The Corporation: Examining the Theory of Corporations

The documentary, The Corporation looks at the theory of the corporation throughout recent history up to today's day dominance. Corporation has become a dominant economic, political and social force around the globe. Joel Bakan one of the writer of the film The Corporation, did an extensive interview with authorities in the corporate world and each person had their own definition of a corporation. One person define corporation as part of a jigsaw in society as a whole, which if you remove it, the picture is incomplete but equally if it's the only part it's not going to work.

Another person stated that corporation is like a family unit where people in the corporation work together for a common goal which is to succeed as an organization. This paper will aim in answering the question what is a corporation along with its history and origin. I will also further discuss where corporation came from and the differences between the classical and the modern corporation.

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In addition I will explain how its legal form give it greater power than human subjects and will use the Steinbeck story to determine who or what is responsible to what happens to the farmers. Based on the film The Corporation, corporations are artificial creations, monsters trying to devour as much profit as possible at anyone's expense. One of the film maker describe corporation as being an institution that creates great wealth that causes both enormous and hidden harms. Corporation has become a fundamental institute of the modern world.

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Before the modern corporation existed, there were large companies which pooled capital for collection economic endeavors. These were known as the joint stock companies. A famous example include the East India Company which was established December 31st 1600 by Queen Elizabeth I, with the purpose of sailing the Indian Ocean and establishing channels of trade. However, after contributing to the British colonial endeavor significantly, it was dissolved in 1857. Unlike earlier regulated companies, the East India Company was established as one body corporate and politick (Robins, 2012, pg. 24). This brought a whole series of financial and organizational benefits, which were especially valuable for the long distance trade to the East Indies. Corporation get their power from their legal form-invoke constitutional rights to challenge unwanted regulation or legislation. They became powerful because they had legal rights to be treated as people. Some large corporations are even richer than an entire nation and courts have given those entities more rights than people. Corporate dominance stem from economic power over social life and its organization. In 1886, without any allowance for discussion or debate, the Supreme Court, in the case of The Santa Clara County v. Southern Pacific Railway, accepted the Santa Clara decision that, corporations are "legal persons." Even though they are artificial entities, they were granted the same legal status as real human beings and were entitled to all the same Bill of Rights protections including freedom of speech. Chief Justice Waite justified corporations as legal person by stating:The courts does not wish to hear argument on the question whether the provision in the 14th Amendment of the Constitution, which forbids a state to deny any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that does it (Nace, 2005, pg. 13).It opened the channels for the growth and unification of corporate power. Corporation was viewed as a legal person with the same rights. Corporation has become an essential organization of the modern world, where they become more powerful than governments with the sole intent to seek profit and power. Some large corporations are richer than an entire nation. The author Nace gave us an insight of the case and its result which explained how it came to ordain corporations as people. How do large corporations have so much power? The business week poll didn't include that question. But one can perhaps imagine what people would have said if they had been asked. They would certainly have mentioned the power that large corporations derive from their political action committees, their lobbyist, their lawyers, and their control over millions of jobs. They might also mentioned the revolving door that moves corporate people in and out of government agencies, the corporate ownership of media conglomerates, and so forth (Nace. 2005, pg. 12).According to Nace (2005) corporations have the power to influence government decisions and sponsor political elections; they have more legal rights and power than people in society, they can influence legislation through lobbying of congressmen and promises of campaign contributions along with other benefits. The courts have given corporations three phases in the development of corporate rights: Phase one Corporate Quasi-Rights which includes limited liability for shareholders, perpetual existence and shape-shifting'. Phase two Corporate Constitutional Right includes Equal protection, Due process, Freedom from unreasonable searches, Jury trial in a criminal case and Compensation for government takings. Phase three Corporate Global Rights includes National treatment, compensation for regulatory takings and minimum standard of treatment. Corporations are gradually utilizing their power and influence in the legislative and regulatory groups, ensuing in a new and disturbing world power organization.The corporation of the nineteen century was quite different from the corporation in the eighteen century. The differences were widespread and highly momentous. The difference between the classic corporation and the modern corporation are that the classical corporation required a custom charter issued by a state legislature, they had to demonstrate a public benefit, they had an expiration date at which point assets would be liquidated and distributed to owners, mobility are usually restricted to home state, corporations were not allowed to own stock in other companies, adaptively were restricted to activities specified in charter, managerial action hampered by legal status of minority shareholders and of corporate agents, the size were limited by charter restrictions and constitutional tights were functional only. Whereas with modern corporation creating corporations got easier, corporations acquire unlimited lifespan, corporations are free to pursue acquisitions and spin-offs, no mobility restrictions, corporation become more adaptable, legal revisions enable consolidation of management's power, asset limits removed; anti-trust laws generally not effective and there are steady acquisition of constitutional rights. The fact that corporations possess these rights leads to perverse consequences undermines the ability of governments to protect the public interest and disables democracy, according to Nace.In today's society, the corporate world holds a great deal of power with the ability to bring about changes to further its own interest. Corporations can use their economic power to gather political power in exchange for legal power. They can use that power to get laws and regulations passed. Furthermore, corporations have the power to finance political elections, and even set state, federal, and world policies. In 1886, corporations were given legal rights similar to those of individuals. Corporations were then held accountable to the public only in the sense that they must operate within the confines of the law. Corporation seems to have more power than humans because they are able to make decisions that regular individual is not able to make. Large firms also use their power to shift some of the costs of doing business onto the public sector. As an example, a large firm may convince a municipality to build a new road near a production or distribution facility. The benefits the firm receives from the road may be disproportional to the costs it pays through taxes " effectively the public provides a subtle subsidy to the firm (, 2019). This simple shows that corporations has a huge influence in politics, they are the ability to use their power to their own advantage. The world's big corporations have way too much power, they are bigger and more powerful than most people have imagined. However, some would argue that large corporations are more productive, innovative, and diverse. These companies also provide higher wages, more training and broader benefits to employees and spend more money to limit pollution. Corporations have undue influence over public policy. According to Investopedia, Apple is one of the world's most powerful corporation with approximately 66,000 employees and an estimated net worth of $605 billion. The company spends $7 million on lobbying in 2018 to fight off President Donald Trump and an onslaught of new federal regulations. Apple is a politic force and is invested in the influence game. Large corporations such as Apple devote massive resources to political system. Rather than seeing government as a threat they started looking to government as a potential source of profits and assistance. In The Grapes of Wrath by John Steinbeck, the farmers, people who develop the land, and gave the owner a share of the crops have been forced off of the land by the landowners. The land had dried up due to the drought, and the dust storm has made farming nearly impossible. There's no money in the farming business anymore. The economy was in a financial crisis, and the landowners have realized that one tractor can do the work of an entire family and requires less money to operate and maintain. So the landowners and banks have forced farmers off of the land and out of their homes and they traveled to California in search of jobs, land, and hope for a brighter future. Steinbeck illustrates the hardships and oppression suffered by migrant laborers during the Great Depression. Steinbeck criticizes the corporate and banking elites for profit exploiting policies that ultimately forced farmers into poverty and even malnourishment. Who gave you orders? I'll go after him, he's the one to killFellow was telling me the bank gets orders from the East. The orders were, Make the land show profit or we'll close you up (Steinbeck, 1972, pg. 39). This clearly implies that the bank is responsible for what happens to the farmers because they were evicted in order to maximize profit. The landowners were using the farmland as a source of profit for business rather than food for people causes widespread suffering and dispossession of farmworkers. However, corporation is not accountable for the plight and unemployment of the farmers.In conclusion, one of the main characteristic of a corporation is that it is considered to be a legal person. Corporations can influence governments through political donations and also lobbying. Corporate power appears particularly evident in the United States, where corporations have lobbied to lower their share of total taxes, receive substantial subsidies, and impose externality costs upon society. Nace discovered that the status of a corporation as a legal person was rooted not in an actual court decision, but in the preamble to it, in the 1886 court case, Santa Clara County v. Southern Pacific Railroad. In the Steinbeck story the author plainly stated his purpose in writing the novel was to shame the greedy bankers who are responsible for the depression and the plight of the worker. Farmworkers were being evicted from their home and driven out of work due to drought, hardship, industry changes, and foreclosures. Corporations progressively use their economic power to influence government and consider this a normal part of the costs of doing business. According to Nace (2005) corporations get their power from lawyers, lobbyist and political action committee which prove to be the same in the Steinbeck story. Corporations are more powerful than people and Apple is one such company. Apple has helped mold international politics to their interest and in some respect, has governments at their beck and call witness their consistent success at dodging tax payment. Classic Corporation can be viewed as liberalism which is more concern with the means of government while Modern Corporation focuses on ends of government. The governments seem to be competing with corporations for influence and political power. It can be stated that we have the best government that money can buy because money does buy government. This lead me to conclude that corporations are more powerful that the government.

Updated: May 03, 2023
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The Corporation: Examining the Theory of Corporations. (2019, Aug 20). Retrieved from

The Corporation: Examining the Theory of Corporations essay
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