Robert Reich and the Elimination of Corporate Criminal Liability

Corporate income tax? Out.

Corporate social responsibility? Out.

Corporate criminal liability? Out.

Milton Friedman? No.

Try Robert Reich.

Yes, the liberal, Robert Reich–Bill Clinton’s Secretary of Labor.

In his new book, Supercapitalism: The Transformation of Business, Democracy and Everyday Life (Knopf, 2007), Reich says corporate social responsibility is a diversion and an illusion, the corporate income tax is inefficient and inequitable, and corporate criminal liability is based on an anthropomorphic fallacy that hurts a lot of innocent people.

But with Reich, it’s a package deal.

Yes, he would eliminate corporate criminal liability. Yes he would get rid of the corporate income tax.

But he would also strip corporations of their constitutional rights.

“Corporations should have no more legal right to free speech, due process, or political representation in a democracy than do any other pieces of paper on which contracts are written,” he writes. “Legislators or judges who grant corporations such rights are not being intellectually honest, or they are unaware of the effects of supercapitalsim. Only people should possess such rights.”

Reich says that while supercapitalism delivers products galore at low, low prices to the American consumer–at the same time it undermines democracy by flooding the public arena with private lobbyists, cash, and corporate influence.

The cure?

Reich wants a bright line separation between the corporate and the public arenas.

In return, he’d zero out corporate criminal liability and the corporate income tax.

“Companies cannot act with criminal intent because they have no human capacity for intent,” Reich says. “Arthur Andersen may have sounded like a person but the accounting firm was a legal fiction. . . how can any jury, under any circumstances, find that a company ‘knew’ that ‘its’ actions were wrong? A company cannot know right from wrong. A company is incapable of knowing anything. Nor does a company itself take action. Only people know right from wrong, and only people act. That is a basic tenet of democracy.”

Reich also says it makes no sense to treat companies as persons with legal rights to challenge in court democratically enacted laws and regulations.

“That should be left to real citizens,” he writes.

Noncitizens should have no right to sue to overturn a law or regulation in American courts unless the law or regulation breaches some international treaty.

“Otherwise, decisions arrived at democratically can be overturned by people who are not even American citizens,” he writes.

In January 2005, nine global automakers sued California to block a new clean car law which required cars sold in California to reduce greenhouse gas emissions 30 percent by model year 2016. A majority of the shareholders of at least seven of those car companies were not American citizens, “yet the court gave them standing to challenge, and to potentially overturn, a law enacted by the citizens of California,” he writes.

“This is nonsensical,” Reich says. “Real citizenship should be the criterion–and by allowing only people rather than companies to sue, it can be.”

Finally, Reich says that since only people can be citizens, “only people should be allowed to participate in democratic decision making.”

“Consumers, investors, executives, and other employees all have a right to advance their interests within a democracy,” he writes. “But as Yale political scientist Charles Lindblom concluded many years ago, neither ethically nor logically do corporations have a legitimate role in the democratic process.”

Supercapitalism has led to the decline of democracy.

But it need not be.

“We can have a vibrant democracy as well as a vibrant capitalism,” Reich says.

But to get there, we have to separate the private from the public spheres.

“The border between the two is breached when companies appear to take on social responsibilities or when they utilize politics to advance or maintain their competitive standing.”

RUSSELL MOKHIBER is the editor of the Corporate Crime Reporter.


Russell Mokhiber is the editor of the Corporate Crime Reporter..