Book Notes

Corporateering: How Corporate Power Steals Your Personal
Freedom … And What You Can Do About It
By Jamie Court
New York: Jeremy Tarcher/Putnam, 2003
$24.95: 322 pages

corporateering: When corporations exceed their traditional role in a marketplace to dominate the cultural sphere and compromise individuals' rights, freedoms and power, and the democratic systems that protect them. The act implies corporations vying with a democratic people for sovereignty over their society and societal rights by redefining the basic rules of society, law and ethical customs to the detriment of individuals.

Whether Jamie Court, the executive director of the California-based Foundation for Taxpayer and Consumer Rights and author of this new book, will succeed in his mission of infusing the term "corporateering" into U.S. political discourse is unclear.

But what is certain is that Court's book is raising a critical set of issues that are dominant themes in contemporary U.S. life but generally ignored, including by corporate accountability campaigners

Court's primary concern is the way that corporations regulate society to exert a controlling influence over popular culture and to deny individual freedom.

Though Court does devote substantial space to hyper-advertising and the incursion the issue of corporate control of the mass media, his focus is not primarily on the corporate degradation of popular culture.

Rather, Court's concern with culture is the way that corporations have managed to shape fundamental beliefs about the way society should be organized, so that "corporate perspectives are becoming prevailing perspectives." There is now substantial public accord with shibboleths like: Regulation will increase consumer costs. Or, interfering with the free market will destroy the business climate. These are the core defenses of companies facing popular demands for public controls. They are so successful as defenses now -- as they were not three decades ago -- because they have become generally accepted nostrums. These are the kinds of ideas that people tend not say in every day conversation, but to offer up on their own if someone suggests restraining corporate power. In other words, as Italian political theorist and activist Antonio Gramsci might say, corporations have achieved hegemonic power.

The mantras of economic freedom and deregulation of the corporate sector, Court argues, "have credibility because of the power of the logic that underlies them -- that the good life is an unregulated transaction."

There are tons of evidence to disclaim the idea that market works efficiently in an unregulated state. And Court documents how deregulation of the California energy market paved the way for the multi-billion dollar rip-off of consumers in the state, and how failure to regulate HMOs has led to the denial of quality care to millions, among other examples.

But even more penetrating is Court's contention is that the idea of unregulated transactions is fundamentally misleading. Failing to regulate corporations leaves them free to regulate people.

An important contribution of Corporateering is the framing of an array of corporate abuses -- traceable either to deregulation or government failure to regulate in the first place -- as the regulation of individuals, and denial of individual freedom.

For example, failure to regulate corporations frees them to regulate people's time by bombarding them with commercial messages and intrusive phone calls (and the FTC's recently implemented Do Not Call registry illustrates how regulation of corporate conduct can free individuals from the shackles of corporate regulation). Regulatory vacuums free corporations to infringe on personal privacy rights, by monitoring office email, trading in private financial information and otherwise. Form contracts from credit card companies, car dealers, HMOs and others require individuals to sacrifice their Seventh Amendment right to a jury trial. These contracts regulate people's action in case of dispute large companies, forcing them to accept mandatory arbitration that is biased in favor of large corporations.

Corporateering concludes with a brief listing of reforms to control corporate power. Though not novel, the list is useful. Proposals range from taxing corporate advertising to barring mandatory arbitration in consumer contracts, from time-limiting all deregulatory efforts to imposing personal liability on corporate managers who knowingly allow corporate wrongdoing.

The book also a call to readers to spread the concepts employed in the book to ever-widening circles. Though it may appear trite, there is a sense in which this proposal is fundamental. The first step in freeing ourselves from corporate regulation is freeing ourselves from corporate regulation of our thinking.

People Before Profit: The New Globalization in an
Age of Terror, Big Money, and Economic Crisis
By Charles Derber
New York: St. Martin’s Press, 2002
$24.95; 324 pages

People Before Profit, by Charles Derber, author of Corporation Nation, is a hopeful book.

Derber describes the present as a Constitutional Moment, a time when the rules of the global economy are in formation and up for grabs. While corporations have for two decades aggressively pushed their own framework for the global economy, and sought to entrench their vision in the rules of the World Trade Organization and other instruments, there is now significant push back from citizens in poor and rich countries alike. And, Derber believes, there is enormous receptivity to very different ideas for how the global economy should be organized.

People Before Profit contains no new reporting and is not heavy on analysis of events. Its approach is to describe broad trends, developments and opportunities in the era of globalization, in a manner that is accessible to all.

In the first, diagnostic portion of the book, Derber situates the present era of corporate globalization in historical context. Just as technology -- the railroad, the telegraph, the telephone -- was vital to an earlier epoch of corporate expansion, so the Internet and computer technologies have helped make possible corporate globalization. But technology's central role in making corporate globalization possible does not mean that it is inevitable; technological change creates a range of possibilities -- power, institutions and rules determine which of them will be realized. Just as unregulated commerce in the Gilded Age enabled a sweatshop economy in which millions worked in desperate conditions to enhance the profits of a few, so too do tens of millions now toil in sweatshops around the world to benefit corporate profiteers. And just as the ability of Gilded Age robber barons to foster a race to the bottom among U.S. states was key to their ability to escape public controls, so does today's race to the bottom among countries give corporations enormous leverage over governments considering regulating their behavior.

With the enormous power accrual by big corporations, "government still wields formal sovereign authority, but sovereign power has actually been transferred to a partnership increasingly dominated by the business sector."

"The incestuous melding of business and constitutional government makes governments look and act more like corporations and corporations look and act more like governments," Derber writes. "Business takes on the planning and rule-making roles of government, and government increasingly becomes about money." This applies both to national governments and to the nascent global governing structures of trade and investment agreements.

But there is a unique feature of global government, Derber argues, which is the dominating role of the United States. While much of what the United States does reveal imperial ambition, Derber prefers to speak of the U.S. umpire rather than U.S. empire. The United States drafts the new rules of the global economy, and oversees their implementation.

But the United States faces a contradictory situation. It wants to build a genuinely global system that can legitimize U.S. power; but it doesn't want the global system to escape U.S. control and become subject to democratic influences.

In this contradiction particularly, Derber sees opportunity to build global democracy.

Among anti-corporate globalization forces, there are two camps: those who favor democratic global government, and those who favor decentralizing power as much as possible to democratized local authorities. Between the two groups, which Derber labels the "UN camp" and the "barbershoppers" (on the grounds that barber shops are local and small-scale), Derber sides with the UN camp. He is most interested in highlighting the two groups' common commitment to democracy, however, and argues that most of the apparent differences between the two disappear when it comes to practical rather than theoretical matters.

Global democracy, he argues, must be built around a global New Deal. At its core, it should emphasize ending the race to the bottom (which Derber says will require replacement of the World Trade Organization, International Monetary Fund and World Bank), redistributing wealth and income on a global basis (including by debt cancellation and financial transaction taxes with revenues directed to the poorest countries), decommodification (with the global commons -- including water and a clean environment -- governed by non-market rules), and participation. To further participation, Derber envisions a diverse set of initiatives, including democratization of the United Nations and creation of a Global People's Assembly.

Pigs at the Trough : How Corporate Greed and
Political Corruption Are Undermining America
By Arianna Huffington
New York: Crown Publishers, 2003
$22.00; 275 pages

Pigs at the Trough is a funny book. It is also probably the best book yet written on the financial scandals that rocked the United States in 2001 and 2002.

Pigs at the Trough is filled with proper sarcasm and contempt for CEOs, investment analysts, accountants and others who profited from the corrupt practices that eventually triggered the Wall Street implosion.

"Ask yourself," Huffington writes at the beginning of Pigs at the Trough , "Which America do you live in?"

She goes on to ask:

Do you live in a $90 million mansion in Bel-Air like Global Crossing founder and chairman Gary Winnick, financed by the cleverly timed sale of more than $730 million worth of stock in the now bankrupt telcom giant? Ö Or are you one of those corporate titans who has so many million-dollar residences scattered around the globe that you have trouble settling down? Ö Are you crafty enough to line up the special kind of financing that netted Bernie Ebbers [of WorldCom] $408 million in loans?

Or are you among the 99.9999 percent living in the other America?

"How did the impossibly rich upper crust get impossibly crustier?"

But while this is a book with attitude, it is not a rhetorical rant. It is chock full of details and anecdotes that recount many of the major scandals -- delivered in clear, fun-to-read prose.

Huffington goes step by step through the abusive maneuvers that enabled corporate executives to deliver rosy financial statements, and to line their pockets, even as their companies were overreaching, overinvesting and underperforming. She details the abusive allocation of stock options and the mis-accounting of them; company manipulation of 401(k) accounts to force employees to invest in and prop up weak employer stock; outrageous company loans to top executives; the tax haven scam by which corporations reincorporated in Bermuda and other tax haven countries -- without moving a single employee from their old headquarters to their new corporate "home;" and how Wall Street evolved a culture which rewarded managers for mass layoffs.

Pigs at the Trough moves on from documenting the abuses -- how the pigs behaved at the trough -- to an assessment of how the pigs were able to get away with it. How the Pigs Stopped Reform looks at the corrupted political culture in Washington, and the specific lobbying initiatives and political donations that greased the way for Congressional approval of the financial deregulation bill and the bill making it harder to sue accountants for approving cooked corporate books, and Congressional intervention (special thanks to Representative Billy Tauzin, R-Louisiana, and Senator Joseph Lieberman, D-Connecticut) to block efforts at the Securities Exchange Commission to crack down on financial misdeeds.

The pigs did not succeed on their own. They were aided and abetted by a cast of thousand of enablers. Huffington portrays the investment analysts, accountants, corporate board members and the media who "made it possible for the pigs to gorge themselves on ludicrous quantities of stock options, grossly inflated pay packages and a dazzling array of perks so indulgent they make Donald Trump look puritanical."

Ultimately, the pigs' excesses ended the bacchanal. Huffington concludes by recounting how the Sarbanes-Oxley financial reform bill overcame massive corporation opposition to become law and by proposing a much further-reaching set of reforms.