Corporate Rule

This essay addresses a new phase in our species’ sociopolitical evolution. It seems to have gone mostly unnoticed for over half a century. Yet it has changed and is changing our world, most notably and rapidly here in the United States, but also in various ways around the world.

I first wrote about it over 11 years ago, during Obama’s second term. My essay was too prolix and used a confusing term, “corporate governance.” To lawyers and business people, that phrase denotes how shareholders, boards of directors and executives govern business corporations. What I meant to and did discuss was the ways in which corporations today perform and control most of what used to be functions of government, with or without governmental authorization. Thus the proper term is not “corporate governance,” but “corporate rule,” i.e., political rule of people’s lives by and sometimes for corporations.

A notable example today involves Elon Musk, the CEO of Starlink (among several other leading firms). He alone is said to have determined in detail how Ukraine can use Starlink’s satellite system to fly Ukrainian drones fighting both inside Ukraine and inside Russia. If so, this one man alone—elected to no office and with no military rank—controls how an ally of our nation, fighting a brutal and desperate invasion, can do so. Is this not a corporation, through a lone man, making foreign and military policy?

That’s just one current example (perhaps an extreme one) of “corporate rule.” Another example has been more subtle but far more pervasive.

Over the last several decades, our American courts have ruled that the “click here” agreements that corporations have you sign in online transactions are valid and enforceable. This is so despite the fact that virtually no one actually reads them, and for good reason. There is no opportunity to negotiate or change the terms, so trying to do so would be a waste of time and energy.

These “click here” contracts (and their earlier paper counterparts) control a vast swath of modern commerce. They’re what law professors call “contracts of adhesion.” You have no control over their terms and no power or opportunity to negotiate them. You are the fly, and they are the flypaper. You either land on them and adhere to the dictates of the corporation’s lawyers, or you fly away and do without. If you land, flapping your little fly wings will do you no good.

What most non-lawyers don’t know is that these flypaper contracts take away (vis-à-vis corporations) many, if not most, of the “rights of Englishmen” and other fundamental safeguards that our Constitution enshrines in our Bill of Rights.

How can they do that? Simple. “Private” corporations can do so by contract because our Bill of Rights, like all our constitutional protections, only restrains action by government. The law calls this “state action,” and it’s a fundamental legal requirement for any constitutional provision to apply (with important but limited exceptions in a few state constitutions).

So unbeknownst to consumers who don’t read these contracts, corporate lawyers over the last few decades have taken away, with the Supreme Court’s complicity, a number of what US citizens think of as fundamental rights. These include consumers’ rights to trial by jury in civil suits, to injunctive relief, to class actions (which make suing for small corporate swindles financially possible) and (through confidentiality clauses) to publicize a win. In other words, over the past few decades (especially but not exclusively in online contracting), corporate practice has taken away many of the most important rights that common law and even statutes eventually developed to level the playing field between wronged individuals and corporate giants.

But that’s just the bad side of “corporate rule.” There’s a good side, too. Corporate rule reflects the necessary specialization that a society of billions of individuals must have to accomplish ever more complex, sophisticated and challenging things.

Take my personal case, for example. My father had congenital hypercholesterolemia, which I inherited. He died of his second heart attack at the early age of 57. With better knowledge of cholesterol, its control by diet and exercise, and later the advent of statins, I’m 81 and still going strong. I literally owe my life and longevity to the development of scientific specialization, and I’m happy that several pharmaceutical corporations produce the simvastatin that I take for this condition, including foreign ones.

We Americans tend to idolize notable individuals. An example is Albert Einstein, the brilliant theoretical physicist who developed two theories of relativity—a “special” one which astronomers, astronauts and particle physicists use every day, and a “general” one whose conclusions about cosmology are still relevant but not yet fully accepted. He is widely considered one of the most brilliant people in human history. But would you want him performing your heart transplant, or even filling a painful dental cavity, let alone programming your computer or flying a space shuttle?

My point is that our individual brain capacity is far more limited than our self-anointed monicker Homo sapiens might suggest. It takes a whole decade of higher education to produce a medical doctor (including internship and residency) and nearly as much to produce a Ph.D. in science or any other field. That’s why you go to different specialists for a heart transplant, a knee replacement, specialized computer programming, or designing your home. That’s why pilots control airplanes, astronauts space ships, and aquatic captains oil tankers and cruise ships. Specialization in tough jobs, abstruse fields of knowledge and the application of specific skills is our species’ primary adaptation to our limited individual brain capacity, slow learning and short life spans.

Enter the corporation. Today it is our primary means of organizing society into specialized groups doing specialized things. (The “conglomerate” phase of corporate development was a financially motivated misstep, as shown by the spectacular demise of Jack Welch’s General Electric.)

In fact, the rise of corporations in human affairs has been roughly contemporaneous with the development of science. Modern science can be said to have begun with the 1613 publication by Galileo Galilei of his confirmation of the heliocentric theory of our solar system by actual telescopic observations. That was just over four centuries ago—less than 7% of our species’ recorded history of roughly 6,000 years, and a minute fraction of the span of our biological evolution.

Observational and experimental science have literally exploded the volume, and vastly increased the accuracy and precision, of our species’ knowledge of our world and our Universe. That explosion of knowledge and expertise necessitated today’s minute specialization. Today, we have corporations that specialize in a wide variety of things, such as sophisticated computer chips, catheters and other medical devices, fertilizers, cars, laundry appliances, and a vast variety of comestibles and household wares for consumers.

Specialization in institutions mimics specialization in individuals. It allows individuals with similar interests to work better together and form social and intellectual bonds. (It’s no coincidence, IMHO, that startup companies in Silicon Valley—and worldwide—typically employ less than thirty individuals. This number is similar to that of members of the tribes/clans/extended families in which we evolved from our ape ancestors.)

So with this non-specialist’s overview of human history, I would categorize the millennia after Christ as follows. The First Millennium (at least in the “West”) involved slow recovery from the Fall of the Roman Empire, and the rise of religion as a dominant sociopolitical force: both Christianity and Islam. In Christian nations, religion once was such a dominant force as to presume to control all that people thought and believed. (Even England’s King Henry VIII had to ask the Pope for permission to annul his many marriages and remarry.)

That stagnant situation lasted well into the Second Millennium, at least until Martin Luther began the Protestant Reformation in 1517. In my view, it’s no coincidence that what we now know as modern observational science began about a century later.

Despite its slow start, science, with its handmaiden engineering, has changed everything in a mere four centuries. It has given us what earlier generations of humans would have considered the powers of gods.

Not only can we annihilate whole cities in an instant with nuclear fire. We can each fly around the world in a single day. Some of us can set foot upon the Moon (and maybe soon, Mars). Doctors can cure diseases and hereditary defects for real, in short times, and in numbers that would make shamans and healers of old green with envy. Seniors well past the expected age of death in earlier generations can walk, run and play tennis again with the aid of artificial joints. And most or all of these miracles are the products of corporations, not government.

So our Third Millennium is unique in human history in that science, its handmaiden engineering—and their teachings and products—are ever-present. They are the things that every nation wants, and whose products and prestige every person wants, along with the corporations that practice them.

In a very real sense, those corporations, at least collectively, are more powerful than any government because: (1) they can make and do things that no government can make or do; and (2) as they proliferate in every field of human activity and every nation, they’ve become as numerous as stars in the sky. (Even Russia has its counterpart to Amazon, a company called Wildberries, whose warehouses Ukraine recently bombed because they supply some armaments to Russia’s invading forces.)

So just as conflict and accommodation between religion and government occupied large parts of the Second Millennium, I think a similar accommodation between government and corporations will occupy much of our new Third Millennium. (For an interesting, current take on that balance in the field of children’s education, click here.)

How will that accommodation emerge? How will governments—especially nominally democratic ones like ours—handle its conflict with the real power of unique expertise applied to citizens’ needs and the power of those few individuals who control the corporations that wield that expertise? How, in short, will civil government maintain its control over society when corporations do almost everything important for ordinary people’s lives, as well as most in their collective defense?

Our current presidency illustrates the problem well. It features corruption and inattention that give corporations pretty much free rein. At the same time, its policies are abandoning support for large swaths of basic research, leaving them to corporations to pick up if they choose. Who or what will pick up support for the basic research that government has abandoned, and how will doing that increase their practical, economic and political power?

However it is managed, the conflicts and accommodations among government and corporations will be far more consequential for our species than the last millennium’s conflicts between church and state. Miscalculations in setting the balance could maim or extinguish our entire species. They could do so, for example, with nuclear war (perhaps begun inadvertently by an autonomous AI), runaway planetary heating (and consequent catastrophic wars over cooler territory), or with a new airborne pandemic that spreads to every corner of the globe in days on airplanes, the greatest viral vector ever noted.

The balance of power between corporations and government will also affect the balance of power between both of them and “us, the people.” The effective cancellation of nearly all “the rights of Englishmen,” developed over most of a millennium, with “click-here” contracts is just one example of many possibilities. Will government step in to make sure that corporations respect the human rights vis-à-vis government that British and American law have developed over eight painful centuries since Magna Carta? Stay tuned.

One thing, however, is clear. The nation or region that first secures a proper balance between political and corporate power will own this nascent Third Millennium, assuming that our species survives.