© 2008 by G. Edward Griffin 2008 May 26

The following email expresses a common misconception about relying on government to control the power of corporations. It is similar to the myth of Left vs. Right being opposing forces when, in reality, they are both champions of collectivism. Since their ideologies are identical, they compete entirely on the basis of personalities and slogans. The extent of their conflict is to determine which group will administer the New World Order. This same false competition appears in the illusion of government supposedly being a means of controlling corporations, and it inspired this question:

There is a central issue which, in my opinion, is perhaps the single most important issue which divides those on the 'left' from those on the 'right' and needs desperately to be analyzed and addressed. This is the matter of state-granted corporate privileges.

Many on the left, who might otherwise join with us in opposition to unlawful tyranny by the state, advocate 'democracy' or 'socialism' (i.e., collectivism) because they see this as necessary to restrain or abolish 'capitalistic' abuses of power, deriving from the privileges that corporations enjoy but individuals do not: namely, limited liability.

What is your position on corporate 'limited liability' priveleges, which is the essential feature of the corporation? Isn't the limited liability corporation, by nature, antithetical to the ideals of individualism, which you tirelessly promote? Isn't corporatism the essential flaw of US government which has resulted in a collectivist government and political favoritism giving corporations unfair advantages over individuals and small businesses - 'competitors'?

REPLY FROM GEG: Our friends on the Left do, indeed, equate corporatism with capitalism and injustice, and they tend to think that the way to offset the injustices of corporatism is to have a strong government, theoretically responsive to the will of the people. What they fail to see is that big government is very similar to corporatism and, especially in recent times, it is obvious that there is a merger of the two. Why? Because they are the same snakes under the skin. Every one of the obnoxious effects of corporatism can be found in big government, and it is most naive to think that it can ever be otherwise.

Governments and corporations are neither good nor evil by themselves. They can serve man well or be a huge disservice depending entirely on the terms of their charters and the character of those who direct them. Private entrepreneurs, partnerships, and associations have exactly the same capacity for good or evil. Corporations become evil when they acquire political favoritism giving them unfair advantages over competitors and legal immunity from crimes – but exactly the same thing happens with politically connected individuals, partnerships, and associations.

There is, however, one characteristic of corporations and governments that has led to widespread corruption and injustice. It is the fact that their officers and managers often are protected from personal liability for their official acts. When crimes are committed by corporations and government agencies, the courts hand down judgments to compensate the victims or to punish the perpetrators, and many people cheer the outcome; but they fail to realize that the real perpetrators usually get off Scot free. The real perpetrators are people, not organizations. They are the leaders and managers who make the decisions and execute the criminal actions. Yet, the fines are not paid by them. When crimes are committed by people in government, the fines are passed on to taxpayers. When crimes are committed by people in corporations, the fines are passed on to stockholders. In both cases, the innocent are punished and the guilty are spared.

That is the root of great evil. If corporate and government officers were held personally responsible for their actions, even when discharging their official duties, most abuses would come to a halt. The problem is not that corporations and governments are intrinsically evil. It is that present laws enable people within those structures to escape liability for their actions.

It can be argued that taxpayers and stockholders should be liable for the actions of those whom they elect, that they have an obligation to monitor them and make sure they perform their duties properly. Therefore, it is appropriate that taxpayers and stockholders should pay their fines. Such an argument, however, is not realistic. Those who lead organizations usually can conceal or misrepresent their actions for long periods of time. Average voters and stockholders have little chance of discovering their wrongdoing until it is too late.

Fortunately, in a sane world it would not be necessary for them to do so. If wrongdoing among executives were not protected by limited-liability laws, few problems would arise from that sector. In other words, if office-holders were held personally responsible for their acts on behalf of the organizations they serve, the level of corruption and crime committed by individuals acting on behalf of corporations and governments would be identical to the level committed by individuals acting outside corporations and governments; which is to say that it would me minimal.

In summary: Governments and corporations intrinsically are neither good nor evil. What makes them so is the character of the people who direct them. If laws did not grant them personal immunity from their acts, the likelihood of corruption and crime in governments and corporations would be no greater than found in any other segment of society. We must focus on the underlying principle: To treat executives of government and corporations differently from all others is contrary to the “Equality-Under-Law” provision of The Creed of Freedom. Follow the Creed, and it will make no difference what organizational structures we choose for our convenience.