'Corporate Socialism'
by
Ralph Nader
The relentless expansion of corporate control over our
political economy has proven nearly immune to daily reporting by the mainstream
media. Corporate crime, fraud and abuse have become like the weather; everyone
is talking about the storm but no one seems able to do anything about it. This
is largely because expected accountability mechanisms -- including boards of
directors, outside accounting and law firms, bankers and brokers, state and
federal regulatory agencies and legislatures -- are inert or complicit.
When, year after year, the established corporate watchdogs
receive their profits or compensation directly or indirectly from the companies
they are supposed to be watching, independent judgment fails, corruption
increases and conflicts of interest grow among major CEOs
and their cliques. Over time, these institutions, unwilling to reform
themselves, strive to transfer the costs of their misdeeds and recklessness
onto the larger citizenry. In so doing, big business is in the process of
destroying the very capitalism that has provided it with a formidable
ideological cover.
Consider the following assumptions of a capitalistic system:
1) Owners are supposed to control what they own. For a
century, big business has split ownership (shareholders) from control, which is
in the hands of the officers of the corporation and its
rubber-stamp board of directors. Investors have been disenfranchised and told
to sell their shares if they don't like the way management is running their
business. Nowadays, with crooked accounting, inflated profits and self-dealing,
it has proven difficult for even large investors to know the truth about their
officious managers.
2) Under capitalism, businesses are supposed to sink or
swim, which is still very true for small business. But larger industries and
companies often have become "too big to fail" and demand that Uncle
Sam serve as their all-purpose protector, providing a variety of public
guarantees and emergency bailouts. Yes, some wildly looted companies that are
expendable, such as Enron, cannot avail themselves of governmental salvation
and do go bankrupt or are bought. By and large, however, in industry after
industry where two or three companies dominate or presage a domino effect,
3) Capitalism is supposed to exhibit a consensual freedom of
contract -- a distinct advance over a feudal society. Yet the great majority of
contracts for credit, insurance, software, housing, health, employment,
products, repairs and other services are standard-form, printed contracts,
presented on a take-it-or-leave-it basis. Going across the proverbial street to
a competitor gets you the same contract. Every decade, these "contracts of
adhesion," as the lawyers call them, become more intrusive and more
insistent on taking away the buyers' constitutional rights to access to courts
in favor of binding arbitration or stipulate outright
surrender of basic rights and remedies. The courts are of little help in
invalidating these impositions by what are essentially private corporate
legislatures regulating millions of Americans.
4) Capitalism requires a framework of law and order: The
rules of the economic game are to be conceived and enforced on the merits
against mayhem, fraud, deception and predatory practices. Easily the most
powerful influence over most government departments and agencies are the
industries that receive the privileges and immunities, regulatory passes,
exemptions, deductions and varied escapes from responsibility that regularly
fill the business pages. Only those caught in positions of extreme dereliction
ever have reason to expect more than a slap on the wrist for violating legal
mandates.
5) Capitalist enterprises are expected to compete on an even
playing field. Corporate lobbyists, starting with their abundant cash for
political campaigns, have developed a "corporate state" where
government lavishes subsidies, inflated contracts, guarantees and research and
development and natural resources giveaways on big business -- while denying
comparable benefits to individuals and family businesses. We have a government
of big business, by big business and for big business, even if more of these businesses
are nominally moving their state charters to Bermuda-like tax escapes.
"Corporate socialism" -- the privatization of
profit and the socialization of risks and misconduct -- is displacing
capitalist canons. This condition prevents an adaptable capitalism, served by
equal justice under law, from delivering higher standards of living and
enlarging its absorptive capacity for broader community and environmental
values. Civic and political movements must call for a decent separation of
corporation and state.
In 1938, in the midst of the Great Depression, Congress
created the Temporary National Economic Committee to hold hearings around the
country, recommend ways to deal with the concentration of economic power and
promote a more just economy. World War II stopped this corporate reform
momentum. We should not have to wait for a further deterioration from today's
gross inequalities of wealth and income to launch a similar commission on the
rampant corporatization of our country. At stake is
whether civic values of our democratic society will prevail over invasive
commercial values.
Ralph Nader is the founder of
Public Citizen.
© 2002 The Washington Post Company
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