In the late 1800´s, corporations became people. It´s kind of hard to imagine Shell or Wal-Mart or other immensely large companies as a person that could be considered your neighbor, but for judicial and legal purposes, corporations have many of the same rights and protections as any ordinary person. Corporate personhood paved the way for mega-corporations to effectively govern the world.
Of the world´s 100 largest economies, 51 of them are corporations, not countries. The wealthiest 700 corporations own over 80% of the world’s wealth and the entire economic system is structured to allow large corporations to continue to grow and concentrate more and more wealth into fewer and fewer hands. In 2011, the list of the Fortune 500 companies was the world’s second-largest combined economy only surpassed by the U.S. economy.
The consolidation of corporate power has caused untold amounts of damage to our world and caused an economic vulnerability that is dangerous and unpredictable. The International Center for Settlement of Investment Disputes (ICSID) is an international court system that has established jurisprudence that gives testament to the increasing power of multinational corporations.
In El Salvador, to name just one example, the Salvadoran government called for a national ban on mining due to environmental destruction, dangers to health and civil conflict that mining caused. Pacific Rim was a Canadian mining company with mining interest in the country. They had been granted exploration permits, but once the national ban was enforced, Pacific Rim took the Salvadoran government to court to demand that they be allowed to open a gold mine. Though this particular case is still being tried, there have been numerous cases where the decisions of a national government have been overruled as a corporation´s right to invest and profit takes prominence over the sovereignty of a nation.
The power and influence of the world´s largest corporations is an inherent danger to the long-term survival of humanity. Though corporations are granted the rights of personhood, they simply aren´t required to live up to the same standards of responsibility. A person (a real person that is) whose only concern or interest is for his or her continued economic profit would be considered a psychopath. People are supposed to show care and concern and compassion as well. The economic rules that govern our global economy, however, demand corporations to follow only one mandate: maximize returns and profit for shareholders.
Author David Korten once said that “the systemic forces nurturing the growth and dominance of global corporations are at the heart of the current human dilemma … to avoid collective catastrophe we must radically transform the underlying system of business to restore power to the small and local.” Empowering the local is one of the most important and necessary aspects for our long-term sustainability and survival.
Korten goes on to say that “the only legitimate reason for government to issue a corporate charter extending special privileges favoring a particular enterprise is to serve a clearly defined public purpose. That purpose should be clearly stated in the corporate charter and be subject to periodic review.” A local company may not be able to provide telecommunications services. If we do need big, multinational companies to provide useful services and products that can´t be provided locally, then those companies should operate under corporate charters and agreements that the public can periodically review and revoke.
Wealth used to be measurable in some sense of tangible terms. In pre-industrial indigenous societies, the wealthiest person in the clan was he that had the most cattle. The agrarian wealth of our grandparents was measured by he or she who owned the most land. Even in recent times, wealth could be measured by the production of some tangible asset of a business owner.
In today´s financial-driven world, however, wealth is increasingly ephemeral and not tied to any concrete thing. With the creation of paper money out of thin air by the Federal Government and big banks, more and more people have come to understand wealth as numbers that appear on a computer screen. Phantom wealth is simply supposed financial assets that appear or disappear in the blink of an eye. A young investor making money on quick turnaround investments or through the inflation of asset bubbles is a wealth that simply isn´t based on anything of value or utility to the general public. The money on the screens of the Dow or NASDAQ doesn’t reflect any real, tangible value but simply a phantom wealth that comes into existence and disappears seemingly at will.
According to Korten, “phantom wealth also includes financial assets created by debt pyramids by which financial institutions engage in complex trading and lending schemes using fictitious or overvalued assets as collateral for loans in order to feed and inflate asset bubbles to create more phantom collateral to support more borrowing to further feed the bubble.”
If this seems hard to understand it is because very few people comprehend the complexity of these money-making schemes. These phantom wealth schemes are what led to the economic collapse of the 2008 mortgage crisis. What´s worse is that phantom wealth schemes are all legal, even though it is the public who ends up paying for the insatiable greed of the few.
From the standpoint of our long-term sustainability, nothing could be more precarious and ephemeral as phantom wealth. The proper and sane purpose of an economy is to secure just, sustainable, and joyful livelihoods for all, not to make the select few ridiculously rich. This may come as something of a shock to the wolves of Wall Street who profit from financial bubbles, securities fraud, foreign sweatshops, tax evasion, and monopoly pricing, but it is nonetheless undeniably true.
Real wealth comes from producing tangible products and services that contribute to our own wellbeing and the long-term wellbeing of our communities. The process of creating real wealth is also a necessary step in regaining sovereignty over our own livelihoods.