The most famous of these in the English context was The English East India Company, which was founded by a charter granted by Elizabeth I on 31 December 1600, giving the company existence as ‘one Body Corporate and Politick’. This was done for the ‘Increase of our Navigation, and the Advancement of lawful Traffick to the Benefit of our Common Wealth’.11 The company was granted the monopoly on trade in the area between the Cape of Good Hope on the southern tip of Africa to the Straits of Magellan in South America. In this enormous region, the company was granted the jurisdiction of the people under its command, the right to have an army, the right to make war and to make peace (officially only with non-Christians), to make laws and judge accordingly, to erect strongholds and fortifications, to engage in diplomatic relations with local rulers, to coin its own money and to have its own flag.12
The East India Company in this respect was indeed a ‘Company-State’,13 and certainly the most famous, but far from being the only one. And they were all granted extensive rights in the area where they operated. As a way of protecting investors in the dangerous and risky endeavours, the trading companies were increasingly incorporated as joint-stock corporations, making it possible for investors to pool resources and be liable only for their own investment.14
As mentioned earlier, the century was also pivotal in the emergence of concept of the state as an impersonal subject, independent of rulers and ruled. One of the most famous thinkers on the sovereign state, Thomas Hobbes, in Leviathan, published in 1651, mounted a strongly absolutist defence of the omnipotence of the state. He did this exactly by likening the state to an ‘artificial man’.
This is captured in the famous image of the Leviathan as an enormous body hovering over a city with a sceptre in one hand and a sword in the other. Above it reads a quote from the Book of Job (Chapter 41 verse 24, in the Vulgate version) describing the mighty sea-creature Leviathan Non est potestas Super Terram quea Comparatur ei – there is no power on earth to be compared to it. In establishing the omnipotence of the state, and making it the sole legitimate claimant to political authority and allegiance, Hobbes was bound to constitute all other corporate bodies (the people, the family, and all other associations, corporations and corporate bodies) as subordinate to and dependent upon state power – or, as Hobbes terms them, ‘wormes in the entrayles of a naturall man’, who were at risk of becoming ‘many lesser Common-wealths in the bowels of a greater’.15 It is precisely because of their structural resemblance to the state that other corporate bodies and associations exist only if the state allows them to.16
This problematic relationship between the state and the corporation goes beyond Hobbes. Edward Coke’s (1552–1634) Institutes and Reports outlined what were was to become the basic tenants of subsequent English thought regarding corporations. In The Case of Sutton’s Hospital from 1612, Coke defined the essentials of a corporation as being firstly, and very importantly, that it had to be created by a ‘Lawful authority of Incorporation’.17. Coke’s definition, and his emphasis on the fact that the corporation’s most important feature is the relation to the power that created it, was reproduced numerous times, including two treatises dedicated to the subject; – the anonymously published The Law of Corporations in 1702 and in the pamphlet Of Corporations, Fraternities, and Guilds in 1659.
William Blackstone, in his Commentaries on the Laws of England (1765–69), a highly influential work bringing together and systematizing the tradition of English law up until that point, held that when it is in the public interest, certain groups are permitted to perpetual succession and legal immortality, and these ‘artificial persons are called bodies politic, bodies corporate (corpora corporata) or corporations: of which there is a great variety subsisting, for the advancement of religion, of learning, and of commerce’.18
Blackstone underlined that ‘The general duties of all bodies politic, considered in their corporate capacity, may, like those of natural persons, be reduced to this single one; that of acting up to the end or design, whatever it be, for which they were created by their founder’.19 is noteworthy in these early understandings is that while the state accepted, recognised and granted the existence of corporations and extended their privileges in order to govern social life and to secure government aims, it was also vital to delimit them as subordinate to and dependent upon state power.
This notion of the corporation as both inside and outside the state, dependent upon but independent of state power, still persists and makes it difficult to properly understand corporate power and its relation to the state.
Is the Corporation a Political Subject?
Obviously, corporate law and the role of corporations have significantly changed since their inception. In nineteenth-century Anglo–American corporate law, successive legislation transformed incorporation from a political, chartered process to an administrative one. However, the earlier writings on corporations highlight the paradoxical role of the corporation as being both inside and outside the law.20 As the political scientist David Ciepley has pointed out, the corporation falls between traditional categories of public and private, making it hard to grasp. Corporations are not entirely private because they are politically constituted and their existence depends on the state, but nor are they entirely public because they are run on private initiative and financing. Ciepley seeks to develop a legal and policy category specific to the corporation, calling it ‘corporate’, beyond and different from public and private.21
Evidently, modern corporations are much less accountable to national laws and do not require a direct government charter in order to exist. Corporations increasingly regulate themselves in private legal systems if international arbitration is essentially a contemporary lex mercatoria. As Bakan has argued, private regulation has exploded since the 1980s, reducing state capacity to protect ‘the public interests, […] people, communities, and the environment from corporate excess and malfeasance’.22 However, as he also underlines, this has not been matched by the curtailment of the state’s protection of corporations and their interests. It is still national law that incorporates companies, gives them the rights and protections of legal persons, and provides them with favourable tax regimes, limited liability, entity shielding, and a host of other privileges.
These legal mechanisms are vital for corporations’ operation. The state also exerts its power to block and repress protests opposing corporate power and its expansion. Internationally, states (of course, subject to lobbying influence) are able to agree to and ratify trade agreements that give corporations hitherto unprecedented rights and powers. Corporations are still dependent upon states for their existence and to obtain their special privileges and legal exemptions – and also for actively securing their way of operating.
The rise of corporate power since the 1970s, and neoliberalism more generally, can therefore be seen as the privileging of one particular subject: the for-profit, publicly traded corporation. Whereas in the Keynesian welfare state, the primary political and wealth-creating subject was the individual worker, in neoliberalism it is the corporation. The corporation is the primary creator of wealth and growth in a neoliberal world and is its ideal subject – perfectly economically rational and free to move in pursuit of profit. This is why the corporation is granted privileges and exemptions from regulations and laws, and is privileged through favourable tax regimes, international mobility and special economic zones.
The open allegiance among Western politicians to the competitive neoliberal state signalled a clear shift in political objectives from the social and economic rights of individuals and families to the promotion of business competitiveness and hence corporate subjects. When competitiveness becomes the most important and central factor, (comparative) corporate strength becomes the most important political goal, leading to states conducting a race to the bottom in order to attract the most productive subjects.
Since the 1980s, the net profits of the world’s largest corporations have tripled, just as corporate tax rates (especially in the US) have fallen.23 Recent US Supreme Court decisions on Citizens United v. Federal Election Committee (2010) and Burwell v. Hobby Lobby (2014) have granted first amendment rights of free speech (in the form of money) as well as religious rights to corporations, thereby making them subjects of free speech and religious freedom.
In many trade agreements – as was also highly debated around the Transatlantic Trade and Investment Partnership (TTIP), the Trans Pacific Partnership (TTP) and the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union (EU) – there is the infamous Investor State Dispute Settlement (ISDS) mechanism, which grants the corporation an inherent right to pursue profit by giving it the right to sue a government if it passes laws placing limitations on this right. The mechanism has rightly been termed a ‘corporate bill of rights’,24 granting corporations rights to pursue profit that supersede entire peoples’ democratic rights. The neoliberal era effectively privileges corporations as the primary political subject to the detriment of not only human subjects, but also other forms of collective subjects, such as unions, cooperatives and other forms of association.25