nsw politics

23 Apr 2008

Coal Companies Are People Too

By Chris Doran

Property developers aren't the only ones with a worrying influence on the NSW Government, writes Chris Doran

The Wollongong developers' donations scandal has laid bare one of the ugliest realities of our political system: the corrosive influence of corporations on government decision making.

The link between property developers' donations to NSW Labor, and the resulting tide of approvals, is now so blatantly corrupt that it has forced the Premier to call for a ban on all donations. But the problem is hardly limited to property developers. Equally dominant - and arguably much more damaging both to democracy and life as we know it - is the coal industry's lock on not only the Iemma Government, but the Australian political system in general.

The real issue is the influence of large corporations on our democratic system. The modern corporation is such a behemoth of wealth and power that ordinary citizens cannot hope to compete with it. There is no such thing as a level playing field when corporations have direct and protected access to government decision making in a way that ordinary citizens do not.

They have this access because of a centuries old British common law provision called corporate personhood, which recognises corporations as having the same legal entitlements as natural persons (citizens). Originally constructed to protect corporations established by the monarchy, corporate personhood is what allows corporations to give donations to political parties, and to lobby on or behalf of legislation, just as natural persons are allowed to.

Similarly, just as there are no limits on how much wealth or property a natural person can possess, corporate personhood guarantees that there are no limits on corporations in terms of their size, or the amount of property they are able to acquire. BHP Billiton is therefore allowed to take over other mining giants like WMC and Rio Tinto and hence increase its size, wealth, power and political influence.

Multinational corporations are now such giants of wealth and power that 95 of the world's 150 largest economic entities are corporations, versus 55 countries. The fossil fuel industry is arguably the most powerful on earth. It certainly is the most powerful in New South Wales, judging by the number of coal related projects that continue to be approved by the Iemma Government.

Australians recognise that corporations have too much power. In a significant 2003 poll, over half agreed that Federal Parliament was run entirely, or at least mostly, for the benefit of big business. Eighteen months ago 70 per cent agreed that government and big business are in bed with each other to ignore climate change.


Image thanks to Lukas.

Banning political donations will not fix the problem of corporate influence. In the United States, corporations are banned from giving campaign contributions. But like Australia, corporations are recognised in the US as having the same rights as people, and as a result have found legal loopholes. Corporations give millions of dollars to the Democrats and Republicans via Political Action Committees. Given the close ties of the NSW Labor Party to corporate Australia (in particular property developers and coal miners), it's a safe bet there will also be loopholes in any NSW legislation. There will be loopholes because corporations exist exclusively for one purpose: profit. They will spend millions (which incidentally they will be able to write off as a business expense) figuring out, creating, and then exploiting, these loopholes.

That's why a ban on donations should be viewed as an important first step, and not a solution in and of itself. Ultimately corporate political influence can only be addressed by removing corporate access to the political system. As long as our legal system recognises corporations as being entitled to the same privileges and protections as flesh and blood human citizens, these corporate excesses will continue.

Banning donations does not address other areas of corporate influence like lobbying, funding of think tanks and political front groups, or financing ads to influence policy debates - like the Minerals Council's "Life Brought to You by Mining" campaign. These are all examples of how corporate personhood allows corporations to influence crucial decisions in ways that ordinary citizens cannot possibly compete with.

These, as well as donations, have allowed the carbon industry to block any meaningful engagement in Australia taking action on climate change until the Rudd Government finally ratified the Kyoto Protocol. But Kyoto is not enough. Scientific consensus is now calling for emissions to peak globally by 2015 - seven years from now.

Coal is the number one contributor to climate change globally, and is the primary reason that Australia is the world's biggest per capita emitter of greenhouse emissions. Yet the Iemma Government continues to facilitate the expansion of coal mining in NSW. And it has substantially reduced the public's say in the approvals process of these new mines and related infrastructure, by pre-approving many of them as major projects. In the last year it has approved the Moolarben and Anvil Hill mines, both controversial and both ecologically sensitive, and both huge in terms of greenhouse emissions.

It, along with Federal Labor, is heavily subsidising clean coal technology, which at the very earliest might be available by 2020 - way too late. And Iemma is set on giving more power to the coal industry by privatising electricity generation.

In his recent book Supercapitalism, former US Clinton Administration Secretary of Labor Robert Reich has called for the end of corporate personhood as a crucial starting point to establish democratic control over corporate excess. Throughout the US, citizens are challenging corporate power and the legal concept of corporate personhood. In Humboldt County in northern California, citizens have passed a referendum overturning corporate personhood by banning corporate access to the local political system. Non local corporations are now prohibited from giving campaign contributions, from lobbying, from advertising on social issues, and from funding political front groups.

Corporations are supposed to be regulated by the representatives we elect, not the other way around. Entities established exclusively for the purpose of generating profit via the burning of fossil fuels should not have a dominant political voice regarding crucial decisions impacting society.

Because it is society's - and the planet's - actual survival that is now at stake.

Discuss this article

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dazza 23/04/08 5:54PM

Yes, but how do we put these monsters back in the box, when they control ‘our’ Governments? Iemma may have ‘banned’ political donations (or be intending to), but you can bet that a lot of people are working on ways and means of circumventing this. We do not have Citizens Initiated Referenda in Australia, so we do not have that avenue to attempt to control the monsters.
No one says much, but in Queensland, the Coal Miners also have almost total control over ‘our’ Government. We are now spending billions of dollars of taxpayers money to build infrastructure to facilitate much greater exports of coal, when what we are doing is sending ‘poison’ to generally China, so that they can burn it and destroy our World. For what?? For massive profits to the Coal Industry, with a little bit trickling back to the State. And this little bit recently got smaller, as the mines negotiated, from a position of great strength, for cheaper freight on QRail. GROSS!!!! INSANE!!!
Dazza.

Samantha 24/04/08 9:30AM

What would it take to remove the legal concept of corporate personhood, and what would the outcomes of that look like? Can we have a little more on the history of how corporate personhood came into being, as it goes some way to explaining the insanity of the current system. Also, the assumption that companies should profit over and above covering their costs, salaries and reasonable shareholder returns has an interesting evolution historically - can the author summarise this too, and give us more details on the Humboldt County system. We’re at the heart of the big issues with this article. Many thanks. Sam.

GeoffDavies 24/04/08 2:56PM

Thanks Chris. I’ve been wondering where corporate personhood came from in Australia. Below is an extract about the American history, from a book I’m working on (working title "Real Economics: that makes sense, embraces life and offers hope").

"The history of corporations in the United States of America is illuminating. The American Revolution was as much a rebellion against concentrations of wealth and power as against the King’s authority in particular. In the early decades of the Republic corporate charters were granted by the states, and they commonly carried specific limitations on such things as the life of the corporation or its maximum capitalisation. These limitations were intended to prevent corporations from becoming foci of wealth, and hence of power, that would intrude on the sovereignty of the people. Americans were alert to the fact that corporations are immortal, and could continue indefinitely to acquire wealth and power without any natural limit.

"Corporations contested such restrictions from the beginning, and as their wealth and power grew, especially during the civil war, they gained influence. One of their arguments was that they should be treated as “natural persons”, as distinct from their standing as individual entities or “artificial persons” that could engage in commerce and legal agreements but could not claim the citizenship rights of a person. It is claimed that in 1886 the Supreme Court ruled that corporations have the rights of natural persons, though it seems no such decision was ever made(1). Nevertheless thereafter an increasing number of judicial decisions granted corporations rights of real people. Given the power that corporations wielded through twentieth century America, one may view that event as a counter-revolution marking the end of the first American Republic and the institution of a plutocracy, rule by wealth(2)."

Geoff

1. Hartmann, T. Unequal Protection: the rise of corporate dominance and the theft of human rights (Rodale Books, 2002).
2. Davies, G. F. Economia: New Economic Systems to Empower People and Support the Living World (ABC Books, Sydney, 2004).

Tom McLoughlin 24/04/08 3:44PM

Oh hell, the history of the corporation. Look out! I did Business Associations in maybe 1985 in law school, and worked for a corporate law firm, itself a corporation in 90-91 but I doubt I could properly answer that question. But hey that never stopped me before Sam.

My barber in Chippo once told me it was his ancestors - the Dutch East Indies Company that pioneered the evil bastards centuries ago. I tend to think he’s right. They had letters from the Royal family I think as excellent Doran points out, and I think Pirates of the Carribean give a passable version of them as vicious profiteers no better than the council of Pirates.

Cook refers to Batavia in Java if memory serves as a pestillent place run by such colonial Euro profiteers where sadly he had to get dock repairs and half his crew died of sickness.

Anyhow then the railroad builders in the Wild West got onto the idea too and I think cooked up their legal identity with strategic cases in USA jurisprudence. And gradually the whole thing took off as akin to liberty and economic growth itself as if private corporations gradually merging into one (like Norman Jewison classic Rollerball in the 70ies made in a disused 1936 Olympics venue in Germany!) could possibly be better than single state monolithic corporation like China Inc today. Public or private they both are ultra hierarchical, fundamentally anti human, and pro material avarice, sociopathic etc like devlish symbol from The Corporation in Chris Doran’s story. Santamaria was pretty right I think to say souless capitalism (read god like corporations) was even more dangerous than monolithic communism.

But I think the logic of corps once did make sense in say 19C where combined funds of shareholders gave financial critical mass to make the enterprise for a social good (like an expensive railway) possible in a time of small government. Now there is no shortage of finance via banks etc to crank an enterprise for social good. And we know govt ain’t small anymore.

Corporations have outlived their utility and their welcome I would say. The doco The Corporation is very compelling about that.