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PROPERTY RIGHTS V. ENDANGERED SPECIES

THE AMERICAN DREAM AND THE COMMON GOOD

A graduate project submitted in partial fulfillment of the requirements for the degree ofMaster of Public Administration

By

Charles Timothy Shates

California State University, NorthridgeJune, 2005


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For Sue, my wife, Julia and Tessa, my daughters, and for future generations

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TABLE OF CONTENTS

Dedication ii

List of Illustrations ivAbstract vIntroduction 1Chapter OneWild Life: The Endangered Species Act 5Chapter TwoGround to Stand On: Property Rights 14

Chapter ThreePowers That Be: The Corporation 27Chapter FourTrees and Water: The Pacific Lumber Case 46Chapter FiveRivers and Highways: The Newhall Ranch Case 53Conclusion 75References 87

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LIST OF ILLUSTRATIONS

Table 1. Projected Forest Seral Type by [Selected] Decades. 48Figure 1. Newhall Ranch sign on Highway 126. 55Figure 2. The eventual fate of the orange trees. 56Figure 3. A cross-section of the Santa Clara River Valley. 57Figure 4. Industrial park development in the town of Castaic. 58Table 2. Newhall Ranch project permits and approvals required. 59Figure 5. On one side of the river, housing in Santa Clarita. 60Figure 6. On the other side of the river from the housing. 61Figure 7. Traffic makes its way over a bridge. 63Figure 8. Shopping center along one side of the river. 64Figure 9. Southern Californias last wild river. 71Figure 10. The Santa Clara River. 72Figure 11. In the same general vicinity, the Santa Clara River. 72Figure 12. The relatively lightly traveled Highway 126. 73Figure 13. Zoning began with the best of intentions. 75

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ABSTRACT

PROPERTY RIGHTS V. ENDANGERED SPECIES

THE AMERICAN DREAM AND THE COMMON GOOD

By

Charles Timothy Shates

Master of Public Administration

This study examines how notions about dominion, self-interest, private property,

and economic growth and how the development of environmental protections, property

rights, and corporations have influenced the shaping of the country. Two illustrative

cases are examined: Pacific Lumber, a large timber-owning concern in Northern

California redwood country, and Newhall Ranch, a large planned community in suburban

Northern Los Angeles County. The study concludes that a sudden, radical paradigm shift

is unlikely, but that accelerated incremental change may result from a convergence of the

ideas of stewardship, traditional liberal democratic problem-solving processes or direct

regulation, and green consumerismrepresenting fundamental shifts in the definitions of

self-interest and the common good, or public interest.

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INTRODUCTION

The Skeptical Environmentalist, Bjorn Lomborgs popular book, began with the

assertion things are getting better and then the book questioned

the Litany of our ever deteriorating environment...the view of theenvironment that is shaped by the images and messages that confront useach day on television, in the newspapers, in political statements and inconversations at work and at the kitchen table (2001, p. 1).

Lomborgs point, ultimately, was not that problems dont exist. Rather, his point

was that, while things were not necessarily good, they were better than they used to be.

To prove his position, he cited such factors as improved sanitation, improved nutrition,

and longer life spans. Indeed, modern science has brought a flood of achievements in its

wake. It is just this success that has added credence to the mythology of progress which

is one of the hallmarks of modernism.

It should be noted that findings of fact made by the modern-day United States

Congress are supposed to be based upon the best scientific evidence available at the time.

In public administration, Any final rule [issued by an administrative agency] must be

based on substantial evidence on the record before the agency at the time of the decision

(Cooper, 2000, p. 152) [emphasis added]. In the Rules of the House of Representatives,

clauses 2(l)(3)(A) of rule XI, and 2(b)(1) of rule X, require that oversight findings and

recommendations be reflected in all Committee reports (U.S. House, 1998). The

Congress ultimately may make compromises or even disregard findings in the interest of

political expediency; unlike administrative agencies, the Congress is directly accountable

to the electorate.

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Notwithstanding environmental skeptics, such as Lomborg, who decline to

acknowledge the darker side of material progress, Section 2(a) of the Endangered Species

Act of 1973 begins with a brief enumeration of the following findings of Congress:

(1) various species of fish, wildlife, and plants in the United States havebeen rendered extinct as a consequence of economic growth anddevelopment untempered by adequate concern and conservation;(2) other species of fish, wildlife, and plants have been so depleted innumbers that they are in danger of or threatened with extinction;(3) these species of fish, wildlife, and plants are of esthetic, ecological,educational, historical, recreational, and scientific value to the Nation andits people

The quality of life issues that the human race confronts at the beginning of the 21 st

century are caused, in part, by unbridled freedom in the use and development of private

property, and in part by market failures. Such problems as traffic congestion, poor air

quality, and loss of habitat are often the direct result of mans economic activities. Many

problems are caused by the way we build; many by the way we extract and use natural

resources.

Efforts to alleviate environmental problems through policy have met with only

mixed success. This is for two reasons. First, symbolic actions give a sense of having

addressed the problem, when they are really only what Smith (1998) called a suture, an

attempt to hide the wound that contemporary environmentalists are making to the smooth

fabric of productivist discourse (p. 7). According to Cahn (1995, p. 24), policymakers

create and sell policy outputs to political consumers, addressing the problem symbolically

but failing to address the substantive issues. Second, some of the most successful pieces

of legislation have also been the most contentious. This is to be expected, given that, as

Cahn wrote, Environmental policy is predicated on regulating the use and development

of private property, (Ibid., p. 8) while at the same time private property underpins the

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liberal democratic tradition. To the extent that legislation such as the Endangered

Species Act has been successful in giving environmentalists a tool with which to fight

development interests, there has been also a significant amount of grassroots mobilization

in opposition to environmental regulation and generally in favor of liberal property rights.

This recent mobilization against environmental regulations has been very

successful because it taps into an emotional response to a very powerful American Dream

archetype. Individuals may have different versions of the dream, which has evolved over

the course of American history. (The dream of a house in the suburbs, for example, is

a far cry from the dream of freedom to worship as one pleases.) In a recent

development on this theme, Rifkens book, The European Dream (2004), was based on

his observation that the American Dream was in decline and would eventually be

eclipsed by the new European Dream, which stresses personal development and

cooperation within community over competitive accumulation of wealth.

This paper explores the conflict between public policy and individual freedom in

the context of land use and development. Property rights rank among the most important

individual freedoms, but what happens when the exercise of those rights by property

owners interested in developing their land, for example, infringes on a neighbors quiet

enjoyment? Before the administrative state came into being, there existed a long history

of common law, the remnant of which is today known as nuisance law, which governed

such infringements.

There exists a strong tension between two fundamentally opposing environmental

philosophies that have shaped the development of the United States. These philosophies

can be summed up as falling under one of two categories of belief about humanitys place

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in and relationship to nature. The first category can be called dominion, that which has

guided the expansive aspect of American history. It informs extraction and development

of natural resources, what Smith (1998, p. 5) called the discourse of productivism. The

second category can be called stewardship, and it informs the conservation of natural

resources. Freyfogle (2003, pp. 37-38) distinguished these two differing types of energy,

as represented by the terms boomers and stickers. The latter were noted for their

desire for quiet enjoyment.

The birth of the modern corporate form of business, not surprisingly on the

dominion side of the equation, has enabled more rapid growth and development of

resources because of its ability to generate greater amounts of capital. Growth and

development is goodto a point. Cells must grow and divide if an organism is to live,

but when cells grow too much, or divide too fast, the result may be harmful to the

organism as a whole. There is a name for this condition andwhen malignantit is

called cancer.

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CHAPTER ONEWILD LIFE: THE ENDANGERED SPECIES ACT

Public policy can be defined as a public response to a perceived public problem.

In the late 1960s and early 1970s, Congress passed, and the Republican president,

Richard Nixon, signed into law, a number of Acts, among them the National

Environmental Policy Act, the Clean Air Act, and the Clean Water Act, designed to

protect the environment and reverse perceived environmental degradation. The

Endangered Species Act of 1973 (ESA) is a public attempt to address the narrow problem

of species extinctionthe loss of biodiversity. Is this a legitimate problem? Species

become extinct as a normal result of the evolutionary process, but scientific evidence has

indicated that mans activities have accelerated the rates of extinction far beyond the

background levels that existed previously, suggesting that the environmental impact of

these activities is significant. Detractors literally tend to miss the forest for the trees,

asking would we rather save an owl or our economic livelihoods. But the bigger picture

is far more insidiousfor if all these other species are dying maybe mans environment

is becoming unsuitable for man as well. It is particularly distressing to some scientists

that the worlds amphibians are rapidly disappearing. These creatures are considered

indicator species, like the miners canary that indicates when it is no longer safe in the

mine. The reason that animals such as frogs are so susceptible to environmental

degradation is in the nature of their biology. Frogs have numerous capillaries near the

surface of their skin and obtain a large portion of their oxygen directly from the air and

water to which they are exposed. The fact that they have been disappearing has scientists

alarmed. The U.S. Geological Survey has instituted a frog watch, asking volunteer

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citizens to report on their observations around the country (Where have all the frogs

gone?, 2002).

From a Darwinian perspective, perhaps man is, by virtue of his large brain,

destined to outlive many weaker species in his built environment. Assuming this is the

case, man must still make the utilitarian determination as to which species are essential to

cultivate for providing his basic needs: air, water, food, medicine, clothing, and shelter.

Until man has attained complete understanding of the biochemistry that underlies all life,

any loss in biodiversity should be looked upon as an opportunity cost. For example,

recently researchers in San Diego have discovered a new species of oceanic bacteria that

naturally produces a previously unknown compound that shows promise of being

effective in treating cancer (Wilson, 2003). The popular movieMedicine Man

(McTiernan, 1992), dramatizes this theme, suggesting perhaps it is better not to burn the

forest in the name of progress before such beneficial creatures can be discovered.

The ESA has been one of environmentalists most powerful weapons against

careless enterprise, but has been under attack recently by those who feel government

regulations infringe upon their property rights. In recent court cases, private property

owners have brought suits questioning the governments ability to interfere with

development on private property. InRancho Viejo, LLC v. Gale A. Norton, Secretary of

the Interior, et al. (2003), the plaintiff sought to develop a housing project in northern

San Diego County and a survey, conducted to comply with the ESA, found that the

development would likely disturb the habitat of a group of endangered arroyo toads in the

area. Rather than accepting an alternative plan proposed by the Fish and Wildlife

Service, the plaintiff filed suit claiming the the application of the ESA is

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unconstitutional because the federal government does not have the authority under the

Commerce Clause to regulate private lands in order to protect the arroyo toads on those

lands, because the toads live entirely within California. The United States District Court

for the District of Columbia entered summary judgement on behalf of the defendants and

plaintiff appealed. Although plaintiff lost on appeal, the dissenting opinion suggests that

perhaps a gradual shift has been taking place, and that the pendulum is now beginning to

swing the other wayin favor of the industrial paradigm.

The following case, dealing with state property, demonstrates the weight of the

Endangered Species Act as a federal issue. In Palila v. Hawaii Dept of Land and

Natural Resources (1979), the district court carried[the] suggestion of a federal

ownership interest in wildlife a step further. In Palila, the court upheld the Endangered

Species Act, as applied to nonmigratory species found on state lands, on the basis of the

treaty power and commerce clause. It nonetheless suggested that the importance of

preserving such a national resource [as endangered species] may be of such magnitude as

to rise to the level of a federal property interest (Bean & Rowland, 1997, p. 22).

California has usually mirrored the federal environmental laws, sometimes

anticipating them. In the 10th

Edition ofThe Guide to the California Environmental

Quality Act(Remy, Thomas, Moose, & Manley, 1999), the authors review several

important court cases relevant to the issue of the California Endangered Species Act

(CESA). The authors discuss how CESA relates to the California Environmental Quality

Act (CEQA), and also how the latter relates to the National Environmental Policy Act

(NEPA ).

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CEQA was passed in 1970 (Public Resources Code Sec. 21000, et seq.) to require

public agency decision makerssuch as, for example, a county board of supervisors

about to approve a development projectto consider the environmental consequences of

their actions. Although CEQA is compared to the National Environmental Policy Act

(NEPA) that was passed a year earlier, and upon which CEQA is modeled, the authors

point out that Unlike NEPA, CEQA has not been characterized as merely a procedural

statute. Rather, CEQA contains a substantive mandate that public agencies refrain from

approving projects with significant environmental effects if there are feasible

alternatives or mitigation measures that can substantially lessen or avoid those effects

(Remy, et al., pp. 2-3). Also, because the environmental review process involves the

public, it has become a means of enabling democratic participation. Thus, the California

Supreme Court has stated that the CEQA process protects not only the environment but

also informed self-government (Ibid., p. 3).

The procedural devices, as the authors call them, of the CEQA environmental

review can be viewed as various steps in the process. The most familiar of these

procedures is the preparation of an Environmental Impact Report, or EIR. The following

steps are not sequential; the negative declaration bypasses the EIR process, for example.

Simply enumerated, they are as follows: (1) the initial study, (2) the negative declaration,

(3) notice of preparation of an EIR, (4) draft EIR, (5) public review of (a) negative

declaration or (b) draft EIR, (6) written responses to comments on draft EIRs, (7)

certification of a final EIR, (8) mitigation reporting or monitoring program, and (9)

statement of overriding considerations.

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The principles governing the interpretation of CEQA are illustrated by important

California Supreme Court cases. CEQA was interpreted the first time in 1972 in the

landmark case Friends of Mammoth v. Board of Supervisors. In its decision the Court set

forth the principle that CEQA should be broadly construed within the reasonable scope

of its language to protect the environment. In later cases, the court hinted that other

considerations may take their place alongside the fullest possible protection for the

environment While the court neither distinguishedFriends of Mammoth nor explicitly

rejected it, the courts willingness to consider economic factors arguably departed from

the interpretive principle announced in the 1972 decision (Remy, et al., p. 7).

The CEQA Guidelines are found in the California Code of Regulations under

Title 14, Sec. 15000 et seq. The Guidelines were first issued by the California Resources

Agency in 1973, under the authority granted by Public Resources Code Sec. 21083.

Section 15000 characterizes the Guidelines as regulations. Section 15005, however,

says that the Guidelines contain mandatory, advisory, and permissive elements.

Although characterized as regulations, the court has declined to make a definitive

determination on the Guidelines, but has emphasized, however, that, [a]t a minimum,

courts should afford them great weightexcept when a provision is clearly unauthorized

or erroneous (Ibid., p. 9).

The general legislative policies that motivated enactment are identified in Public

Resources Code Sections 21000-21003. They will not be enumerated, but following are

two examples: 7. to require all agencies that regulate activities to give major

consideration to preventing environmental damage while providing a decent home and

satisfying living environment for every Californian; 14. to require governmental

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agencies at all levels to consider qualitative factors as well as economic and technical

factors and long-term benefits and costs, in addition to short-term benefits and costs and

to consider alternatives to proposed actions affecting the environment (Ibid., pp. 12-13).

Compared to NEPA, The Legislative history of [CEQA] also supports the view

that environmental values are to be assigned greater weight than the needs of economic

growth.The act thus requires decision-makers to assign greater priorities to

environmental than to economic needs.The federal statute requires only that agencies

consider the potential significant adverse environmental impacts of their major

actions, as described in environmental impact statements (EISs) (Ibid., p. 31). Unlike

CEQA, however, NEPA does not create for federal agencies a mandatory duty to act,

even if alternatives or mitigation measures arefeasible. One NEPA procedural

requirement that is more stringent than its parallel requirement under CEQA is that a

final EIS must be circulated for public review for at least 30 days prior to project

approval. In addition, the alternatives analysis found in an EIS is typically much more

detailed than what would be typically found in an EIR.Under CEQA, in contrast,

alternatives need only be discussed in meaningful detail (Ibid., p. 33). Because

CEQA was modeled after NEPA, the California courts have often looked to federal cases

interpreting the latter statute as strongly persuasive authority as to the meaning of the

former.Because the California statute is more protective of the environment, however,

it seems fair to say that NEPA cases generally set the environmental floor, but not

necessarily the ceiling, for interpreting CEQA (Ibid., pp. 34-35).

The issue of endangered species is invoked within the discussion of CEQA

Guidelines Section 15065, which lists conclusions that would cause making mandatory

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findings of significance. Among these conclusions is the potential toreduce the

number or restrict the range of an endangered, rare or threatened species (Ibid., p.

176). Whenever any of the named conclusions may occur, an EIRmustbe prepared,

rather than a negative declaration. Furthermore, if an EIR shows that they will occur, an

agency cannot approve a project without first issuing certain findings as required by

Public Resources Code section 21081 and CEQA Guidelines section 15091. If after

making such findings, the project in question will still cause significant impacts that are

not at least avoided or substantially lessened, the agency then must issue a statement of

overriding considerations before approving the project.Section 15065, in other words,

is necessary not only to ensure that EIRs are prepared under proper circumstances, but

also to ensure that agencies do not avoid the requirements to make necessary findings, to

modify projects where feasible to lessen or avoid significant impacts, and to adopt

statements of overriding considerations (Ibid., pp. 176-177).

The case ofMira Monte Homeowners Association v. County of Ventura (1985)

first gave effect to section 15065. The issue before the appellate court was whether the

Ventura County Board of Supervisors abused its discretion under CEQA by certifying an

EIR and granting approval of a tentative tract map without first preparing a subsequent or

supplemental EIR when new conditions were discovered regarding encroachment of a

project on a sensitive wetland area and vernal pool. The court states that Guidelines

section 15162 directs that an additional EIR be prepared where[substantial] changes

occur with respect to the circumstances, such as due to the involvement of new

significant environmental impacts not covered in a previous EIRThe CEQA Guidelines

require a mandatory finding of significance where, inter alia, the project has the

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potential to threaten to eliminate a plant or animal community, [or] reduce the number

or restrict the range of a rare or endangered plantThe Guidelines further provide that a

project will normally have a significant effect on the environment if it will substantially

affect a rare or endangered species of plant or its habitat or substantially diminish habitat

for fish, wildlife or plants. The court found that the discovery that E Street would

pave over part of the wetlands was a change in circumstancesand the implementing

guidelines dictate that the proper procedure upon discovery of the encroachment should

have been further environmental evaluation by way of a subsequent or supplemental

report prior to any project approval. By failing to act in this manner, the County did not

consider the full range and effectiveness of alternatives and mitigation measures. As

Remy described it, the court rejected the respondent agencys argument that substantial

evidence supported its experts view that the impact in question was

insignificantInstead, the court reasoned that the impact was significant [b]y

definition, treating the issue as involving a pure legal question as to which no deference

to agency experts was proper (Remy, et al., p. 177).

Remy also deals with the issue of endangered species in the discussion of the

substantive requirements of EIRs, specifically Impacts on endangered and threatened

species (Ibid., p. 406). Focused on the California Endangered Species Act (CESA),

which is found at Fish and Game Code section 2050 et seq., Section 2080 provides that

[n]o person shalltake or attempt to take any species, or any part or product thereof,

that the Fish and Game Commission has determined to be endangered or threatened

(Ibid.).

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From an intergovernmental perspective, Section 6 of the federal Endangered

Species Act (ESA) provides for cooperation with the States, which may include

consultation with the States, management agreements, cooperative agreements, allocation

of funds, and provides that the Secretary review State programs. The ESA explicitly

states (Sec. 6(f)) that Any State law or regulation respecting the taking of an endangered

species or threatened species may be more restrictive than the exemptions or permits

provided for in this Act or in any regulation which implements this Act but not less

restrictive than the prohibitions so defined. The federal law therefore sets a floor on

States environmental quality, but not a ceiling. The Act also requires consultation with

the Secretary on any federal project that may have an impact on an endangered or

threatened species.

This section has demonstrated that environmental laws and regulations at both the

state and federal levels can play a significant role in determining what an owner can or

cannot do to develop his or her property. In one conception of mans proper place and

role in nature, developmentor economic growthis absolutely vital to his continued

existence.

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CHAPTER TWOGROUND TO STAND ON: PROPERTY RIGHTS

Our place the ground we stand on is both physical and spiritual, concrete andimagined, real and symbolic. The place we define for ourselves, and the place that isdefined for us, is a constant point of reference for seeing the world, and for transforming

the world and our "place" in it (Inter Pares, 2003).

The idea of property has its roots in western civilization. When settlers arrived in

the New World they found a Native American culture that did not believe in private

ownership of land (Zinn, 2003). When the Owens Valley in California was settled,

whites pushed Native Americans out and fenced the land where water rights along the

Owens River would eventually become an important issue to the growing city of Los

Angeles (Halperin, 1993). The Native Americans who inhabited the country had

coexisted with nature for thousands of years, but the settlement of the West demanded

that water be captured for use. Bean & Rowland (1997) characterized the property status

of wildlife in the following passage:

In the history of Western thought, there is an almost unbrokentradition, starting at least as early as the Roman Empire, in which wild

animals (or animalsferae naturae, as they were called) were regarded asoccupying a nearly unique status. The law considered wild animals intheir natural state to be like the air and the oceans, in that they were theproperty of no one. Yet unlike the air and the oceans, wild animals couldbecome the property of anyone who captured or killed them (pp. 7-8).

In early New England, wildlife was owned by the people collectively, and state

law implicitly and sometimes explicitly allowed the public to hunt on unenclosed land

and to fish and forage (Freyfogle, p. 23). As the timber industry grew, and timber

operations began to cause environmental degradation (that is, fishermen and resort

owners were beginning to suffer economic losses) the state of Maine, considering

regulating the timber industry, asked the Maine Supreme Court for an advisory opinion.

The Court held that the legislature did have the authority to curtail private rights

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whenever, in its judgment, the publics interest was served (Ibid., p. 25). This case

demonstrated a central element of ownershipthe obligation of landowners to refrain

from activities that cause harm to public interests (Ibid., p. 27).

Philosophers have written extensively on the meaning of property, asking what it

is and where it comes from. According to Rifkin (2004) it was the French philosopher

Jean Bodin who believed common ownership is unnatural and a violation of divine

law. Why would God include the commandment Thou shall not steal if he didnt mean

to embrace the concept of private property?... (p. 139).

As Freyfogle (2003, pp. 16-17) pointed out, Landownership includes more than

just the right to put land to use; it also includes the indispensable right to complain when

other landowners materially interfere with ones quiet enjoyment. Inevitably, these rights

are relative: one owners right to use land is tempered by his neighbors right to remain

undisturbed. Nuisance law incorporates this ownership element by providing vital

protection for land uses, ordinary as well as sensitive, yet it does so by restricting the

ability of all landowners to conduct activities that cause harm. Nuisance law enhances

andprotects property rights at the same time as it limits them [emphasis added].

Freyfogle wrote about the two rival versions of what private dominion is all

about (Ibid., p. 37). The first is an ownership image that has held high a landowners

right to live peaceably at home without significant disruptionto be protected in ones

quiet enjoyment of the land (Ibid.). The second version is what Freyfogle says might be

termed the industrial or developmental perspective, emphasizing opportunity, a release

of physical energy, and an owners liberty to act with little restraint. Dominion in this

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view is about exploiting the land for personal gain (Ibid., p. 38) and was clearly

associated with the idea of manifest destiny.

Early research, according to Freyfogle, had developed a limited view of private

property, providing comfortable reassurance in the dominant myth of material progress:

Everyone shared at first, theory had it, and only later, aspopulations rose and economies gained sophistication, did true privateproperty emerge. It was a comforting conclusion, for it placed at the apexof propertys evolution a world view based on the individualism andprogressive thought of nineteenth-century Europe (p. 44).

Continued research in the 20th

century created a much more nuanced

understanding of the institution and how it evolved, as Freyfogle wrote,

Private rights in tribal groups were crafted and allocated to groupmembers in ways that reflected the members needs, economies, andvalues. Rights to land typically took the form of specific use rightsrights to use a given tract for one or more specified purposesTypically,more than one person or family had enforceable rights to use a given pieceof land for differing purposes. Moreover, many use rightsto hunt,gather berries and nuts, and the likewere retained by the group as awhole, with all members (but not outsiders) able to exercise them (Ibid.).

Freyfogle emphasized that during the period when the United States Constitution

was written and adopted, concepts about property were strongly shaped not only by

Lockean liberalism, but by English common law as well (Ibid., p. 45). The English

common law in turn was shaped by the prevailing hierarchical culture of the manor

system. The spatial makeup of a typical English village of the thirteenth century was

described as follows:

populated by 400 to 600 inhabitants, the landscape was dividedinto three categories of space:public spaces, where anyone could go,including outsiders; communal places, where inhabitants of the village butnot outsiders held distinct use rights; andprivate places, normally homesand private gardens, where owners expected an element of privacy (Ibid.,p. 48).

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Although the manor system was eventually replaced by mercantilism,

Landownership[remained] a status, and to enter into the status was to enjoy the rights

and be subject to the responsibilities that pertained to it. With few exceptions, the

community had a voice in the ways people used their lands (Ibid., pp. 49-50) [emphasis

added]. In the colonies, there was a vigorous tradition of regulating land uses in the

public interest. Owners of attractive sites for water mills could have their lands seized

if they failed to use them in the public interest (Ibid., p. 60) [emphasis added]. Timber

regulation was commonplace, and as early as 1630, the Pilgrimshad begun restricting

the right of timber owners to export their products without the approval of governor and

council and In New Hampshire and elsewhere, large trees suitable for ship masts

were claimed as public property, even when located on private land (Ibid., pp. 60-61).

Perhaps alluding to late 20th Century wise-use and property-rights movements, Freyfogle

wrote,

As many of these colonial and early federal-era laws illustrate,land-use regulations went well beyond the avoidance of harm to imposeaffirmative duties on private owners to help achieve social aims. Latergenerations would resist the imposition of such duties, portraying them asunprecedented, but the generation that led Americas formation seems tohave had little trouble with them. Indeed, historian John Hart concludesthat the legal record they left behind reveals no sign of the later-imaginedright of landowners to be let alone as long as they do not harm others.That idea would gain currency only toward the end of the nineteenthcentury, after lawmakers had fundamentally reworked laws to supportAmericas insatiable desires to develop the continent, expand markets,widen choices, and multiply the nations wealth (Ibid., p. 62).

It was the Sanderson case, according to Freyfogle, that was pivotal in deciding

which version of dominion would hold sway. In that case the Pennsylvania Supreme

Court ruled against an ordinary homeowner in favor of The Pennsylvania Coal Company.

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With Sanderson, the pendulum had completed its swing, at least inthe coalfields of Pennsylvania. From an agrarian property system thatprotected quiet enjoyment and enforcedsic utere tuo firmly, ownershiplaw had swung completely to the industrial property side, freely permittingintensive land uses with only modest concern about resulting

harmsProperty law was no longer about the right to remain undisturbedin ones lawful use; it was now chiefly about the right to use land formaximum gain. The mentality of the migrants and boomers hadtriumphed (Ibid., p. 73).

Fast forward to the 21st Century In a recent article about coal mining, Williams

(2005) described the latest technique used by the mining industrylongwall mining.

This is a form of underground mining where a seam of coal is removed except for a long

transverse wall of the seam. Once the seam has been completely mined, the wall is

removedallowing for the recovery of the last bit of coal in the seamwhich causes

surface subsistence. One of the problems created by this method has been the

disappearance of streams and ponds: the permanent alteration of existing watersheds.

Another problem is the loss in property when subsistence occurs under private

residences. Describing what happened to the former occupants, Williams wrote, Most

of the former residents were living in new double-wides and other modest dwellings

provided by the companies. For most it had been a step up (2005, p. 46). It had been a

step up because the richest coal depositthe worlds richest mineral depositthe

Pittsburg Coal Seam, runs like layer-cake filling for 2,000 miles, 300 to 800 feet under

Pennsylvania, West Virginia, Virginia, Ohio, Indiana, Illinois, and Kentucky (Ibid., p.

44). He wrote, Longwalling happens anywhere there is coal, but the grossest

environmental damage is in the impoverished regions (Ibid.).

The liberty celebrated by Americansto be able to pursue the American

Dreamwas strongly influenced by the institution of private property. In the formative

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years of the country, property was considered indispensable to freedom from tyranny and

to providing access to the democratic process. As Americans pushed westward, however,

freedom became much more individualized. As Freyfogle (2003) noted, for the

drafters of the Declaration of Independence, it was collective liberty that was the primary

issue of the day: It was the power of the colonists as a people to govern themselves

without interference, not the rights of individuals as such to resist constraint (p. 59).

Individual freedom, and the pursuit of happiness, by the middle to the end of the 19th

Century, began to take on what Rifkin (2004) referred to as the Horatio Alger

storiesthat its possible for every American to go from rags to richesis what the

American Dream is all about (p. 26).

Throughout the latter half of the nineteenth century, the courts were busy undoing

the common law protections for quiet enjoyment. Quoting an 1873 New York Supreme

Court decision, Freyfogle wrote,

The general rules that I may have the exclusive and undisturbeduse and possession of my real estate, and that I must so use my real estateas not to injure my neighbor, are much modified by the exigencies of thesocial state. We must have factories, machinery, dams, canals andrailroads. They are demanded by the manifold wants of mankind, and layat the basis of all our civilization (2003, p. 74).

It is interesting to note that early industrialists were in favor of government

interference and regulation for the common good when it benefited their plans for

growth and development, often depriving less powerful constituencies of their quiet

enjoyment in the process. The irony is that nowadays those who prefer more intensive

uses of the land commonly complain about environmental protections as being

tantamount to interference by the federal government in state and local matters. In yet

another twist, as Freyfogle pointed out, Probusiness critics of government began to

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argue that it was the common law alone that defined a landowners rightsthe common

law that was now so slanted in favor of industry. Statutes and regulations were part of a

different body of law entirely, a body of public law that was seen to threaten private

rights (Ibid., p. 82) [emphasis added].

The idea of property is much broader than land, though much of the controversy

surrounds land use. The Lockean influence on the founders clearly contributed to the

countrys early development. In the Lockean scheme of things, land that is not put into

cultivation or put to some other use is wasted. In the early history of the country, land

was often given away or sold very cheaply to encourage settlement and development.

The Mining Law of 1872, for instance, allowed private development on public lands and

led to a privatization of policy (Klyza, 2001, p. 113). The idea of ownership according to

Locke is that one owns ones self and the products of ones labor. By placing land into

cultivation, a farmer adds increased value and is entitled to the fruits of his labor. From

the earliest period, the role of government was seen to be the fostering of the economic

development of the country by private citizens and the protection of property thereby

acquired by those citizens.

The Lockean notion of private property as an incentive to development worked

well in the countrys early history, but there were also abuses. These abuses and the

growth of the country into a more fully settled stage, required more government

intervention in the form of an administrative state. Particularly, the Interstate Commerce

Commission and various pieces of legislation such as the Sherman Antitrust Act came

about in an effort to curb excesses of the robber barons at the end of the 19th century.

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Yet, even today the wealth of these families is notable, and many of their names, such as

Morgan, Rockefeller, and Kennedy, continue to be well known.

Many writers have described the balance between private property rights and the

public interest. Richard Pipes (Property and Freedom, 2000) has attempted to

demonstrate the primacy of the right to property as a necessary prerequisite to other

freedoms. Other libertarian writers have described the gradual erosion of constitutional

protections as the country has grown. Particularly, the advent of the administrative

state has led to greater direct government involvement in land use policy (for example

zoning laws) and indirectly through other regulations that may impact land use.

Ellen Frankel Paul gave a prime example of the libertarian point of view. She

claimed that the rise of the environmental movement in the 1970s has had an enormous

impact upon the rights of ordinary property owners, and not just the conduct of business

enterprises (1987, 6).

That august political philosopher of the seventeenth century, John

Locke, insisted that governments are constructed by men for one reasononly, and that is to protect their property rights. He believed that the rightto acquire, possess, and enjoy property is the fundamental liberty uponwhich all other inherent rights of life and liberty depend. The Americanfounding fathers were deeply imbued with these Lockean notions. They,too, cherished property and the opportunity for personal development itrepresented. They embraced the idea that government exists to protectpeople's inalienable rights and should be tolerated only so long as it acts asa rights protector (Ibid., p. 3).

According to Locke, property belonged to an individual not because a king

granted it to him, but because he "mixed his labor" with it and thereby transformed it into

something separate and distinct from the common, unowned land in the state of nature

(Ibid., p. 8). Ellen Paul suggested that environmentalists rejection of these Lockean

notions represents a slide back toward a feudal notion of the state as the ultimate

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authority over the use and disposition of land (Ibid., p. 9). Yet, as Freyfogle

demonstrated, land use was well-regulated in the colonies at the local level, not by a far-

flung evil empire nor by a distant bureaucracy. Ellen Paul claimed,

Most proponents of an expanded state role in determining land usedo not see themselves as embracing a return to feudalism. Rather, theyfocus upon the supposed waste and environmental degradation foistedupon society by rapacious developers who are concerned only with profitsand care nothing for the welfare of future generations. To replace theseindividual market decisions, they advocate some form of state or nationalland-use policy that will collectivize decision making while leaving theownership of property in private hands (Ibid., pp. 9-10).

She asked, Is the quality of our environment a private, local, or state concern, or

is it a federal problem? She answered that there has been a steady shift of the balance of

power in the direction of federal government and lists a number of new laws that have

spawned an elaborate apparatus of controls over the use of land, water, and air (Ibid.,

pp. 10-11). Included among them are the Clean Air Acts of 1963 and 1970, the National

Environmental Policy Act of 1969, the Water Quality Act of 1965, the Water Pollution

Control Act Amendments of 1972, the Solid Waste Disposal Act of 1968, and the Federal

Coastal Zone Management Act of 1972. What she fails to do, however, is to place these

laws within historical context. In other words, she fails to explain that one of the reasons

national legislation became an imperative is because these problems were not being

addressed at the local level.

Not content to criticize only the federal government, she went on to say, But the

environmentalist activism of the past few years has not been limited to shifting the locus

of control over land use to the federal government. Of equal or even greater impact has

been the veritable flood of state land-use programs. These seek to supersede local zoning

authorities and regulate land that falls into the nebulous category of land involving state-

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wide concern (p. 12). In addition, she pointed out that local control over the use of

land has been a decisive force in shaping our land-use patterns since the early twentieth

century. If we have unsightly strips of garish neon lighting, if we have cities congested

by high-rise office buildings, if we have suburban sprawl and neighborhoods in which it

is impossible to do your shopping without hopping into your carall phenomena

castigated by environmentaliststhenzoning can take its fair share of the blame (Ibid.,

p. 13) [emphasis added]. If libertarians such as Ellen Paul had their way, with so little

government what need would we have for democracy?

Ellen Paul was particularly critical of what she calls the environmentalist

movement. She said, To comprehend fully the influences on judges and legislators, one

must examine the environmentalists arguments. Environmentalists have been very

successful in dramatizing their cause, and their influence upon legal writers dealing with

the police power and its proper limits is in no small part responsible for the wave of

environmental legislation and for the generally sympathetic review of it by the courts

(Ibid., pp. 13-14). She characterized environmentalism as a battle for control of land.

suppositions shared by most environmental activists: that mans artifacts and

civilization threaten the environment; that our limited spaceship earths finite resources

are being eroded; that pollution threatens life on earth and must be eradicated at great

cost; and that the root cause of all these impending disasters lies in the unrestricted

forces of the market (Ibid., p. 14). She continued, Fundamental to the views of those

on the more extreme fringe of the environmentalist movement is a rejection of many

fundamental Western values. Both Christianity and the Greek tradition emanating from

Aristotle placed the human race at the focus of moral concern and atop the hierarchy of

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earthly beings. But, she says, environmentalists believe that Western man, no longer

the focus of moral concern, ought to learn from the Zen Buddhists, Asian mystics, and

ancient pagans who knew how to live in harmony with nature and natures laws (Ibid.,

p. 17).

The most radical wing of the environmentalist philosophers takes its inspiration

from Aldo Leopold and his land ethic, which he enunciated in 1949 in hisA Sand

County Almanac. These thinkers wish to extend value or rights to nonconscious entities,

thus extending the purview of moral consideration beyond humans and animals to include

plants, rocks, streams, oceans, and the atmosphere. Although it would be wrong to

suppose that all environmentalists fall into this category, the radicals do in a sense set the

agenda. By establishing the far reaches of the environmentalists stance, they make less

extreme positions appear moderate (Ibid., p. 19). Describing Leopolds land ethic she

wrote, His system emphasizes our obligations to nature rather than our privilege to rule

over it as mere property. His conception of an interdependent biotic community was

definitely not human-centered. Consequently he disparaged the efforts of others who

pursued the conservation of nature motivated by an ethic based principally upon human

or economic concerns (Ibid.).

Way at the other end of the spectrum, she described

a dwindling band of moderate ecologists, probably the leastfavored by activists but the most influential with the general public. Thisposition might be called the right wing of the ecological movement.These thinkers, relatively few in number, reject the Weltanschauung oftheir more radical colleagues and seek to preserve endangered species orthreatened biosystems from an avowedly anthropocentric standpoint. Government, according to them, has a legitimate role to play as arbiter, todetermine exactly which natural objects and species ought to be preservedfor their future utility to humankind. Although more reasonable than otherenvironmental philosophies, this position still grants to government

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decision-making power in an area where personal values decree the resultrather than hard, scientific evidence. How are officials to determine thevalue of a wetlands, for example, when no market competition informstheir decision, and they must rely upon their personal understanding of thepublic interest? (Ibid., pp. 25-26).

Here she raised a good question. How do we value such assets? Yet, even though

there is no market for them, intuitively we know they have some valueand the less

there is of them, that is the more scarce they are, the more valuable they must become.

In her view, eminent domain had also become a serious issue as courts have

emasculated one of the principal constraints upon the exercise of eminent domain: the

public use proviso, which used to mean that property could not be taken merely to

transfer it to another private owner. But with the Supreme Courts sanction for the

taking of a nondilapidated building that happened to lie within a blighted area destined

for urban renewal (inBerman v. Parkerin 1954), courts throughout the country have

been encouraged to find a public use in a variety of imaginative takings by the states.

These takings have only a tenuous connection to public necessity or public purpose, and

they often simply transfer property from one private owner to another (Ibid., pp. 28-29).

As Cahn noted, eminent domain, which many describe as a government initiative to

secure the public good, is more accurately defined as governmental action on behalf of

self-interested policy elites (1995, p. 10).

Ellen Paul made some good arguments and asked some difficult questions, but

failed to adequately address the historical basis of governmental actions. The origin of

zoning laws is a case in point. As expressed in Suburban Nation:

While government programs for housing and highway promotedsprawl, the planning profession, worshipping at the altar of zoning,worked to make it law. Why the countrys planners were so uniformlyconvinced of the efficacy of zoningthe segregation of the different

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aspects of daily lifeis a story that dates back to the previous century andthe first victory of the planning profession. At that time, Europesindustrialized cities were shrouded in the smoke of Blakes dark, satanicmills. City planners wisely advocated the separation of such factoriesfrom residential areas, with dramatic results. Life expectancies rose

significantly, and the planners, fairly enough, were hailed as heroes.The successes of turn-of-the-century planning, represented inAmerica by the City Beautiful movement, became the foundation of a newprofession, and ever since, planners have repeatedly attempted to relivethat moment of glory by separating everything from everything else. Thissegregation, once applied only to incompatible uses, is now applied toevery use. Perhaps the greatest irony is that even industry need not beisolated anymore. Many modern production facilities are perfectly safeneighbors, thanks to evolved manufacturing processes and improvedpollution control. (Duany, Plater-Zyberk & Speck, 2000, pp. 9-11)

A dynamic, ontogenetic view of propertyas opposed to a static viewreveals

a blind faith in the power of technological progress, or what Smith (1998, p. 5) calls

productivism, driven primarily by corporate capital. The hegemony (Cahn, 1995, p. 18;

Smith, 1998, p. 16) of this system is such that a packaged and marketed vision of the

American Dream has come to be accepted as normal (Silverthorn, 2004).

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CHAPTER THREEPOWERS THAT BE: THE CORPORATION

The capitalist process, by substituting a mere parcel of shares for the wall of and themachines in a factory, takes the life out of the idea of property. It loosens the grip thatonce was so strongthe grip in the sense of the legal right and the actual ability to do as

one pleases with ones own; the grip also in the sense that the holder of the title loses thewill to fight, economically, physically, politically, for his factory and his control overit, to die if necessary on its steps. And this evaporation of what we may term the materialsubstance of propertyits visible and touchable realityaffects not only the attitude ofthe holders but also that of the workmen and the public in general. Dematerialized,defunctionalized and absentee ownership does not impress and call forth moral allegianceas the vital form of property did. Eventually, there will be nobody left who really cares tostand for itnobody within and nobody without the precincts of the big concerns(Schumpeter 1942, p. 142, in Monks & Minnow, 1991, p. 67).

There can be little doubt that the corporation, as a form of organization, plays a

significant role in the modern world. As Bakan (2004, p. 1) wrote, A key premise is that

the corporation is an institutiona unique structure and set of imperatives that direct the

actions of people within it. But precisely what is a corporation, and how did this entity

become such a powerful player in all our lives?

Bowman (1996, p. 2) defined the large business corporation as an organization

possessing all of the following attributes: (1) it is a legal entity (a fictitious and

immortal person possessing rights and obligations), (2) it is an enterprise chartered by

government and subject to the rule of law, (3) it is a joint-stock company that earns

dividends for its stockholders, and (4) it is an economic, political, and social institution

through which power is exercised internally (within the enterprise) and externally (in

society at large).

The corporate form of organization surpassed the sole proprietorship and

partnership forms of organization as a tool of economic expansion because it permitted

the accumulation of large amounts of capital by pooling investors resources (unlike a

proprietorship) and it provided limited liability (unlike a partnership). This form of

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organization provided the fuel for the U.S. expansion in the 19th century, being the

catalyst for the industrial revolution. A child of nation-building, according to Beatty

(2001, p. 10), the professionally managed corporation began in the effort to reach the

ever-receding line of settlement by railroad, Americas first big business.

Hall (2002, pp. 23-24) provided three explanations for the emergence of the

multinational corporation as a powerful influence. The first explanation is imperialism,

which he defined as an expansion of corporate markets and reduction of costs by

exerting economic power over a weaker nation. Second, he made the somewhat

circular argument that local economic independence is impossible for many nations,

particularly those with weak political and economic systems. The multinational firm

becomes the dominant economic and political form of organization, superseding the

traditional nation-state in weaker parts of the world. One could argue that such a

condition of dependence is brought on by the imperialistic actions of corporations in the

first place, however, and that the second explanation is really an extension of the first.

His third explanation was that the multinational corporation is the inevitable result of

corporate choices made to implement product-market strategy: As corporations begin to

produce a complex range of products, these are to be sold in different markets through

multiple channels of distribution.

A recurrent theme in Hall was that organizations in general seek to expand their

influence over the environment (Ibid., p. 24). For example, with regard to

technological, legal, and other environmental conditions, he stated, Organizations do not

respond to technological change through simple absorption. Instead, the organizations

political process operates through the advocacy of change or stability (Ibid., p. 205).

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Since innovation goes against the status quo, one could argue that organizations advocate

for stability more often than they advocate for change. He wrote, The pharmaceutical

industry has had great success in protecting itself from competition by securing the

passage of state and federal legislation. It also was successful in getting organized

medicine, through the American Medical Association, to permit the industry to advertise

drugs by their brand names rather than by their generic names (Ibid., p. 257). Similarly,

Organizations are not benign recipients of laws and regulations. Organizations in all

sectors attempt to select the appropriate legal strategy aimed at the appropriate level of

government. Organizations are important actors in the development of laws and

regulations through their lobbying efforts (Ibid., p. 206).

In Halls discussion of the resource-dependence model, he said, Another

important aspect of the model is that organizations attempt to deal actively with the

environment. Organizations will attempt to manipulate the environment to their own

advantageit also contains the idea that the administrators of organizations manage

their environments as well as their organizationsThis is the institutional level of

operations, in which the organization is linked to the social structure by its top

executives (Ibid., p. 265). Furthermore, Interlocking directorates provide opportunities

for collusion, co-optation, monitoring, legitimacy, career advancement, and social

cohesionInterlocks are a means by which organizations can attempt to manage

uncertainty in their environments (Ibid., p. 231). One could argue that since change is a

major cause of uncertainty, most organizations attempt to manage uncertainty in their

environments by maintaining the status quo and thereby stifling innovation.

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Large partnerships and joint ventures permit the pooling of resources, and newer

forms of these organizations, such as limited partnerships, provide a certain degree of

limited liability to investors. If the concept of limited partnerships had been around in the

early 19th century, perhaps they would have become the dominant form of business

organization instead. But it was the corporation that existed at that period in our history.

The corporation existed in Europe before America was colonized. In fact, the

great trading companies of the European empires had a significant influence on how early

settlers viewed chartered companies. As Wasserman (1983) put it in his bookAmerica

Born and Reborn, As a whole the colonists were most thoroughly incensed by Britains

exploitation of their commerce and industry (p. 42). The American Revolution was, in

Wassermans view, a populist revolt against, not only the Monarchy, but also the

excesses of trading companies such as the East India Company. The spirit of American

democracy had unleashed the worlds first anti-imperial revolution, only to give birth to a

nation that saw itself as chosen by God to rule the world (Ibid., pp. 47-48). The Articles

of Confederation formed a loosely knit federation of states that allowed for greater local

control and a more direct form of democratic government, but the Founding Fathers

realized that their own property interests were at risk. According to Wasserman,

Alexander Hamiltonlaid the foundations for the rise of Americancorporate capitalism. All communities divide themselves into the fewand the many, he wrote. The first are the rich and the well born, theother the mass of the people. The mass are turbulent and changing; theyseldom judge right. Therefore the rich must have a distinct, permanentshare in the government to check the unsteadiness and imprudence ofdemocracy. [As a result] Adams codified a constitutional system builtaround property qualifications for office-holding and voting, a strongexecutive, two legislative houses with at least one dominated by the rich,and strict limitations on the abilities of the masses to rulethe Federalistideal was perhaps best reflected in the state constitution of Maryland.

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Among other things it installed an electoral college which doubly removedthe election of representatives from the public (Ibid., pp. 50-51).

As the Constitutional Convention got underway, suspicion spread through the

countryside that the convention was dominated by men who intended to profit directly

from the formation of a new government. Supporters and critics alike understood that the

Constitution was a document of post-Revolutionary reaction designed to cement the

power of what James Madison called a landed interest, a manufacturing interest, a

mercantile interest, a monied interest, with many lesser interests. John Jay put it more

succinctly. Those who own the government, he said, ought to run it (Ibid., p. 52).

The government formed by the Founding Fathers was based on the economic

theory of classical liberalism, which was, in the words of Bowman, an affirmation and

defense of the freedom and rights of the individual whether they be political, religious, or

pecuniary

It is the last of these for which liberalism offered the strongestdefense, and understandably so, since it sought to justify an economicsystem that was premised on contractual relations between individuals.

A product of both the Enlightenment and the Reformation,classical liberalism also contains a conception of history as materialprogressa partly economic, partly religious view that identifies industryand acquisitiveness with the social good and heavenly rewards.Furthermore, American liberalism contains a version of material progressthat is peculiarly its ownnamely, the doctrine of the open frontier,economic expansion, unlimited opportunity, and upward mobilityinshort, the American promise.

Adam Smiths economic theory, which was outspokenly critical ofthe inefficiencies of corporate enterprise within the marketplace ofindividuals, eventually became a source of the corporations greatestideological strength. To accomplish this result, the long-held view of thebusiness corporation as a tool of monopoly power would have to bejettisoned for a modern, anthropomorphic conception of the corporationsuited to the individualistic premises of liberalism. The uniquecontribution of American constitutional law to this ideological trick ofmirrors, what I shall term the doctrine of corporate individualism, tookhold in American jurisprudence in the early decades of the nineteenth

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century. Not only did it confer on the corporate entity the legal rights andcapacities of the contracting individual during the dawn of Americanindustrialization, but it also personified this legal fiction, therebytransforming a collectivity into an individual (1996, pp. 6-9) [emphasesadded].

So, from the beginning there was a structure in place that would allow, even

encourage, corporate predominance to come to the forefront. Eventually, classical

liberalism would give way to corporate liberalism. But until the industrial revolution and

the invention of the steam locomotive, corporate power would remain a local

phenomenon. Chandler, in his essay The Railroads: The First Modern Business

Enterprises, 1850s-1860s, described how this technological innovation brought about

the large corporate industrial and financial organizations with which we are familiar in

todays global environment:

The swift victory of the railway over the waterway resulted fromorganizational as well as technological innovation. the operationalrequirements of the railroads demanded the creation of the firstadministrative hierarchies in American business. The men who managedthese enterprises became the first group of modern business administrators

in the United States. Ownership and management soon separated. Thecapital required to build a railroad was far more than that required topurchase a plantation, a textile mill, or even a fleet of ships.

With the coming of the railroad boom of the late 1840s, the capitalrequired for railroad construction could no longer be raised Funds forthe simultaneous construction of so many large railroads had to come fromthe older commercial centers of the east.

As soon as the American capital market became centralized andinstitutionalized in New York City, all the present-day instruments offinance were perfected; so too were nearly all the techniques of modernsecurities marketing and speculation. By the outbreak of the Civil War,

the New York financial district, by responding to the needs of railroadfinancing, had become one of the largest and most sophisticated capitalmarkets in the world. The only significant innovation after the Civil Warwere the coming of the telegraphic stock ticket to record sales and thedevelopment of the cooperative syndicate of several investment bankers tomarket large blocks of securities. For more than a generation this marketwas used almost wholly by the railroads and allied enterprises, such as thetelegraph, express, and sleeping car companies. As soon as American

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manufacturers had comparable needs for funds, they too began to rely onthe New York markets. However, except for the makers of electricalequipment, few manufacturers felt such a need until the 1890s. When theydid begin to seek outside funds, the institutions to provide such capitalwere fully developed (1977, pp. 99-108).

Throughout the course of the history of corporations, there were periodic

challenges to and consolidations of, corporate power. The courts, being the most

conservative branch of government, have tended to favor the propertied interests. But

populist uprisings, labor unions, and social movements have brought significant

challenges to corporate power. These movements have led to the enactment of antitrust

legislation and other regulatory reforms. As Beatty (2001) wrote,

The post-Civil War economy lacked centers of countervailingpower to balance the distending power of the great corporation: Anysocial history of the corporation in these years must start with thatperception. Private economic power is held in check by thecountervailing power of those who are subject to it, Professor Galbraithwrote in American Capitalism in 1952, when the worst evils of oligopolywere prevented by vigilant governments, with an arsenal of antitrust andregulatory weapons; strong unions, brandishing the threat of strikes; andnationwide retail chains, which could use their purchasing power to keep

prices in line. None of these conditions obtained in the age ofincorporation. Government could not exert countervailing power over thecorporation because, at all levels, it was in the purse of corporations.Trade unions could not exert countervailing power because they weresmall and weak, and even peaceful strikes were put down by state militiaor federal troops called out by politicians acting for corporations acting forshareholders. (And these were not Mr. and Mrs. Front Porch, with theirretirement money invested in 401(k) accounts, but the richest 1 percent ofAmericans holding more wealth than the other 99 percent). Andcompetition could not exert countervailing power as, in industry afterindustry, it yielded to combination. The Framers would have seen at once

the root of what was coming to be known as the corporation problemhow to make the great corporation answerable to society. For them,checks and balances was not just constitutional machinery, but a theory ofhuman nature. If men were angels, Madison said, there would be no needof government (pp. 129-130).

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The Civil War era was an ugly episode of American history, and one during

which corporate power grew tremendously. The most fascinating result during this

period of consolidation of corporate power was the judicial activism which gave the

corporate person, a legal fiction, all of the rights of a natural person. As Wasserman

wrote,

In 1862, with the slaveowners out of Congress, a Homestead Actwas passed and signed. The foundations were also laid for the highestindustrial tariff in U.S. history, and for an Immigration Act which openedthe floodgates to cheap foreign labor. Most important of all, industrialinterests began voting themselves gargantuan grants of money and land forexpanding the western railway system. With huge profits pouring in from

supplying the army with food and materiel, the nascent industrial classsolidified its hold on the government.Just as the Confederacy had exempted large slaveholders from

fighting, the Union had allowed its rich to pay $300 each to stay out of thedraft. Among those who did so were John D. Rockefeller, J. PierpontMorgan, Andrew Carnegie, James Mellon, Cornelius Vanderbilt, PhilipArmour, and Jay Gould. Fattened by war contracts, tariffs, and enormousgrants of money and land, this cadre of nascent Robber Barons put a gripon the machinery of government that remains very much intact today.

Combining scientific theory and medieval Calvinism, the newSocial Darwinist elite declared itself the chosen of both natural selectionand a profit-minded deity. The growth of a large business is merely theworking-out of a law of nature and a law of God, said the originalRockefellerIn the true Puritan tradition, those who had not experiencedsuch divine or natural favor had obviously been condemned as unfit.When it came to the poor, Cotton Mathers old idea to let them starvewas back in fashionIn a market economy, workers could be used anddiscarded with no real concern for where or how they lived.

If natural selection was at work in the corporate world, theSupreme Court was its ultimate arbiter. As part of the Black Bill ofRights, Congress had passed the Fourteenth Amendment forbidding thestates to deprive any person of life, liberty, or property without dueprocess of law. The Klu Klux Klan and other forces of southern reactionpaid the law little heed. But in 1886 the Supreme Court ruled definitivelythat corporations have human rights, and that 230 state laws regulating bigbusiness violated due processFor all intents and purposes, thecorporations were now above meaningful public regulation. In 1887Congress passed the Interstate Commerce Act, only to see the commissionit mandated turn into a committee of executives who shuttled back andforth between the government and the companies they were supposed to

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regulate. In 1890 Congress tried again with the Sherman Antitrust Act. Inthe next seven years the Act was used twelve times to break labor unions(1983, pp. 84-95) [emphasis added].

The labor unions were one of the first countervailing powers to emerge out of the

industrial revolution, followed by Populist and Socialist movements which paved the way

for the reforms of the Progressive Era, and later the New Deal. In the aftermath of the

legal and political accommodations of the Progressive Era and the New Deal period,

antimonopoly sentiment has been largely contained and legitimized through the public

regulation of enterprise (Bowman, 1996, p. 5).

In the latter half of the 20th century, new regulatory legislation came into

existence as a result of the Civil Rights movement and the environmental movement. In

response, corporate power has been further consolidated through mergers and a new

partnership with government. As Wasserman pointed out, the Reagan administrations

Robber Baron ethic led to the dismantling of the federal antitrustapparatus. One target was FDRs Holding Company Act, which prohibited theinterlocking of utility empires. The number of Federal Trade Commission

prosecutions for unfair, deceptive, or anticompetitive business practices droppedfrom sixty-eight cases in 1980 to fifteen by 1982. I think, said George Bush,weve started to see this philosophical shift, the end or the beginning of the endof this adversary relationship between government and business. Governmentshouldnt be an adversary. It ought to be a partner. That government-businesspartnership, meant a green light for a new wave of mega-mergers. Billions ofpetro-dollars now fueled a merger mania. By the end of the decade the largest200 industrial concerns controlled 64 percent of the nations manufacturingassets, up from 46 percent in 1950. Oil company profits accounted for whatBusiness Weekcalled a mind numbing 40 percent of all industrial profits, moneynow fueling the final centralization of the industrial system (1983, p. 265).

In addition to this marked centralization of power, the evolution of the

multinational corporation has in many ways put corporate power even beyond the reach

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of national governments. What about the impact of corporate power on democracy and

culture?

Democracy is defined as government by the people; a form of government in

which the supreme power is vested in the people and exercised directly by them or by

their elected agents under a free electoral system. Democracy is a part of culture, which

is defined as the sum total of ways of living built up by a group of human beings and

transmitted from one generation to another.

Korten described how multinational corporate power has evolved outside of the

democratic process. He wrote, It is helpful to understand how the corporate

globalization agenda has been crafted and carried forward largely outside the public

discourse. It is not a matter of a small elite group meeting in secret to craft a master plan

for taking over the world. It works much more like any networking or shared culture-

building process out of which alliances among individuals and groups emerge and

evolve. There is no conspiracy, though in practical terms, the consequences are much as

if there were (2001, p. 135).

The most troubling impact on democracy, as described by Korten below, has been

the corporate influence over public opinion through the media which has undermined the

democratic election process.

Before the 1970s, business interests were represented by old-fashioned corporate lobbying organizations with straightforward names:

Beer Institute, National Coal Association, Chamber of Commerce, orAmerican Petroleum Institute. As aggressive public-interest groupssucceeded in mobilizing broad-based citizen pressures on Congress,business decided that another approach was needed. Corporations beganto create their own citizen organizations with names and images thatwere carefully constructed to mask their corporate and sponsorship and[sic] their true purpose. The National Wetlands Coalition, which featuresa logo of a duck flying blissfully over a swamp, was sponsored by oil and

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gas companies and real estate developers to fight for the easing ofrestrictions on the conversion of wetlands into drilling sites and shoppingmalls. Corporate-sponsored Consumer Alert fights governmentregulations of product safety. Keep America Beautiful attempts to give itssponsors, the bottling industry, a green image by funding anti-litter

campaigns, while those same sponsors actively fight mandatory recyclinglegislationThe views of these and similar industry-sponsoredgroupsare regularly reported in the press as the views of citizenadvocates. The sole reason for their existence is to convince the publicthat the corporate interest is the public interest and that labor, health, andthe environment are special interests.

With the growing role of television in American life and thedecline of the U.S. labor movement, costly television-based mediacampaigns have become increasingly central in deciding electionoutcomes. As a consequence, the grassroots organization that was oncethe foundation of the Democratic Party structure has disintegrated, causing

it to lose its populist moorings and leaving those who once constituted itspolitical base feeling unrepresented (Ibid., pp. 144-148).

Originally commercial speech was protected because it was deemed to have social

value by providing consumers with information, but the approach to corporate advertising

has changed dramatically from one of providing information about a product to one of

associating a product with a particular lifestyle. And the courts have supported this

asymmetry. Since Virginia State Board of Pharmacy v. Virginia Citizens Consumer

Council, federal courts have shifted from consumer-based assessmentsthat commercial

and corporate speech is protected if it enhances consumer decision-makingto the view

that laws and regulations limiting advertising restrict free speech (Soley, 2002, p. 256).

Coleman (1982, pp. 102-104), writing about the asymmetry of relations between

corporate actors and natural persons said, One consequence is that the corporate actor

nearly always controls most of the conditions surrounding the relation. The corporate

actor controls much of the information relevant to the interactiontypically by

advertising, propaganda, market research, public opinion research, credit ratings of

customers, and dossiers of other sorts. Information expressly designed to serve the

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interests of the person is far less in evidencePersons have become, he wrote, in a

sense that was never before true, incidental to a large fraction of the productive activity in

society. This is most evident when the person who occupies a position in a corporate

actor is replaced not by another person but by a machine. Then the general irrelevance of

persons is clear. But the invention which made this possible was not a technological

invention which replaced [people with machines]; it was a social invention which created

a structure that was independent of particular persons and consisted only of positions.

Once this was done, it became merely a matter ingenuity to devise machines that could

carry out the activities which those positions required. Coleman emphasized that it is

the social structure that is the culprit. The irrelevance of persons in the structure is not

a question of machines, it is a question of the form of the structure. In management

training programs in many firms, there is a game that is used as part of the training

program: the in-basket gameThe aim of the in-basket exercise is to make the transition

from one manager to the next unnoticeableto make the manageras a person irrelevant

to the functioning of the plant. This is good for the smooth functioning of the

organization; but it takes away something of central importance to each of us: the sense

of being needed.

Beatty, writing about Emersons views on Trade, said, Emersons optimism

about the beneficent effects of trade was wisdom in advance of its time, or so it looks

today. He identified a new kind of powersoft power, one political scientist calls it,

the propaganda of the good life, that is palpable in the world today. In the century now

beginning the hard power of the nation-state is yielding to soft power, which rivals

totalitarianism in its capacity to make change, but without coercion. Soft power, the

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amalgam of economic and cultural influence spread through the new media of

communications (2001, p. 123).

Klein, in her popular bookNo Logo, described the cultural imperialism of

modern-day global enterprises. She blamed much of what was wrong with globalization

on a tendency of moving away from product-centered values and toward image-centered

values.

The astronomical growth in the wealth and cultural influence ofmultinational corporations over the last fifteen years can arguably betraced back to a single, seemingly innocuous idea developed bymanagement theorists in the mid-1980s: that successful corporations mustprimarily produce brands, as opposed to products (2001, p. 3).

And for the longest time, the making of things remained, at least inprinciple, the heart of all industrialized economies. But by the eighties,pushed along by that decades recession, some of the most powerfulmanufacturers in the world began to falter. A consensus emerged thatcorporations were bloated, oversized; they owned too much, employed toomany people, and were weighed down with too many things. The veryprocess of producingrunning ones own factories, being responsible fortens of thousands of full-time, permanent employeesbegan to look lesslike the route to success and more like a clunky liability.

At around this same time a new kind of corporation began to rivalthe traditional all-American manufacturers for market share; these werethe Nikes and Microsofts, and later, the Tommy Hilfigers and Intels.These pioneers made the bold claim that producing goods was only anincidental part of their operations, and that thanks to recent victories intrade liberalization and labor-law reform, they were able to have theirproducts made for them by contractors, many of them overseas. Whatthese companies produced primarily were not things, they said, but imagesof their brands. Their real work lay not in manufacturing but inmarketing. This formula, needless to say, has proved enormouslyprofitable, and its success has companies competing in a race towardweightlessness: whoever owns the least, has the fewest employees on the

payroll and produces the most powerful images, as opposed to products,wins the race (Ibid., p. 4).

The branded multinationals may talk diversity, but the visibleresult of their actions is an army of teen clones marchingin uniform, asthe marketers sayinto the global mall. Despite the embrace ofpolyethnic imagery, market-driven globalization doesnt want diversity;quite the opposite. Its enemies are national habits, local brands and

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distinctive regional tastes. Fewer interests control ever more of thelandscape.

Dazzled by the array of consumer choices, we may at first fail tonotice the tremendous consolidation taking place in boardrooms of theentertainment, media and retail industries. Advertising floods us with the

kaleidoscopic soothing images of the United Streets of Diversity andMicrosofts wide-open Where do you want to go today? enticements.But in the pages of the business section, the world goes monochromaticand doors slam shut from all sides: every other storywhether theannouncements of a new buyout, and untimely bankruptcy, a colossalmergerpoints directly to a loss of meaningful choices (Ibid., p. 129).

Ahmad, in an article titled Whos Wearing the Trousers? (2001), answered

Kleins claim that consumers were being manipulated by big corporations and their

brands, and wrote

Historically, building a brand was rather simple. A logo was astraightforward guarantee of quality and consistency, or it was a signalthat a product was something new. For that, consumers were, quiterationally, prepared to pay a premium.

The new marketing approach is to build a brand not a producttosell a lifestyle or a personality, to appeal to emotions. But this requires afar greater understanding of human psychology. It is a much harder taskthan describing the virtues of a product. The attempt by brands to adopt asocial componentto embrace a lifestyleis giving consumers a lever toinfluence the behaviour of the companies that stand behind them. TheNoLogo proponents are correct that brands are a conduit through whichinfluence flows between companies and consumers. But far more often, itis consumers that dictate to companies and ultimately decide their fate,rather than the other way round (Ibid.).

Ahmad concluded the article with the following statement, The founders of some

of the world's oldest [brands]Hershey, Disney, Cadbury and Boots, for exampl

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