| Delmer D. Dunn Department of Political Science The University of Georgia Athens, GA 30602-1615 706-542-2963 FAX: 706-542-4421 EMail: ddunn@uga.cc.uga.edu |
This paper analyzes David Korten's When Corporations Rule of the World by utilizing the values and approaches presented by the authors of The Federalist Papers. (1) Korten's book centers on later-Twentieth Century problems facing the United States and other countries. He strongly attacks the vastly increased power of corporations and their control over the lives of people in this and other countries. Free trade and the globalizing economy have elevated the power of corporations. The result of these intermingled developments damages the livelihood of the vast majority of the people of the world, with ever increasing differences of wealth between the rich and the poor, environmental degradation, and a breakdown of human values and solidarity. Korten then suggests several solutions for dealing with powerful corporations and a globalizing economy.
John Jay, Alexander Hamilton, and James Madison, authors of The Federalist Papers, also focused on problems related to America, though in the Eighteenth, rather than the Twentieth, Century. Their immediate purpose centered on persuading New York to ratify the proposed Constitution of the United States. One of the three authored each of the 85 papers in the collection, but all papers listed the pseudonym "Publius" as author. "Publius" will designate the authors, and that designation will rightly be associated with the personal pronoun "he." The papers appeared in several New York City newspapers several times a week, attracting a large audience. Constitution supporters compiled, published, and circulated segments of the papers in other states as well. (Wills, 1982) Subsequent to the ratification of the Constitution, the papers stand as the most definitive interpretation of the meaning of the Constitution. They also exemplify the principles and approaches of the Founders as they created a new government and stated the case for it.
Publius focused on several problems facing the new nation and indicated how the proposed Constitution would deal with or mitigate those problems. These areas track very closely the problems presented by Korten. This paper will utilize Publius's discussion of these four problems for analyzing Korten's critique of the modern corporation and the globalization of the economy. These include 1) creating greater prosperity, 2) promoting peace, 3) preventing foreign intervention, and 4) controlling power.
Publius argued strongly that creating a stronger union of the 13 states and the common economic market it established would bring prosperity to the inhabitants of the states. He eloquently enumerated the vast natural resources available to support prosperity in the United States:
Providence has in a particular manner blessed it with a variety of soils and productions, and watered it with innumerable streams, for the delight and accommodation of its inhabitants. A succession of navigable waters forms a kind of chain round its borders, as if to bind it together; while the most noble rivers in the world, running at convenient distances, present them with highways for the easy communication of friendly aids, and the mutual transportation and exchange of their various commodities. (2, p. 9)
Publius contended that "the prosperity of America depended on its Union." The "great object of the plan" the convention produced was to "preserve and perpetuate" the Union to achieve prosperity. (2, p. 12)
The Federalist Papers argued that the creation of a stronger union stemmed from the need to lower trade barriers and reduce other impediments to commerce between the states. In citing the practice of some states during the period of the confederacy, Publius noted:
The interfering and unneighborly regulations of some States, contrary to the true spirit of the Union, have, in different instances, given just cause of umbrage and complaint to others, and it is to be feared that examples of this nature, if not restrained by a national control, would be multiplied and extended till they became not less serious sources of animosity and discord than injurious impediments to the intercourse between the different parts of the Confederacy. (22, p. 132)
The proposed Constitution took away from the states the power to issue money for similar reasons. As Publius stated:
Had every State a right to regulate the value of its coin, there might be as many different currencies as States; and thus the intercourse among them would be impeded; retrospective alterations in its value might be made, and thus the citizens of other States be injured, and animosities be kindled among the States themselves. (44, p 290)
In addition the new Constitution empowered the newly created national government to regulate interstate commerce and required states to allow full faith and credit for contractual arrangements and obligations made in other states. Publius, along with other authors of the U.S. Constitution, believed that the new Constitution would create a common trade area among the states, regulate commerce among them, and establish a common monetary system to facilitate trade among the states. Publius, for example, argued: "An unrestrained intercourse between the States themselves will advance the trade of each by an interchange of their respective productions, not only for the supply of reciprocal wants at home, but for exportation to foreign markets." (11, p. 68)
Publius, arguing for the new Constitution, placed great emphasis on the power of a strong union to mitigate conflict and potential war between states as well as between groupings of the states into several confederacies. The opponents of the Constitution did not support breaking the existing confederation into separate ones, nor did they oppose a union of the states. (Storing, 1981, p. 24) But virtually all Founders believed that the weak union under the Articles of Confederation would inevitably lead to groups of individual states to form multiple confederations within the boundaries of the former colonies. The attempted break away of the southern states at a latter time, even with the stronger national government provided by the Constitution in place, justified this concern.
Commentators today do not emphasize the argument that a strong Union helps to prevent hostilities that lead to war, but this concern suffused the Founders' support for the Constitution. Publius's worry flowed deeply: "It is sometimes asked, with an air of seeming triumph, what inducements could the States have, if disunited, to make war upon each other? It would be a full answer to this question to say -- precisely the same inducements which have, at different times, deluged in blood all the nations of the world." (7, p. 34)
Using Great Britain as a case in point, Publius argued that England, Scotland, and Wales "were almost constantly embroiled in quarrels and wars with one another." (5, p. 23) Publius hoped that the new nation could "profit by their experience without paying the price which it cost them." (5, p. 23) Numerous reasons can motivate states, or groups of them, to fight rather than cooperate. Continuing the reference to Great Britain's history, Publius voiced concern about disunited states:
Would not similar jealousies arise, and be in like manner cherished [as happened in Great Britain]? Instead of [the states] being "jointed in affection," and free from all apprehension of different "interests," envy and jealousy would soon extinguish confidence and affection, and the partial interests of each confederacy, instead of the general interests of all America, would be the only objects of their policy and pursuits. Hence like most other bordering nations, they would always be either involved in disputes and wars, or live in the constant apprehension of them. (5, pp. 23-24)
Publius then suggested that as a state or confederation of states became more important than others, neighbors would "behold her with envy and with fear." (5, p. 24) This would lead less important neighbors to promote "whatever might promise to diminish her importance; and would also restrain them from measures calculated to advance or even to secure her prosperity." (5, p. 24) This in turn would lead to mutual distrust, "and by nothing is good-will and kind conduct more speedily changed than by invidious jealousies and uncandid imputations, whether expressed or implied." (5, pp. 24-25)
Publius also outlined several specific reasons why the states, either individually or in confederations, would likely war against each other. Territorial disputes constitute a prime reason. Publius indicated that such disputes comprise one of the "most fertile sources of hostility among nations." (7, p. 34) He then noted that the states would be especially susceptible to such hostilities because of the unsettled territory within the boundaries of the United States. (7, p, 34) Publius reminded his readers "There still are discordant and undecided claims between several of them ...." (7, p. 34)
"Competitions of commerce" encompass another factor leading to discard between separate states and nations. Publius explains why, convincingly:
The States less favorably circumstanced would be desirous of escaping from the disadvantages of local situation, and of sharing in the advantages of their more fortunate neighbors. Each State, or separate confederacy, would pursue a system of commercial policy peculiar to itself. This would occasion distinctions, preferences, and exclusions, which would beget discontent. (7, p. 37)
Publius fretted that states in a position to exact tribute from other states would likely do so and thus create sources of potential conflict. This would most likely occur between states with ports and those which needed access to them to foster foreign trade. (7, pp. 37-38)
Publius worried that the intensity of war between the states might be greater than wars in Europe. In comparing America with Europe, he wrote, "The art of fortification" renders "sudden conquests impracticable ...." (8, p. 41) European states also have standing armies to "exhaust the strength and delay the progress of an invader," (8, p. 41) as well as the likelihood that such wars in American would be fought by militia rather than regular, more disciplined troops. Since "plunder and desolation ... march in the train of irregulars" wars could be more violent and destructive in American than in Europe. (8, p. 42) Moreover, the danger of wars would eventually lead to the establishment of standing armies, which the Founders believed provided a constant threat to liberty, and to be avoided at all costs. (8, pp. 42-43) No wonder Publius asked, "[W]hat reason can we have to confide in those reveries which would seduce us into an expectation of peace and cordiality between the members of the present confederacy, in a state of separation?" (6, p. 32) In this concern, Publius evinced remarkable prescience as noted by the exceptionally destructive and bloody U.S. Civil War.
Publius revealed deep concern about the role of foreign governments in the new nation. He noted:
The number of wars which have happened or will happen in the world will always be found to be in proportion to the number and weight of the causes, whether real or pretended, which provoke or invite them. If this remark be just, it becomes useful to inquire whether so many just causes of war are likely to be given by United America as by disunited America; for if it should turn out that United America will probably give the fewest, then it will follow that in this respect the Union tends most to preserve the people in a state of peace with other nations. (3, p. 14)
Publius developed two major arguments showing that a united America would forestall foreign intervention. The first argument emphasized deterrence through strength, gained from an America united by a strong union, rather than an America either divided, or in a feeble union that resulted in a weak government. Publius contended that a "cordial Union, under an efficient national government, affords ... the best security that can be devised against hostilities from abroad." (3, p. 14)
The second argument focused on removing the temptations of states to invite foreign intervention. Publius noted cogently:
... [I]t is ... probable that in America, as in Europe, neighboring nations, acting under the impulse of opposite interests and unfriendly passions, would frequently be found taking different sides. Considering our distance from Europe, it would be more natural for these confederacies to apprehend danger from one another than from distant nations, and therefore that each of them should be more desirous to guard against the others by the aid of foreign alliances, than to guard against foreign dangers by alliances between themselves. (5, p. 26)
A major principle of The Federalist Papers centered on controlling the power of government, including the one proposed by the new constitution. Publius focused his argument on the rationale for the structure of the national government to allay fears that the proposed national government would be too powerful, and thus constitute a continuing threat against the liberties of the people. The principles associated with this argument appear in perhaps what modern audiences recognize as the best known parts of the papers, because they explain the design and structure of the government. In one familiar passage, Publius illuminated the necessity of controlling the power of government:
If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. (51, p. 337)
Elsewhere, Publius explained that creating the new republic, necessitated the delegation of power to persons, which required establishing "representatives and agents" who would "assemble and administer it." (14, p. 80) The writers of The Federalist Papers voiced concern about the quality of the persons to whom the Constitution delegated this power: "The aim of every political constitution is, or ought to be, first to obtain for rulers men who possess most wisdom to discern, and most virtue to pursue, the common good of the society; and in the next place, to take the most effectual precautions for keeping them virtuous whilst they continue to hold their public trust." (57, p. 370) Publius placed great emphasis on the accountability of the government to the people. He reasoned that elections, government structure, and the federal system itself would offer adequate protection against potential abuses to liberty of government-centered power.
The framers desired to create conditions that would bind representatives to the people: "Duty, gratitude, interest, ambition itself, are the chords by which [representatives] will be bound to fidelity and sympathy with the great mass of the people." (57, p. 373) Elections also constitute a key element in binding citizens with their government. Publius wrote, "The elective mode of obtaining rulers is the characteristic policy of republican government." (57, p. 370) Publius also noted the "restraint of frequent elections" especially as they apply to the House of Representatives. (57, p. 372) The Constitution also specified that elections would elevate persons to office for a specified period of time, and this term of office differed for members of the House of Representatives, the Senate, and the President. Publius argued, "The means relied on in this form of government for preventing their degeneracy are numerous and various. The most effectual one, is such a limitation of the term of appointments as will maintain a proper responsibility to the people." (57, pp. 370-371) He described the way that the combination of elections and fixed terms of office would restrain elected office holders in the new government:
Hence ...the House of Representatives is so constituted as to support in the members an habitual recollection of their dependence on the people. Before the sentiments impressed on their minds by the mode of their elevation can be effaced by the exercise of power, they will be compelled to anticipate the moment when their power is to cease, when their exercise of it is to be reviewed, and when they must descend to the level from which they were raised; there forever to remain unless a faithful discharge of their trust shall have established their title to a renewal of it. (57, p. 372)
The proposed constitution provided for indirect election of Senators and the President, but by inference Publius argued that these elections would also provide a suitable restraint. Still opponents of the Constitution criticized the lengthy terms stipulated for the President and Senators.
Publius asserted that the lengthy terms provided for the Senate would mean that Senators would be "in place sufficient time to become perfectly acquainted with our national concerns" and render "their accumulating experience more and more beneficial to their country." (64, p. 418) It may save government from making laws not in the public interest and act as a check on power because of the "additional impediment" it erected "against improper acts of legislation." (62, p. 402) The more lengthy Senate terms also permitted senators to be "justly and effectually answerable for the attainment" of matters that take several years to mature. (63, p. 409)
Even though the Constitution provided for an indirectly elected president, it sought to assure accountability for this person's conduct in office. In defending the term of office and the possibility that the president could be re-elected indefinitely, Publius wrote that the length of term would provide:
... to the community time and leisure to observe the tendency of his measures, and thence to form an experimental estimate of their merits ... to enable the people, when they see reason to approve of his conduct, to continue him in his station, in order to prolong the utility of his talents and virtues, and to secure to the government the advantage of permanency in a wise system of administration. (72, pp. 469-470)
Publius also argued permitting re-election of the president would benefit the President as well as the people:
One ill effect of the exclusion would be a diminution of the inducements to good behavior. There are few men who would not feel much less zeal in the discharge of a duty, when they were conscious that the advantages of the station with which it was connected must be relinquished at a determinate period, than when they were permitted to entertain a hope of obtaining by meriting, a continuance of them. This position will not be disputed so long as it is admitted that the desire of reward is one of the strongest incentives of human conduct; or that the best security for the fidelity of mankind is to make their interest coincide with their duty. (72, p. 470)
Elections permit only partial control by citizens of the power of elected officials, however, because "experience has taught mankind the necessity of auxiliary precautions." (51, p. 337) The framers provided for the precautions in part by separating powers and creating a two-house legislature. " ...[T]he constant aim is to divide and arrange the several offices in such a manner as that each may be a check on the other -- that the private interest of every individual may be a sentinel over the public rights." (51, p. 337) A key ingredient in making certain that each branch will check the others is to provide each branch of government a "will of its own." To attain this goal, each branch "should be so constituted that the members of each should have a little agency as possible in the appointment of the members of the others. (51, p. 336) The key methods for doing this included providing for different terms of office, different methods of election (direct for the House of Representatives, and indirect for the Senate and President), and different constituencies, resulting from the different electorates responsible for electing these officials. The result: the two houses of the legislature and the president had different roles in government.
Publius introduced the argument that each branch be given the "necessary constitutional means and personal motives to resist encroachments of the others. ...Ambition must be made to counteract ambition." (51, p. 337) The Constitution provided the President with "energy" so that this officeholder would be "a leading character in the definition of good government." This energy would protect against foreign attacks, provide for "steady administration of the laws", protect property, and secure "liberty against the enterprises and assaults of ambition, of faction, and of anarchy." (70, p. 454) The House of Representatives directly represented the people. The relatively small size of the districts from which representatives were elected allowed personal contact with voters. The Senate's role in representation included representation of the states, as well as constituents. (9, p. 52; 64, p. 422) The Senate also contributes balance to the political system, not provided by the House of Representatives, by its stability, experience, and intelligence.
The kind of relationship Publius envisioned between citizens and those elected to represent themselves in the national government designed as a republic did not include acting in accordance with public preferences. He believed it "essential to liberty that the government in general should have a common interest with the people," a concept that differs from a government that always follows the preferences of the people. (52, p. 343)
In addition, the division of power between the states and the national governments provided for checks of one against the other. As Publius noted:
In the compound republic of America, the power surrendered by the people is first divided between two distinct governments, and then the portion allotted to each subdivided among distinct and separate departments [or branches]. Hence a double security arises to the rights of the people. The different governments will control each other, at the same time that each will be controlled by itself. (51, p. 339)
Publius did not believe that elections and the checks and balances in the structure of government would prevent another problem that the constitution dealt with, namely that a determined set of citizens could violate the rights of others. Publius expressed this concern in discussing "factions." He defined a faction as "... a majority or minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens, or to the permanent and aggregate interests of the community." (10, p. 54) He then argued that the causes of faction cannot be removed, but the effects of factions should be controlled. This can be accomplished in several ways. For a faction of less than a majority "relief is supplied by the republican principle, which enables the majority to defeat its sinister views by regular vote." (10, p. 57) But empowering the majority, as a republican from of government does, also creates a problem. Like a minority faction, a majority faction can "sacrifice ... its ... passion or interest both to the public good and the rights of other citizens." (10, p. 57) Publius argued that the proposed Constitution dealt with a majority faction:
... [through] delegation of the government ... to a small number of citizens elected by the rest ... to refine and enlarge the public views, by passing them through the medium of a chosen body of citizens, whose wisdom may best discern the true interest of their country, and whose patriotism and love of justice will be least likely to sacrifice it to temporary or partial considerations. (10, p. 59)
The Constitution also protected against majority factions by virtue of what Publius called an extended republic "to guard one part of the society against the injustice of the other part." Publius explained: "Whilst all authority in it will be derived from and dependent on the society, the society itself will be broken into so many parts, interests and classes of citizens, that the rights of individuals, or of the minority, will be in little danger from interested combinations of the majority. (51, p. 339)
The greater area of a larger republic like that one proposed in the Constitution would: "take in a greater variety of parties and interests ... [making] it less probable that a majority of the whole will have a common motive to invade the rights of other citizens; or if such a common motive exists, it will be more difficult for all who feel it to discover their own strength, and to act in unison with each other." (10, p. 61) A larger republic would require a more broadly based coalition to form a majority than would be the case in a smaller republic, where a single-issue majority could more likely occur.
Publius also indicated that the proposed Constitution guarded against ill-considered majorities that can occur during "particular moments in public affairs when the people, stimulated by some irregular passion, or some illicit advantage, or misled by the artful misrepresentations of interested men, may call for measures which they themselves will afterwards be the most ready to lament and condemn." (63, p. 410) The Constitution protected against this possibility through the Senate with lengthy terms of office, which provided for a "temperate and respectable body of citizens ... to suspend the blow mediated by the people against themselves, until reason, justice, and truth can regain their authority over the public mind." (63, p. 410)
Publius amply demonstrates his concern with the power of government officials, and of determined factions. The elaborate structure of the government indicates the degree to which the Founders emphasized that government should embody the long-term interests of citizens. It also indicated their desire to guard against those holding powerful positions in government from usurping the power the people and creating a despotic government that did not act in accordance with citizens' interests.
Having laid out the principal concerns and arguments of Publius, let us now examine how these apply to Korten's critique of the modern globalizing economy and increasing power of concentration, which he presents as major problems in the late Twentieth Century. Korten's positions and principles both agree and disagree with those of Publius.
The Founders argued that a stronger Union would lower trade barriers and enhance prosperity. Post-World War II developments have spurred lowering trade barriers, with notable examples including the European Common Market, the World Trade Organization (WTO) and the North American Free Trade Association.
These trade agreements match the thinking of the Founders, who in effect argued for the creation of a common market among the 13 states. The founders of the European Common Market also sought to enhance the prosperity of the citizens of these countries. Jean Monnet, considered to be the driving force behind the creation and expansion of the European Community, for example, wrote, "The countries of Europe are too small to give their peoples the prosperity that is now attainable and therefore necessary. They need wider markets. ... To enjoy the prosperity and social progress that are essential, the States of Europe must form a federation or a 'European entity' which will make them a single economic unit." (1978, p. 222)
Korten questions the central connection between free trade and prosperity. He asserts:
One of the most significant human commitments of the last half of this century has been to economic growth and trade expansion, and we have been spectacularly successful in accomplishing both. ... Yet the things that most of us really want -- a secure means of livelihood, a decent place to live, healthy and uncontaminated food to eat, good education and health care for our children, a clean and vital natural environment -- seem to slip further from the grasp of most of the world's people with each passing day. Fewer and fewer people believe that they fact a secure economic future. (pp. 18-19)
Free trade policies, Korten argues, exacerbate the growth of the modern corporation, and provide them an international reach. The corporate giants must produce growing profits, leading them to "downsizing to shed people and functions." (p. 12) They force "subcontractors and local communities into a standards-lowering competition with one another to obtain the market access and jobs that global corporations control." (p. 13) The twin developments of free trade and powerful multi-national corporations lead to a world that "is increasingly divided between those who enjoy opulent affluence and those who live in dehumanizing poverty, servitude, and economic insecurity." (p. 20) The deepening poverty brings social disintegration, and the practices of the modern corporation lead to environmental destruction. (Korten, pp. 20-21)
The birth of the European Community also generated concerns about the potential negative impact of lowered trade barriers. The first step toward creating the community combined the coal and steel producing capacities of France and Germany. Leaders, both within Europe and in the United States, expressed concerns about establishing a cartel that would control the prices of coal and steel. (Duchêne 1994, pp. 245-249) But Monnet and others believed other goals envisioned for the community (discussed below) more important and did not allow concern concerns about a cartel to stop them.
Korten makes some intuitively appealing observations. The stock market, for example, has often plunged in the wake of "good" economic news, like lower unemployment figures. Nevertheless, Korten offers little empirical evidence to support many of his conclusions. Is more of the world in ill health now than earlier in this century, for example? Examining such empirical evidence goes beyond the scope of this paper. (for more comprehensive evaluations and critiques of Korten, see Burke, 1997; Lundberg and Young, 1997; and Walter, 1997) Meanwhile, the Union created by Publius and his colleagues continues to prosper and offers an aspiration to many in the world, who see the benefits of the American model of free trade as offering more benefits than costs.
Publius strongly emphasized that the proposed Union of the 13 states would more likely create peaceful conditions among them than would a territory containing many separate states or nations. With the exception of the Civil War there have been no armed conflicts between the states. But that exception indicates that the possibilities envisaged by Publius were real. Publius did base his case on the warring nations of Europe. And just as the Founders learned from Europe, those who created the European Community learned from the United States, indicating a continuing relationship between creating common markets and promoting peace. Korten, however, provides no linkage of peace with the economic relations between nations. Korten's neglect of this issue stands in contrast to both Publius and the more modern development of the European Community.
The move toward some union of European nations began after World War I. Some hoped that the League of Nations would provide a basis for greater cooperation, at least politically, if not economically. In 1929, French Foreign Minister Aristide Briand proposed closer ties between European nations in a speech before the League. He indicated that "there should be some kind of federal bond" that would permit conferring about interests, "agree on joint resolutions" and establish "a bond of solidarity ... to meet any grave emergency that may arise." (Albrecht-Carrié, 1965, p. 223) Others expressed hope that some kind of unity of European nations might be established to prevent hostilities. (Lewis, 1993, p. 12) But establishing this kind of federated union prior to World War II did not occur, and war broke out once again on a grand scale in Europe.
Jean Monnet led the move for European union from that point. His strengths included the skill of persuading diverse persons to work together for common interests. Monnet began discussing his ideas during the war with such leaders as Paul-Henri Spaak, of Belgium, Charles DeGaulle, of France, and Harold Macmillan, of Great Britain. To DeGaulle he spoke of a Europe united by free trade. In 1944 he told Macmillan "that the whole future of Europe turned on Germany and that a full United States of Europe was out of reach, but that a strong League of Nations enhanced by interstate trade and monetary arrangements might be feasible." (Duchêne, 1994, p, 183) Monnet wrote in 1943, "There will be no peace in Europe if States re-establish themselves on the basis of national sovereignty, with all that this implies by way of prestige policies and economic protectionism. If the countries of Europe once more protect themselves against each other, it will once more be necessary to build up vast armies." (1978, p. 222)
Fear of renewed hostilities in Europe dominated Monnet's thinking, although he viewed free trade as the means to this end. One of his biographers, François Duchêne, wrote, "Combined with his belief in the large market, this might make Monnet seem a free-trader. In fact, he was more of a planner with a strongly expansionist outlook. Free trade was an excellent means to encourage growth and to lower political borders. It was not a decisive criterion on its own." (1994, p. 212)
The plan for union following World War II took place very slowly. The destruction and disorganization that befell war-torn countries required decisive action, and this took priority over developing plans for some kind of union of Europe. At one point Monnet took an extensive hike in the Alps (walking constituted his method for thinking deeply) and remarking later on his notes taken at the time, he wrote, "I can read in them the anxiety that weighed on Europe five years after the war: the fear that if we did nothing we should soon face war again." (1978, p. 289)
Monnet's plan proposed combining the steel and coal enterprises in Germany and France and to operate them as one. Those two commodities had provided the raw material for war, and Monnet saw that if they became a common resource between the two major continental European powers it would greatly enhance the prospects of peace. As Monnet explained, "Coal and steel were at once the key to economic power and the raw materials for forging weapons of war. This double role gave them immense symbolic significance, now largely forgotten.... To pool them across frontiers would reduce their malign prestige and turn them instead into a guarantee of peace." (1978, p. 293) An early draft defined the purpose of the proposal: "... to make a breach in the ramparts of national sovereignty which will be narrow enough to secure consent, but deep enough to open the way towards the unity that is essential to peace." (1978, p. 296) Other leaders shared Monnet's vision. Churchill, for example, spoke approvingly of it. (1951, p. 299) And Duchêne writes that the five clauses in the preamble of the plan all treat peace in one way or another and only two deal with economics. (1994, p. 224) Monnet, as the original draft of the proposal indicates, saw the creation of the Coal and Steel Community as just the first step toward greater unity in Europe. In fact, he envisioned creating a United States of Europe. (Monnet 1978, pp. 405-417)
Monnet's thinking closely parallels that of The Federalist Papers, and provides a modern juxtaposition of the link between free trade and calming hostilities between nations. Although Monnet does not say that the papers directly impacted his thinking, his memoirs indicate that he had read them. (1978, pp. 282-283) The further development of the unity of Europe, and its success, also spurred support for free trade in the post-war era.
Korten's neglect of the linkage between economic relations and peace constitutes a real puzzle, particularly in light of the emphasis on this link by Publius, as well as by Monnet, Adenhauer, Churchill, Spaak, DeGaulle, and other European leaders in the post-World War II era. Early in the book he discusses the recent "creation of the first consequential institutions of global governance." He then states, "Western Europe was transformed from a conflictual continent of warring states into a peaceful and prosperous political and economic union." (1996, pp. 17-18) This transformation constitutes a major positive development, especially when considered against this history of conflict in the geographical area covered by the European Common Market. Despite the importance of this linkage, this sentence encompasses the extent to which Korten deals with the subject.
Publius's emphasis on peace also extended to the possible impact of foreign intervention on peace between the states. The Founders obviously thought strategically about the appropriate relationship between the Union and other countries. They recognized that the fledgling nation could not match stronger European countries, but would obviously be stronger united than divided. Does thinking strategically about foreign intervention into national affairs offer assistance today in analyzing Korten's arguments? It does on two grounds -- how the United States should face global economies, and how the power of international corporations relates to the power of national government, especially that of the United States.
The globalizing economy and increasingly powerful corporations that Korten describes have a reach-and-grasp beyond as well as within the nation state. These developments require leaders in this country to think strategically about how best to relate to developments beyond this country, just as Publius, and other Founders, considered the appropriate relationship with foreign countries in forming the constitution. U.S. governments and most major corporations in the post-war era have embraced free trade and supported the globalization of the economy. This surely constitutes a strategic decision: United States' firms desire to influence the world economy and benefit from the potential profits associated with opening markets in other parts of the world. To stand idly by would abdicate these markets to the firms of other countries, especially those based in Europe and Japan.
Could our national strategy have differed from this? Would workers and consumers in this country have benefitted had the United States sought to insulate itself from the growing globalization of trade? Civic and business leaders could not have adopted a strategy of insulation, and had they done so that policy stance would not have benefited American citizens. Thus, post-war American civic and business leaders evaluated relationships with foreign governments and businesses just as the Founders evaluated our relationships with foreign governments: how can the interest of this country in relation to other counties best be pursued? The Founders answered that question by advancing unity at home and insulation from foreign influences and ties. Modern-day leaders have answered that question by advancing the embracing of the global economy.
On the other hand, Korten correctly observes that the global economy kindles forces that infringe upon the sovereignty of the nation state. Nation states have limited power to govern globally active corporations. Korten writes, "As markets become freer and more global, the power to govern increasingly passes from national governments to global corporations, and the interests of those corporations diverge ever farther from the human interest .... " (1996, pp. 66-67) They do this by "routinely and effortlessly [sidestepping] governmental restrictions based on old assumptions about national economies and foreign policy." (p. 127)
The supra-national agencies charged with enforcing free-trade laws can also infringe on national sovereignty. For example, through the World Trade Organization,
... any member country can challenge ... any law of another member country that it believes deprives it of benefits it expected to receive from the new trade rules. ... Unless the government against which the complaint is lodged can prove to the satisfaction of the WTO panel that a number of narrowly restrictive provisions have been satisfied, it must bring its own laws into line with the lower international standard or be subject to perpetual fines or trade sanctions. (Korten, 1996, p. 174)
The gradual shifting of the locus of sovereignty from the nation state to such international bodies as the World Trade Organization naturally flows from creating larger and larger common markets. Those who opposed adopting the Constitution in this country, the Anti-federalist, made this point in their opposition to the creation of the United States common market envisioned by the Constitution. They related as strongly to their individual states as we today relate to our nation states and realized that the Constitution required a sharing of sovereignty that previously resided more totally with the states. Thus Korten's arguments on this point share more the sentiments of the Anti-federalists than the views espoused in The Federalist Papers. In fact, Korten consistently holds this position. He argues, for example, that even at the present time "It makes good sense to devolve to the individual states more of the powers once lodged at the national level, including the power to regulate commerce and trade." (pp. 274-275) He focuses in this passage on the American states, not the modern nation states, which again aligns his position with that of the Anti-federalists rather than with the authors of the U.S. Constitution. (Storing, 1981, pp. 9-14, 28-32)
Korten and Publius agree most closely on controlling power. As noted Publius believed that the country needed a government of energy, (37, p. 224) but the Founders utilized a number of devices to make it subject to the interest of the people and structured it to keep it from abusing that power or infringing upon the rights of the people. Korten expresses concerns about the growing power of corporations, strengthened by the global economy, and the failure of government to control that power. Korten asserts:
When the economy is global and the governments are national, global corporations and financial institutions function largely beyond the reach of public accountability, government become more vulnerable to inappropriate corporate influence and citizenship is reduced to making consumer choices among the products corporations find it profitable to offer. (p. 92)
In the United States, public relations firms skillfully aid the quest for corporate power. According to Korten:
Washington's major growth industry consists of the for-profit public-relations firms and business-sponsored policy institutes engaged in producing facts, opinion pieces, expert analyses, opinion polls, and direct-mail and telephone solicitation to create "citizen" advocacy and public-image-building campaigns on demand for corporate clients. (p. 146)
These public relations firms effectively function to "convince the public that the corporate interest is the public interest." (p. 143) Korten in effect argues that the power of corporations, coupled with modern technology, makes it possible for corporations to suppress the safeguards that the Founders designed to make the national government sensitive to the interests of the people. With these safeguards contained, government makes policies that do not match the public interest, and allow corporations more power than necessary or desirable. This position comports comfortably with that of Publius, who would view these corporate interests as minority factions that would be restrained, if the government structure worked properly, by the majority.
Korten advances a number of reforms designed to control the power of corporations, which in effect enhance the possibility that citizens, through the government, could control corporations. These reforms include prohibiting their "involvement in any activity intended to influence the political process or to 'educate' the public on issues of policy ...", prohibiting political advertising on television, and limiting total campaign expenditures. (pp. 309-310) He also proposes that corporate charters be more tightly drawn and that corporations be required to operate more overtly in the public interest. (p. 308) The banking system should be regulated so that it returns to a more community-centered operation. (p. 314) The government should take legal action to break up concentrations of corporate power. (p. 314)
Although he does not explicitly cite Publius, Korten's reforms would bring public policy making closer to that envisioned by the Founders by keeping elected officials more attune to the public interest rather than to the more particularlistic interests of corporations. They would also make it easier for the majority to check the minority faction of corporations' interests. The reforms correspond with Korten's concerns about the growth of corporate power.
However, Korten's reforms do not conform with other positions he takes in his book. Korten generally opposes a national government with the kind of authority that would be needed to impose his reforms or to regulate effectively the powerful corporations that he opposes. Korten argues, as noted earlier, that more power should be given to the states within the United States. This stands in stark contrast to Publius, who believed in an "energetic" government, and certainly would have argued for a government "energetic" enough to control corporations as minority factions. Korten further confounds his argument by taking the position throughout the book that corporations have grown and have begun operating in the global economy in ways that make them beyond the reach of nation-state governments. If the nation-states cannot control corporations, how could United States state governments do so?
Would the reforms Korten advances, which actually center on the nation-state, adequately deal with the problems that he describes? What kind of efforts might be made beyond the nation states at the international level to allay the problems he describes throughout the book? If the growth in the United States of the modern corporation after the Civil War required an increase in the regulatory efforts of the national government to control those corporations, does not that imply that effective regulation of global corporations will have to take place in concert between nation states and international regulatory bodies? Korten ignores the implications of his own arguments by limiting reforms to the United States political arena. The greater portion of Publius devotes attention to the nation state and the appropriate powers that should be attached to it. In creating a new nation, Publius boldly stepped into an unknown future by proposing limiting the states' sovereignty as he knew it to create and share sovereignty with a larger nation created by the Constitution. Publius and other Founders assigned certain powers to the national and state governments, though with some ambiguities to be sure.
Korten's murky thinking about the nation state creates the inherit contradictions in his positions. In order to regulate effectively global corporations, Publius, whose foremost concern focused on creating an appropriate nation state, would instruct us today to apportion power among the national government, the states, and extra-national institutions. In effect, bodies like the World Trade Organization already in some instances provide for the regulation of commerce between member states, a point that Korten criticizes. More systematic attention needs to be devoted to the best means of apportioning power among several power centers, including these extra-national entities, as well as present nation states.
Korten also addresses another problem that relates to the Founder's efforts to control power in order to achieve the happiness of the people. This problem concerns the inherently authoritarian character of the modern corporation. Korten writes, "I retain a deep distrust of large institutions and their concentrations of unaccountable power." (p. 9) In this he shares concerns of Publius and other Founders. Speaking of the power of corporations, Korten asserts:
If is far from an incidental consideration that in its internal governance structures, the corporation is among the most authoritarian of organizations and can be as repressive as any totalitarian state. Those who work for corporations spend the better portion of their waking hours living under a form of authoritarian rule that dictates their dress, their speech, their values, their behavior, and their levels of income--with limited opportunity for appeal. (pp. 221-222)
Moreover, as Korten points out, the movement of power from government to corporations has inherent undemocratic consequences:
... [M]arkets and politics are both about governance, power, and the allocation of society's resources. It is also a misleading message that masks an important political reality. In a political democracy, each person gets one vote. In the market, one dollar is one vote, and you get as many votes as you have dollars. ... Markets are inherently biased in favor of people of wealth. ... [M]arkets have a very strong bias in favor of very large corporations, which command far more massive financial resources than even the wealthiest of individuals. (p. 66)
After introducing these problems, Korten does little to indicate how they might be resolved.
Do the lessons of Publius offer any recommendations for controlling the power of corporations? Are there ways that corporations can be organized (or regulated) so that they will operate more in accord with a general, and long-term, interest of the people? The Founders' plan for government in the United States sought to make government officials responsive to the general interests of a broadly defined citizenry. It also set up internal controls designed to check the ambitions of those holding power within government. In recent years reformers have attempted to make corporate executives more accountable, and hence more responsive, to a broader constituency, namely the stockholders (as opposed to management or ingrown boards of directors). But that has only led corporate officers to emphasize more the ability to make more profits in short spans of time. As Korten notes, "... [I]t is becoming increasingly difficult for corporate managers to manage in the public interest, no matter how strong their moral values and commitment." (p. 13) Publius would argue for a more broadly based plan of accountability for corporation officers. Several strategies might accomplish this. One way for fostering the more responsive corporation might be requiring corporations to develop profit sharing and compensation plans so that workers also became the major shareholders. As this occurred, corporate managers might become more responsive to the needs of workers. But the needs of workers, while more general and comprehensive than that of the stockholders' interest to maximize profit, remain less general and comprehensive than that of the population as a whole. Another approach might focus on boards of directors by establishing procedures that would include board members whose explicit duties included representing the more general interest. That would promote a selection method for board members that included more input from the citizenry than typically occurs. The lessons from the Founders would also include fixed terms of office for corporate officers (who could be re-elected by the more broadly based board of directors to which they were accountable).
The California Public Employees' Retirement System (Calpers), one of the largest pension shareholders in the United States, has suggested similar reforms. The Calpers reforms include nominating, audit, ethics, governance, and compensation committees composed entirely of outside directors, a majority of outside directors on the board, an outside chairman, and only one insider on the board. Other Calpers proposals, less in keeping with Publius-style preferences, include mandatory retirement for directors, a limit of the number of directors over age 70, and prohibiting retired chief executives on the board. (Bryant, 1997) The growing power of corporations does suggest that attention needs to be devoted to harness it in ways that best meet the needs of citizens of this country, as well as others. Ultimately, however, that reform quest, to be effective, must also occur beyond the nation state.
Korten and Publius disagree more than they agree. Korten does not share Publius's view that common markets produce prosperity. In fact, he takes the contrary view that these markets work to the disadvantage of the average citizen as well as produce corporate power that restricts the well being of citizens throughout the world.
Korten also disagrees with Publius's emphasis on common markets' ability to calm potential hostilities between independent political entities. Publius placed great emphasis on this argument in advancing the Union of American states. Founders of the European Community also put great emphasis on this argument. Although Korten mentions the Western Europe's transformation from hostile and warring states into a "peaceful and prosperous political and economic union," he fails to note the significance of the connection between economic union and the cessation of armed conflict. (1996, pp. 17-18) This constitutes a major difference with Publius, and also a major weakness of Korten's arguments.
Korten differs with Publius in thinking strategically about the relation of the nation with foreign powers. While Publius shows sophisticated thinking about the appropriate relationship of the new country with foreign powers, Korten argues, in effect, that the United States should isolate itself from the globalizing economy. This stance would abdicate developing markets to other countries, reduce prosperity for Americans, and diminish America's influence on future economic relations in the world.
Korten's greatest agreement with Publius centers on controlling power. Publius would undoubtedly share many of Korten's concerns about corporate power, especially the way that it has suppressed some of the protections against undue influence of factions that the Founders believed to be important. Many of Korten's suggested reforms embody the kinds of structural control of power that Publius and other Founders built into the U.S. Constitution.
But Publius and Korten ultimately disagree about the control of power. Korten's arguments for reform become unconvincing when he opposes nation state authority required to regulate corporate growth and power. The nation state cannot control corporations if power devolves, as Korten proposes, to the component units of the state, which possess less of what the Founders called "energy" to establish effective control. Productive reform of too powerful corporations requires establishing extra-national governing bodies with sufficient strength to regulate corporations pursuing markets and profits throughout the world. Publius devised a nation state and thought systematically about the sharing of power among the component states and the new national government. He more daringly opted for a future that envisioned a very different formula for sharing power among various governmental entities than Korten, who shies from venturous stances when it comes to solutions.
Ultimately Korten better represents Publius's protagonists, the Anti-Federalists, who supported states' rights, the status quo, and a more narrow vision of the future. In fact, Korten's arguments often link more directly to the more particularlistic principles advanced by the Anti-federalists, which are also a part of the heritage of the United States. Publius's views outline a more robust vision of the future than that of the Anti-federalists. Even today, Publius's views define a more robust vision for the future than that of Korten, despite the fact that Publius set forth his views more than 200 years ago.