A Citizen Agenda to Tame Corporate Power, Reclaim Citizen
Sovereignty, and Restore Economic Sanity
The following is based on
David C. Korten, When Corporations Rule the World
(Kumarian Press and Berrett-Koehler Publishers, 1995)
Policies advocated by free market or corporate
libertarian ideologues have led to the creation of an economic system out of control. So what can we
do? Needless to say, it hasn't been easy to create an economic system able to
produce 358 billionaires while keeping another 1.3 billion people living in
absolute deprivation. It took long and dedicated effort by legions of
economists, lawyers, and politicians on the payrolls of monied interests to
design and implement such a system. It required a radical altering of the
dominant culture and the restructuring of many important institutions. It will
take a similarly committed effort on the part of civil society to design and put
in place an economic system supportive of economic justice and environmental
To reclaim our economic spaces, we must first reclaim our political spaces from
the corporations and other big money interests that control them. This will
require far more than incremental or marginal changes. The following are among
the obvious, but ambitious measures that must be considered.
- Prohibit political advertising on television. TV political
ads are far more often misleading than informative, extremely expensive,
discredit the political system, and give money inordinate power in deciding
elections. In their stead, electronic communications media that enjoy access to
the public airways should be required as part of their public service obligation
to provide ample time for debates, interviews, and roundtables with political
candidates-thus giving the public in-depth exposure to their ideas and
- Place strict limits on individual campaign contributions.
The principle of democracy is one person one vote, not one dollar one vote.
- Place strict limits on campaign spending.
We want to know what a political candidate can do with a limited budget, not
how effectively he or she can manipulate us with large amounts of money.
- Strip corporations of their fictitious human rights.
Take appropriate legislative action to put aside the legal fabrication
created by a corrupted court system that corporations have the same rights as
individuals. Only living things have natural rights.
- Get corporations entirely out of politics. Corporations are
public bodies created by public charter to serve a public purpose. It is the
responsibility of the corporation so created to obey the rules that people chose
to set for them, not make the rules. Therefore, corporations should be barred
from making political contributions of any kind. Indeed, they should also be
barred from any involvement in politics and political advocacy-including the
solicitation of their employees, shareholders, sales outlets, and suppliers to
make either political contributions or representations on political or public
policy matters. Corporate charitable contributions should also be prohibited in
recognition of their widespread abuse to advance corporate political aims. The
corporation's workers and individual shareholders-not corporate
management-should make their own decisions as to how their shares of corporate
income will be allocated for political and charitable purposes.
- Eliminate the concentration of media ownership. To avoid
concentration of media power and assure a diversity of political voices, the
communications media should be subjected to strict anti-trust provisions
prohibiting any single individual or corporation from owning more than one major
electronic or print media outlet. This would both increase the diversity of
independent editorial voices and strengthen competition in the media industry.
- Take back the corporate charter. Facilitate citizen action
to withdraw the charters of corporations that demonstrate disregard for the law
or otherwise fail to serve the public good.
Reclaiming Our Economic Spaces. One of the fundamental points on which
Adam Smith and Karl Marx agreed is that workers should own their means of
production. Though not widely noted, in the small enterprises of Adam Smith's
ideal economy the worker was generally also the owner and manager. Furthermore,
Smith assumed that enterprises would be locally owned and that their owners
would thus be imbedded in a framework of local community values and interests.
While Smith believed in the benefits of trade, he considered it logical that
most markets would be local because of the costs and uncertainties of trading
with foreign lands. He took an especially dim view of large corporations with
absentee owners that used their political and market power to extract monopoly
Our present globalized economic system affirms much of the wisdom of Smith's
vision. The more economic power becomes highly concentrated and detached from
any local interest, the more surely it is used to benefit the power holders at
the expense of larger community interests.
If we intend that markets allocate resources efficiently in the public interest,
then we must restructure them to fulfill the appropriate conditions-much as
Smith defined them. Thus, it will be necessary to break up large concentrations
of economic power, re-establish the connection between investment returns and
productive activity, create incentives for producers to internalize their costs,
and root the ownership of capital locally in people and communities engaged
primarily in local production to meet local needs. It will also be necessary to
reduce and slow international financial flows, deflate the global pool of
extractive capital, and favor long-term over short-term investment.
The needed restructuring is appropriately guided by a vision of a global system
of localized economies that reduce the scale of economic activity and link
economic decisions to their consequences. Working out the details of an
appropriate policy agenda will require our best minds and substantial
experimentation. The following are some of the measures that should be
- A 0.5 percent financial transactions tax on the purchase
and sale of financial instruments such as stocks, bonds, foreign currencies, and
derivatives to discourage short-term speculation and arbitraging.
- A graduated surtax on short-term capital gains to make most
speculation unprofitable, stabilize financial markets, and lengthen investment
perspectives without penalizing long-term productive investment. The surtax on
the sale of an asset held less than a week might be as high as 80 percent.
- A 100 percent reserve requirement on demand deposits
to reduce the ability of the financial system to create money by
pyramiding loans. This would make it possible to restore the connection between
the creation of money and the creation of wealth.
- Preferential Treatment of community banks. Governments
should guarantee only deposits placed in unitary community banks that channel
the majority of their funds back to the community.
- Rigorous enforcement of anti-trust laws to break up
concentrations of corporate power. Buy-out and merger proposals should be
subject to intensive and skeptical governmental review with the burden of proof
resting on the proposing party to show that the proposal will advance the
long-term public-not just short-term investor-interests.
- Worker and community buy-outs. Before a major corporation
is allowed to close a plant or undertake a sale or merger, the affected workers
and community should have a legal right of first option to buy-out the assets on
preferential terms. The terms should reflect the workers' years of personal
investment of their labor in the company and the collective investment of the
local community in public facilities that have made its local operations
possible. Bankruptcy rules should be structured similarly to give employees and
communities a buy-out option. Similarly, when a company is required to divest
parts of its operation under antitrust, employees and/or the community should
have first option to buy the divested units. Government oversight should assure
that such buy-outs are structured so that workers and/or communities have real
control. Rules governing company pension funds might be revised to allow their
use by employees to purchase voting control of their firm's assets.
- Tax Shifting. Corporate tax law should be revised to
shift taxes from things that benefit society, such as employment-employer
contributions to social security, health care, and workman's compensation-in
favor of taxing activities that contribute to social and environmental
dysfunction-such as resource extraction, packaging, pollution, energy use,
imports, corporate lobbying, and advertising.
- Annual Profit Payout. Corporate income taxes should be
eliminated simultaneously with the introduction of a requirement that
corporations pay out their profits each year to their shareholders. These
profits would thus be taxed as shareholder income at the shareholder's normal
marginal rate. Corporations would then have no incentive to shift profits around
the world to the jurisdiction with the lowest tax rate. Interest payments on
debt financing would come directly out of profits, rather than out of taxes,
thus discouraging the use of debt financing and making most corporate buyouts
- Corporate Subsidies. Welfare reform should give top
priority to getting dependent corporations off the welfare rolls.
- Intellectual Property. The appropriate purpose of
intellectual property rights protection is to provide incentives for research
and creative contribution, not to create protected information monopolies.
Intellectual property rights should be defined and interpreted narrowly and
granted only for the minimum period of time necessary to allow those who invest
in research to recover their costs and a reasonable profit. The patenting of any
life form or genetic process, any discovery funded with public monies, or any
process or technology that gives the holder effective monopoly control over a
type of research or class of products should be precluded by law.
- Advertising. Those forms of advertising that serve to
encourage consumption rather than simply inform prospective customers regarding
the availability and specifications of products should be banned. This will at
once eliminate an important market advantage of large corporations and remove an
important underpinning of the consumer culture.
- Debit Cards. Replace credit cards, which encourage
indebtedness and consumption beyond one's means, with debit cards, which are
merely a convenient substitute for cash.
ECONOMIC EQUITY AND SECURITY
Inequality makes it possible for those with economic power to pass the costs of
their unsustainable consumption onto the economically weak and encourages
extravagant consumption by the few. Economic insecurity creates a significant
incentive for individuals to accumulate wealth beyond their real need. Public
policies that favor economic equality and assure basic economic security should
move us toward sustainability as well. Appropriate measures may include:
- A guaranteed income sufficient to meet basic subsistence
- Highly progressive income and consumption taxes on levels
of income and consumption above those required to comfortably meet basic needs;
- Taxation of inheritance and trust income at the same rate
as any other income to avoid creating a perpetual privileged class and provide
an incentive for the offspring of wealthy families to make their own creative
- A reduced workweek to allocate available paid employment
A number of reforms are required at the global level to remove important sources
of injustice and restrain the power of transnational capital. These include:
- Eliminating international debts of low income countries.
The public international debts of low income countries should be
eliminated through a two step process. Odious debts contracted without public
consent or for purposes that did not serve public purposes should be repudiated
through appropriate internationally sanctioned legal processes to pass the costs
onto the responsible individuals and financial institutions. The remaining debts
should be repaid out of an international fund under agreements that preclude
- Closing the World Bank as part of the plan to end the
process of international debt creation. It is time to recognize that creating an
institution to increase the debts of poor countries was simply a bad idea.
- Placing an international financial transactions tax on all spot
transactions in foreign exchange to dampen speculative currency
movements. The funds generated should be used to retire Third World debt and
fund the United Nations.
- Closing the World Trade organization (WTO) and the International
Monetary Fund (IMF) and transferring responsibility for international economic
management to the United Nations, with the mandate to maintain a
balanced and equitable system of economic relationships among nations that
encourages and supports substantial environmental and economic self-reliance.
Responsibilities would include negotiating and enforcing agreements establishing
standards of conduct for transnational corporations, coordinating international
antitrust action, and protecting the rights of all nations to chose with whom
they will trade under what terms and to set rules and standards for businesses
operating in their jurisdictions. Decision processes should be transparent and
open to public participation.
- Monitor cross border environmental flows. Establish an
international monitoring system to report imbalances in flows of environmental
resources between countries as a step toward limiting the ability of one country
to pass the environmental burdens of its consumption to another.
This is an admittedly full agenda. And it is surely incomplete. There is no
simple fix for a system as badly broken as the one we presently have. This list
is illustrative of the types of measures that must be considered. There is need
for a vigorous public debate toward building a broadly based political consensus
in support of comprehensive citizen agendas for national and international
reforms adequate to the task of building just and sustainable societies for the