A Modest Proposal: How to Break Up Corporations and Redistribute Wealth in the United States

Let’s start with a simple example: New York State is unique in the country in requiring that licenses for liquor stores–retail outlets selling wine and liquor for consumption off-premises–be limited to one location in the state owned by a single individual. No one can own more than one liquor store in the state. The 1934 Alcoholic Beverage Control Law ensures that each of the state’s over 1300 liquor stores are independently owned by sole proprietors.

The effect of this legislation has been to decentralize an important sector of retail commerce to ensure the widely distributed ownership of individual stores. By limiting ownership to one store per person, the law effectively bars chain stores from selling liquor in the state. At the same time it provides opportunities not normally available for local entrepreneurs to succeed as independent community business people.

This is an overlooked precedent worth pondering. Its purpose was to make local asset ownership more widely distributed than it otherwise would be. The profits from businesses so regulated are locally retained and reinvested, keeping wealth in the community. Proprietorship fosters a class of local leaders with experience and independence of judgment. The competition and cooperation among independent proprietors in a community is democratic in spirit; local business leaders tend to promote and sustain local civic organizations and cultural life.

There was a time–before the industrial revolution took hold–when nearly all production was localized and carried out by independent producers: the family farm or ranch, the village shopkeeper, the blacksmith, the tailor, the sawmill, the saloon keeper, the doctor, the furniture maker, and so on. Very few businesses were big enough to dominate the market and consolidate its profits. Competition and cooperation were common. Most people knew a trade or skill compatible with private business ownership, and thereby an entree into economic independence and security. It was capitalism at its best–a world of many producers and many consumers–where no one could dominate the marketplace. Politically independent businesses people, free of intimidation by employers, could act in their own best interests, which largely coincided with the interests of their communities.

This Jeffersonian world was upset not by industrialization or technology, as is widely assumed; it could have adapted to them, and even prospered. It was instead upset by intentional laws of incorporation which allowed private businesses to be indirectly managed for passive investors, and to operate in multiple locations. These new-fangled corporations became the big businesses which today range anywhere from small regional chains to global internet giants. As a result, distant inventors are able to capture profits and drain wealth that would otherwise have remained in local hands. Corporate legalisms–including the fiction of corporate ‘personhood’– has made possible the corporate colonization of our communities.

Those laws set the rules for commercial activity. Investors–speculators in particular–made sure that laws governing commerce place no limits on the scale of corporate operations. The New York State liquor law is a modest pushback against corporate power. If it works to protect independently owned liquor stores in New York State, why can’t similar laws do the same for independent ownership in other areas of the economy? Liquor stores are hardly unique. Where else might widespread ownership of resources be protected?

One place where the proprietorship principle, as we might call it, can more easily be applied is with the introduction of a new type of industry. The Liquor Laws of 1934 could be written as they were because the repeal of prohibition created a clean slate for the reintroduction of alcohol into society. There were few vested interests to contend with. A similar situation obtains today with the recent legalization of cannabis in New York State and elsewhere. Here is an opportunity to legislate in favor of separate sole proprietorships in production and distribution. Growers might be limited to one farm in one location, and retailers might be limited to one retail outlet.

Corporate interests would obviously resist any transition to a single proprietorship model. Yet, to the degree it could be accomplished, it would radically distribute ownership of capital in the general population, and go a long way towards reducing the income inequalities of the country. It has the potential to spark a revolution in improving the economic health of the nation. Certainly nothing else has worked toward effectively redistributing wealth in recent decades; as is widely acknowledged, we’ve been going in the wrong direction, with wealth becoming more rather than less concentrated.

Limiting production and distribution facilities to one site each may be a reasonable rule for small scale industries, but what about large scale enterprises? What about, say, General Motors? GM is an integrated manufacturer and distributor. It has numerous plants specializing in various aspects of production, as well as numerous outlets (dealerships under franchise). The rule here for splitting up and redistributing assets cannot be location. It might instead be product line. General Motors, or any large corporation, could be broken down into a series of separate, independently owned business enterprises corresponding to its product lines and distribution outlets.

Product lines would have to be defined. The product line for liquor stores is wine and spirits. For General Motors the product lines are vehicular types, such as pickup trucks, vans, sedans, SUVs, etc. General Motors also indirectly controls its distribution through dealer franchises. Single ownership of large scale productive operations, like vehicular product lines, would take the form of individual ownership, or perhaps partnerships of individual owners to facilitate raising capital. More than one location for production could be justified, however, if multiple sites were necessary to produce the product line in question. Ownership of multiple dealerships would similarly be prohibited. Direct personal ownership would replace indirect corporate ownership through stocks.

Corporations would be dissolved upon the sale of all their production and distribution operations to independent sole proprietors (singly or as partners). The wealth of investors would not be confiscated; they would be compensated by the market value determined by what the sale of the corporate assets would bring. Independent producers, once established, would be free to sell to any distributors, or retailers, and independent retailers would similarly be free to buy from any seller. Contracts to the contrary would be in restraint of trade.

What about the big internet companies? How could they be resolved into partnerships of proprietors? They are primary distributors, or large virtual stores whose location is everywhere and nowhere. But they too can be broken up into their product distribution lines. The Amazon website, for instance, is differentiated by an alphabetized menu currently listing some 52 product distribution lines it sells, beginning with audible books and ending with video games. Amazon (and similar companies) could be required to spin off and sell each product line separately to independent proprietors or partners. Shareholders of these corporations would also be compensated by the sale of these assets. Competing product lines could be purchased or freely established–for example, there could be any number of internet book sellers–but no single person would be able to own (in whole or part) more than one of these product distribution lines.

Pie in the sky? Hopeless idealism? At this stage, we seem remote from decorporatizing our economy. We’re not ready yet, it appears, to disestablish corporations from their central role in American life, even if we see that we should. The prospect raises more questions than can be answered in this short essay. Yet America, along with much of the Western world, has reached a crossroads. Corporate capitalism seems to be at an apogee, yet it has deeply, and apparently irredeemably, corrupted our politics and culture in its dramatic redistribution of wealth from the very many to the very few. The increasingly narrow range of corporate-controlled left/right debate has ruled out any hope for the kind of structural reform necessary to ameliorate these inequities. The socialism of the left threatens a concentration of state power in the name of humanity which is authoritarian and corporate in structure, and ultimately global in scope. Its classic form is communism. The tribalism of the right pursues an atavistic politics unable to mount any significant resistance to corporate power; its accommodation to corporatism leads to national socialism, or the infusion of tribalism into corporatism. Its classic form is fascism. Either way the little guy is crushed by top-down corporate power.

If there is a precedent for an anti-corporate vision of American life, it lies not in our two party corporate system, but in the democratic populism of the colonial and early federal periods. Old time American populists followed Jefferson in insisting on the decentralization of economic and political power, and resisted Hamilton’s corporatism. Unlike corporatists, then and now, populists understood that political freedom depends upon economic security, and that economic security depends on the widespread independent ownership of private property. That cannot be achieved by a minimum wage, or a guaranteed income, or a host of government social programs, all of which promote economic dependency. The populist ideal was small-scale, widely distributed capitalism as the basis of society not only because it guaranteed personal economic security, but also because the responsibilities of productive ownership are essential to the creation of civic virtue. It’s a precedent worth reviving.

Adrian Kuzminski is a scholar, writer and citizen activist who has written a wide variety of books on economics, politics, and democracy. 

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