Other Publications:

A Guide to the Legal Mechanisms of Corporate Power

by George Draffan


draft February 8, 2001

A Guide to the Legal Mechanisms of Corporate Power

Washington State Corporations: Outline of History, Resistance, Law

Washington Corporation Law: Structure of Washington Corporations & Avenues Toward Involuntary Dissolution 


Common law precedents
Corporate personhood *
Constitutional protections *
bill of rights *
commerce clause *
due process *
Commerce clause *
Limited liability *
Management perogative *
Fiduciary responsibility *
Eminent domain *
Private property *
Private Securities Litigation Reform Act of 1995 *
Safe Harbor Statements *


Corporate power is supported by a matrix of economic, cultural, political, and legal mechanisms and institutions. Much of the legal power of corporations comes from two sources. The first source is a series of U.S. judicial decisions over the past 200 years which are based on a few legal doctrines such as corporate personhood, limited liability, and the commerce clause; these doctrines and the judicial decisions that arose from them are the subject of this guide.

The second source of legal power is international in scope, and largely based on agreements arising out of GATT and other trade treaties. The result is growing concentration of power in a few institutions including the World Trade Organization and the United Nations. These international institutions are the subject of The Corporate Consensus: A Guide to The Institutions of Global Power (available at http://www.endgame.org/corpcon.html ).

U.S. corporate codes have traditionally been state-based, although they've been increasingly homogenized to undercut local jurisdiction. A outline for the study of Washington State corporate law and corporate political history has been drafted ( http://www.endgame.org/charter-wa1.html ), as well as a legal analysis of Washington Corporation Law ( http://www.endgame.org/charter-wa2.html ).


Common law precedents

Sources of Information

Chandler, The Visible Hand

Davis, The Corporation

Grossman, forthcoming anthology


Corporate personhood

Corporate personhood is a judicial doctrine used to confer civil rights to corporations as if they were natural persons protected under the U.S. constition.

Sources of Information

Samuels, Corporations and Society


Constitutional protections


bill of rights


commerce clause


due process

Sources of Information

Draffan, Chronology of Incorporation and Monopoly http://www.endgame.org/primer-history.html


Commerce clause

The commerce clause of the U.S. constitution has been interpreted by the courts to mean that local and state governments have no authority to regulate commerce. The commerce clasue has become an excuse for centralization of power. The U.S. national version was a precursor to the internatinal WTO.


Limited liability

Limited liability shields directors, managers, and shareholders from responsibility for the impacts of the corporation's operations.


Management perogative

Management perogative is used to control workers in the workplace, shoppers in the malls, etc.

Sources of Information

Chandler, The Visible Hand


Fiduciary responsibility

Fiduciary responsibility is used to claim that any action taken by corporate management which does not maximize shareholder profit could be the subject of shareholder lawsuits.

The absurdity of the claim that shareholders alsways come first is shown by the exhorbitant salaries and bonuses which executives grant to themselves; for example, in 199?, two-thirds of the total profits of Disney went to CEO Michael Eisner.

Sources of Information

Estes, Tyranny of the Bottom Line

Monks, Power and Accountaibility

Monks, The Emperor's Nightingale


Eminent domain

Supposedly a government's right to appropriate private property for a public purpose, eminent domain has often (usually) been used to deprive small property owners in order to benefit large property owners. Historical examples include the transcontinental railroads. Current examples include the Minnich furniture factory being taken for a shopping mall in East Harlem (see Dana Berliner, of the Institute for xxx, a conservative opponent of this taking).


Private property

The word "private" has the same root as "deprive."

Property has never been an absolute possession, but rather an evolving bundle of rights and duties.

Concentration of land ownership has been a fundamental characteristic (and basis) for the "industrial revolution." Enclosure, increasing concentration of land ownership (in U.S. as elsewhere), the dwindling of the public domain.

Sources of Information

Ely, The Guardian of Every Other Right: A Constitutional History of Property Rights.


Private Securities Litigation Reform Act of 1995

Sec. 101. Private securities litigation reform.

Sec. 102. Safe harbor for forward-looking statements.

Sec. 103. Elimination of certain abusive practices.

Sec. 104. Authority of Commission to prosecute aiding and abetting.

Sec. 105. Loss causation.

Sec. 106. Study and report on protections for senior citizens and qualified retirement plans.

Sec. 107. Amendment to Racketeer Influenced and Corrupt Organizations Act.


Safe Harbor Statements

Safe harbor statements are public promises which corporations do not have to keep. For example, building materials dealer Wickes Inc. promised in a February 2001 news release that it was doing everything it could to phase out the sale of ancient forest wood products -- and ended its news release with this statement:

"This release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are information of a non-historical nature and are subject to risks and uncertainties that are beyond the company's ability to control. The company cautions shareholders and prospective investors that the following factors may cause actual results to differ materially from those indicated by the forward-looking statements: costs of materials sold; changes in selling prices; competition within the building materials supply industry; the effects of economic conditions; as well as other factors set forth in the company's Form 10-K and other documents, which are on file with the Securities and Exchange Commission."