrote on the East India Company. I scooped the NYT by 15 years – how about that. The essay is from my book OF BY FOR: The New Politics of Debt, Money, and Democracy. The politics remain as fresh and relevant today as they were 15 years ago.
The Corporation That Changed the World - 2011
At its inception, our contemporary Tea Party voiced important and legitimate concerns about the bank bailouts and the power of corporations in America. Yet today, both in the corporate media's coverage and the rhetoric of the movement's self-proclaimed representatives, little is being heard concerning the unchecked power of corporations.
That wasn't the case with the Party's revolutionary era ancestors. That Tea Party understood implicitly the tea they were throwing into the Boston Harbor belonged to the East India Company, not the crown. In Nick Robins' excellent history of the East India Company, The Corporation That Changed the World, he writes how the American colonial press was filled with vitriol against the East India Company, which the English crown had given monopoly control of the tea trade. Robins writes,
“From October onwards, newspapers, and handbills provided the citizens of the 13 colonies with a barrage of analysis and polemic. The Boston Evening Post of 18 October 1773, for example, contained a powerful article from 'Reclusus' exposing the folly of Lord North's plan. "Though the first Teas may be sold at a low rate to make a popular entry" he acknowledged, "yet when this mode of receiving tea is well established, they, as all other Monopolists do, will mediate a greater profit on their goods, and set them at what price they please."
Lord North's plan was an attempt by the crown to lessen the unpopular taxes, but it was met with more opposition than the original Stamp Act of eight years before. Robins adds another colonist's critique of the Company,
“Writing in The Alarm newsletter, 'Rusitcus' underlined how 'their conduct in Asia for some years past, has given simple proof, how little they regard the laws of nations, the rights, liberties, or lives of men'. 'They have levied War, for the sake of gain,' adding: 'fifteen hundred thousands, it is said, perished by famine in one year, not because the earth denied its fruits, but this company and their servants engulfed all the necessities of life, and set them at so high a rate that the poor could not purchase them.'”
As Robins points out, the colonials’ actions against the Company preceding the Tea Party had been so highly effective that, "Legal imports of the Company's tea plummeted from a record 869,000 lb in 1768 to just 108,000 lb in 1770."
It's an interesting fact that the American colonials' important and vivid critiques and opposition to the power of the East India Company have mostly been lost to history, as has the history of the Company itself. Both are relevant to our age and to anyone concerned with present questions of freedom, liberty, and democracy. The East India Company set the precedent and became the model for the global mega-corporation of our age, in both its productivity and corruption, and in its completely anti-democratic structures and behaviors. The East India Company existed for over two and half centuries. In that time, with and without the help of the English government, the Company gained monopoly control over Asian trade, conquered and impoverished vast chunks of India causing the largest famine of India's history, and fought two wars with China to keep the illegal and despicable opium trade open, enslaving millions of Chinese.
The East India Company was so notorious in its day they gained the opposition of Adam Smith, Edmund Burke, and Karl Marx. Not exactly an historical coalition that would spring quickly to anyone's mind. Edmund Burke, one of the patron saints of American conservatism, would lead the prosecution in the English parliament for six years in a case against the head of the Company. Burke and his partner Richard Brinsley Sheridan charged,
“Compared Hastings (the Company's chairman) to the 'writhing obliquity of the serpent' and damned him for a character that was all 'shuffling, ambiguous, dark, insidious, and little'. And as for the Company, it combined 'the meanness of a pedlar and the profligacy of pirates... wielding a truncheon with one hand, and picking a pocket with the other.'“
While Adam Smith, the tremendously misinterpreted and wrongly deified advocate of modern mega-corporate power wrote of the Company,
“The result of this anti-competitive behavior was to raise profits above the natural level, amounting to (Smith writes) 'an absurd tax upon the rest of their fellow citizens.' Cartels are thus an ever present danger in a market economy and in Smith's immortal words, 'people of the same trade seldom meet together, but the conversation ends in conspiracy against the public or in some contrivance to raise prices.'”
An absurd tax on the rest of us! What can better describe the control of the American economy by the descendants of the East India Company, our own era's global mega-corporations? Robins informs about our present economy, “Over 60 percent of international commerce now takes place within corporations rather than in the open marketplace, making it idle to talk of free markets.”
Sounding as relevant today as two centuries ago, Robins describes the Company's operations,
“It was the speculative behavior of corporate insiders and short-term investors that emerged as the most powerful factor in the Company's spectacular fall from grace in the middle of the 18th century. Financial engineering, flimsy managerial controls and inadequate regulation all played their part... the same passion for aggressive acquisitions, the same obsession with executive perks for corporate insiders, and the same focus on executive self-preservation as ordinary shareholders started to suffer the consequences of excess.”
And what did this financial engineering, inadequate regulation, and corporate insiderism lead to? Repeated bailouts by the government, with the largest occurring at the end of the 18th century. Robins writes,
“To avoid a run on the stock, (Prime Minister) Pitt pushed through legislation extending the Company's ability to raise debt, and so pay its regular dividend at 8 percent. Of course, this measure made little financial sense as the Company was paying dividends out of debt. But it helped to stabilize the situation.”
Sound familiar?
The English government, a monarchy, chartered the East India Company, thus the Company had plenty of monarchical characteristics. Modern US mega-corporations are also charted by government, though, with what at this point can only be called a quirk of history, they are chartered through our state governments. With this chartering through the states, it was hoped corporations might be more functionally democratic, but that has not proven the case.
The East India Company still had a relatively small grip on the overall British economy. We live in a time with not one dominant corporation but in an economy completely dominated by several hundred massive corporate structures, riddled with corruption, insiderism and speculation, to such a degree that their “absurd tax" on the rest of us dwarfs the taxes of DC.
Yet, there is no American politics against "oppressive" corporate power. Both parties are completely in the pockets of the corporate oligarchy and if these were or are concerns expressed by the present Tea Party, they've been completely censored by the corporate media and the loathsomely decadent Republican political class.
At the beginning of the 21st century, we can, like this republic's founding generation, step-up to talk about and take action concerning our corrupted and dysfunctional political system. It must include all aspects of power, and that includes the enormous power of the modern global mega-corporation. We would do well to follow the founding America tradition -- the first step to dealing with unaccountable power is to break it up. This is the tradition set by the colonial Tea Party and a necessity for self-government. Our present Tea Party might find it useful to go back and read more of America's founding documents, the newspapers, letters, and pamphlets written in the years leading to the Revolution. They would find the founders, not just those in the pantheon, but the thousands scattered up and down the eastern seaboard, had as much concern about the unaccountable power of the nascent corporation as they did of their ancient King.