Corporation Nation: From Nothingness to Personhood
Note: This discussion is focused primarily on large-cap companies valued at more than $1 billion. Small and mid-sized companies are treated differently, as discussed later.
The use of faceless corporations as villains in pop culture is so well-worn it’s become cliche. From the 1973 sci-fi classic Soylent Green to the dystopian Detroit of Robo Cop, audiences love cheering for heroes as they topple the evil empire. Even children’s animated films like Despicable Me and Disney’s Wall-E cash in on the groan-worthy trope.
According to OpenSecrets.org, which collects official data from the Federal Election Commission, 1,603 corporations contributed at least $5,000 to Super PACs in the 2020 election—25 of which donated at least $1 million. Recent reports also suggest that corporations have quietly contributed $6.8 million to politicians who objected to investigating the Jan 6 Capitol riots since they occurred, and federal disclosures indicate tech giants like Amazon, Facebook, and Google have spent nearly half a billion on lobbying efforts in the last decade.
This influence has resulted in courts filled with judges granting corporate wishes, consistent tax cuts for the wealthy, and an exponential surge of issue-oriented lobbyists whispering in politicians’ ears. Their sway was never more apparent than after the election of Donald Trump, who was portrayed as a billionaire villain in pop culture long before moving into the White House.
Their motive for infiltrating all aspects of government? It’s not world domination—it’s money. Despite many influential leaders decrying the importance of shareholder value in 21st century business—former GE CEO Jack Welch called it “the world’s dumbest idea”—companies are still chasing profits with abandon.
But politicians weren’t always on the corporate dole, and with a few bottom-up reforms recently emerging, it’s more possible than ever to regain control of the megacorp monolith.
Climbing the corporate ladder
During colonial times, incorporating under British law was prohibitively expensive and provided little benefit, so many enterprises chose other forms such as sole proprietorships or partnerships. The founders made no mention of corporate governance in the Constitution, which left its handling to individual state legislations. As MIT American History professor Pauline Maier points out, the states’ “willingness to exercise that power remains puzzling,” since forming corporations was seen by most at the time as distinctly old world. Maier theorizes “the proliferation of American corporations reflected a sense of legislative empowerment”—that is, states chartered corporations simply because they could. Other historians suggest the driving force was for states to increase their tax base.
And proliferate they did. Between 1801 and 1860, states granted charters to more than 20,000 corporations worth nearly $25 billion in capital, making the US the world’s leader in corporate development. While incorporation initially required an act of legislation and the company to demonstrate social need in most states, the influx of tax revenue that came from the budding companies became so enticing that most states simplified the process. A race to the bottom ensued, where states deregulated the incorporation process in an attempt to entice more businesses—and undercut each other. The state most famous for this deregulation is Delaware, whose incorporation laws and tax loopholes are so business friendly, its number of corporations outnumber its residents—a figure the state boasts about on its official website.
The Gilded Age—a term coined by Mark Twain to describe the period between the Civil War and the turn of the century—brought about soaring profits for corporations, which they earned on the backs of low-wage workers. Historians suggest the era’s so-called robber barons—titans like Cornelius Vanderbilt, John Rockefeller, and Andrew Carnegie1— exploited their political connections and skirted lax corporate law to amass the fortunes that have made them household names a century after their deaths. Companies bribed politicians with reckless abandon. According to History.com, the Central Pacific Railroad, for example, spent $500,000 annually in thinly disguised bribes between 1875 and 1885. “This is a government of the people, by the people, and for the people no longer,” President Rutherford B. Hayes wrote in his diary in 1886. “It is a government by the corporations, of the corporations, and for the corporations.”
The turn of the century brought some oversight. In 1890, Congress passed the Sherman Antitrust Act to regulate significant monopolies, but it was largely unenforced until President Teddy Roosevelt began using it to “trust-bust” companies like JP Morgan’s Northern Securities Company. While in office, Roosevelt initiated suits against 44 major corporations, extended the power of the Interstate Commerce Commission, and passed the Pure Food and drug and Meat Inspection acts, which regulated the quality of food coming from processing factories. This time period is generally known as the Progressive Era.
What followed was a long period of corporate honesty. While speculative bubbles triggered income inequality and nearly doomed capitalism during The Great Depression, President Franklin D. Roosevelt’s New Deal installed a safety net for citizens and assuaged fears of total economic ruin. Public faith was restored in large corporations during and after World War II because of their willingness to support the war effort. Companies like Underwood began making rifles instead of typewriters, and General Motors’s Oldsmobile factory cranked out more than 40 million artillery rounds2. “If the Gilded Age is America’s most corrupt period, the time between the Progressive Era and the 1970s is among the least corrupt,” said Richard White, author of The Republic for Which It Stands. The public’s trust of corporations was generally positive following World War II, and profits soared.
But with a prolonged period of economic stagflation—slow economic growth combined with rising prices—beginning during Gerald Ford’s presidency in 1976, incoming President Ronald Regan began deregulating many of the safeguards against corporate greed that had been in place nearly 100 years. Coined “Reaganomics,” these tactics included lowering taxes for corporations under the assumption that if corporate expenditures were reduced, those savings would “trickle down” to the rest of the economy and encourage growth. He also reduced restrictions on the financial services industry and relaxed enforcement of the Clean Air Act that hampered industrial production.
The plan worked—kind of. From 1982 to 1990, Reaganomics created over 21 million jobs and paved the way for a booming stock market. But critics like Nobel laureate Paul Krugman pointed out the money never trickled down to the people who needed it most—the middle class. The corporations just got richer.
The results of Regan-era deregulation are not only limited to the income inequality we see today, with 10 percent of the US population owning almost 70 percent of the wealth. It’s also resulted in a resurgence of corporate influence in politics.
“Corporations of vast wealth and remorseless staying power have moved into our politics to seize for themselves advantages that can be seized only by control over government,” Sen. Sheldon Whitehouse (D–RI) writes in his book Captured: The Corporate Infiltration of American Democracy. These advantages include a plan to fill courts with judges who consistently side with corporate interests—which Whitehouse claims is being funded by corporate “dark money.”
Another indication of corporate influence is the country’s defense budget, which ballooned to $777.7 billion in 2022, according to a Senate press release. When adjusted for inflation, the budget is larger than those passed during both the Vietnam and Korean wars. According to a Congressional Research Service report, more than half that budget goes to contractors, including Lockheed Martin, Boeing, and General Dynamics. Not surprisingly, OpenSecrets.org reported these companies spent more than $98.9 million in 2021 lobbying Washington to increase defense spending. Evidence also suggests lawmakers receiving campaign donations from defense companies are less likely to vote for cuts. Whenever there are public-private partnerships—as are common between the Department of Defense and outside contractors—there are opportunities for companies to game the system. Contracts are awarded to major donors or friends in exchange for power, often in not-so-subtle ways—such as when former Haliburton CEO Dick Cheney became Vice President.
But perhaps the most alarming advancement of corporations thumbing government scales is the 2010 Supreme Court case Citizens United v. FEC that ruled corporations have First Amendment political rights to buy ads in all American elections. In essence, companies have the same rights as citizens. In her book Corporate Citizen? An Argument for the Separation of Corporation and State, author Ciara Torres-Spelliscy argues the Supreme Court is allowing for expanded corporate rights while also excusing them from a growing list of responsibilities. The corporation-influenced courts have allowed businesses to cherry pick which personal rights and laws apply to them.
What comes from this corporate infiltration? Income equality, the reduction/offshoring of middle class jobs, and the destruction of unions as a countervailing force to the power of wealth. Asset owners have created tax avoidance schemes while wage earners are still on the hook.
It’s not just an economic problem, but a political one as well. The closed meritocracy between CEOs and politicians—graduating from the same Ivy League schools and swimming in the same cultural ponds—has turned regulatory practices into back-room deals among friends, squeezing out the majority of citizens who don’t belong to the club. They’ve set a political smoke screen, distracting the average American with issues of cultural and racial inequality, while behind the scenes they distance themselves from the fray.
Greed is Good
The good news is that unlike many other sticky political issues plaguing our nation, righting corporate wrongs is more clear cut. Corporations are by far the easiest institutions to manipulate because the bottom line is all that matters to them. Greed knows no allegiance.
Corporate collusion can be rectified with a two-pronged approach: political reform and economic regulation.
Politically, both liberal and conservatives could unite to win battles in areas of economic justice, including performing a successful audit of the Department of Defense, which hasn’t ever been accomplished, despite legislation mandating it in the 1990s. Another would be raising the minimum wage, which would reduce the public burden on public assistance, and breaking up the so-called “too-big-to-fail” banks.
On the regulation side, the government could institute “smart regulations” that would treat SMEs—small and mid-sized enterprises—differently than large-cap companies that have a market value of more than $1 billion. SMEs have long been thought to be the backbone of the economy, and loosening regulations on their creation and maintenance while tightening the reins on large caps would achieve the desired results.
The ultimate goal is not to inhibit big business from making profit—lest they take their companies overseas—but altering HOW they make it. By changing the requirements of incorporation so company profits and loss are calculated using previously externalized costs like cultural and environmental impact, and providing incentives for becoming B-Corp certified. Most of this can be accomplished without legislation simply by changing generally accepted accounting principles (GAAP). These changes wouldn’t inhibit their ability to make money, but it would regulate them to the point where they’re good citizens. That way, companies can still be as profit-motivated as they want, but they’d now also contribute to a positive society. Corporations will follow the money—we just need to move the money.
What’s Your Take?
I’ve shared my perspective on the corporate influence in politics, and I want to hear yours. How can we defeat the corporate villains?
It’s important to note that both Rockefeller and Carnegie—though rightly labeled as robber barons of the era—often fought against companies accepting government favors. Furthermore, in the latter parts of their lives, both contributed significant portions of their wealth to public institutions and interests.
Despite the seemingly patriotic motives of their actions, these companies didn’t shift production out of the goodness of their hearts. The US government essentially wrote the manufacturing industry a blank check, and companies like GM—who generated more than $12 billion in four years—were happy to accept.