Monday, July 21, 2008

Public corporations disguised as private enterprise

The premise put to global citizens is that corporations are purely private entities serving private ends and that the Western economies operate on the principle of the ‘free market’ which is an ideology that supports the economic system of capitalism. ‘The market’ is sacred in a society that operates under such a paradigm, therefore government and citizens have been prohibited from intervening in the workings of it.

We are told, on the other hand, that the ‘public’ realms of our society consist of such things as ‘government’ and ‘democracy’. (Albeit I am concentrating on the very limited ‘public’ areas that get the major media focus today).

‘Government is put forward as an essential evil; as a bureaucracy that must function in order to acquire the taxes necessary to perform its various functions such as to regulate industry (only when it is absolutely essential), to build public roads and bridges and to provide crucial social infrastructure and services such as ‘defense’ and basic education services.

The other public realm I mention, ‘democracy’, has several critical elements, the most essential being IMHO ‘the active participation of the people, as citizens, in politics and civic life.” [1]

But what happens when these two critical ‘public’ realms – government and democracy - are taken over by a relative handful of ‘private’ corporations operating in the ‘free market’?

This is a big subject and again for the benefit of practicalities I limit this discussion to a tiny area of exploration.

How can Governments collect sufficient taxes, for example, to fund essential services and infrastructure? Large corporations now control the majority of the nation’s economic output [2] and can evade taxes very easily? “In 2002 half of the world's 500 billionaires and a third of the 27 million millionaires call[ed] the USA their home. They own controlling interests in most of the large corporations that dominate the economy.” [ 3] Today, the trans-national nature of big business mean that these organisations can engage in tactics such as ‘transfer pricing’ [4] “Transfer pricing is probably the single most important reason that so many major corporations pay little or no federal income tax.” [5]

How can the public asset of democracy work in a society where citizens can no longer participate in the mass media? In 2004 the major American broadcast networks - ABC, CBS, NBC, and Fox - owned fully or partially nearly 80 percent of the new series they aired. This created a ‘market’ environment where most of the independent media businesses were either swallowed up by one of the big media companies “or driven out of business altogether.” [6] The creation and dissemination of news follows a propaganda model according to Noam Chomsky in his book entitled ‘Manufacturing Consent’. Information is filtered in a way that serves the information to the needs of the powerful. [7]

In the last decade the emergence of the Internet has resulted in the only opportunity ordinary citizens have had to be published and thus sidetrack the filters imposed by ‘private’ media corporations. Fortunately, ‘net neutrality’ has reigned up till now. ‘Net neutrality’ “is the principle that you should be able to access whatever web content or services you choose, without any interference from your Internet service provider. However, no law or rule protects citizens facing obstacles to getting access to the information on the Internet.” [8] The Communications Opportunity, Promotion, and Enhancement Act of 2006 (COPE bill) “would make it impossible for those protections to be written into law or rule, making all of us vulnerable to big companies who would like to "own" the Internet and mine it for profit. Some companies like Verizon and Comcast have already announced plans to create a two-tiered Internet, where some websites and services would travel in the "fast lane" - for a fee, of course - and the rest would be relegated to a "slow lane."” [9]. This is likely to be the beginning of a host of changes aimed at limiting the free flow of information and discussion on the Internet.

Clearly, if people around the globe are to benefit from areas of public good then those arenas must be specifically defined and separated once and for all from an unfettered market. If we fail to do this we will end up with a ‘private’ rather than a ‘public’ government and live in a society that is completely organized on the basis of private profit for a tiny few; with devastating consequences. That’s if we don’t already.

I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country…
corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.

Abraham Lincoln. November 21, 1864 in a letter to Colonel William F. Elkins

[1] Lecture at Hilla University for Humanistic Studies
January 21, 2004

[2] Charles Derber wrote in his book ‘Corporation Nation – How corporations are taking over our lives and what we can do about it’ (ISBN 0–312-25461-X, 1998 page 90,) that “the myth of small business as the backbone of the American economy has not been true for fifty years.”

[3] Facts on the US Economic Empire
by etra Jaimers. Eat the State. Volume 7, #3 October 9, 2002

[4] Transfer pricing is the understatement of a corporation’s income through the overstatement of its costs by way of that corporation charging itself inflated prices for goods from one of its own international subsidiaries to another.

[5] Global Shell Games - tax evasion by multinational corporations - Statistical Data Included
Byron L. Dorgan. July 2000. Washington Monthly.

[6] My Beef With Big Media
How government protects big media--and shuts out upstarts like me
By Ted Turner. July/August 2004

[7] Manufacturing Consent - A Propaganda Model - excerpted from the book
Manufacturing Consent by Edward S. Herman and Noam Chomsky
. Pantheon Books, 1988

[8] Communications Opportunity, Promotion, and Enhancement Act of 2006

[9] Communications Opportunity, Promotion, and Enhancement Act of 2006

4 comments: said...

Crucial to all this has been the development of the concept of corporations as being juridical individuals, a concept that largely grew out of early 19th century jurisprudence in the US, although it had roots earlier in the English common law.

CMike said...

Excellent post.

You finish with a Lincoln quote that Al Gore used on page 88 of his book The Assault on Reason. In his book Wealth and Democracy, Kevin Phillips attributed the same quote to Lincoln.

The quote seems almost too good to be true. Two internet debunking sites, Snopes and De-fact-o, echo each other in discussing the quote:

The quote was falsely "authenticated" by the 1950 Lincoln Encyclopedia, compiled by Archer H. Shaw. Shaw cited a 1864 letter from Lincoln to one Col. William F. Elkins found in Emanuel Hertz's 1931 book, Abraham Lincoln: A New Portrait that has since been shown to have been forged. Hertz was fooled by the forgery, and Shaw compounded the mistake by adding the fake letter to his encyclopedia (along with other dubious Lincoln quotes) without verifying its authenticity.

Years ago in response to a caller on CSPAN David Donald, Lincoln biographer and Harvard emeritus, said the sixteenth president was not the author of the quote. said...

It is a great quote, but in fact Lincoln was generally pretty pro-US business, even though the only signature by Karl Marx in the US National Archives is on a letter from the First International, signed by its then Chairman, Karl Marx, congratulating Lincoln on his reelection as president in 1864.

Which just goes to show that the Republican Party is ultimately a communist conspiracy, :-).

Brenda Rosser said...

Thanks for the clarification on the Lincoln quote. As for Karl Marx, well, didn't he say he wasn't a Marxist?