Corporations and Corporatism – A Review of “Unequal Protection”

An interesting review of the book Unequal Protection by ACC reader, Hogeye Bill.

By Hogeye Bill

Corporations are under political scrutiny again, as they have been periodically in American history. Also under examination is corporatism, the alliance between large favored firms and central government. While “corporatism” is easy to define – the collusion between politically connected firms and State – defining “corporation” is a little more difficult. This is because the word can refer to a broad category of human associations.

In its broadest sense, a “corporation” is an artificial person representing an association, which has certain legal rights that a natural person has. In particular, these legal rights generally include the right of ownership, contract, and the right to sue or be sued. When several people get together for a common purpose, they may create such an artificial entity to pursue that purpose. At this level of abstraction, a corporation’s “rights” are simply the direct extension of its members’ rights.

Notice that, using this general definition, there is no official sanction or charter for a corporation, just as there is none for most associations or groups. A corporation is created by people exercising their freedom of association. These people’s rights can be protected “in a package” by reference to their corporation.

Some histories of corporations, such as the one in “Unequal Protection” by Thom Hartmann, ignore corporations’ part in history until the merchant shipping industry of the 1600s. Also, Hartmann (and others) play too loosely with the definition of “corporation,” drawing unwarranted conclusions by comparing vastly different entities. For example, Hartmann takes a GSE (government sponsored entity) with government bestowed monopoly privileges, the East India Company, and attempts to liken that to modern PPEs (private for-profit entities.) The fact that government and private entities have different incentives, rely on fundamentally different funding (political vs. economic), and have different constraints on collective conduct, doesn’t seem to occur to anti-corporationists like Hartmann.

Before continuing, let’s define one more term: “special interest.” A special interest is a group or association which attempts to promote a certain agenda or values through government power. Thus all corporations are special interests if they attempt to influence or exert political power. But not all special interests are corporations. Special interests include unions, churches, environmental groups, racial and national identity groups, and so on.

“Unequal Protection” has two major flaws. First, it construes the problem too narrowly by discussing the many problems of special interests in a democracy, but blaming these problems only on one special interest – PPEs. Second, it takes an innocuous convention – corporate personhood – and claims that it is the root of all corporatist evil. This monist scapegoating is wrong historically, and (as Hartmann all but admits) is no more than a marketing ploy. It makes for some pithy bumper sticker slogans (“Corporations are not People”), but objectively misunderstands the problem of corporatism.

Click here for the rest of the review.