GUEST BLOG: Making Corporate America Safe for Democracy

Written by Taru Taylor

Occupy Wall Street highlighted class conflict between the United States’ “99%” and “1%.” Now coronavirus exposes its dysfunctional Establishment, another name for the 1%. They lack a sense of duty, or noblesse oblige fitting man or woman to rule. They know how to exploit, but not how to govern. Like Nero, the emperor, fiddling while Rome burned, plutocrats continue to water stocks and inflate currencies and bloat their accounts with more billions of paper dollars while people cough to death.

Occupy Wall Street failed. A mere protest, it should have stood for a set of principles—popular sovereignty in the workplace as well as the public. Occupy Wall Street should have sworn to overcome servitude.

Defined by Servitude

Notwithstanding glittering generalities about “life, liberty, and the pursuit of happiness,” the medieval European master-servant relation still defines American law. Most employees serve at the pleasure of their corporate employer. They are “at-will” and can be fired at any time and for any reason, or for no reason at all. To the corporation, labor is an expendable commodity.

Yet there are contradictions. Revered economists Adam Smith and Karl Marx, and political scientist John Locke, defined labor as man’s property in himself. Smith described labor as “the original foundation of all other property, so it is the most sacred and inviolable.” According to the labor theory of value, labor that produces goods determines their values. Thus labor determines the value of GDP (gross domestic product).

But the Establishment commodifies labor. Their laborer is servant. Writing in 1970, U. S. Supreme Court Justice William Douglas said the Establishment was “the new George III.” In his book Points of Rebellion Douglas describes tyranny in terms of the military-industrial complex, with civil rights and Vietnam the hot-button topics of the time. Douglas saw that what we now call the 99% had legitimate grievances against him and his fellow one-percenters analogous to those listed against George III in the Declaration of Independence. For Douglas and the authors of the Declaration, George III made the perfect rhetorical foil. But the Establishment is actually the new William the Conqueror.

Medieval England’s vanquished Anglo-Saxons defeated by the victor Normans set the paradigm for today’s vanquished 99% and victor 1%. Since William the Conqueror led the Normans to victory in 1066 until now, the English have endured under the divine right of kings. In the 1700s King George III denied colonists of Virginia and Massachusetts etc. their self-proclaimed rights of Englishmen. In 1776 colonists redefined themselves as “Americans” and declared their independence from the king. The upshot was a new divine-right regime.

Despite their guarantee of a republican form of government, Americans suffer under the divine right of wealthy white men. The constitutional framers’ “original intent” is revealed in the fact that, until President Andrew Jackson, only white men with landed property could vote. “We the people” meant propertied white men. Does it still?

According to Article I of the U.S. Constitution, “No State shall pass any Law impairing the Obligation of Contracts.” However congressional nonfeasance on this point is a big reason why the essential terms of America’s social contract remain master and servant.

The Corporation

Consider the Virginia Company (1607) and the Massachusetts Bay Company (1629), corporations akin to General Motors and IBM before King Charles I remodeled them into “colonies.” Settlers of Massachusetts enjoyed “all liberties and immunities” as members of the private corporation. They made laws for company and colony; they directly participated in corporate governance. They were known as freemen.

Massachusetts’ and Virginia’s seventeenth-century corporate charters were blueprints for state constitutions to come. Their state constitutions, in turn, served as models for the U.S. Constitution. These constitutions were all contracts. Thus civics begins with contract law.

The Contract

Every valid contract has three essential elements: offer, acceptance, and consideration. Offer and acceptance constitute mutual assent. Each party consents, or not, to the other party’s contractual terms. A consideration is a substantial bargained-for exchange. The two parties must have more or less equal bargaining power. Their promises to each other, spelled out in the contract, constitute mutual obligation.

Here’s an example: A offers to mow B’s lawn for $120. B accepts A’s offer. They have a valid contract for they have mutual agreement and a bargained-for exchange. Their promises to each other (A promises to labor and B promises to pay) constitute mutual obligation. So long as A’s good-faith effort reflects an honest day’s work, B is obligated to remit an honest day’s pay.

But now suppose Y promises to pay X for his labor only if Y is personally satisfied with X’s lawn-mowing. According to Oliver Wendell Holmes’ The Common Law, written before he joined the Supreme Court, this is “no contract at all, until the promisor’s satisfaction is expressed. His promise is only to pay if he sees fit, and such a promise cannot be made a contract because it cannot impose any obligation.”

In the first example, one free man made a valid contract with another. In the second example, a man vanquished by circumstance—a gun pointed at his head or starvation—agreed to a day’s servitude for a day’s pay at the master’s despotic discretion.

A and B are mutually obligated. X is liable to Y but Y has the power to extract labor from X and then decide whether or not to pay X based on Y’s personal, perhaps unreasonable, judgment of X’s work. A consented to a valid contract. X assented under duress to an invalid contract.

What Consent?

Thanks to congressional nonfeasance regarding the Contracts Clause, the 99% are X and the 1% are Y. State laws mostly allow “at-will” employment contracts, where employees routinely assent to draconian terms under duress. The 18-year-old signing on to work for McDonald’s hasn’t the equal bargaining power that makes for a valid contract. The Contracts Clause mandates that Congress legislate against these state laws that have impaired mutual obligation between employer and employee. The failure to act amounts to nonfeasance.

Every day workers sign invalid contracts to work for this or that corporation. Suffering paycheck-to-paycheck duress, whether salary or wages, the sword of Damocles hangs over their cubicles. A wrong word here, the dreaded label of “troublemaker” there: Fired! Contractual obligation goes both ways. But most employment contracts go one way, the corporate way.

Covid-19 Exposes a System

Amazon.com, Inc. recently fired a man named Chris Smalls. Smalls said Amazon fired him because he called attention to Amazon’s unsafe working conditions in the wake of the coronavirus outbreak. Amazon claimed to have fired him because he made the workplace less safe. He said, it said. Ultimately, Amazon fired him because it could. Chris Smalls and the rest of the 99% are servants whom the corporate master may fire with or without cause.

In a better world, signing an employment contract would not vanquish a person to servant status. The 99% should look to the freeman of the Massachusetts Bay Company as their model for parity within the corporate system. Codetermination in Germany, where workers enjoy 50% representation on boards of directors, provides another model. Instead of occupying Wall Street the 99% should occupy their friendly neighborhood corporate boardroom. As freemen and freewomen, today’s workers should directly participate in corporate governance. They should command substantial representation on boards of directors and have power to govern them.

Stop the Buck

The 99% should no longer tolerate congressional nonfeasance regarding contractual obligation. They should instruct their 435 representatives to pass laws to repair the obligation of contracts in all 50 states, Washington, D.C., and the territories.

They could start by overturning the law of the land expressed by the Michigan Supreme Court case Dodge v. Ford Motor Co. (1919). The court stated: “A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end.” The 99% should command boards of directors to represent workers no less than shareholders. To redistribute corporate income so that wages of labor achieve parity with profits of stock. Corporations should employ freemen and freewomen not masters and servants.

The 99% must govern to make the workplace unsafe for 1% shareholder dominion. To make Corporate America safe for 100% stakeholder democracy.

Editor’s Note: Taru prefers that every American citizen have “The Buck Stops Here” placard that President Truman imperially had on his desk. He does occasional I Ching readings and thinks them less arbitrary than most court decisions. Email him at tytaylor521@yahoo.com for further discussion if so moved. We are excited to publish his guest blog here.

Want to submit a guest blog? Contact us at simon@celdf.org.