Incorporation

The notion of viewing the government as a corporation is foundational for NeoReaction and Absolutism, having first been proposed by Mencius Moldbug and presently being revisited by Imperial Energy. The government is in the security business: its customers (formerly known as “citizens”) pay a fee (formerly known as “taxes”) and the government provides internal security for property and person, and external security from, presumably, the other security corporations in the world—or, perhaps, from more primitive and therefore maybe more dangerous state organizations. The idea has its roots in libertarian thought. It might gain more support from the recent work of political scientist David Ciepley, who in one essay argues that the framers of the US Constitution very deliberately constructed the constitution as a “charter” and the government as a corporation. According to Ciepley, mainstream political thinkers through the 19th century were perfectly aware of all this, and used the words “charter” and “constitution” interchangeably. This argument regarding the USG is part of a larger argument Ciepley has been making, perhaps most prominently in an American Affairs essay, about the fundamentally anti-liberal character of the corporation. Contrary to liberal and libertarian accounts going back to Adam Smith, which see the economy in terms of contracts entered into by individuals and more recently updated by Milton Friedman, who misrepresented the corporation as owned by its shareholders (causing all kinds of mischief), corporations are fundamentally public-private mixtures, established by the state and rooted in medieval social forms—and these institutions, not contractually based partnerships, dominate the modern economy.

Ciepley’s argument regarding the US founding is a complex one. He rejects the notion that founders like Madison and Hamilton had “social contract” theories, whether those positing a covenant among a people or those positing one between the people and a ruler, in mind in theorizing the new order they were establishing. They knew how preposterous such theories were. They were trying to establish a charter for a government, a corporate “person,” that, like a corporation, would have powers limited to those enumerated in the charter. They modeled this new government on the state governments, all of which had, in fact, been corporations chartered by the British government. Like the shareholders of a corporation, the people could vote for officials filling the positions established by the charter, but would have no role in governing—and, if they were to make demands that violated the terms of the charter, those demands should be ignored. He even shows how the practice of judicial review evolved not out of some pure constitutional logic but the role of the sovereign in rejecting policies of the corporation that violate its charter. But this is where the problem for the founders lay—if the government was a chartered corporation, who chartered it? Corporations are chartered by the sovereign—but the sovereign, the British Parliament, had just been overthrown. The “people” had to be sovereign, but what did that mean? A kind of social contract theory gets snuck in through the back door here, as some constitution of the people as a people must be retrojected back into the distant past. Developments within ancient and medieval theory helped here, as the Roman emperors legitimated themselves by claiming a one time (and of course irrevocable) donation of power to them by the “people”; this theory, mostly dormant in Roman history itself, was picked up and activated by those critical of the medieval European kings.

This opens all kinds of very interesting problems, because in this conception popular sovereignty is essentially a cipher—the sovereign is the original source of legitimacy, and the basis upon which the acts of the government can be criticized, but can’t actually do anything. It’s pure negation, which is the way imperium in imperio works. In a sense, all modern political theory is an attempt to give some content to what is almost a mathematical term introduced to make an equation work—it’s an ideal site for power conflicts because anyone can introduce anything into it they want. The American founders were acutely aware of these dangers (I don’t share Ciepley’s awe at their solution, but his argument is so powerful that his admiration for them rubs off), and tried to present the American people as a kind of instantaneously dissolving sovereign: they assembled in a formal, recognized manner, on the model of, say, town hall meeting called by the local authorities (of course all this must be recognized after the fact), in order to establish the constitution, and then recede into quiescence and let the government do its work. Americans still participate in government, but as individuals voting, promoting candidates, arguing about ideas and policies, etc.—not as the sovereign. They can resume their sovereignty in a way accounted for by the Constitution itself—the amendment process—but is that really sovereignty? If the charter of a corporation contains a provision allowing the shareholders to modify some element of the charter, do the shareholders thereby become sovereign? Well, maybe, because if they can modify one element, they can modify two, and if two, three, and ultimately the entire charter. Eventually they would have to finish the “amending” process and become passive sovereigns once more. This is quite different, though, from a sovereign who has chartered the corporation from the outside, and who has chartered many other corporations besides this one. The shareholders or citizens all benefit, or perceive themselves as benefiting, in different ways and degrees from the operation of the corporation. To get to the point of a constitutional convention or some other mechanism by which the charter is to be overhauled the divisions must be running very deep among the community—indeed, since everyone knows it can get to this point, the very possibility would be a source of division that many within the corporation would have an interest in inflaming. And this is for the reason I gave above: we are dealing with what is really phantom sovereign, an empty center which those occupying different positions within the actual sovereign can struggle to fill. So, the process of everyone claiming diverse and incompatible forms of sovereignty while being unaccountable to the consequences of such claims in the actual operations of sovereignty never ends.

Any conceptualization of the government as a corporation, then, has to deal with the question of who has chartered the corporation—it’s enough for a business partnership to have customers, but a corporation, an institution that transcends the lives of those who run it and resists any effort by participants to fold it up by “exiting,” must have a charter, from a real, not notional, sovereign. This is why I think both that the corporate form is the ideal form for the absolutist state and that the state itself cannot be a corporation. (Ciepley points out that most of the European states were in fact corporations, but since that is what allowed the phantom sovereignty to be slipped in, they are not to be emulated in that regard.) Chartering corporations of all kinds—and here the medieval and even ancient roots of the corporation are important—religious, educational, scientific, exploratory and, of course, profit-making businesses is the best way for the sovereign to recognize socially relevant and beneficial activities and scrutinize them in the most economical and non-intrusive way. And, as Ciepley points out, the corporation form itself is consistent with all kinds of internal governance—to his credit, it’s very hard to get a sense of Ciepley’s own politics, and I sense they wouldn’t fall very clearly in one place along the left-right axis, but he does acknowledge the viability of worker participation in some forms of corporate governance—as a way of helping keep the corporation focused on its long-term prosperity, rather than turning a quick profit for shareholders.

The corporate form has obviously lasted so long, through so many social transformations, because it is an extremely reasonable mode of organization. It is especially remarkable that the corporation has persisted in spite of its being in absolute contradiction to liberal principles—the Enlightenment liberals, and liberals since then, have wanted to get rid of or at least reduce to liberal imperatives the corporation, that remnant of feudal governance, with its fixed hierarchies, it being a quasi-law unto itself, its governance through “status” rather than “contract.” The Left has always been well aware of and suitably outraged by these features of the corporation—they’ve never quite been able to give the abolition of the atrocity of limited liability the high profile they had hoped to, but it’s still there, lurking in the shadows, although perhaps now more for purposes of blackmail than any real transformation, as the Left has learned to work its will very well through corporations. Ciepley in fact agrees with the left (and, in fact, some—especially pro-Trump, interestingly—sections of the right as well) in condemning the Citizens United decision. He thinks that, as entities chartered by the states, corporations should not have the rights given to natural persons. But perhaps the problem is that we still think in terms of “natural persons”—Ciepley doesn’t see any problem with the public-private distinction as such, he just thinks that corporations straddle the divide. He also thinks that corporations can be liberalized and democratized—for example, the free speech rights granted to citizens could be extended to employees of corporations. But this suggests some uneasiness on Ciepley’s part with the undemocratic character of corporations. We could more easily argue for pushing the needle in the other direction, toward the corporatization of the rest of social life. While the whole notion of free speech, free assembly, religion, and so on, is becoming increasingly inapplicable in public life, it seems to particularly ridiculous to try and impose it on corporations. You want your employees to speak freely about problems they notice in the engineering design of the latest product; and you want them to shut the hell up about gendered bathrooms. What do we need “people” in general to speak freely about? As chartered corporations, shouldn’t towns be allowed to prevent their public spaces from being taken over and defaced by “protesters”? If these public corporations need public input into their decision making, they can solicit it in their own way. Now, the interesting thing about Citizens United was that it wasn’t a business, but, rather, a corporation formed for the purpose of making a movie criticizing Hillary Clinton. Ciepley answers the question of why corporations like the New York Times should have free speech by noting that the Constitution explicitly establishes freedom of the press, but what is the press? Whatever the sovereign says it is, it seems to me—if I get together with a couple of friends and form a corporation to make gifs ridiculing prominent public figures, we’re the “media” just as much as the Times, NBC, CNN, and the rest—and our charter will reflect that our purpose is to enrich public life through satire. So, rather than saying that corporations should not participate in public life, because they are not “natural persons” with rights, we should say to “natural” persons to de-nature themselves, incorporate, get a charter, and enter public life on terms agreeable to and with rights granted by the sovereign.

Corporations have been so successful (“adaptable”) because they presuppose an absolutist ontology. They presuppose a structured hierarchy prior to the individuals that will enter that hierarchy. We can ordinarily assume that those who originate the corporation and first acquire the charter will themselves fill those roles—perhaps that would often be stipulated in the “application” (much like the US Presidency was designed with its first occupant in mind)—the corporation will be designed to perpetuate that originary relationship and purpose. That’s absolutist ontology: any enterprise has a founding and a founder; the founder has “seconds” of various kinds (a “board”); and the enterprise is then ready to mobilize people and resources. But in an incorporated world, what kind of organization will the sovereign preside over? What kind of non-corporate organization will even be conceivable? The corporation institutionalizes, rationalizes and “routinizes” the founding; the sovereign retains the “charisma” of the founding, and is staffed by those who prefer the “team” to the “roles,” the anomalous to the rule-governed. The sovereign would mostly be chartering and inspecting the conformity of corporations with the terms of the charter—he would need a team of “generalists.” How to select the sovereign himself is a problem, because there’s no reason to assume a hereditary monarch will be up to the task. Maybe some kind of rotation of the leading CEOs themselves, with each choosing his own team. Every corporation has those with abilities, ambitions and visions stifled by the institution—sometimes, of course, they should be stifled, but the sovereign would want to staff his own team with such “rogues,” who are more interested in innovation and excellence than “playing ball.” They must also be the people most interested in secure sovereignty.

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