Against the Corporate Form Part I

An Article by Mr. Jeffersonian

The corporation is a business form that modern Americans encounter daily. In the Supreme Court case Dartmouth College v Woodward, John Marshall defined corporations thusly, “A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of creation confers upon it, either expressly, or as incidental to its very existence.” From the local Walmart store to the McDonald’s or Popeyes down the street, corporate interactions play a huge role in providing many of our modern delights. But what has this organizational form meant to the long-term viability of a free citizenry?

This problem is not new. American thinkers have struggled with it in detail since the early 1930s. In 1932, Adolf A. Berle and Gardiner C. Means published a short work titled The Modern Corporation and Private Property, wherein they discussed the revolution taking place in American business. Berle and Means saw the main issue with the corporate form was the creation of a new property class not based on individual property rights but corporatist property rights, describing the issue,

In its new aspect, the corporation is a means whereby the wealth of innumerable individuals has been concentrated into huge aggregates and whereby CONTROL (emphasis mine) over this wealth has been surrendered to a unified direction. The power attendant upon such concentration has brought forth princes of industry, whose position in the community is yet to be defined. The surrender of control over their wealth by investors has effectively BROKEN (emphasis mine) the old property relationships and has raised the problem of defining these relationships anew.

The main problem that will be focused on in this essay is the separation of ownership and control. A common quip of libertarians when it comes to government ownership of a resource or service is that “when everyone owns something, then nobody does.” This concept is equally applicable to publicly-traded corporations, as their “ownership” consists of millions of individual shareholders and dozens of institutional investors, including public pension funds like California’s CALPERS system. What does this mean?

In his book The Managerial Revolution, James Burnham described what he envisioned as the replacement of the capitalist structure. This structure began taking form during and after WWI, and resulted in an ousting of the true capitalist owners of business in favor of a managerial system in which highly technocratic managers would eventually become an independent class who wielded the reigns of corporate power. These managers would become independent of all accountability, as they would have control over the billions of dollars invested by the company’s shareholders with no direct accountability to said shareholders. This problem has been greatly exacerbated by the rise of institutional investors. Pick any given American corporation, and it is highly likely that the top five shareholders are some mixture of Blackrock Inc, Vanguard, Berkshire Hathaway, and Blackstone. These corporations effectively nullify any attempt of individual shareholders to drive policy changes, as the corporate entities or their fund managers retain voting rights over their shares and proxy votes are done by weight.

All of this means that the only ownership individuals have is the ownership of declared dividends from the company (which a lot of more modern companies are refusing to pay, focusing instead on growth). You as an investor have no right to go and inspect your “property” whenever you want. The private security would promptly escort you off the premises. So even though you helped finance that product or intellectual property, you have no real ownership or control of it. It also means that when our colleges manufacture the latest and greatest “woke” managers, those types will be wielding immense power over other people’s money and developing a corporate social agenda whether individual investors approve or not. For example, see Facebook’s censorship campaign, Gillette’s man-hating ad campaign from a couple of years ago, and Coca-Cola telling its employees to be “less white.” There is no way for rank-and-file investors to oust the managerial class responsible for developing and carrying out these agendas.

In the age of the covid plandemic, we’ve also seen that these megacorps are beyond market forces of profit and loss. They have become centralizing supermen of the state and view the government as their target customer since the government can dole out billions in printed currency with the stroke of a computer key. It’s becoming even more concerning as corporations begin moving into the single-family rental housing market and depriving individuals of the largest and most accessible wealth-generating tool still left for Americans. Corporations already control to a major extent Americans’ access to food, healthcare, and income. When they come to dominate housing as well, many of us will be standing around wondering how we became so ensnared in a system that denies so many options for ownership and capital accumulation.

In closing, no one owns corporations, and therefore, no one controls them except for the state. It’s time that we pay attention to the warnings of James Burnham and dust off the philosophy of the Southern Agrarians so that just maybe we can return to an economic system based on real individual property rights instead of the Hamiltonian nightmare we’ve been enslaved in today.