=======================Electronic Edition========================
RACHEL’S ENVIRONMENT & HEALTH WEEKLY #489
—April 11, 1996—
News and resources for environmental justice.
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Environmental Research Foundation
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Fax (410) 263-8944; Internet: erf@rachel.clark.net
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FIXING CORPORATIONS–PART 2:
CORPORATIONS FOR THE SEVENTH GENERATION
by Jane Anne Morris [1]
[Note: This is second of two articles that explore strategies for
going beyond the usual calls for “corporate accountability.”
(Part 1 appeared in REHW #488.) The author is part of a
movement, already taking root in over a dozen states, that
advocates retaking the historic right of the sovereign people to
determine and direct corporate action.]
In view of the historic provisions that used to govern
corporations (see REHW #488), their representatives must be
pleased that at least in this country, boycotts and divestment
strategies are considered radical, and “dialoging” is the
preferred mode of interaction. The rest of this paper is an
exploration of ways to restructure today’s corporation so that
citizen activist efforts to eliminate corporate wrongs can amount
to more than just a few hard-won needles in a corporate haystack.
As we saw last week, corporations are a special form of business
entity given a state charter and certain privileges in exchange
for being subject to the will of the sovereign people as
expressed through state legislatures.
Over the last half a dozen generations, corporation
representatives have managed to set up barriers to insulate the
corporation from citizen influence. Several trends have made it
more difficult to direct the corporation towards serving the
public interest it was created to serve. Among them: ** Under
cover of the U.S. Constitution’s “commerce” clause [2]as
interpreted by the U.S. Supreme Court, federal regulatory
agencies have usurped many of the powers once exercised regularly
by state legislatures. Today’s corporations are ideally suited
to wage battles on the regulatory front, because it is so
difficult for citizens’ groups to match their resources. [3] (In
many ways, the late 19th century ascendance of the “commerce”
argument is an eerie foreshadowing of today’s NAFTA and GATT
controversies.)
** Through a series of leveraged expansions of the “diversity
clause” of the U.S. Constitution [4](allowing “citizens” from two
different states to be heard in federal court instead of the
presumably more biased courts of either’s home state), the U.S.
Supreme Court “deemed” corporations “citizens” and thus gave them
nearly unrestricted access to federal courts. [5] This saved
corporations the trouble of defending themselves in the courts of
the state where they actually cause the harms. ** In 1886 the
U.S. Supreme Court decreed that corporations are “persons” under
the 14th amendment, thus granting them protection under the Bill
of Rights. [6]Such guarantees of free speech, due process, and
equal protection under the law were long considered to apply to
human persons. This ruling gave corporations unprecedented
“rights” to question almost any law applied to them, and
frustrated the ability of the people to direct corporate action
in service of the public good.
** Stockholders, who used to really run corporations, have seen
their power dramatically reduced. Today the powerful corporate
manager class is insulated from stockholder influence by a
variety of stock voting tricks and governance structures that
they themselves set up. They are protected from most liability
by state corporation codes and lax laws and enforcement. And
they write their own paychecks. [7]
In order to have a world that we would not be ashamed to bequeath
to the Seventh Generation, we must make two major changes in the
governance of the corporation. First, we must remove obstacles
to citizen control of the corporation. Second, we must reinstate
provisions such as those (enumerated in REHW #488) once governing
corporations, and add others that are particularly suited to our
times.
“Model” provisions can become part of 1) state constitutions, 2)
state corporation codes and/or 3) the actual corporate
“charters,” which are the documents states give to corporations
to formally bring them into existence. A program to institute
such changes would include areas such as the following.
People’s power over corporations.
1. We the people can demand that state legislatures, the most
direct expression of the people’s will, use their “reserved
power” to revoke the charters of errant domestic corporations.
(A domestic corporation is one chartered in that state.) The
people of Delaware and a few other states with “easy” chartering
policies would have a more exciting time than the rest of us
here, since the overwhelming majority of offending (U.S)
multinational corporations are chartered there.
2. In other states, citizens can demand that their attorneys
general (or whatever agent is specified in their state laws and
constitutions) revoke the permission of errant foreign
corporations to do business in their state. (A foreign
corporation is one chartered in another state in the U.S. Those
chartered in other countries are called alien corporations.) Such
actions have already been initiated against Weyerhaeuser, WMX
(formerly Waste Management, Inc.), and CSX corporations. [8] (See
REHW #455.)
** Annul “rights” given corporations by judge-made law. We can
work for state constitutional amendments that underline
corporations’ status as subservient to the people and the
legislatures, and assert that corporations are not legal
constitutional “persons” and thus are not protected by the Bill
of Rights of the U.S. Constitution.
** Re-open corporate affairs to legislative scrutiny. At one
time, all corporate records and affairs were open to legislatures
or other designated state officials so that state governments, on
behalf of the people, could monitor and evaluate corporate
actions. We can reinstate such provisions in state corporation
codes.
** Reinstate stockholder/owner control over corporate management
and policy. For decades, concerned stockholders have attempted
to curb some of the worst excesses of corporate policies, only to
find their efforts thwarted by corporate management. We can
modify states’ corporation codes to return a modicum of control
of corporations to their putative owners, the stockholders. Some
basic provisions might include a) a one stockholder, one vote
policy, b) prohibitions against issuing non-voting stock, c)
removal of obstacles to stockholders’ access to information,
initiation of policies, and removal of unsatisfactory corporate
management.
** Give state courts clear authority to hear all corporation
cases. State courts, more sensitive to local needs and conditions
and more accessible to citizens, once heard most corporation
cases. During the last years of the nineteenth century, numerous
unsuccessful attempts were made at the federal level to reinstate
this practice. Both federal legislation and federal
constitutional amendments were proposed. Either one would do the
trick.
** Reinstate historic limits on corporations. State corporation
codes and/or corporate charters can be amended to include
provisions such as the following: a) Require corporations to
have a specific purpose, with a penalty of charter revocation if
said purpose is either not fulfilled or is exceeded. This would
include a prohibition on the kind of “look how ethical we are!”
advertising that currently dissipates stockholders’ dollars and
discombobulates public perceptions. b) Require a percentage of
stockholders to live within the chartering state. c) Prohibit
corporations from owning stock in other corporations. d) Issue
corporate charters for only a specific term of existence, perhaps
ten or twenty years. e) Limit real estate holdings to that
necessary for corporate purposes. f) Prohibit any and all
political donations by corporations. g) Prohibit all civic,
charitable, or educational donations not specifically provided
for in the corporate purpose. h) Impose strict liability for all
corporate officers and/or stockholders.
** Initiate new limits on corporate activities. We can add
provisions (to state codes, charters, and/or constitutions) that:
a) Forbid corporations from doing business under pseudonyms or
alternative names.
b) Require corporations to use earth-friendly materials in all
stages of operations, and to list all ingredients.
c) Prohibit corporations from buying up patents for the purpose
of preventing others from exploiting them.
d) Require every corporate document to be signed by a human being
who thereby takes responsibility for the veracity of statements
and the soundness of judgments therein.
e) Require a corporation to pay for periodic health, safety, and
environmental audits by independent experts selected by workers
and affected communities.
f) Require that in the event of bankruptcy, corporate management
pay and perks be withheld until all other debts and creditors are
paid, starting with workers and small businesses.
g) Require 95% recycling.
h) Prohibit corporations from seeking or accepting “incentive”
packages from any government entity.
i) Establish a maximum ratio (like 1:5) between compensation of
the lowest-paid worker and the highest-paid executive.
j) Establish a process similar to “recall” procedures for elected
officials, so that citizens can initiate revocation referendums
for corporate charters (in the case of domestic corporations) and
for certificates of authority (that allow foreign corporations to
do business in one’s state).
k) Require uniformity of health benefits within each corporation
for all corporation employees (from CEOs to wage-laborers).
This is just a sampling of some of the options open to us.
Priorities might include working to revoke corporate charters, to
end the privileges granted corporations under the judicial
“corporate personhood” doctrine, and to prohibit political
contributions. Most of the obstacles we face are in the arena of
judge-made law, but historic legislation and constitutional
provisions offer us a solid body of favorable precedents. Much
debate lies ahead. But it is high time we shifted the
controversy from whether we control corporations to how we do so.
                                                                    
The sky’s the limit. What are we waiting for?
===============
[1] Jane Anne Morris is a corporate anthropologist working on
corporation issues as part of Democracy Unlimited of Wisconsin
Cooperative. [Join them: 29 E. Wilson, Ste. 201, Madison WI
53703; phone (608) 255-6629; fax (608) 255-6643]. She is author
of NOT IN MY BACK YARD: THE HANDBOOK (San Diego: Silvercat
Publications [(888) 299-9119], 1994).
[2] U.S. Const. Art. I, Sec. 8.
[4] U.S. Const. Art. III Sec. 2.
[6] Santa Clara County v. Southern Pac. R.R., 118 U.S. 394.
[8] CORPORATE CRIME REPORTER, Vol. 9 No. 25 (June 28, 1995).
Descriptor terms: reforming corporations; regulation; history;
constitutional law;