The Divine Right of Capital: Chapter 5

Chapter 5: Liberty for Me, Not for Thee

The Principle of Liberty:
Corporate capitalism embraces a predemocratic concept of liberty reserved for property holders, which thrives by restricting the liberty of employees and the community.

When wealth interests seek government protection, we’re told that property rights are vital to a free market. When the community or employees seek government protection, we’re told about the danger of infringing on the free market. Privilege tied to property is one of the bedrocks of our current system and the second is “freedom of contract” or the free market.

Property and liberty.

With freedom of contract, we’re all free to contract with whom we choose and the government is there to make the contracts legally binding. It’s in the Constitution in Article 1, Section 10 which says that no state shall make any law “impairing the Obligation of Contracts.” With regard to corporations, legal scholars no longer view shareholders as actually “owning” a corporation. Instead, they’ve transfered the rights of ownership to a conceptual framework of the corporation as a “nexus of contracts.” These same scholars note that the reason to remain focused on the interests of shareholders is that they are the last in line to receive compensation in the result of a liquidation of the company, even though in practice this rarely happens because troubled companies are usually allowed to be raided and sold at the hight viable share price.

Even with this “nexus of contracts” notion, it’s been hard to shake the idea that the corporation is actually owned and has owners. It is the common perception and the nexus of contracts slight of hand provides a legal framework for connecting shareholder rights to the Constitutional stipulation that the state not impair obligation of contracts.

The notion of the free market goes back before Adam Smith’s invisible hand to a pre-economic focus by Leibniz who talked about a “hidden hand” that led to “a basic harmony of interest among men in the long run.” Some might call it faith. But, Kelly notes, The Wealth of Nations was written long before the rise of the modern corporation and industrialization and what has developed is the “two nations” effect due to capitalism’s tendency to uplift some even as it degrades others.

Liberty stops at the corporate doors. Employee surveillance occurs at nearly three-quarters of major companies and 86 percent do drug testing. Employees have no due process, no right to privacy, no protection against unreasonable search and seizure, no representatives to take their side, no say in governance, no free speech, no jury to hear their case. In the corporation, we are obsessed with the notion of liberty of property which originates from feudal norms. With the birth of our democracy, we shifted to a new focus on liberty of persons. But where liberty of property is allowed to run rampant, there is no room for liberty of persons.

The World Trade Organization’s restrictions on countries’ ability to democratically determine their own laws is an example of this on a macro-level, where free markets trump democracy. We’ve also started to shift the way we talk about these forces, increasingly replacing the term “capitalism” with “market systems” – which shields wealth holders from the spotlight and gives them functional anonymity.

“While employees and the community are left to the protection of the invisible hand, wealth is protected by the visible hand of government and corporation.” Kelly closes chapter five with a fascinating vision of a world where labor rights are enthroned in law and property rights are left to the invisible hand.