Corporations or Capitalists? was Re: exploitation

Julio Huato juliohuato at SPAMhotmail.com
Mon Jun 18 22:10:33 MDT 2001


Sorry to jump in in the discussion without having checked all relevant
postings.

Carrol Cox <cbcox at ilstu.edu>:

>The U.S. Supreme Court long ago perpetrated the legal fiction that
>corporations were persons and entitled to the rights endowed on persons
>by the 14th amendment (and doubtless other legal systems have done the
>same), but in analyzing the world we should not automatically accept the
>U.S. Supreme Court as dogma.

It's good to emphasize that capitalists (people) own the corporations.  In
the last analysis, they control them.  [When people condemn 'corporate
capitalism' emphasizing the adjective, I wonder if they mean to imply that
'non-corporate capitalism' would be better.  It seems that the main culprit
is a legal institution instead of the social relations that make it
necessary.  Kind of like getting rid of the Pope without abolishing the
Catholic Church.]

That said, we should still consider the fact that corporations, as legally
chartered organizations of individual capitalists, develop a dynamics of
their own.  They are 'relatively autonomous' from the individual owners (if
I may use the old formula).  Sometimes, the alienation between individual
capitalists (specially the holders of small portions of the stock of a large
corporation) and the corporation can be significant.  In the last analysis,
corporations respond to the capitalist owners, but if corporations did not
develop a behavior separate and somewhat independent from that of individual
capitalists, then they would be largely useless or innecessary.

People who are historically inclined can correct me if I'm wrong, but
corporations have a long history.  They were acting in Britain in the 17th
century already.  It's likely that, as legal entities, they were created in
the ports of the Mediterranean or of the North Sea -- if not by the
Phoenicians (BC times).  Somewhere with a lot of early merchant capital
activity.  Corporations, in their different modalities, have emerged and
evolved as the main organizational form for large capital pools, most
probably because of the handy way in which they hedge the shareholders
against the downside in capitalist ventures (risk).

>Some capitalists are indeed (over their
>life span) "international," but on the whole, capitalists (however they
>may share ownership of a given corp with each other) are still pretty
>tied to particular nation states.

What should we understand by capitalists being 'pretty tied to particular
nation states'?  Certainly, they hold passports issued by their countries of
citizenship.  They are supposed to pay taxes in the countries where they do
their business.  And vote.  But not always or necessarily their country of
citizenship is in charge of protecting their interests.  [Of course, when
push comes to shove, and they need the backup of the state, they can only
resort to the enforcing powers that exist.  Although there are (have been
and will be, increasingly) international arrangements allowing for
supranational jurisdictions to enforce some contracts or, at least, mediate
disputes, the main reliance is on well established national states.]

But let me focus on the case where individuals of country A can use the
state power in country B to protect their interests.  For example, Japanese
capitalists buy certain financial assets in the US.  These assets may be
standardized contracts whose enforcement relies on the jurisdiction of some
US court.  In that case, the interests of Japanese capitalists are being
protected by the US state.  Given the international legal arrangements in
place, there's little that the Japanese state can do to protect a citizen
(or even a large group of them) caught in a legal dispute on that asset.  [I
understand that, in the last analysis, power is power and the legal codes
reflect power.  But legal (and even de-facto) arrangements are relatively
stable crystallizations that reflect long standing balance of forces between
states.  Power is a 'scarce resource' and advanced states try to use it
judiciously.]

International companies, when they establish and incorporate branches in
other countries, are in a position to develop very sophisticated strategies
to protect their interests relying on the power of several states.  They
have something like a menu of options and they try to figure out strategies
to make the best use of them.  Usually, it is in their interest to keep
their headquarters in countries where the bulk of their business takes place
and, hopefully, the judicial system is sufficiently stable (or, short of
that, where they have good political connections).  [Unfortunately for them,
the advantages of bribery and political connections on which they have
depended traditionally (in, say, Mexico) are increasingly unstable.]

Affluent individual capitalists and large corporations are willing and able
to appeal to the protection of the states of other countries, not only of
their own.  There's a body of commercial international law in place that
protects their businesses.  Of course, there are inconveniences to dealing
with legal issues in foreign countries where legal codes are different and
people speak other languages, but with financial clout, armies of lawyers
and accountants, and adequate international legal arrangements, their
international position looks safe.
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