Capitalists and Crowds


"Corporate Death" Penalties Plus
Making Shareholders Criminally Liable for Corporate Misbehaviour

In the Soviet Union, capitalism triumphed over communism.  In this country, capitalism triumphed over democracy.

- Fran Lebowitz

by Kalle Lasn

A corporation has no heart, no soul, no morals.  It cannot feel pain.  You cannot argue with it.  That's because a corporation is not a living thing, but a process - an efficient way of generating revenue.  It takes energy from outside (capital, labour, raw materials) and transforms it in various ways.  In order to continue "living" it needs to meet only one condition: its income must equal its expenditures over the long term.  As long as it does that, it can exist indefinitely.

When a corporation hurts people or damages the environment, it will feel no sorrow or remorse because it is intrinsically unable to do so.  (It may sometimes apologise, but that's not remorse that's public relations.)  Buddhist scholar David Loy of Tokyo's Bunkyo University puts it this way: "A corporation cannot laugh or cry; it cannot enjoy the world or suffer with it.  Most of all a corporation cannot love."  That's because corporations are legal fictions.  Their "bodies" are just judicial constructs, and that, according to Loy, is why they are so dangerous.  "They are essentially ungrounded to the Earth and its creatures, to the pleasures and responsibilities that derive from being manifestations of the Earth."  Corporations are in the most literal and chilling sense "dispassionate."

We demonise corporations for their unwavering pursuit of growth, power and wealth.  Yet, they are simply carrying out genetic orders.  That's exactly what corporations were designed - by us - to do.  Trying to rehabilitate a corporation, urging it to behave responsibly, is a fool's game.  The only way to change the behaviour of a corporation is to recode it; rewrite its charter; reprogramme it.  When a corporation like General Electric, Exxon, Union Carbide or Philip Morris breaks the law, causes an environmental catastrophe or otherwise undermines the public interest, the usual result is that nothing very much happens.  The corporation may be forced to pay a fine, revamp its safety procedures, face a boycott.  At worst - and this is very rare - it is forced into bankruptcy.  The shareholders lose money and the employees lose their jobs.  Usually, though, the shareholders move on to other investments, and company executives find work elsewhere.  In fact, it's often the public and low-level employees who suffer the most when a corporation dies.

bulletIf you're a shareholder, why shouldn't you be held responsible for that company when it becomes criminally liable?

What if there was another, more serious, potential outcome, one that would lay responsibility where it belongs?  What if each shareholder was deemed personally responsible and liable for "collateral damage" to bystanders, or harm to the environment?  Why shouldn't it be so?  If you're a shareholder, a part-owner of a corporation, and you reap the rewards when the going is good, why shouldn't you be held responsible for that company when it becomes criminally liable?

If we rewrote the rules of incorporation so that every shareholder assumed partial liability, financial markets would immediately undergo dramatic change.  Fewer shares would be traded.  Instead of simply choosing the biggest cash cows, potential shareholders would carefully investigate the backgrounds of the companies they were about to sink their money into.  They would think twice about buying shares in Philip Morris Inc or R J Reynolds or Monsanto.  Too risky.  They would choose resource companies with good environmental records. They would stay away from multinationals that use child workers or break labour laws overseas.  In other words, the shareholders would be grounded - forced to care and take responsibility.  Stock markets would cease to be gambling casinos.  Our whole business culture would heave.

We made an enormous mistake when we let shareholders off the legal liability hook.  But it's not too late to rectify that mistake.  We, the people, created the corporate charter and the rules for buying stocks and shares, and now, we, the people, must change those rules.

The same approach can be extended to corporate crime.  When a human being commits a major crime - gets caught trafficking cocaine or robbing a store - society metes out harsh justice.  The felon automatically loses his political rights (to vote and hold office) and if the crime is serious enough, he does hard time.  When he gets out of jail he's marked for life.  Employers won't hire him.  People who know his background won't trust him.  He cannot travel freely across borders.  He is a marked man.

Compare that to the worst that might happen to a corporation caught flagrantly breaking the law.  The public is outraged.  The CEO loses his job.  There's a shake-up in the boardroom.  The company faces a class action suit and pays out a lot of money.  But, at the end of the day, the executives of a criminal corporation really don't have so much to worry about.  Their chances of ending up in jail are next to zero.  And the corporation itself loses none of its political or legal rights to continue doing business, lobby congress or participate in elections.  The corporation hires a new CEO, settles the suit, launches a PR campaign to regain public confidence.  This is often seen as just the price of doing business.  That's why the executives of rogue corporations like Philip Morris can keep lying to us, hiding information and otherwise flouting the law with impunity year after year after year.  There is no penalty they fear.

bulletRepeat offenders could be barred for a specified number of years from selling things to the government

We must find ways to instil that fear.  We must enact tough new corporate criminal liability laws.  Repeat offenders should be barred for a specified number of years from selling things to the government.  They should be ineligible to hold government contracts and licenses for television stations.  They should not be allowed to finance political campaigns or lobby congress, and they should forfeit their legal rights just as individual criminals do.

bulletA company caught violating automatically has its charter revoked, its assets sold off and the money funnelled into a superfund for its victims

We must rewrite the rules of incorporation in such a way that a company caught repeatedly and wilfully dumping toxic wastes, damaging watersheds, violating antipollution laws, harming employees, customers or the people living near its factories, engaging in price fixing, defrauding its customers, or keeping vital information secret, automatically has its charter revoked, its assets sold off and the money funnelled into a superfund for its victims.

In America, the home of probably the world's biggest, most powerful corporations, there are historical precedents for this kind of action, though you have to go back a century to find them.

bulletThe judgement sought against the defendant is one of corporate death

In 1884, the people of New York City, citing a wilful pattern of abuse, asked their attorney general to revoke the charter of the Standard Oil Trust of New York (and they succeeded).  The state of Pennsylvania revoked the charters of a number of banks that were found to be operating against the public interest.  Michigan, Ohio and New York revoked the charters of oil, sugar and whisky trusts.  In 1890, the highest court in New York State revoked the charter of the North River Sugar Refining Corporation with these words: "The judgement sought against the defendant is one of corporate death.  The state, which created, asks us to destroy, and the penalty invoked represents the extreme rigour of the law.  The life of a corporation is, indeed, less than that of the humblest citizen."

Warnings about corporate consolidation have also come out of more recent US court decisions.  In 1976, US Supreme Court Justices, Brennan and Marshall noted that "the special status of corporations has placed them in a position to control a vast amount of economic power by which they may, if not regulated, dominate not only the economy but also the very heart of our democracy, the electoral process."

Today, after 100 years of inaction, American corporate charters are once again being challenged, and these challenges are setting an example for those across the world who understand the need to rein in the power of corporations.  In May 1998, New York Attorney General Dennis Vacco revoked the charters of the Council for Tobacco Research and the Tobacco Institute, on the grounds that they are tobacco-funded fronts that serve "as propaganda arms of the industry."

bulletAlabama, the only state in the US where a private citizen can file a legal petition to dissolve a corporation

In Alabama, the only state in the US where a private citizen can file a legal petition to dissolve a corporation, Judge William Wynn did just that.  In June 1998, acting as a private citizen (and comparing his actions to making a citizen's arrest), Wynn named five tobacco companies that, he asserted, have broken state child abuse laws and should be shut down.  "The grease has been hot for a year now, and it's time to put the chicken in," he said.

On 10 September 1998, in what may be the largest corporate charter revocation effort in a century, 30 individuals and organisations (including the National Organisation for Women, Rainforest Action Network and National Lawyers' Guild) petitioned California Attorney General Dan Lungren to pull the plug on Unocal Corporation, which, they claim, engages in environmental devastation, unethical treatment of workers and gross human rights violations.  And on Tuesday 3 November 1998, in the fiercely political university town of Arcata, California, citizens in the first ballot initiative of its kind in US history voted 3,139 to 2,056 to "ensure democratic control of all corporations conducting business within the city."  Now, in town hall meetings and an ongoing city-wide conversation, the people of Arcata will decide what role they want corporations to play in their community.

bulletTo overturn the judgement that corporations were "natural persons" under the US constitution

The 1886 Santa Clara County versus Southern Pacific Railroad decision in the US Supreme Court declared that corporations were "natural persons" under the US constitution.  Suddenly, corporations "came to life" among us, and started enjoying the same rights and freedoms as we, the citizens who created them.  One of the ultimate long-term strategies for jammers is to revisit that judgement, have it overturned, and ensure that the corporate "I" will never again rise up in our society.  It will be a long and vicious battle for the soul of America and the outcome is far from clear.  In the next century, will America evolve toward a radical democracy or an even more entrenched corporate state?  And what example will it set to the rest of the corporate world?  Will more and more of the world economy be centrally planned by global mega-corporations?  Will we live and work on Planet Earth, or Planet Inc.?  The only way to avoid this latter, nightmare scenario is for people to start thinking and acting as sovereign, empowered citizens.

bulletMake an example of one of the world's biggest corporate criminals - Philip Morris Inc

One way to jumpstart this vital process is to make an example of one of the world's biggest corporate criminals - Philip Morris Inc.  Launch a TV campaign that tells the horrifying truth about that company's long criminal record.  Organise a massive boycott of its food products, collect a mind-addling number of petition signatures, keep applying the pressure and simply never let up until the attorney general of the state of New York revokes the company's charter.

Kalle Lasn is editor and publisher of Adbusters Magazine. He was previously a documentary film maker who received 18 international film awards for his efforts.

Source: from The Ecologist May/June 1999 e-mail:

I don't entirely agree with the ideas expressed above.  For one thing, I feel when someone has completed his or her first sentence in prison, the punishment should be allowed to stop there (unless the crime was pædophelia or similar).  Why prevent that person from being able to get a decent job and fit back into the community?  So he or she can join the ranks of the recidivists?  Subsequent incarcerations (depending on their nature) may revoke that right of privacy, however.


Capitalists (from the Latin word for head) generally count in their ranks only the heads of corporations (from Latin word for body).  What is the "head" of the body?  The brain?  The mind (if you think there's a difference)?  The emotions?  The information stored in the genes?  What heads a company?  The Chairman?  The Board?  The stockholders?  The computer?

Companies have an energy that animates them.  It can come mainly from one person or from several.  The intensity of this energy is directly proportional to the strength of belief in a "vision."  We all invest in those things we think are most likely to pay off.  Why waste your time on unproductive people, on unproductive activities?

That which emerges from the unsentimental struggle for survival may be the fittest, but may not be the most desirable.  Perhaps the worst of the corporations - the criminals - should be subject to capital punishment.  I suppose a stiff fine would "punish" their capital by reducing it, but what I have in mind is forced dissolution.  (Then could a company leave behind a Last Will and Testament, designating assets be given to a company of its choice?  It probably would never be necessary as all the lawyers sure to be involved would never leave any.)

Federal laws in the US and elsewhere say that espionage and treason are crimes punishable by death.  Why are these laws so harsh?  Because treason is an attack on the "state" with intent to do grievous bodily harm or even murder?  This makes the state sound like a person.  Well, why not?  It IS an entity, legally, socially, and culturally.  Corporations can be similarly affected by treasonous acts.  (That's why whistleblowers are shunned by the guilty and innocent alike - they threaten the stability of the enterprise.)

Capital punishment in the form of assassination occurs infrequently but with some regularity in both governments and large corporations when the actions of one or more troublesome individuals threatens the well-being of the entrenched beings-in-power.  There are numerous lesser punishments that are more covert.

I think crowd behaviour takes over when a crowd begins to act as a single organism: it takes on a "life" (an esprit d'corps), has an awareness and a recognisable personality - has boundaries, dimension, definition.  It is with this "corpus" the live performer communicates.  It is this which energises him.  Not every collection of people is united into life.  It requires a communication within the group and a focus (music fills the bill quite readily, as does laughter).

At first, I assumed that a tv audience could not function as an organism because communication is one way.  But is it really?  Both the audience and the performer can read later in the newspaper (or see on tv) how large a group was watching, how intense were their feelings, et cetera.  and could then begin to consider themselves as part of the "body" of admirers.  Interactive tv could tighten the feedback loop until, as on the Internet, members can feel the weight of the group directly (for example in chat rooms).  A crowd, once "life" has been ignited, wants to maintain it.  A feel-good camaraderie develops.

Will the Internet prove to mainly be available to an elite sub-group (the "neural net")?

See also:

bulletGroups Can Be Therapeutic (a couple of pages further along in this section) - The problem of human organisations requires "sensitivity to hyperstructural information", that is, knowledge of how knowledge is organised, of how knowledge of knowledge organisation is organised, and so on.  Intelligence is a sophisticated creation of social interactions embedded in particular cultures, not the genetic endowment of any individual...
bulletPrinceton's Global Consciousness Project - ...groups of people sometimes experience a special resonance of feelings and ideas; recent scientific evidence indicates that effects of coherent group consciousness can be detected with appropriate instruments...
bulletI Want to Hurt My Computer - I want to know what good is a Web search engine that returns 324,909,188 "matches" to my keyword.  That's like saying, "Good news, we've located the product you're looking for.  It's on Earth."
bulletYearning to Be a Nobody - "the arrival of effective nanotechnology at the end of the 21st century allowed molecular-sized nanobots at last to enter the human brain so thought mail commenced - the instant exchange of messages by an act of thought..."

The 20th Century

Sir - As you say, democracy and the market, although imperfect, have succeeded where other systems have failed.  However, you do not discuss why this should be.  What is clear is that the most successful systems are aligned to mankind's predispositions rather than working against them.

Capitalism succeeds by aligning itself with the predisposition to greed (or personal prosperity, to give it a kinder name), and communism fails by believing incorrectly that man has innate altruism.  Likewise, democracy works by aligning many people's desire for power with a system which on balance is helpful to the general population, unlike various forms of totalitarianism.  And hand in hand with democracy are the opportunities created by the corporate system, where others not suited to winning power electorally have a chance to do so through management.  It may be surprising to see management as a social grace, but fulfilling the burning need to exercise power in a relatively harmless manner provides a useful social service.

Eric Roche
Newcastle, Australia

Source: The Economist 9 October 1999

Unfortunately, maximising utility and removing inequity may be profoundly incompatible...

See also:

bulletFair Game (further on in this section) - about envy, cooperation, fairness and the imbalance of wealth...
bulletWhy Living in a Rich Society Makes Us Feel Poorer - to function effectively in complex social environments, we need ways to evaluate how we're doing and make judgments about how best to adapt to changing environments.  Such judgments almost always depend heavily on how we're doing relative to others in the same local environment...
bulletHuge Pay Gaps - Due to a lack of effective oversight, chief executive officers are often able to write themselves a blank cheque.  This leads to an economy characterised by fraud and outright theft.  The disparities between the money CEOs get and what the average worker gets have steadily been increasing - 1965: 20 to 1; 1978: 29 to 1; 1991: 56 to 1; 1999: 107 to 1...

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