[Corp. Watch] The big problem with corporations: They're too big

[Corporation Watch]

Trustbusting 2.0?

  by Zephyr Teachout

(The Nation, April 7) -- As a friend of mine said to me last week, it  
seems the economic team advising Obama has an unfortunately limited  
imagination. This has led to a limited range of responses [to the  
economic crisis], all tied to "getting back to where we were" or  
"recovering".

	Even in the language used there are metaphors of recreating a past,  
or healing something like a hurt shoulder -- recovering after bypass  
surgery -- instead of creating a different kind of future.

	One of the things [we need to do to "recover" from the crisis] is ...  
[consider] a much greater range of ideas about how we choose to  
organize our economy: how things are made, how people are paid, and  
how risks are punished and rewarded.

	I think our short-term solutions and responses ought be tied to long  
term structural protections against similar crises. Instead of  
imposing after-the-fact regulations on corporations, why not pass a  
new anti-trust policy that limits the size to which companies can grow?

	Current anti-trust law limits a variety of anti-competitive  
behaviors, like price fixing, and is focused on consumer welfare and  
market manipulation. But anti-trust could become a tool for limiting  
size qua size, not just size when it becomes anti-competitive.

	It would require a major overhaul [of the current system], but in the  
long term a size-based anti-trust policy might actually be simpler  
than the complicated and often unworkable measures of market share and  
examinations of inchoate consumer needs.

	Why? Because economies of scale, which work well for creating  
widgets, are very dangerous when it comes to influencing political  
decisionmaking.

	Political power amassed by concentrated financial power leads to  
serious distortions in policy, leading Congress to pass absurd, non- 
responsive legislation that gives illogical copyright extensions,  
dangerous environmental licenses, and tax breaks to those who least  
need it.

	Anti-trust law now limits anti-competitive behavior between companies  
within an industry -- but it could just as easily limit corporate  
power in the political sphere by creating a maximum size limit.

	We might want to use anti-trust policy to encourage collective action  
on the problems caused by big business, such that companies would be  
more likely to spend their energies on productive behavior instead of  
on political influence to modify the rules of the game.

	I recognize that this would lead to less efficient production of  
goods in some areas, but in the long-run, the cost of this  
inefficiency is worthwhile [and may be more efficient compared to the  
current boom-and-bust cycle].

	We enable corporate charters [i.e., allow the creation of  
corporations] to make us healthier and happier. We believe that  
without corporate charters, and the limited liability they confer,  
people would not take risks and invest in inventions and  
infrastructures that improve our lives.

	There is nothing necessary or innate about the particular corporate  
form that is now the norm; it is only worth keeping as long as it  
serves our collective purposes, and we should constantly be remodeling  
it to ensure that it does serve those ends.

	So when it turns out our creation is making us less healthy, happy,  
and secure, we ought consider tinkering with the shape and size.

	Efforts to limit corporate power over the political process via  
campaign finance reform have had limited successes at best -- the best  
example perhaps public funding of elections.

	A new anti-trust policy that takes scale into account would protect  
against any corporation becoming to big too fail. It would also  
protect against some of the systematic lobbying, direct and indirect,  
of Congress by the major companies.

	But it might also lead to a society where more people are closer to  
having a meaningful voice in the company in which they work, which  
itself has positive political side effects.

	As John Stuart Mill argued 150 years ago, it is hard work to take [a  
person who is accustomed to being just] a cog in a machine, and turn  
them into an [independent and politically participatory] citizen a few  
days a year.

	But if they are accustomed to making judgments and exercising power  
in their personal, professional, and familial life, the leap to being  
a collective political decisionmaker is not so great.

	Reforming anti-trust is not the only solution, but its a kind of  
solution we should be hearing more about. This crisis ought to cause  
us to rethink the nature of the institutions we want to exist, not  
simply the after-the-fact behavior regulations of those institutions.

	While the difference between institutional shape and regulation may  
sound semantic, viewing institutions in terms of "what they look like"  
instead of "what they can do" will lead to a productive, collective  
conversation about what we value, and the kind of world we want to  
live in.)

	As Teddy Roosevelt said, "The great corporations ... are the  
creatures of the State." If these creatures are causing massive  
instability, inequality, or environmental ruin, then we ought modify  
them.

	Importantly, this is not an anti-corporate argument -- to be anti- 
corporate actually buys into the reification of the corporation as it  
currently exists.

	I happen to think corporations serve incredibly valuable social  
purposes. But those values are radically limited if we stop  
understanding the corporate form as deeply flexible, putty in our  
hands if we want it to be -- a flexible tool for human, democratic,  
societal ends.