The Corporation and Democracy

An Interview with Peter Kellman

Peter Kellman works with the Program on Corporations, Law and Democracy (POCLAD), an organization that examines the relationship between corporations and society, with an emphasis on the historical origins of corporate power. A long-time labor, anti-war and anti-nuclear activist, he was the primary organizer in the Jay, Maine strike against International Paper in the late 1980s. One of the outgrowths of the Jay strike was the passage of an environmental ordinance that gave town of Jay the same power as state and federal authorities to monitor, enforce and license environmental rules within the town's boundaries.

Multinational Monitor: POCLAD has been critical of people who take a regulatory approach to dealing with corporate abuses. What underlies that criticism?

Peter Kellman: There was a turning point in this country after the Populists, who in the 1880s, 1890s and turn of the century recognized that big corporations -- which were primarily the railroads at that time -- couldn't be regulated. They understood that what was necessary was for the citizens to define what different institutions in society could do, and corporations were right on top of the list.

If you are going to regulate an industry, you kind of give up on being sovereign over it. What is necessary is to define it.

If we want to grow a particular kind of food, or make cars, then we should define the institution that particularly does that, rather than say any group of people who form a corporation can do anything they want, unless it violates other laws.

This isn't something that I particularly like to dwell on, because the words themselves, regulate and define, can be interchanged fairly easily.

MM: What about activists' current work? POCLAD has tried to draw a bright line in this regard, and been critical of people taking a regulatory approach.

Kellman: I come from a labor perspective, and I'm not critical of people who work within the confines of the National Labor Relations Act (NLRA), because they don't have any other choice. I'm personally not critical of people who work within the framework of a regulatory agency, because that is all there is.

The question is: Are they working to expand that, to move outside of it, toward using that forum to get to the point of defining what institutions do, rather than just regulating?

What I am trying to do is work with people who do that, and look at other ways the process of organizing workers can take place.

MM: What would be a way to organize workers that would be more consonant with that approach?

Kellman: One of the difficulties is that in most countries workers have working class parties, so they can move an agenda outside of just the day-to-day relationship between the employee and the employer.

In this country, under the law we are pretty much confined to the employer-employee relationship -- that is how the NLRA works.

Also, labor has since Franklin Roosevelt been in the camp of the Democratic Party.

So one of the routes is to discuss how the law should be different, and how labor should function outside of the workplace relationship.

There are a number of workers in this country who don't come under the NLRA or state labor relations acts -- for example farmworkers in many states -- so organizations like the Farm Labor Organizing Committee organize directly around the issue of freedom of association. They don't participate in elections, except the election that elects people to union office, or to decide to accept a contract.

They start from the position that a group of workers has the freedom of association to form a union, and the company has to respect that. The company cannot be involved in an election to determine whether or not workers will be represented.

MM: What would trying to move that vision mean in terms of changing the NLRA framework?

Kellman: It is important to look at what union elections are. What we call recognition elections are in fact violations of international law.

When we vote for someone who is running for Congress, we vote for someone running for office. We don't vote for whether or not there will be a Congress.

But when it comes to union elections, we vote as to whether or not there will be a union, not who will be representing people within that particular union.

MM: Would you envision the union at a workplace representing all of the workers, or would there be multiple unions within a single unit?

Kellman: I think it should be multiple. I think people should have freedom of association. If five people want to form a union, they should do that. And the employer should recognize them based on their strength.

But they shouldn't have to go through an election process to prove that they belong to an organization, especially not an election process that includes employer free speech.

MM: And there should be no right for the employer to participate or speak or in any way to influence the decision to unionize?

Kellman: Right. This was the initial intent of the NLRA. Initially, for a short while, the National Labor Relations Board viewed any interference by the company as being an unfair labor practice.

Companies got freedom of speech in the Virginia Light and Power case in 1941.

Prior to 1941, if a company participated in any way in the certification process, it was an unfair labor practice. And that is the way it should be.

Why should the company be involved in a process by which workers decide if they want to exercise freedom of assembly and organization? It has nothing to do with them. It is not their business.

MM: How do we get from here to there? How do you move to that kind of labor organizing from what we've got now?

Kellman: The first step is to have a discussion within labor, and to expand the parameters of labor history.

Generally, people in labor think about the CIO as to what we need to go back to. I think we won't get a whole lot of ideas from going back to the CIO, though I think there are some important ideas that are there.

Prior to that, labor often thought of itself as a community organization, an organization that was interested in more than so-called bread-and-butter issues, which the AFL has always promoted -- and the CIO for the most part agreed.

If we do that, we'll begin to get some ideas about how to proceed. I think the Labor Party is a really important component of this, because it is finally trying to politicize the labor movement. Without that politicization, we won't get beyond just thinking about the relationship between employer and employee.

I also think we need to galvanize people around ideas, as labor had done in the past.

In the past, the 10-hour day and the eight-hour day were important goals of labor. But in the 1830s, when the goal was the 10-hour day, the goal was also public education, and the two were linked.

Labor people at the time picked up on a republican theme of the preceding 20 years, and said, "If we are going to have a democracy, people have to be educated. If they are working 14 hours a day, we can't get an education, and so we can't participate in this democracy."

What I would suggest today is that we set as our goal the 32-hour week, four eight-hour days. And we call the fifth day a Democracy Day, when everybody would be free to participate in governmental processes.

I don't think the corporate lobbyists would last very long if once a week in our legislative halls thousands of people showed up.

Because of their present economic situation and the whole nature of the society, most people are now denied the ability to participate in the political process, except basically to vote every two or four years.

How can you talk about having a democracy unless people have the time to participate in it?

One of the biggest problems I've had with campaign finance reform is that it misses a number of really important points.

In my experience in grassroots politics, the biggest problem I have always had in running people for local and state legislative offices is finding the people to run. That is, I would guess 80 percent of the population cannot afford to run for office -- they just don't have the time to participate.

How many people have jobs where they can just leave for six months to go to the legislature? Not too many. So they never get to the question of how to finance a campaign.

The question is how do you make it possible for people to participate in government. Because if you can't do that, you can't talk about having a democracy.

That was a question the Founding Fathers addressed at the Constitutional Convention. They wanted to know how they could protect themselves from the majority of people. How could a minority class protect itself from this idea of democracy. That is what they wrote a constitution to do -- to exclude people.

MM: Especially in looking at early U.S. history, you have emphasized the importance of studying property relations.

Kellman: One of the things that POCLAD focused on initially was corporations. And one of the conclusions that can be drawn from an earlier POCLAD publication, "Taking Care of Business," is that corporations at one time were controlled by the people.

I think we have evolved to say that that was never the case.

There has always been a propertied class in this country that has run things. The corporation became more important as the concept of the corporation became more important to the propertied class.

It is true that legislatures in 1800, for example, had defined corporations as opposed to regulating them. But it is also true that people who ran those legislatures represented the propertied class. When they saw the need to make it easy to form corporations, they passed general incorporation laws.

I think George Washington was tremendously influenced about the need to have a Constitutional Convention because of conditions that arose out of two corporations that he was involved with, the Ohio Company and the Potomac Company. He thought it was real important to start building canals, to bring commerce down to the ports, and he had a lot of trouble convincing the state legislatures of Virginia and Maryland to support canal construction.

Washington and others among the very rich, those with the most property, were very concerned about the smaller property class, who had taken over state legislatures and passed laws to grow their small businesses.

They were starting to have tariffs between the states. The richer people, the commercial class, needed to break those barriers down.

That is why I call the Commerce Clause of the Constitution the first NAFTA.

It did the same thing amongst the states that NAFTA did in North America and the WTO is trying to do worldwide. The first NAFTA was really the Commerce Clause in the Constitution. It is really an old concept in this country.

If you look at Washington and corporations from the perspective of them representing the interests of a propertied class, the historical sense you have of corporations changes from what POCLAD talked about originally.

MM: In looking at U.S. history, what do you pull out as important strains of resistance?

Kellman: One piece of history that is significant to look at in terms of the corporation and people's movements is the Dartmouth College case.

After the Revolution, the Democrat-Republican Party was elected in different places and people of a republican nature wanted to have public education.

They started to change the charters of private colleges. The question was how to make them public. In Pennsylvania, they took the private college and made it a public institution. When they tried to do that with Dartmouth College in New Hampshire, the U.S. Supreme Court eventually found it unconstitutional.

You had the state legislature of New Hampshire saying, "We need to make public these private institutions, because education is too important to leave in the hands of a few privileged people."

So they take the charter of Dartmouth College and they change it. And the Supreme Court in New Hampshire says they are right in doing that, because education is just too important to leave in the hands of a few private people.

The U.S. Supreme Court says, "No, you can't do that, because the corporation is not so much a creature of the state as a party to a contract creating the corporation."

Now, the Contracts Clause of the Constitution is important. An institution which didn't have constitutional protection all of a sudden, under the Contracts Clause, does.

The corporation thus gets constitutionalized out of a fight over who is going to be responsible for educating people -- whether it is going to be in private or public hands.

The next time the issue really surfaces is with labor, which in 1828, 1830 picks up that republican notion and fights for the 10-hour day and public education as a way to create a democratic society.

MM: What other movements or moments do you look to for lessons and inspiration?

Kellman: If I have to pick a few things, I usually point to the Populists and the Knights of Labor.

I use the subtreasury plan of the Populists of the 1880s and 1890s to explain their orientation.

The Populists came to the conclusion that the people of the country form a government. One of the things the government does is issue money, in the name of the people, supposedly. But then that government turns around and loans that money to banks, which turn around and loan that money to people. In the process, the banks make a lot of money and are able to determine what money will be used for -- who will get money to build what, where.

The Populists said, "Why should we go through all of that? Why shouldn't someone if they want to borrow money just go to the post office and borrow it, and eliminate this whole layer of control which does nothing but consolidate more wealth and power in the hands of a few people?"

At about the same time, the Knights of Labor were doing similar things. They promoted the idea that the economy should be run by worker and consumer cooperatives. They also argued that there should be no communications in the hands of private interests -- the telegraph then, today it would be the internet, television and radio.

MM: What is your view now of POCLAD's emphasis on the corporate charter?

Kellman: I think it makes sense as a tactic coming out of a particular struggle -- for example, if I knew what I know today, I certainly would have encouraged the people in Jay in 1987 to go after the charter of the International Paper Corporation. If corporations are responsible for destroying communities and killing people, then people should go after their charter.

Although the courts consider corporations a contract, one of the things that came out of the Dartmouth case was the Reserve Clause, which I think 48 out of the 50 states still have, in which the state as party to the contract reserves the right to change the contract at any time, for almost any reason.

Challenging a charter has to come out of an actual struggle, and if it fits, as a tactic to awaken awareness and maybe even solve the problem, then it is appropriate.

I don't think it should be seen as a way to make corporations act responsibly. I think it is a way for people to understand that we are the ones that have to act responsibly, and not allow private institutions to define for the rest of us what our culture is going to be about.

MM: What is the practical value of charter revocation? If a charter was pulled in New York, say, couldn't a company just recharter in Delaware and operate without interruption?

Kellman: To operate in any state, a corporation needs a certificate of authority, which is the equivalent of a charter in that state.

Let's take Maine as an example. IP has a plant that is worth several billion dollars. What is going to happen to that property if they can't do business in the state? It is either a question for the legislature or the courts to decide.

In Maine, it is actually the legislature, because of the Reserve Clause. So they would lose their property in that state. They would lose their business in the state. They couldn't sell paper. They couldn't do anything. They would just be excluded from the state.

But surely -- just for the sake of argument, if they were chartered in Maine, they could just pick up and recharter in Delaware.

International Paper is chartered in the state of New York. But if the Maine legislature revokes its certificate of authority in Maine, it does not matter where it is chartered, it cannot do business in Maine.

The problem about this stuff is that we are arguing that that is feasible under the existing law. There hasn't been much done since the turn of the century. Who knows what would happen? But as a way of raising people's expectations about whether or not they are sovereign, this is a good way to do it.

The real question we are trying to get to when we talk about corporations is: Are they public or are they private institutions? I think the best example to raise the issue is when General Motors in the 1920s decided that in order to sell more cars, it would bankrupt the trolley systems in the major cities. They made that decision, and essentially the board of directors of GM decided the United States was going to be a car culture.

The question is: If we are going to do things like that, should they be public decisions or should they be private decisions?