Swans Commentary » swans.com October 24, 2005  



The United Corporate States of America


by Raymond Garcia





(Swans - October 24, 2005)   The question is, who are we, what have we become in the USA? An existential question for sure, yet a practical one. What do we represent, in our own eyes, who are we as a product of our actions? There are clearly many ways of approaching this question, as the current issue of Swans illustrates. For me, the closest definition that captures our essential core, in the USA, is that we are The United Corporate States of America. We are the nationalist expression of the corporate state.

"In order to form a more perfect union," we, the people, have empowered corporations with rights far beyond those possibly imagined for individuals, as the founders of this country envisioned in their Constitution predicated on the radical principle of popular sovereignty (see Wood, Bailyn, et al.). Original intent, as such contemporary constitutional wing nuts as Antonin Scalia and Clarence Thomas would have it, means land-owning white men were and should still be the arbiters of popular sovereignty.

Thankfully, these paleoconservatives and their retrogressive views remain outside the mainstream of an increasingly reactionary-tilted normative standard in contemporary judicial philosophy. However, as we fight with said reactionaries, embodied by the Federalist Society, the base of devoted, original-intent wing nut central, a far more insidious philosophical plague has colonized our judicial philosophy: the corporatist ideal.

The era of Jacksonian democracy in the 1820s ushered in a key electoral reform in the USA: free white men (non-indentured slaves, essentially) could now vote in elections, with property ownership no longer a requirement. Citizenship as the criteria for democratic participation, not ownership class membership. This was indeed a radical reform, as it foreshadowed future electoral participation of freed slaves, as well as, God forbid, women (though not for another hundred years). The quaint dictates of Madison's Constitution, designed to prevent majoritarian (those without property) tyranny over the minority (property owners without popular support) gradually became untenable as an effective protection for elites against the growing empowerment of the masses.

As the U.S. turned from an agrarian-based economy to an industrial economy, pushed significantly by regional imbalances and the butchery of the Civil War, a new base of wealth was being created: access to the ever-growing largesse of government budgets, especially the federal budget. As the shift to industrial investment became the primary access to consolidating wealth over the middle half of the 19th century (say, 1825-1875), governmental power increasingly shifted toward a dual policy imperative: holding down the power of non-elites (i.e., citizens with a vote and little else), and directing budgets toward growing industrial monopolies (see, for example, Howard Zinn's A People's History of the United States). Thus, a policy of support for monopoly financial power became ingrained with the development of the history and reality of the United States.

A serious obstacle to the growth of such elite power developed, however: The potential growth of democratic power, as embodied in this constitutional commitment to popular sovereignty. Here the separation of political and economic power became primary. Madison's constitutional protection of elites from majoritarian tyranny would no longer suffice. As noted by a number of disparate social analysts, including Zinn, Noam Chomsky, Kalle Lasn, and the Alliance For Democracy folks, in stepped the US Supreme Court with a bizarre ruling that laid the groundwork for The United Corporate States of America. In 1886, The Supreme Court ruled that corporations were "natural persons" under the law, essentially extending civil rights to corporations as a "legal fiction," who now had all of the rights of a citizen, but none of the responsibilities or obligations.

Given that the corporation's ultimate responsibility is to profitability for stockholders, this ruling institutionalized the separation of economic welfare and democratic political power. The results of this separation soon became clear, as great monopolies of industry proliferated in the late 1800s/early 1900s. Anti-trust efforts of the Progressive movement succeeded in busting the most onerous of the monopolies, which then ushered in the oligopolistic reign of corporate power that remains the foundation of The United Corporate States of America today (again, see for example Zinn, et al.).

In a nutshell, a corporation formed can pursue its own profitability with little or (these days) no restraint, and yet renounce any legal responsibilities, liabilities or obligations it incurs by declaring bankruptcy and shutting down. This includes escaping responsibility for any contracts agreed to and any damage done; physical, environmental, economic or otherwise. The result is socializing the costs of profit accumulation, while privatizing (for the ownership classes) the benefits of economic activity. This is how we became The United Corporate States of America.

Consider the news headlines of today, in specific the Delphi Corporation. Here we have the largest US supplier of auto parts, a private corporation created when General Motors decided to divest itself of its parts supply division in 1999. A mere six years later they have now filed for bankruptcy. With an unfunded pension liability of 10.8 billion dollars (that's right, BILLIONS), Delphi is demanding that workers accept an immediate pay cut of up to and over 50%, radical benefits (health, pension, and otherwise) cuts, and the immediate elimination of health care provisions for retirees. And maybe they'll then stay in business. If not, the bulk of that unfunded pension liability will be borne by a massive federal bailout, with workers collecting 50 cents on the dollar for promised pensions, if lucky. And all finances counted on for the future by workers will magically disappear.

Try to get your mind around this key fact: General Motors and Delphi negotiated these contracts they now want to abrogate "in good faith." In other words, past decades of workers agreed to provide their labor power for established pay rates and benefits (in lieu of higher pay at the time) for contractual guarantees signified by agreement of corporate leadership. These corporations paid out billions of dollars in profits over the years of these contracts, earned through the hard work of their labor force. Yet when the time comes to make good on their contractually promised guarantees to workers, corporate legal accountability becomes so much legal fiction, just like "corporations as natural persons" as established by the Supreme Court in 1886. The difference is, however, that corporate contractual responsibilities are in the end REAL fiction, as they pursue profit without recourse, while the rights of working people to the legal enforcement of contract law satisfaction is equally fictional.

What happens when a real person defaults on obligations from a contract signed with a corporate entity? They get sued to the ends of the earth with the complicity of the state and federal court systems, and end up paying double the amount owed, with court-sanctioned fees applied, or are financially ruined if unable to pay. When a corporation defaults? The workers (and especially unions) get blamed for the failure, and the corporation is protected by the courts, and/or is allowed to disband with no responsibility borne by the executives and owners who drove it into the ground.

Let's return to Delphi. Currently, punditocracy columns and letters to editors are being cranked out, blaming "greedy" unions for this looming disaster. How unreasonable, that they should expect corporations to live up to contractual promises! Meanwhile, Paul Krugman notes in the October 17, 2005 New York Times that "large severance packages (were) given to Delphi executives even as the company demanded wage cuts." Who are we? Why, The United Corporate States of America, of course. Accountability only applies to working individuals, not to the "fictional persons" set up to insulate wealthy elites from democratic influence.

Ironically, this very contradiction was illustrated in the business section of The Chicago Tribune on October 13, 2005. The top of the fold article was titled "Delphi Chief Warns Workers," in which the CEO of Delphi warned workers that if they didn't accept these radical pay and benefit cuts, they'd hire scabs or go bankrupt. Directly below it was an article about Federal Reserve Chief Alan Greenspan (ex-Ayn Rand disciple) glowingly pronouncing that the US economy was avoiding energy price-fueled inflation because of its "flexibility."

Here you have the definition of "flexibility": unfettered (by regulation) liquidity for capital and its investors; zero legal accountability for corporations who abrogate contractual obligations to real people; and a workforce of individuals forced to legally and financially bear the burden of their own demise. It's laughable that we are still regularly treated to blather from the punditocracy that we are "the pinnacle of free market capitalism."

The sainted prophet of such ideology, Adam Smith, warned in The Wealth of Nations that the power of what became monopoly and oligopolistic groups (in his day, monarchy charter entities like The East India Company and The Hudson Bay Company) would destroy the possibility of truly free markets and their social benefits, as he envisioned them. In the U.S., we ignore(d) that part of Smith's writings. We have set up corporations and their elite ownership to be insulated from democratic influence and legal accountability, and reduced individuals to the status of mere corporate supplicants. That's who we are, what we've become, in The United Corporate States of America.



Wood, Gordon, The Radicalism of The American Revolution, Vintage, 1993.

Bailyn, Bernard, The Ideological Origins of the American Revolution, Harvard U Press, 1967.

Zinn, Howard, A People's History of the United States, Perennial, 2003.

Chomsky, Noam, Profit Over People, Seven Stories, 1998.

Lasn, Kalle, Culture Jam, HarperCollins, 2000.

Alliance For Democracy

Krugman, Paul, "The Big Squeeze," The New York Times, 10-17-2005

The Chicago Tribune Business Section, 10-13-2005

Smith, Adam, The Wealth of Nations, Bantam, 2003.

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Internal Resources

America the 'beautiful'

Patterns which Connect on Swans


About the Author

Raymond Garcia is a "lumpen academic" (aka untenured university instructor), currently at Michigan State University. In the fall, he'll be a visiting professor at Aquinas College, Grand Rapids, Michigan. His columns, "Confessions of a Lumpen Academic," used to be published by Bruce Anderson in the Anderson Valley Advertiser. Garcia also contributes to the online magazine Loafer's. He lives in Lansing, Michigan.



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This Edition's Internal Links

Theocracy. Hypocrisy. Plutocracy. - Jan Baughman

The Dark Side - Milo Clark

The American Experiment, Really? - Gilles d'Aymery

To Hell In A Hand Basket - Gerard Donnelly Smith

What Have We Become? Not Better -- Zombie Nation - John Steppling

Soup Of The Evening, Beautiful Soup - Michael Doliner

U.S.: A Psychological Profile - Charles Marowitz

The Best Of Times - Deck Deckert

The Corporate-Owned Ivory Tower: An Omen - Audra Himes

Where Is The Left In The U.S.? - Robert Wrubel

Crisis: Depravity Of The Leaders, Obedience Of The Citizens - Philip Greenspan

Do Workers Understand Their Class Interests? - Louis Proyect

The Terms Of My Surrender... - Michael DeLang

Letters to the Editor

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Swans -- ISSN: 1554-4915
URL for this work: http://www.swans.com/library/art11/rgarci02.html
Published October 24, 2005