Consent Of The Governed

The reign of corporations and the fight for democracy
By Jeffrey Kaplan
Orion Magazine

Image by Matt Wuerker

DESCRIBING THE UNITED STATES of the 1830s in his now-famous work, Democracy in America, the young French aristocrat Alexis de Tocqueville depicted a country passionate about self-governance. In the fifty years since sovereignty had passed from the crown to the people, citizens of the new republic had seized upon every opportunity “to take a hand in the government of society and to talk about it....If an American should be reduced to occupying himself with his own affairs,” wrote de Tocqueville, “half his existence would be snatched from him; he would feel it as a vast void in his life.”

At the center of this vibrant society was the town or county government. “Without local institutions,” de Tocqueville believed, “a nation has not got the spirit of liberty,” and might easily fall victim to “despotic tendencies.”

In the era’s burgeoning textile and nascent railroad industries, and in its rising commercial class, de Tocqueville had already detected a threat to the “equality of conditions” he so admired in America. “The friends of democracy should keep their eyes anxiously fixed,” he warned, on an “industrial aristocracy....For if ever again permanent inequality of conditions and aristocracy make their way into the world it will have been by that door that they entered.” Under those conditions, he thought, life might very well be worse than it had been under the old regimes of Europe. The old land-based aristocracy of Europe at least felt obliged “to come to the help of its servants and relieve their distress. But the industrial aristocracy… when it has impoverished and brutalized the men it uses, abandons them in a time of crisis.”

As de Tocqueville predicted, the industrial aristocrats have prevailed in America. They have garnered enormous power over the past 150 years through the inexorable development of the modern corporation. Having achieved extensive control over so many facets of our lives—from food and clothing production to information, transportation, and other necessities—corporate institutions have become more powerful than the sovereign people who originally granted them existence.

As late as 1840, state legislators closely supervised the operation of corporations, allowing them to be created only for very specific public benefits, such as the building of a highway or a canal. Corporations were subject to a variety of limitations: a finite period of existence, limits to the amount of property they could own, and prohibitions against one corporation owning another. After a period of time deemed sufficient for investors to recoup a fair profit, the assets of a business would often revert to public ownership. In some states, it was even a felony for a corporation to donate to a political campaign.

But in the headlong rush into the Industrial Age, legislators and the courts stripped away almost all of those limitations. By the 1860s, most states had granted owners limited liability, waiving virtually all personal accountability for an institution’s cumulative actions. In 1886, without comment, the United States Supreme Court ruled for corporate owners in Santa Clara County v. Southern Pacific Railroad, allowing corporations to be considered “persons,” thereby opening the door to free speech and other civil rights under the Bill of Rights; and by the early 1890s, states had largely eliminated restrictions on corporations owning each other. By 1904, 318 corporations owned forty percent of all manufacturing assets. Corporate owners were replacing de Tocqueville’s “equality of conditions” with what one writer of the time, W. J. Ghent, called “the new feudalism… characterized by a class dependence rather than by a personal dependence.”

Throughout the twentieth century, federal courts have granted U.S. corporations additional rights that once applied only to human beings—including those of “due process” and “equal protection.” Corporations, in turn, have used those rights to thwart democratic efforts to check their growth and influence.

CORPORATE POWER, largely unimpeded by democratic processes, today affects municipalities across the country. But in the conservative farming communities of western Pennsylvania, where agribusiness corporations have obstructed local efforts to ban noxious corporate farming practices, the commercial feudalism de Tocqueville warned against has evoked a response that echoes the defiant spirit of the Declaration of Independence.