Democracy v. Plutocracy: Behind Every Great Fortune Lies a Great Crime
In this first part of a two-part program, we travel back and forth in time to explore the battle between democracy and plutocracy that goes back to the very founding of the United States.
The extreme concentration of corporate power and the prevalence of monopoly are indeed inarguable. If the solution is once again to throw the tea in the harbor, what does that look like in the 21st century?
In today’s new Gilded Age of rule by the wealthy, rising anti-trust movements are challenging the stranglehold of corporate monopoly.
- Thom Hartmann, the top progressive talk show host in America for over a decade, a four-time Project Censored Award-winning journalist, and bestselling author. Learn more at his website.
- Stacy Mitchell, Co-Director of the Institute for Local Self-Reliance, which produces research and develops policy to counter corporate control and build thriving, equitable communities.
- Maurice BP-Weeks, Co-Executive Director of ACRE (Action Center on Race and the Economy) where he works on campaigns to create equitable communities by dismantling systems of wealth extraction in Black and Brown communities.
- Executive Producer: Kenny Ausubel
- Written by: Kenny Ausubel
- Senior Producer and Station Relations: Stephanie Welch
- Host and Consulting Producer: Neil Harvey
- Producer: Teo Grossman
- Program Engineer and Music Supervisor: Emily Harris
This is an episode of the Bioneers: Revolution from the Heart of Nature series. Visit the radio and podcast homepage to find out how to hear the program on your local station and how to subscribe to the podcast.
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NEIL HARVEY, HOST: The more things change, the more they stay the same.
In 1889, Frederick Townsend Martin was known as the “millionaire with a mission.” He had famously turned class traitor, betraying his filthy rich family dynasty. These were his words, later published in his book The Passing of the Idle Rich.
Among my own people, I seldom hear purely political discussions. When we’re discussing pro and con, the relative merits of candidates or the relative importance of political policies, the discussion almost invariably comes down to a question of business efficiency. We care absolutely nothing about any other political question, save in as much as it threatens or fortifies existing conditions.
Touch the question of the tariff, touch the question of the income tax, touch the problem of railroad regulation, or touch the most vital of all business matters – the question of general federal regulation of industrial corporations – and the people amongst whom I live my life become immediately rabid partisans.
It matters not one iota what political party is in power or what president holds the reins of office. We are not politicians or public thinkers; we are the rich; we own America; we got it God knows how, but we intend to keep it if we can, by throwing all the tremendous weight of our support, our influence, our money, our political connection, our purchased senators, our hungry congressmen, our public-speaking demagogues into the scale against any legislation, any political platform, any presidential campaign that threatens the integrity of our state.
In truth, the battle between democracy and plutocracy goes back to the very founding of the United States.
THOM HARTMANN: So the American Revolution was triggered by the Boston Tea Party, which was done in response to a tax cut for the largest monopolistic corporation on Earth.
HOST: Thom Hartmann is the number one progressive talk show host in the country and world. He has written and spoken extensively about monopoly, while highlighting solutions to restore democracy in books such as The Hidden History of Monopolies. He spoke online at a Bioneers conference.
TH: Queen Elizabeth I signed the charter for the British East India Company on December 1, 1601 and brought into birth the modern corporation. It was the first of what we would today call modern corporations. And it was modeled on the Dutch trading companies which had existed for about a century before that. And at that time, England was just starting to come up, and the Netherlands were really much more powerful.
And they basically, by the 1770s, had monopolized the trade of most of the world that interacted with Europe, and had very radical laws that had been passed by the British Parliament regulating commerce in the United States. It was, for example, illegal to manufacture fine clothing in the United States. It had to be bought from the British East India company and it had to be manufactured in the United Kingdom.
But one of the other things that they had monopolized was tea, and tea was the drug of choice, along with alcohol, in those colonies at that time, all up and down the eastern seaboard. You couldn’t pass a city block without a tea house. They were the centers of social life and of commerce. And about half the tea sold in the United States was coming from smugglers, and the British East Indian Company was very flipped out about that, and they were hiring people to—in fact, some of the pirates were actually employed by the Brits to stop that trade.
And so parliament passed the Tea Act. The way it worked was when the East India Company imported tea from India into the UK for shipment to us, they would pay tax on it when they brought it into the UK. So they had millions of pounds of tea in their warehouses that they had already paid taxes on. And what the Tea Act did was gave the East India Company this massive rebate on the taxes that they had already paid. So they got this cash—huge cash advance and dropped radically the tax on the tea that they would ship to North America. And this allowed them to compete with the smugglers and try to run them out of business in all these tea shops up and down the east coast, which really pissed off the colonists.
HOST: The British East India Corporation became the only game in town for Colonial tea shops. The Colonists said “enough.”
In 1773, when three British East India company ships carrying tea entered Boston Harbor, the Colonists boarded the vessels and dumped a million dollars’ worth of tea into Griffin Harbor.
TH: And then of course, the Brits in response to that passed the Boston Ports Act that said that no commerce could take place through the Boston port until the City of Boston paid back the East India Company a million dollars for that tea, which of course Boston didn’t do, and that led right to the Boston Massacre, which led right to the shot heard round the world, which led right to the American Revolution.
HOST: From the earliest days of the Republic, there was great concern about corporate power, such as the British East India Company. Corporations were kept on a very tight rein, usually at the state level where they were chartered for limited terms with strict limits. But because the US Constitution exalted property rights above all other rights, and because corporations were the largest holders of property, gradually they began to gain greater and greater power.
The Civil War coincided with the full-throttle economic explosion of the industrial revolution. Central to that revolution were the Railroads, which were like the Internet of their time. Leading their rise were Robber Barons such as Collis Huntington and J. Gould. Their business model was summed up by Huntington: “Anything that’s not nailed down is mine – and anything that I can pry loose is not nailed down.”
TH: The railroad barons basically were trying to grab more and more and more political power, along with the economic power that they already had. They were among the top four oligarchic enterprises in the United States, and monopolistic as well. And they had bribed Stephen J. Field, who was a member of the US Supreme Court, and back in those days, the members of the Supreme Court also did what was called riding the circuit, they were also the chief judge in the circuit court. And Field was the judge in the Ninth Circuit, which was California. And he had been bribed by J. Gould and some buddies. They told him they were going to help make him president if he would help this accomplish.
There were a series of cases – this is just a decade after the 14th Amendment was passed—there were a series of cases that were referred to as the California tax cases. There were seven of them altogether that came out of California and were sent to the US Supreme Court by Field. He sent them from his own court in the Ninth Circuit to himself on the Supreme Court.
And of course, that would require them to be covered by the 14th Amendment, which says persons repeatedly. So in these seven cases – this was one of them; this was the most notable of them that went to the Supreme Court – the railroads lost all seven cases. But this one particular cases – Santa Clara versus Southern Pacific Railroad, where the county sued the railroad and said you’ve got to pay your damn taxes, and the railroad said no way; we’re being denied equal protection under the law – what lawyers will tell you – and it’s fascinating; I get to talk—Actually I’ve given all kinds of talks on this all around the country at various law schools, and I’ll start out by saying, you know, with a room full of law students and law professors, how many of you know that in 1886 in Santa Clara County vs. Southern Pacific Railroad corporations were given personhood rights under the Constitution so that they could claim things like free speech rights under the First Amendment, privacy rights under the Fourth Amendment, you know, etc. And everybody’s hand will go up. And, you know, it was in that decision.
Well, it turns out that decision actually the railroads lost. Morrison Remick Waite, who was the chief justice of the court, just dismissed the argument altogether, and Delphin Delmas was the lawyer who was arguing on behalf of the county. He was the guy who saved the redwoods in California. Both of these cases, by the way, he did pro bono. And Delphin Delmas famously said, you know, what, you would give corporations the right to marry? And, you know, he went through all the absurdities of this. And Waite agreed with him.
HOST: The landmark 1886 case called Santa Clara County versus Southern Pacific Railroad has been used ever since as the precedent for granting personhood for corporations.
But the plot thickens…
TH: But weirdly, there was the guy who was the clerk of the court who stayed in Washington, DC all year long, even though the court was only in session three months and the other justices were all out riding the circuit. The clerk of the court, in the head note to that decision – a head note has no legal standing; it’s basically there for lawyers and law students; it’s a short summary of the case – in the head note to that case, he said that the chief justice had asserted that corporations are persons under the law and therefore entitled to equal protection under the law.
So, you know, the Supreme Court never actually ruled that corporations are persons. There have been rulings that danced close to that; they certainly have artificial person status. That was established in 1815 in a case that involved Dartmouth College. But they’ve never explicitly ruled until the 1890s and then into the 20th century when they started simply asserting that it had been done in 1886. And in fact, the Citizens United decision in 2010 cites Santa Clara County vs. Southern Pacific Railroad. Falsely, you know, wrongly. So, you know, this is another one of those b.s. stories that gets shoveled to us, and even to our lawyers and law students and that I think could be subject to challenge.
HOST: Right up to the Citizens United decision, an entire body of corporate law has been built on a falsehood, on a lie by a scheming law clerk. Nonetheless, it’s considered settled law.
Similarly, during that infamous period called the Gilded Age around the turn of the 20th century, the robber barons devised the template for the modern corporate monopoly.
At the front lines of that political revolution were the railroad barons. The golden apple was to build the transcontinental railroad connecting East and West. Whoever controlled the railroads would control commerce. The Big Four understood that monopoly was the name of the game.
Along with a shopping spree to purchase state politicians and judges, the Big Four targeted the nation’s capital. Huntington arrived with a suitcase filled with cash. He returned with a portfolio of federal contracts. They included the monopolistic right to build the railroad line connecting West to East; 12 million acres of free land grants; the right to set their own freight rates; and cheap federal loans for his own company to build the railroad, which he never paid back.
The Southern Pacific railroad was universally reviled as the “octopus,” memorialized in the famous novel of the same name. Its iron tentacles strangled all of Western commerce.
Farmers shipping their goods to market were quoted one price at spring planting, then a higher price at harvest. It charged the highest freight rates in the nation — except of course for the “rebates” – or kickbacks – that it secretly gave to other Robber Baron customers such as John D. Rockefeller’s Standard Oil, thus methodically wiping out smaller competitors. As Rockefeller snarled, “Competition is a sin.”
In industry after industry, the monopolists seized control.
Karl Marx was correct in identifying monopoly as the ultimate logic of capitalism, but he was dead wrong in predicting that the workers of the world would rise up in solidarity against it. It has been capital that successfully organized and globalized.
Fast forward to Amazon. Stacy Mitchell says the railroads are a very apt analogy to Amazon today.
STACY MITCHELL: Originally questions of corporate power were really handled at the state level because corporations generally didn’t—they were chartered at the state level and they generally didn’t, you know, extend beyond state lines. And that changed in the 19th century with the rise particularly of the railroads. And suddenly you had these corporations that became an infrastructure for the entire national economy.
HOST: Stacy Mitchell has been one of the most effective actors on the national stage challenging Amazon. She’s co-director of the nonprofit Institute for Local Self-Reliance where she directs the group’s initiative to decentralize economic power and level the playing field for independent businesses.
She has produced many influential reports and articles, testified before Congress, and been seminal in antitrust actions against Amazon. She’s also helped to design local and federal policies and collaborated to build effective coalitions and campaigns.
SM: And you had industrialists at the time who gained control of those railroad lines, people like John D. Rockefeller, part of how he built his monopoly in oil was that he commandeered relationships he had with railroad companies and got these setups where he was able to move his oil to market but his competitors were not.
And that’s what really led to our first national anti-monopoly laws. Even before the Sherman Act, we had laws designed to address railroad power and interstate commerce, and then in 1890 the Sherman Act, which for various reasons never really was fully used. We have some additional laws that come along in the 1910s.
And then really it isn’t until like the Great Depression that we get the fuller realization of our anti-monopoly laws.
In essence, our history’s sort of gone up and down with the degree to which we’ve confronted monopoly power through law. And for the last 40 years we’ve been at a real downward kind of low point where we’ve really largely ignored corporate power and treated it as though it weren’t an issue and it were somehow separate from our politics, separate from our democracy.
And in that space, along have come a new set of companies that have an even more dangerous form of monopoly power than the concentration that we see across farming or retail – Walmart, Monsanto, all of these other big companies, which are hugely destructive.
But the rise of Amazon, Google, Facebook is sort of another degree of monopoly power, and that’s because they function very much like the railroads. They control the infrastructure of commerce and communications, and so they’re able to set the rules. They control who can be on those platforms and how they operate, and they can favor their own products; they can essentially govern us. We should recognize them as a form of private government.
And so the analogy of the railroad is very apt. And also I think the solutions that ultimately came about around the railroad is part of the solution that we need with Amazon.
HOST: When we return, how the modern Robber Barons run the table, and how that table was built on racial capitalism.
I’m Neil Harvey. You’re listening to the Bioneers: Revolution from the Heart of Nature.
HOST: The current level of corporate and financial concentration is unprecedented. We’re living on a giant Monopoly board.
- Ten asset-management firms manage about $20 trillion globally, an outlandish, unparalleled concentration of capital.
- Ten corporations control virtually all US military contracting, half the semiconductor and chip markets, and 73% of global auto sales.
- Eight companies own nearly all US broadcast and cable networks.
- Five banks control about half of all US banking assets, more than after the bank bailout in 2008
- Four corporations own 83% of the beef market, and 60% of the hog and broiler chicken industries.
- Three control 99% of the US pharmaceutical market.
- Two dominate global aircraft manufacturing.
- And one, Google, has up to 90% of online searches globally outside China.
If you’re waiting for a partridge in a pear tree, the list goes on – and on. When people say “free markets,” ask if “free” is a verb.
But Big Tech takes the cake. Or more precisely, they want to have their cake and eat yours too. Again, Stacy Mitchell.
SM: And to understand a little bit more about Amazon in particular, Amazon captures about half of all online spending, but the even more relevant statistic is that about two-thirds of Americans when they want to buy something online they start at Amazon. It used to be that they went to a search engine and they put in what they were looking for and they would run across all sorts of different results, including local businesses also including Amazon. Now most people start at Amazon. And what that means is if you make or sell anything and you want to reach people online, you have to sell on Amazon’s platform, and they essentially control your business. They can levy a toll on you. They can stop you from selling. They set the terms. They decide what we see as consumers, what we don’t see.
And Google and Facebook similarly are these kind of powerful gatekeepers. And that concentration of power means that we have an incredible concentration of wealth with lots of people who are struggling to get by, and who have no control over their own livelihoods. We have lots of communities that have lost their sense of agency and direction. And then we increasingly have these giant companies that, you know, use the incredible power that they have over how our economic systems are run to gain a great deal of power politically and power over Congress, and to really set the rules.
I very much believe that what we need to do is we need to disperse economic power, that we need stronger unions, we need more independent local businesses, we need more cooperatively and publicly owned infrastructure and institutions to deliver what we need, we need more democratic oversight.
The concentration of power in the hands of someone like Jeff Bezos, who is now worth $200 billion, which is extraordinary, is just antithetical to all of those values.
So in all of these ways, I think we need to understand Amazon and some of these other companies as a form of autocratic private government, and the solution in effect is to throw their tea in the harbor.
HOST: In the founding of the United States, part and parcel of the battle between democracy and plutocracy was slavery. Colonial slavery had actually first begun with Indigenous Peoples, and then led to the enslavement of Africans. It formed the foundation of the economy.
Slaves were the country’s single largest financial asset. The profits from cotton catapulted the US into one of the world’s top economies. By the Civil War, the Mississippi River Valley had more millionaires per capita than any other region.
MAURICE BP-WEEKS: Yeah, it’s another one of those stories about the founding of the country that we learned in school that, you know, usually doesn’t bring up the fact that we had free coerced labor from enslaved Africans for many, many years, which was able to create lots of profit for the country. There’s a key factor, the really key factor of capitalism is a drive to produce the maximum profit by paying as little as possible for labor and materials.
There are a couple of things we can stand in the way of that. One, you know, as Stacy talked about is a form of economic democracy. So, you know, forcing there to be some competitors in your space, so even if you, you know, you try to pay your workers, you know, $5 an hour to maximize your profit, someone else is willing to pay $6 an hour and your workers leave. So there’s some competition to get you to reduce your profit. Or government regulations that stop you from doing things that increase your profit.
So, you know, we all can—we all know a bout collusion and why it’s illegal to sort of go get a group of firms together and all agree that you’re going to charge the same exact price so that you can stay in the market and, you know, take as much from a [INAUDIBLE] group of people as possible. There’s a government regulation against doing that. There were government regulations on the books against forming monopolies. And that’s sort of the other factor that’s sort of pushing things down.
HOST: Maurice B.P. Weeks is co-director of the Action Center for Race and Economy, called ACRE. He works with community organizations and labor unions on campaigns to create equitable communities by ending systems of wealth extraction that exploit black and brown communities. He’s working to dismantle a monopolist system that he calls racial capitalism.
Maurice B.P. Weeks spoke online at a Bioneers conference.
MBP-W: Racial capitalism really is a term that speaks to the real founding – both the evolution and the founding – of capitalism, and just to lift up the fact that the fundamental form that the exploitation takes place is on top of racist ideals and racist profit practices. So in that terms, think of course slavery and the production of crops in the South by Africans, and really global slavery, share cropping, low wage immigrant work, all these things that really at certain—at different points in our economy have really powered our entire economy are built on top of these racist systems of social division.
You can trace some of the same practices that monopoly owners and operators like Bezos do to those same racialized practices that people did in the era of slavery. And that’s what allows us really to correctly charge that their very business model is racist and takes advantage of race in the same way that other economic forms have in the past.
A colleague and friend of mine, Derrick Hamilton, likes to say that the US economy is structured on rules that either privilege or exploit based on race. If we agree that concentration of corporate power is something that is happening in our economy, which I think is of course inarguable, and monopolies are sort of the pinnacle of that corporate concentration, then we must look to them as the ones who are sort of the high-water mark for racially motivated racist undertones, privileging and profiteering. So that’s how we sort of weave together this notion of racial capitalism, some of the drawbacks of capitalism itself, and racial inequality and monopoly.
HOST: The extreme concentration of corporate power and the prevalence of monopoly are indeed inarguable. If the solution is once again to throw the tea in the harbor, what does that look like in the 21st century?
In part two of this program, we look at contemporary solutions and the growing antitrust movement rising both in the U.S. and worldwide.
This has been Democracy Versus Plutocracy Part 1: “Behind Every Great Fortune Lies a Great Crime”, with Thom Hartmann, Stacy Mitchell and Maurice B.P. Weeks.