Thursday, May 25, 2006

Column on Statism and Corporate Commerce

Must Corporations be Statist?

Tibor R. Machan

It was Ralph Nader who advocated this idea back in the 1960s and 70s?that
business corporations are actually arms of government, creatures of the
state. Historically, of course, he was right that when monarchs ruled
countries, they created business corporations. But they created nearly
everything else, even churches, scientific projects, and the arts. That?s
because they ruled and the rest of us were their subjects. And they ruled
because it had been argued by their apologists that they owned the realm
as a grant from God. This, the divine rights of kings, had been an
influential doctrine and Nader in effect never gave it up!

After John Locke and, following him in more practical ways, the American
founders overthrew the rationalizations for monarchy and laid the
foundations for and established a relatively free country, governments
lost their justification for any authority to impose their rule without
the consent of the governed. All sorts of institutions in society started
to come under the management of the citizenry. It was they who then did
society?s work, created its businesses, its art, its churches and so

Business corporations, too, began to be built from the bottom up?people
started businesses and governments were merely registering their charters.
This, at least, was the way things were supposed to happen until the
government reasserted itself and grew and grew again, not just in size
but, especially, in scope.

Today business corporations could be free but since everything
else?universities, art museums, sports facilities, labor unions, you name
it?is entangled with government, they too have become corrupted. So now a
great deal of corporate commerce is sadly in cahoots with the state.
Businesses receive government subsidies, bailouts, protection from
competition, special favors of all kinds?but, of course, so do nearly all
other special interest groups.

But this doesn?t have to be. A business corporation could stand apart
from government, and some do in fact do so, if their owners and managers
are principled enough, refuse to cave in to the temptation to get on the
dole. No doubt this is difficult to do. Some will suffer competitively
when they run a firm in a principled fashion. Just think, if various
athletes are allowed to cheat, those who keep to the rules obviously will
have a harder time keeping up. But some will insist on doing so because
they do not want to profit at the expense of their souls, their integrity.
But this is difficult to encourage when those who teach business ethics,
not to mention political economy and philosophy, are so supportive of
government meddling with the economy, including with corporate commerce.
Instead of sticking to principles, what most corporations do is hire a
legal team and a substantial HR department that will help them navigate
the treacherous waters of government regulation. The idea of doing the
right thing then slowly metamorphoses into doing what is legally
permitted. The very idea of business ethics evaporates. And the notion
that corporate commerce must get into bed with government begins to be
taken as a given.

This can only be combated by education, proselytizing, peer pressure, and
so forth. Which is why the recent rise of free market and libertarian
think tanks, web sites, newspapers and magazines, is so vital. It is these
that may set the trend in the direction of a fully free society, as
opposed to settle for the namby-pamby mixed economy with its innumerable
semi-coercive institutions, including corporate commerce.

We can only hope that in time all institutions of society will be like
journalism and churches, separated from government. Until then those who
appreciate what is at stake, namely, the regime of individual liberty in
all realms of social life, need to be ever so vigilant, which is after all
the price of liberty.

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