Tea Party Fights Corporate Abuse

The East India Company, chartered in 1600, was the first corporation in the modern sense. Members would invest capital, management would conduct the operations, and investors would receive repayment in proportion to their investments. For the first time, investors and mangers were separate persons. At this time, it was unclear who would be responsible for wrongs committed by the corporation.

As this and similar ventures developed, investors were increasingly separated from the actions of the corporations, and limited liability (investors could only lose the amount they invested in the corporation) became the norm by the end of the nineteenth century. This also made corporate immortality possible as corporations could outlive their owners.

The British East India Company (BEIC) rapidly gained economic power and exerted global influence. It formed the largest standing army in the world at the time, gained control of India and the surrounding islands, controlled the opium trade in China, and managed slave trading out of Madagascar. One-third of British parliament members held stock in BEIC, 10 percent of British tax revenues came from tax on BEIC tea, and the King depended on loans from the company. In exchange for these benefits to the British government, BEIC was granted many favors, including monopoly rights.

The company conscripted thousands of British for forced labor in Jamestown, a colony set up in America by BEIC. Eighty percent of these laborers died before completing their seven-year tenure. Because of its rapid expansion and competition from small colonial business, though, BEIC was almost bankrupt. It was able to overcome this setback with more favors from the British government, which expanded its monopoly and led to the 1773 Tea Act, lifting tariffs on tea and enabling BEIC to flood the market with cheap tea and destroy its competition.

This was the catalyst for the Boston Tea Party. During the Boston Tea Party, protestors dumped more than 90,000 pounds of tea into the harbor, which was then closed for more than a year and a half. This led to the battles of Lexington and Concord; as a result, America’s founders vowed to protect the United States from corporate power and corruption.

The Boston Tea Party is an enduring symbol of America’s popular resistance to the collusion of corporations and government against the interests of the people.

Information for this blog came from:

1. Christopher D. Stone, Where the Law Ends: The Social Control of Corporate Behavior (New York: Harper & Row, 1976).

2. Shelley K. White, “Corporations, Public Health, and the Historical Landscape that Defines Our Challenge,” in The Bottom Line or Public Health: Tactics Corporations Use to Influence Health and Health Policy, and What We Can Do to Counter Them, ed. William H. Wiist (New York, NY: Oxford University Press, 2010).

When should corporations be treated as people?

I recently attended a conference on business ethics, and one of the presenters asked what human rights corporations had. When some scoffed at the notions that a corporation could have any human rights at all, the presenter asked whether corporations did not have the right to buy property. Indeed, the earliest laws regarding corporations dealt with just such problems.

Lawyer Christopher Stone described some of the history of corporations in his 1976 book, Where the Law Ends: The Social Control of Corporate Behavior. The earliest corporations arose from the need of some organization, such as the church, to own property. It did not make sense to say that the abbot owned the property, could buy or sell it, and pass it on to his heirs. Rather, the property belonged to the church, and the congregants were responsible for it. When the abbot died, the church would still control the property.

And property was the primary function of the early proto-corporations. As you may know, some people, especially libertarians, assert that all human rights are property rights (see Murray Rothbard). If all human rights are, indeed, reducible to property rights, then the corporations, having the right to hold property, also are entitled to all the rights any human might reasonably demand. This is what free-market thinkers mean when they say corporations are people without the slightest pause.

The earliest commercial corporations were entities such as trade guilds. Although these guilds operated as one organization, when harm was done, individuals, not the guild, were held responsible. If you got bad meat from a butcher, you would blame the butcher, not the butcher’s guild. Stone points out that this system had its own drawbacks. It may be that a guild created a culture or corruption or failed to create a culture of safety. In this case, you may want to hold the corporation responsible rather than seeking out individuals.

You may demand that the corporation lose its charter, which was once the threat the public had against corporations. To withdraw a business charter would be the death penalty for a business. If such things still happened, perhaps we could better handle the equation of corporate rights with human rights, although it still does not sound right. But just imagine how life would be different if corporations could effectively be sentenced to death for wrongdoing. Well, they can, but it will take a great deal of political will to reinstate the death penalty for corporations.