Capitalism Revisited: The Case For Free Markets Without Corporations

An Introduction

Much of what plagues American politics, the environmental health of our land and water, the physical health of our people, and the collective financial well being of our citizens today is a result of massive, for-profit, stock-issuing corporations. While corporations can undoubtedly be agents for the public and private good, it seems this theoretical capability is giving way to an increasingly rapacious and cancerous reality. It is convenient to associate the corporation with capitalism and, therefore, write off the latter due to the former. In this brief essay I’d like to split these two concepts and see how free markets might be improved by the abolition of stock exchanges and corporations.

While this might seem unthinkable, the long narrative of human trade and economic co-existence shows us that it is person to person transaction that forms the most natural incarnation of free markets. Corporations, multinational or otherwise, did not factor into a sophisticated economy until the early 1600s when the Dutch East India Company issued bonds and shares of stock on a formal exchange. In many ways, this business archetype is what enabled the consequent legacy of brutal global colonization by Western countries and kingdoms that has defined the world order extending to the present day. There isn’t a part of the earth left untouched by this legacy.

The impact of the corporation on our past and present is undeniable. However, the claim that the wanton cruelty, forced servitude, and widespread destruction (societal and environmental) that defined colonization have been subdued and eliminated, most definitely is deniable. As with any form, time has applied a smooth varnish to the corporation. They have learned to hide many of their transgressions behind the cloak of charitable giving, complex financial shell games, sophisticated manipulation of governments, and the modern form of propaganda called advertising. Little has changed with the fundamentals of core corporate intentions. Only the face they show to the world has evolved.

Much of the current negative sentiment towards pure capitalism was also held by the public in the 1940s and 1950s after the events of the Great Depression. Out of this crisis came the “New Deal” and “Great Society” initiatives of Presidents Roosevelt and Johnson. Given a different, more peaceful world climate, things may have developed differently. Regardless, the Second World War intervened and corporations were welcomed with open arms to help with the overwhelming demands of a war time economy. Then came the Cold War which soon turned capitalism into a political banner from which to rally against the looming communist threat of the USSR and its allies.

When the USSR collapsed in 1989, doomed Soviet reformer Mikhail Gorbachev was somewhat hurt and irritated by the Western reaction led by the first President Bush, with whom he had a somewhat congenial relationship. Instead of simply lauding Russian attempts at reform and celebrating the promise of greater global stability, Bush gleefully celebrated the victory of capitalism over communism. It is this spirit of arrogance and zero-sum mentality which has blinded most Americans to the many fundamental flaws in our own economic system. This becomes even more troubling when we acknowledge that, in many respects, our system is the world’s system. Therefore, the methods and mentality that we’ve so aggressively spread across the world brought their problems with them.

This realization seems to be blossoming again before our eyes. Then-Senator Obama frequently fought off pesky accusations of socialist-like reforms during his 2008 campaign. Fast forward a mere 8 years to the 2016 presidential election and Bernie Sanders is rallying hundreds of thousands of enthusiastic supporters to the banner of socialism. How realistic his proposed reforms were/are is debatable. As a litmus test for the current national mood, however, his rise in popularity is very telling. Further, the way in which he was silenced by the political establishment, despite more-or-less spontaneous, grass roots support that the DNC and RNC would normally kill for, is well within the scope of this essay. While many deep pocketed corporations and individuals were hedging their bets by supporting both Clinton and Trump, Sanders was forcefully pushed aside in favor of more “game” candidates. This is one small symptom of a far larger problem.

That being said, this essay is not an endorsement of socialistic ideals over those of capitalism. Time and again, free markets (even when they’re not institutionalized) seem to be the natural tool of economic equilibrium to which people default even, or especially, in the most dire circumstances. A system of trade for food, clothing, and favorable jobs was well documented within Stalin’s Gulag, itself meant to be a shining example of Soviet Russia’s state planned, collectivist economy. The people of North Korea, where most goods and services flow exclusively through the state and food is rationed and issued directly from the government, turned to illicit black markets to trade during the famine of the 1990s. After the fall of the USSR, the flow of food and other necessaries which had been the life line of the DPRK’s tightly controlled economy suddenly ceased. Slowly, even the most favored North Korean citizens weren’t getting enough rations to live on. Soon, neighborhood markets sprang up so people could sell what they had in exchange for what they desperately needed. This is the reality of human co-existence and survival at any time, in any culture, in any circumstance: supply and demand. This reality is best served by free markets.

When theorizing within the realms of political science, economics, et cetera, it’s very easy to forget that, fundamentally, the discussion is built on the flawed human psyche. This has two basic components. The first is that humans don’t always act rationally. There are a myriad of highly intangible components that factor in to both actions taken and not taken. Fear, greed, and even different perceptions of what suitable ‘justice’ or ‘fairness’ look like. These are all potential wrenches in the cogs of a theoretically perfect machine. The second is that, especially in large societies (rather than tribes), humans are fundamentally self interested and do not ascribe to utopian ideals merely because they seem rational. Man made systems ultimately degrade to the point at which they best serve the greed and pleasure of whoever is controlling them.

These observations are not revolutionary. They are, however, critical to a discussion of how better to build a system that is rugged enough to longer withstand the flaws of mankind. Theory is fun. Operating within a vacuum allows thinkers to potentially build with the best possible materials (physical or conceptual) under the best possible circumstances. Alas, systems that concern the direction and cooperation of humans must acknowledge the fact that its fundamental building block is capable, creative, often well-meaning, but very flawed.

1. Why Are Corporations So Destructive?

The simple reason the corporation is so destructive is that it unleashes the full force of man’s worst qualities: arrogance, shortsightedness, callousness, and, perhaps worst, greed. These are qualities that always have, and always will, plague humankind. There are, however, few institutions that more effectively unfetter them than corporations.

This is primarily due to the corporation’s ability to grow exponentially, sometimes overnight. And then continue to grow, unchecked, for decades. This starts with the initial public offering (IPO) in which any person can buy a small piece of the company (a share) for whatever the going rate is (the stock price). It is not unusual for companies to get a cash influx of tens, sometimes hundreds, of millions of dollars from an IPO. A “healthy” company will then see its stock price increase over the years. This, in turn, gives them a greater amount of operating income. In the case of large corporations, this number can climb into the billions. As we’ll see, it is not necessarily the growth itself that is harmful in the long term. Indeed, the inflow of large amounts of cash allows companies to achieve things on a scale that they scarcely could have imagined before an IPO.

Unfortunately, it is from the very moment of the IPO that the entire dynamic of the company changes for the worst. Formerly accountable only to his customers, the business owner strikes a Faustian bargain and, in return for mounds of cash, sells his sovereignty to “the shareholders”. Now he and “the board” must listen not just to the customers but also to the expectant and demanding hoard of people waiting for their dividend check. If he makes a decision the shareholders don’t like or the “financial projections” don’t “meet expectations”, shareholders start to sell their stock and, as a result, the stock price takes a tumble. Therefore, he goes to great lengths (some legal, some, perhaps, not) to appease the shareholders. Meanwhile, the customer has become a secondary concern. What is this situation if not a blatant conflict of interest? As Jesus observes in Mathew 6:24, “No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other.”

Dig a little deeper and more problems with this arrangement are revealed.

The first is the abrogation of responsibility. It is obvious that people love to bask in the glow of success and acclamation but no one likes to take blame on their shoulders, when the situation calls for it. This is fundamental human nature and it’s something that is unfortunately aggravated in a corporate setting. In a privately held company, the owner(s) really has no one to blame for any malfeasance on the part of his organization. He can’t blame his customers. And he can’t really blame his employees because he hired them and oversees them. In addition, the scope of business operations tends to be much smaller and, therefore, much easier to responsibly oversee.

The corporation, on the other hand, tends towards immensity. The thick layer of middle management provides an inevitable opportunity for instructions to be lost in translation (or twisted) and, when necessary, provides a ready scapegoat when things go wrong. This is why we often see mid-level players getting prosecuted in the latest banking scandal or corporate fraud case rather than high-level officers or board members. The other convenient excuse corporations will use to justify wrong doing (illegal or semi-legal) is the “I’m just trying to provide value for the shareholders” card. Regardless of what the obviously moral or just decision is, high level corporate officers routinely justify their highly dubious actions by the stock price imperative. All humans instinctively shy from consequences and seek a scapegoat. In the corporate setting, unfortunately, this instinct is unleashed and, often, encouraged.

The problems that extend from the corporate arrangement of shares and shareholders extends beyond issues of morality. Often, the pressure exerted by the need to keep shareholders happy and shares prices high results in bad business decisions. Exxon Mobile’s recent habit of borrowing money to keep dividends high, despite diminishing returns on their oil exploratory and drilling investments, is a perfect example. Dividends are normally paid out of the surplus after all the necessary bills and re-investment have been paid (called capital expenditure). The fact that Exxon Mobile is borrowing money to cut a check that is supposed to come from their surplus profits is clearly not sound business practice. The reason Exxon deems this action necessary is the pressure to keep shareholders calm and happy and share prices stable. If Exxon were to simply state the cold, hard fact that profit margins are not what they used to be (due to a diminishing supply of easily accessible oil), stock prices would fall and thereby decrease the amount of cash at their disposal. It’s a vicious cycle: Company has a problem that should be addressed. Company hides the problem to keep shareholders happy and share prices up. Company continues to make bad decisions until, floundering, they get bought for scrap by another corporation or they get bailed out by the government (e.g. car companies and banks).

What underlies all of these corporate problems is the unending demand for growth. A privately owned company can grow rapidly, or slowly, or not at all. If the market is there, by all means, grow. But if, instead, the company is providing comfortably for its owner and employees and growth seems like a potentially undesirable source of risk and stress, it is acceptable and feasible to merely stay the course. To survive as a private business you must, of course, adapt and innovate but growth is optional. The corporation, however, must always be growing. If you’re not growing stocks prices fall, the money dries up, and you get absorbed into another corporate amoeba. Growth is normal and healthy but unchecked growth is cancerous and unnatural. One of the reasons corporations often seem ridiculous and out of touch is because they’re so desperate. Desperate to connect, to be relevant, to grow. Business should be a matter of utility by fulfilling a need not an attempt to expand indefinitely.

2. How Do Corporations Affect Our Lives?

The aforementioned points are the intrinsic flaws of the corporation. Next we must look at the second order problems that result from these weaknesses. Namely, ones that stem from their size. This essay will focus on the power of size as it is, and has been, wielded in taxation, banking, and the food industry.

Perhaps the most disheartening and infuriating consequence of corporate size and power can be found in politics. There are few things more influential in the daily American life than government. They collect the taxes, print the money, set the interest rates, build and maintain interstates, fund and field the military, etc. In theory, government is the origin of enlightened lawmaking, the arbiter of justice and the balancer of social scales. Despite the periodic spells of petulant gridlock and dysfunction, government undeniably wields great power.

a. Taxes

Unfortunately, this great power has been almost entirely hijacked by corporate interests. The tax code, a Gordian knot of indecipherable legalese and corporate entitlements, not only makes tax season an unnecessary nightmare for normal taxpayers but turns tax preparation into big business. The booming tax preparation industry is now a 10 billion dollar business sector with an additional two billion spent by Americans on tax prep software. That’s an astounding amount of money to pay an industry that shouldn’t (and doesn’t) even need to exist. That’s also an astounding waste of human capital that could be much better used elsewhere. And both of these facts don’t even take into account the millions of wasted man hours spent collecting forms and receipts and then bush whacking through the tax jungle every year.

Why haven’t we simplified the tax code? After all, it turns out the way forward is one of the few things the majority of economists and tax experts agree on. By broadening the base of what is taxed (no entitlements or deductions), and lowering the rate, the complexity of tax payment and collection plummets and tax revenue rises. This is the solution that was proposed by tax reform committees during both the Bush and Obama administrations. In both cases, the idea was smothered on all sides by big business lobbying. The tax collection industry doesn’t want to lose their gold-egg-laying-goose and many of the other interests didn’t want to lose their lucrative entitlements.

Everyone wants something from the government. Whether it’s food stamps or low capital gains tax, we take what we can get. Unfortunately, corporations are able to get almost anything they want. If they don’t get it overtly, they get it by stealth. This is due to their immense size. They have war chests of money dedicated to lobbying. As a result, Washington is flooded with corporate cash and, consequently, populated by lawmakers (and presidents) who are more than happy to do corporate America’s bidding.

Furthermore, the consequences of an unfair tax regime go beyond the tangible imbalances felt by average Americans come April. They also serve as a strong indicator for the health of society. Ineffective, unfair tax regimes breed underlying resentment and unrest. Tax regimes perceived as being effective and even handed, however, lend legitimacy to the government and encourage feelings of cooperation and shared ownership. The bloated, ineffective, imbalanced tax regime we have in the United States is harmful to both the American wallet and the shared American spirit.

b. Banking

One of the most vaunted characteristics of the American system of government is its pragmatic use of checks and balances. The executive, legislative, and judicial branches of government all have unique powers but are in some way accountable to the others. We are a nation suspicious of tyranny and this system seems wise to us. What few people know, however, is that our entire monetary system is run by an institution that is not actually part of the government and is accountable to no one. When they decide to print more money, raise or lower interest rates, or enact any other policy, they don’t need permission from anyone. This institution is called the Federal Reserve.

Brought into being by the Federal Reserve Act of 1913, the Fed (as it is known) is actually a cartel of large banks who lend money to the government and charge it interest. The money they lend is printed out of thin air. In essence, The Federal Reserve Act allows these banks to regulate themselves and to control the public money source all while making an unfathomably large profit. While the inner workings of the Fed are highly secretive and shadowy, it is safe to say that banks like Goldman Sachs and JP Morgan Chase have an important and lucrative stake in its operation and actions.

Ironically, the Federal Reserve Act was a response (proposed by the banks)to the Panic of 1907 which was triggered when a handful of these banks failed in an attempt to corner the market on stock of a mining company. This coup on the part of the banks was merely the knockout punch that ended a struggle between pro-debt and pro-sovereignty ideologies stretching back to colonial America. It was most visibly on display in the political rivalry between Alexander Hamilton and Thomas Jefferson during the early years of the republic.

What has become evident time and again is that banks, rather than stabilizing society as they claim, pillage and destabilize it. This is evident in the booms and busts of the 20th and 21st centuries, each of which has served to incrementally transfer wealth from the many to the few. The Great Depression (1929), Black Monday (1987), the collapse of Long-Term Capital Management (LTCM) and the Dot-com bubble of the late 90s, the Great Recession (2007), and even the Arab Spring (2010/11) are all examples of the instability that results from the Fed’s reckless, easy money policies. Despite this record of failure and corruption, large, publicly traded banks like Goldman Sachs and JP Morgan Chase still enjoy a vice grip on the reigns of power in both finance and government.

The implications of this arrangement are negative for the majority of the people caught in it. It means an increasingly rapid transfer of wealth to the top few net worth percentiles. It results in increasingly rapid inflation which disproportionately affects people with average and below average income levels. The average tax payer ends up paying the bulk of funds used in government bailouts of failed banks, car makers, and other corporations. Despite the commonly held belief that depositors benefit from the banking system via interest payments on their deposits, the rates are laughably low (many banks pay 0.01% interest) and lag far behind the rate of inflation. It is a system designed to funnel money from the general populous into a handful of well lined pockets.

Banks could serve a positive function in society by providing responsible lending at reasonable rates, offering a fair rate of interest to depositors, and by investing in the economy in a conservative manner. Unfortunately, the big, publicly traded banks have hijacked any government regulatory power and used their unbridled power to engage in reckless speculation, predatory banking practices, and fraud. The key words here are fair and responsible. Both of these characteristics are absent in our financial system today.

c. Food

In its nascent years, the United States was primarily an agrarian society. Around 70 percent of the population made their living by agriculture and animal husbandry. These days that number has dwindled to just two percent. As you might expect based on this number, the surviving farms are large, corporate operations.

This has had multiple implications for the diets and general health not just in America, but globally. Large agricultural companies, as well as food corporations like Nestle, Heinz and Kraft have the monetary clout to shape public perception through finely calibrated marketing campaigns and playing a part in shaping governmental dietary suggestions.

These well funded campaigns of misinformation have coincided with almost total public separation from the origins of the food they consume. Most Americans don’t know what real, whole food looks like because they’ve never seen it. Store shelves are lined with fatty, sugary processed foods, corn fed meat, and waxed, engineered produce.

Sugars and saturated fats now plague the entire earth as companies like Nestle have pushed deep into developing countries to offer cheap, addictive, sugary foods that soon lead to high blood pressure, obesity, and diabetes. Simultaneously, they’ve encouraged local farmers to stop growing traditional sustenance crops like rice and beans in favor of the cash crops used in mass produced food products. This ongoing operation is facilitated by active lobbying in governments across the world to prevent awareness of the know health implications of these products.

Even produce itself isn’t safe from companies like Monsanto who patent their genetically modified seeds and then weaponize the patents in aggressive legal battles meant to intimidate smaller farms. Often the lawsuits revolve around unintentional cross-pollination of genetically modified crops with normal ones. Farmers who intentionally buy genetically modified seeds are required to sign paper work mandating that they not collect seeds for re-use, thereby guaranteeing a steady stream of income for the corporation.

Returning to smaller, more localized farming and food production is both possible and necessary. When corporate interests are able to set the governmental and scientific agendas for food safety it is the general populace that suffers. Taking the big money out of food would have significant primary and secondary benefits. A more decentralized food industry would have far less money to dedicate to the propaganda that causes people to make eating decisions that go against their own best health interests. Secondarily, it would bring a greater percentage of the population into contact with the origins of the food they consume. Through this increased awareness, people would make more informed eating decisions and would have a larger stake in how their food is grown and raised. This is even an environmental boon to the earth. Small scale farming creates communities around shared ecosystems and fosters a shared custodianship of the land.

3. What Would Life Be Like Without Corporations?

Humans are naturally tribal, social creatures. Small communities of people have been banding together to farm, build, procreate, worship, and protect each other for thousands of years. This is what has given the earth its vibrant, unique cultures. Each has developed and evolved based on shared experiences and circumstances. While co-operation between separate groups of people has at times been necessary and fruitful, smaller communities are what best serve the everyday needs of the individual.

During the last few centuries, the ethos of the corporation has hijacked this reality and asserted its own dominance. They have successfully peddled cheap pleasure to replace meaningful happiness. Human beings are fairly simple in their needs. Human companionship, responsibility in a community, and good food are the bedrock of human happiness. It would take a highly seductive charlatan to lead people away from this reality. Tragically, this has already happened. Due to their sheer size and monetary power, corporations have created an addicted world. Addicted to poisonous food, bottomless consumption, and fake human interaction.

Life without corporations would be slower but more sustainable. It would return a healthy amount of accountability and ownership to the population. There would be greater opportunity for normal people to step into the public arena and make truly necessary contributions to their communities. The wealth of this nation could be reinvested in the people and their land rather than into the corruption and waste of big business.


It is at this point that many readers will probably shrug and say, “Yeah, but how do you end corporations? There’s no way that will ever happen.” This may be true but the way forward is more possible and tangible than most think. It is not through governmental regulation but through deliberate, daily, individual decisions.

There is a great amount of warranted frustration and jadedness regarding the political leadership in this country. What more of us need to realize is that we live not in a democracy of votes, but a democracy of dollars. The ultimate key to power is found in each man’s wallet and every woman’s purse. By being pragmatic and ruthless with this vote, the people of this country have the the power to change this world more rapidly than they can possibly imagine.