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Publication Date: 2005
Publisher: Berrett-Koehler
Binding: Paperback
Topics: Corporate Rule, Crime & Punishment, Democracy: Theory & Practice, History: Local to Global, Race & Civil Rights, Social Movements, United States

Description: "This is the first comprehensive 'people's history of the corporation', from medieval times to the present. If you've ever wondered how corporations got their power, here's the dirty laundry!" - Ted Nace

Corporations are the dominant force in modern life, surpassing even church and state. The largest are richer than entire nations, and courts have given these entities more rights than people. To many Americans, corporate power seems out of control. According to a Business Week/ Harris poll released in September 2000, 82% of those surveyed agreed that "business has too much power over too many aspects of our lives." And the recent revelations of corporate scandal and political influence have only added to such concerns.

Where did this powerful institution come from? How did it get so much power? In 'Gangs of America: The Rise of Corporate Power and the Disabling of Democracy', author Ted Nace probes the roots of corporate power, finding answers in surprising places.

A key revelation of the book is the wariness of the Founding Fathers toward corporations. That wariness was shaped by rampant abuses on the part of British corporations such as the Virginia Company, whose ill-treatment killed thousands of women and children on forced-labor tobacco plantations, and the East India Company, whose attempt to monopolize American commodities led to the merchant-led rebellion known as the Boston Tea Party.

Because of such attitudes, the word "corporation" does not appear once in the United States Constitution. At the Constitutional Convention, all proposals to include corporations in that document were voted down by delegates. Corporate attorneys persisted in seeking legal protections for their clients by means of sympathetic court rulings, but until the Civil War such attempts largely failed.

After the Civil War, the tide quickly turned, as lobbyists secured key changes in corporate law, and as corporate attorneys won a series of decisions from an increasingly pro-corporate Supreme Court. Nace recounts the key figures who engineered the "corporate bill of rights," in particular two brilliant strategists: railroad baron Tom Scott and Supreme Court Justice Stephen Field. The book explores in depth the bizarre intrigues that resulted in the infamous "corporations are persons" ruling of 1886, and how that ruling affected the subsequent development of Supreme Court doctrine.

Nace charts the growth of corporate power through the Gilded Age, including the bloody repression of organized labor and the rise of social Darwinist thinking among American elites. He recounts how that expansion came to a halt under the New Deal, as organized labor gained legal protections, social Darwinism fell into disrepute, and Franklin Roosevelt asserted a vision of American society that placed democratic limits on corporate power. To many observers, it seemed that the corporate Frankenstein had finally been tamed by "countervailing power."

According to Nace, that optimistic view was dashed in the final decades of the twentieth century, as Big Business mounted a remarkable comeback. The corporate political resurgence began with a 1971 memorandum written by Lewis Powell, Jr., shortly before Powell was appointed to the Supreme Court by Richard Nixon. In the memorandum, Powell urged corporate America to apply its full organizational and strategic resources to politics, a course of action that proved highly successful.

'Gangs of America' describes the expansion of corporate legal empowerment onto the global stage through international agreements such as the North American Free Trade Agreement, which boosted the legal powers of corporations to the level of sovereign nations. The book pays special attention to recent events, including campaign finance reform, the financial scandals of 2002, and the growing movement to redefine the corporation and limit corporate power.

Ted Nace worked as a researcher on electric utility policy for the Environmental Defense Fund and as staff director of the Dakota Resource Council, a grassroots group seeking to protect farms and ranches from strip mines and other energy projects. In 1985, he founded Peachpit Press, the world's leading publisher of books on computer graphics and desktop publishing. After selling Peachpit Press to British publishing conglomerate Pearson, Nace felt driven to understand the historical roots of corporate political power. 'Gangs of America', the result of that quest, features Nace's engaging, personal, and complex voicethat of a writer, a businessman, and an activist.

Review(s): "A beautifully documented and readable history." - Ben Bagdikian, author, 'The Media Monopoly'

"A brilliant page-turner revealing how powerful, greedy corporations wage institutional terrorism. Reading it is the first step to saving our communities, our democracy and our planet's environment." - John Stauber, author, 'Toxic Sludge Is Good for You'

"A valuable resource for understanding the origins of corporate power in this country. It offers an acute analysis of how the legal system became more and more a protector of corporate interests over human rights." - Howard Zinn, author of 'A People's History of the United States'

"The essential guide to the history of the American corporation -- it explodes the myth of inevitability surrounding the corporate takeover of our lives." - Maria Elena Martinez, executive director, CorpWatch

Review in the New York Times by Diana Henriques on September 14, 2003:

"Nothing is illegal if 100 businessmen decide to do it."

After two years of corporate scandals, billions of dollars in investor losses and a tawdry parade of guilty-pleading corporate princelings - the latest, on Wednesday, was Ben F. Glisan Jr., a former treasurer at Enron - it's hard not to love a book that opens with that ruefully apt observation, attributed to Andrew J. Young Jr., the former Atlanta mayor and ambassador to the United Nations.

That was just the first laugh-out-loud moment in 'Gangs of America', [Ted] Nace's provocative and entertaining examination of the rise of corporate power in America. It is followed by wonderful vignettes of the obscure jurists, lobbyists and business executives who helped slap together the intellectual bricks and legal mortar of the American Corporation.

The often lopsided conclusions drawn from this engaging history will infuriate or exasperate many readers. Mr. Nace successfully founded the Peachpit Press, a technology publishing house, and is thus a baptized capitalist himself, but he nevertheless thinks that corporations have too much power and he wants citizens to do something about it. Even if you disagree with his conclusions, no one but the most humorless acolyte of the capitalist religion could be bored by the evidence he gathers.

That is a surprising and welcome achievement, because most of the business-bashing books that tumble down on us these days are the literary equivalent of fingernails scraping across a blackboard. And that's a shame, because behind all the caterwauling about "Corporation Rex" are some profoundly important questions about the balance between the virtues of our civic institutions and the demands of our corporate interests. America is long overdue for a less rapturous re-examination of its continuing experiment with the joint-stock, limited-liability business form that we call the corporation. Despite its unfortunately pugnacious title, 'Gangs of America' addresses both needs with lively insights and refreshing research.

Mr. Nace opens with a succinct account of how General Motors and a handful of other giant corporations helped engineer the eclipse of America's electric streetcar system in the 1930's and 40's. But, thankfully, this is not another catalog of corporate conspiracies and corruption. Instead, Mr. Nace is curious about how corporations - those merely imaginary constructions of legal paperwork - acquired their power and rights.

His research took him deep into the archives of the 14th Amendment, at least as important for corporate Americans as it was for African-Americans. He dusts off some shocking but largely forgotten discoveries about the Supreme Court case that is the Rosetta stone of corporate law. And he examines the little-noticed contributions to corporate power made by Lewis F. Powell Jr., the Supreme Court Justice who died in 1998.

"Powell tended to be a bridge builder between conservatives and liberals on social issues such as abortion," Mr. Nace writes. "But in his advocacy on behalf of large corporations, Powell was anything but moderate." In 1971, two months before his nomination to the Supreme Court, Mr. Powell drafted a memorandum for the United States Chamber of Commerce warning that free enterprise was fighting for its life against passionate antibusiness forces in American society. "As every business executive knows, few elements of American society today have as little influence in government as the American businessman," Mr. Powell wrote just three decades ago. He added, "One does not exaggerate to say that, in terms of political influence with respect to the course of legislation and government action, the American business executive is truly the 'forgotten man.'"

How we got from there to the point where energy executives are intimately involved in the drafting of American energy policy is just one of the fresh strands of historical evidence woven into Mr. Nace's story.

Of course, there are flaws, two of them fairly serious. Mr. Nace almost entirely ignores the American shareholder. He approaches corporations as "them," separate and threatening. In fact, in the spirit of Pogo, the Walt Kelly cartoon character, we must increasingly say that we have met the corporation and it is us. Mr. Nace also slights the contributions the corporate form has made to average Americans' prosperity - aside from a whimsical acknowledgment that "this book owes its existence to a computer made by Toshiba Corp., software from Microsoft Corp., electricity supplied by Pacific Gas & Electric Corp. and coffee roasted by Peet's Inc."

Fortunately, Mr. Nace's case for the prosecution is ably balanced in bookstores these days by the case for the defense, 'The Company: A Short History of a Revolutionary Idea' (Modern Library) by John Micklethwait and Adrian Wooldridge, two writers for The Economist. By itself, 'The Company' is too rosy by half about the history of the joint-stock corporation. Where are the greedy appetites, brazen vote-buying and courtroom arm-twisting? And unlike Mr. Nace, these writers think the future belongs to smaller, nimble corporations, not the multinational giants.

But 'Gangs of America and 'The Company' agree that the corporate form is best thought of as a "technology," as potentially beneficial as gene-splicing, as potentially dangerous as atom-splitting. Together, they offer a stimulating point-counterpoint perspective on what may be one of the most important debates of this new corporate century.