MARGINALIZING WORKERS, WAGES, COMMUNITIES, ENVIRONMENTAL CONCERNS WHILE CONCENTRATING INCOME AND WEALTH IN THE HANDS OF THE FEW
By: Frank Thomas
At a time when the global economy is separating ever larger international firms from public accountability and the public’s interests; at a time when economic globalization is systematically creating a sea of poverty and race to the bottom for middle-class Americans; at a time when corporations are bidding down wages and taxes under the threat of moving elsewhere, outsourcing and automating away jobs at will, closing down plants and trashing any responsibilities to productive, loyal employees and communities; at a time when the Paul Ryans are orchestrating the coup de grãce of unions, the sell-off of government assets, the elimination of jobs for teachers, firemen, policemen, and social workers – the main unresolved questions facing all Americans are less about political ideologies than about life’s values vs. financial values, about the concentration of economic power in mega global corporations, now society’s most powerful citizens … whose sole mission is maximizing shareholder wealth and often, as Robert Hinkley has noted, “at the expense of the environment, human rights, the communities in which they operate, or the dignity of their employees.”
As far back as 1996, David Korten of the Harvard Business School with unusual foresight gave his verdict on the then existing (and now populist Tea Party) libertarian doctrinaire harangue that an unregulated free-market economy equates with democracy. His verdict on what the free market and the unfettered self-interests of multinational corporations are doing was smack on the point, “We are suffering from a threefold human crisis: the deepening of poverty, social disintegration, and environmental destruction.”
Following excerpts are from his writings and 1996 essay entitled, “The Rights of Money versus The Rights of Living Persons” His observations have an unnerving relevance to the Fiscal-Economic QUAGMIRE we are in today after 30 years of laissez-faire capitalism (Parts I, II and III of my writing on this subject) … which in its worst form is taking our nation toward plutocracy and away from egalitarianism and democracy. In the spirit of John Lawrence’ s blog to explore deeply – with eyes and mind open – our nation’s structural problems and solutions to same, here is David Korten’s provocative, prescient plea for a reawakened civil society and for reclaiming the economic spaces in our society in favor of the small and the locally accountable. Written 15 years ago, Korten’s out-of-the-box thinking reminds me of some words once said by LeRoy Greason, former President of my Alma Mater, Bowdoin College in Maine, who just passed away:
“We are seldom absolutely right. Even when most alive and living beyond ourselves, we had best walk humbly with our gods.”
“THE RIGHTS OF MONEY VERSUS THE RIGHTS OF LIVING PERSONS,” by David Korten, November 1996
Proponents of market liberalism claim the free market is the essential foundation of political democracy – a guarantor of the rights of people against the abuse of state power. They neglect, however, the important ways in which the unfettered market tends to function as a profoundly undemocratic institution.Political democracy vests rights in the living person, one person, one vote. By contrast, the market recognizes only money – one dollar, one vote. It gives no voice to the penniless (or those hit by bad times), and when not balanced by constraining political forces can become an instrument of oppression by which the wealthy monopolize society’s resources, leaving the less fortunate without land, jobs, technology, (training) or other means of livelihood. Only when wealth is equally (I prefer word, equitably) distributed can the market be considered democratic in any meaningful sense.
World markets are now dominated by global-mega corporations – among the most undemocratic and unaccountable of human institutions. By its nature, the corporation creates a legal concentration of power (and highly paid lobbyist network) while shielding those who wield that power from accountability for the consequences of its use. Many mega-corporations command more economic power (including advertising budgets that rival education budgets) than do the majority of states, and they dominate the political processes of nearly all states. Their growing unaccountable power poses a serious threat to the basic economic and political rights of people everywhere.
The time has come to re-examine some of our most basic assumptions about the nature of democracy, human rights, and the institution of the corporation. The survival of our political freedoms depends on recognizing that economic rights are an essential foundation of political democracy. Consider, for example, two of the most fundamental of all human rights – the right to a means of living (literally the right to live) and the right to participate in making the decisions that affect our lives.
The Right of Access to a Means of living: The earth’s (rapidly declining) life-sustaining resources are a common heritage of all life. All people are born with an inalienable right to a sufficient share of these resources to create a secure and fulfilling life for themselves and their families. They have a corresponding responsibility to share and steward these resources to the benefit of all persons and other living things.
Since the most basic requirements of living depend on the products of the earth, there is a fundamental – though often neglected – connection between livelihood rights and property rights. English philosopher John Locke set forth a moral justification for property rights in The Second Treatise of Government published in 1689. Locke argued that where unused land is abundant, a man has a right to appropriate for his private and exclusive use the land which he tills to produce for his basic subsistence needs. It is through the application of his labor to make the land produce that he acquires this private right. Locke stressed that given the condition of abundance, such appropriation in no way deprived others of similar opportunity. Locke was clear that the rightful claim to a property right followed only from the application of one’s personal labor. Furthermore, this claim legitimately extended only to such property as required to meet one’s material needs – suggesting that a property is virtually synonymous with a livelihood right.
Locke, however, went beyond this relatively unassailable moral argument to seek justification for actions of those who accumulate property far beyond their personal needs. Presuming that property rights are most likely to be accumulated by clever and industrious persons who seek to realize their full productive potential, Locke argued that the result of this accumulation would be to maximize the wealth of society and thereby the well-being of all. It is essentially the same argument that economists make to this day in defense of inequality based on the assumption that the surpluses created through investments of the wealthy in a growing economy will be widely distributed through society in the form of high-paying jobs and well-funded public services (the lying “trickle-down” economic con-game played on ordinary Americans the last 30 years).
It is noteworthy that the moral defense of inequality in Locke’s thesis and the work of (many) modern economists rests on two inadequately examined assumptions : (1) natural wealth is abundant relative to need; and (2) the benefits of an overall increase in economic activity are widely shared even when wealth is distributed unequally.
Unfortunately, on a global basis, for several billion people who find their livelihoods increasingly at risk, neither premise is valid in our present world. To the contrary, the poor are being excluded from access to land, technology is eliminating jobs quicker than it is creating new ones, and public services are being systematically dismantled – all to increase the riches of those whose wealth already exceeds any conceivable need. In short, property rights are being used routinely to justify the exclusion of those without property from access to a decent means of living.
As suggested by Locke’s argument, the rightful purpose of a property right is to protect a person’s right of access to a means of livelihood or to secure for the individual a just reward for entrepreneurial initiatives that create a better life for all. A property right loses its legitimacy when its exercise by those who have more than they need denies others of their rightful means of a livelihood or otherwise diminishes their opportunities for a full and meaningful life. The livelihood rights of the many come before the property rights of the few. Recognition in our laws and public culture of this limitation of property rights is fundamental to the market’s socially efficient function.
The Right to Participate in Decisions That Affect One’s Life and Community : Born with reason, conscience, and the capacity for intelligent choice, all people have the inalienable right – indeed the obligation – to use these gifts to participate actively in the decisions that affect their lives and communities.
In the economic realm, the exercise of the right of participation extends far beyond choosing among those products the market finds it profitable to offer us. It includes the right to participate in setting standards and priorities for the economic affairs of our communities, the uses to which our local resources will be put, and the conditions under which we will engage in external trade and invite the participation of others in our domestic economies.
This right is under attack by the world’s mega-corporations that seek to establish their own right to move across the planet without restriction to extract resources; exploit unorganized and unprotected labor; evade taxes and environmental regulations, and health safety; monopolize indigenous knowledge and genetic materials without regard to the human and environmental consequences. Their weapons of choice are international (and national) agreements on trade and investment that take precedence over the rules and regulations established by people and their governments to govern local commerce.
Negotiated in secret and implemented without full public discussion and democratic assent, these agreements are systematically eroding the democratic rights of people to regulate their own local and national economies, and to set rules for commerce consistent with their own values and judgments regarding their personal and community needs. The interests of money and the fictitious legal persona of the corporation are thus placed ahead of the interests of living persons and their communities – all in the name of market freedom.
An unregulated market invariably encourages the externalization of costs because the resulting public costs (resource giveaways, low wage labor, tax breaks, lax environmental regulations) become private gains. This happens, for example, when a chemical corporation dumps wastes (or a natural gas driller pumps huge quantities of chemicals into the ground destroying water supplies) without adequate treatment, thus passing the resulting costs of air, water, and soil pollution to the community in the form of health care costs, genetic deformities, lost working days, a need to buy bottled water, and the cost of cleaning up the contamination.
It is useful to recall that Adam Smith, the intellectual patron saint of free-marketeers, favored a market comprised exclusively of small buyers and sellers. Smith considered the corporation to be an instrument for monopolizing markets and saw no place for such institutions in a properly functioning competitive market economy. By his reckoning, the corporation is an anti-market institution. Smith opposed any form of economic concentration and would be outraged by claims that he advocates that the market turns unrestrained greed into socially optimal outcomes. Smith’s focus was on self-interest of small business entrepreneurs, small farmers, and artisans trying to get the best price for their products to provide for themselves and their families. For him, greed is a high-paid corporate executive firing 10,000 employees and then rewarding himself with a multi-million dollar bonus for having saved the company so much money. In short, Smith believed the efficient market is composed of small, owner-managed enterprises located in the communities where the owners reside (my note: This is precisely the democratic modus operandi of the exciting trend to community, regional, state-wide, worker-manager owned cooperatives).
A corporation comes into being only through the public act of the government that issues the corporate charter. The creation of a corporation is thus a public, not a private, act. And its only justification is to serve a public purpose. Whatever privileges or authority the corporation may enjoy are derived from the authority of government, which is itself derived from the will of the people. It therefore follows that the corporation is rightfully subject to the will of the people and to whatever laws people freely choose to establish governing its function.
It is the proper function of the corporation to implement the laws that people establish through their governments, not to participate in their creation. Indeed, it is essential to the integrity of democratic governance that corporations be barred from political participation of any kind on the theory that political rights reside in real people. (my note: This position by Korten in 1996 is a far cry from present-day reality reflected in Supreme Court’s recent one vote majority decision in Citizens United case ruling that spending money to influence elections by corporations is a form of constitutionally protected free speech under the 1st Amendment).
The idea that corporations should enjoy the rights of flesh and blood persons – including the right of free speech – grew out of the U.S. Supreme Court decision in 1886 that designated corporations as legal persons entitled to all the rights and protections afforded by the Bill of Rights of the U.S. Constitution. Significantly, the U.S. Constitution makes no reference to corporations. It was a decision without legal or moral foundation made by a corrupted court system. (my note: By the beginning of the 20th century, corporations had become sovereign as persons under the law and had turned people into consumers, or workers, or whatever the corporation of the moment chose to define humans as).
Markets are important institutions and they have an essential place in any democratic society – functioning within a framework of democratically determined rules and public safeguards. There is nothing democratic, however, about an unregulated market that responds exclusively to the needs of the wealthy and subordinates human rights and interests. In the end, only an active and politically engaged citizenry can assure the protection of our human rights from the arbitrary use of power by either states or corporations (my note: For example, the recent moves by some states to privatize publically-owned government assets and eliminate collective bargaining rights of unions).
Institutional power and legitimacy flow from the will of the people, and when any institution usurps our natural rights, it is the right of the people to restructure, replace, or eliminate, that institution.
SUMMARY
At a time when abundant resources critical to all life are being rapidly depleted and falling commodity prices have become a thing of the past, we are being warned that our traditional, desperate free-for-all focus on 4% or higher GDP growth rates is no longer sustainable. This requires a paradigm shift to policies aimed at achieving the conditions where market-driven capitalism can function in a more equitable democratic fashion in the public interest. This also means we cannot sustainably consume at 70% of GDP with zero Savings, explosively high Trade Deficits and related consumer and federal Debt … a formula we’ve perfected that will inevitably bring the next crisis of all crises.
We need to fundamentally rethink our social-economic model … as someone said “do a little fate-of-the world scale thinking.” But I’m afraid we will continue to tinker with things broken in our unstable social-economic system. We seem Hell Bent on remaining captive to divisive ideology where the best and brightest ideas are sacrificed to inflexible dogma and the greedy pursuit of political power.
I support David Korten’s thesis that corporations owe as much to the public as they do to shareholders. They owe something to workers, communities and the natural environment in which they operate. This calls for a far more civil society founded upon the values of equity, cooperation, openness, active citizen participation, consensus-oriented decision making and responsibility to the whole society.
In a 2000 essay, David Korten further wisely contrasted the values/benefits inherent in an uncivil purely capitalistic society where the sole defining purpose is making money and people are treated as expendible commodities -- vs. a more humanistic civil society where inclusivity, equity, shared sacrifice and shared gain are the dominate cultural values:
“We might thus expect the economy to be comprised primarily of local enterprises and to vest in each individual a share in the ownership of the productive assets on which their livelihood depends (i.e., cooperatives, small enterprises). The civil society is radically self-organizing and predominately cooperative in the manner of all healthy living systems, and seeks to maximize the opportunity for each individual to fully and freely develop and express their creative potential in service to the whole life. (my note: Actually this was the American Dream that has become a middle-class Nightmare). Thus, a civil society differs on every dimension from the capitalist economy in which we currently live.
In the pure capitalist economy, money is the defining value and the primary mediator of relationships among persons and institutions. The whole of public life is dominated by national and global financial markets (and shareholder interests) that value life only for its liquidation price. The wages of working people are suppressed to increase the returns to those elite few who already command vast financial holdings.
Dominant corporations buy politicians and control public discourse to create a grossly distorted one dollar, one vote democracy. Spiritually impoverished and pressed into a struggle for survival, those deprived of both political voice and a (decent) adequate means of livelihood become increasingly indebted to the system that demands they devote ever more of their life energies to its imperatives. Ideals of equity are out the window and individual freedom becomes largely illusory.”
