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Author Topic: On Limiting the Power of Corporations
NobleHunter
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The Clinton's speech thread has drifted into a discussion of the relationship between corporations and government. KidTokyo has argued (I think) that corporations are twice connected to government: they are the creation of governments and, upon reaching a certain size, encourage the creation of laws and regulations to their benefit at the cost of competition.

I'm more interested in the second point as 18th century corporations were almost entirely subject to government control. I reference the East India Companies which all existed and failed in the context of government control and support, often while carrying out the functions of a government in overseas territories. I also like to think early corporations stuck more closely to their stated purpose; I don't think the EIC drifted too far from their purpose of bringing stuff back from the Far East.

As such, it seems likely that the authors of the constitution believed limiting the power of government limited the power of corporations. They had no experience with corporations who transcended national borders while existing independently of national support. The vast majority (as today[-ish]) operated on a much more personal and local level, easily fitting in the framework of decentralized power and local influence constructed by the US Constitution. Their interests were more narrowly constrained as well, as corporations didn't(?) own businesses in multiple industries.

Now we have mega corporations that are neither personal nor local and seem to induce government interference for their convenience rather than their survival. Governments often struggle to regulate and monitor them. As transnational entities, they fit poorly into a structure of government that has local issues being settled locally as a fundamental principle. Likewise, the chains of ownership make it much more difficult to figure out who, exactly, you're doing business with.

I suppose the point of this meandering on the subject of corporations is to speculate on whether or not the authors of the constitution would have limited corporations (by limiting the government which creates them) if they had foreseen how much power they would accumulate. I mean, we know they were twitchy about Central Banks and I can't imagine they'd be happy about the media being owned by so few corporations.

tl;dr: It seems the modern experience of corporations and their relationship to government is fundamentally different than in the 18th century. There may be value in extending constitutional principles of limited power to corporations, given how corporations extend and co-opt government power.

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KidTokyo
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The founders were quite familiar with large international corporations as the Boston Tea Party was aimed directly at the East India Tea Company.

The important thing to remember when discussing what the founders "wanted" in this context is that the founders were establishing a federal constitution. Corporations, however (with the exceptions of national banks) are created by state governments.

State "police powers" kept them in check for a very long time -- it was the post civil war 14th amendment that gave corporate lawyers an opportunity to drastically change the landscape, by find a range of new corporate "rights." Once that happened, states had to compete with one another for who could grant the most liberal corporate powers in order to generate tax revenue. So, yes, big corps were created so states could collect taxes from them and draw industry. The legal argumentation behind all of this is a bit complicated and I'll try to elaborate tomorrow, but it basically was the invention of corporate personhood at a time when a radical activist sector of the judiciary was ascendent that placed the declaration of independence into the constitutional legal cannon and found "freedom of contract."

So to answer the question, its not that the founders limited them -- corporations were presumed limited by definition because they could only do what their charter from the state granted them. Its that later on, lawyers and judges were able to make very creative use of newly created constitutional powers.

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NobleHunter
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But the EIC was still a national institution in a way modern corporations are not. If I remember the context of the Tea Party correctly, the EIC was extracting revenue from the colonies for the Crown (which was obstensibly the point of having colonies). I remember coming across a memo, possibly to one of other chartered companies (Hudson's Bay?), issued in the wake of the 1701 Act of Union reminding managers that they now had to extend the privileges of the English to the Scots. The EIC was essentially an arms-length agent of the Crown, whether it realized it or not.

It might be a categorization error on my part. The EIC and VOC can be defined as something distinctly different from modern internationals; therefore, the people who lived with them conceptualized them differently. But they may not have considered them as tools of the state. The public/private separation was a lot weaker back then.

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KidTokyo
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quote:
But the EIC was still a national institution in a way modern corporations are not.
I'd say that holds true as a formal distinction and as a matter of public perception, but functionally not so much. Corporations now not only hold huge sway over domestic policies in most nations of the world, they also directly influence international law...even though many of them rely on legal principles developed and applied by courts in the state of Delaware.
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