AskProfWolff: The Corporation as a Totalitarian Institution

AskProfWolff: The Corporation as a Totalitarian Institution

October 19, 2019 76 By Kody Olson


This is a response to our patreon community
and in particular to a comment and a suggestion by one of the members of our Patreon community,
Henry Silver. He suggests and I think his suggestion is
excellent, that we talk a little bit about the modern large corporation, both in the
United States and around the world and that we make one fundamental point about it: namely
that the modern large capitalist corporation is in 99% of the cases a top-down and in Mr.
Silver’s words “a totalitarian institution”. He’s right! At the top of a corporation or a tiny group
of people, the major shareholders, folks you could gather in one small room: big pension
funds, big banks, super wealthy families, and so on. Those people have the majority of the shares. That’s what makes the major shareholders and
as such, they decide who’s on the board of directors, because the way modern corporations
work is you get one vote for who’s on the board of directors for every share you own. It’s not a democracy. The people don’t vote. It’s not even a democracy among the people
who are shareholders, which is a small minority of the total population. Even they don’t have one person one vote. They have one share one vote. So, if you are sitting at the top of a wealthy
family or bank or pension fund then you have millions of votes. Whereas the person who inherited two shares
of that company stock has two votes. Bottom line, the major shareholders select
the Board of Directors and who are there usually? 15 to 20 people selected in this manner, usually
people that are well-known in corporate leadership. They went to school with their major shareholders. They married the children of the major shareholders. They play golf with the major shareholders. You get the picture. They run the corporation if we take a large
corporation: Walmart, Target, General Motors, General Electric, General Dynamics, you name
it. The board of directors selected by that handful
of people who are major shareholders. They run the company. Together those fifteen or thirty people are,
in the full sense of the word, dictators. What they say goes and let’s take a look at
what they have say about. They decide what the company produces: what
goods, what services. They decide what technology will be used:
what machinery, what chemical processes, they decide. For example, whether the chemical processes
will injure the public with pollution, or the workers with excessive noise, or anything
else. They also decide where production takes place
in the United States, providing jobs for Americans or somewhere else, adding jobs for somebody
else and giving unemployment to Americans. Finally, they decide what to do with the profits. Notice, all the workers help to produce the
profits, but only a tiny number of them decide what is done with the profits. And here comes something that shouldn’t surprise
you at all: the people at the top of the corporations the major shareholders together with the Board
of Directors, they can and often do give the bulk of the profits produced by everybody
to themselves. The money you give to shareholders is called
dividends and the money you give to the Board of Directors are called fees. Top corporate executives get huge salaries. They often sit on the board of directors just
to make it all super cozy. If you want to know why there are such unequal
divisions of income and wealth in major capitalist countries, and certainly the United States,
it’s because of this corporate system. The dictatorship at the top of this totalitarian
organization gives itself the lion’s share of the profits. Now, to talk about the dictatorship in another
way. Everything inside a large corporation is planned. The different parts of the corporation do
not interact in a market exchange. They don’t bargain they are told what to do. Just like every other employee of the corporation
is told by the executives chosen by the Board of Directors what to do, where to sit, when
you come in to the corporation, how to dress, what machinery to work with, what raw materials
to process, in what way… and then that interesting moment at the end of the day when the employer
says to you, “Go home”. You leave behind everything you used your
muscles and your brains to produce because that belongs, you guessed it, to the Board
of Directors as fast as it’s produced. You’re a drone; your job is to make it happen. Their job is to decide what happens next. That’s what dictatorship means. The dictatorship of the modern large corporation
is experienced every day by the vast majority of our working citizens, who live and work
in that environment. When they hear bad words about socialism and
top-down dictatorship that has existed in some socialist countries, not in others, but
where it has existed it operates in a dictatorial way and Americans have an instinctive negative
reaction. Not because they understand how these other
socialist societies work; Most Americans have never been to one. No, what they think badly about socialism
is actually what they understand very well from the capitalist corporations. They live in and depend on and work with. Here’s the irony: in the critique of capitalism,
where the notion is that the employer being a small proportion of the population should
not have the dominant wealth and power that the whole society produces, that there should
be genuine economic democracy. That idea was hateful to the people at the
top, so they held on to their power by demonizing socialism, as if it were something fundamentally
different. Even though the only difference there is that
the state plays the role that the private enterprise owners and operators play in capitalism. It’s a phony issue: the state versus the
private. The real issue is are we going to have a dictatorship
of the few people at the top either way or are we going to have a genuine democracy? Don’t be fooled by the demonization of socialist
enterprises. It’s a projection from the actual way that
capitalist corporations work.