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Article Excerpt
The U.S. Supreme Court decision on eminent domain, the legal seizure and transfer of property from one citizen to another, has caused an outcry from citizens who feel the state is supposed to protect their property, not steal it.
This article discusses the issue in terms of the relationship between democracy and oligarchy. It is a subject well known to Aristotle and the ancient Greeks as well as the founders of the United States. However, this discussion must be debated anew with the rise of corporations, the new would-be oligarchs. Like the state, corporations are social institutions that can either serve people or cause great harm.
The author provides an overview of this development in the United States and suggests principles by which laws should be written.
INTRODUCTION
The eminent domain decision of the United States Supreme Court on June 23, 2005 allows municipalities to take land from private individuals and sell it to developers who promise economic development (jobs and tax revenue) for the city. The power for such decisions rests in the hands of a few elites and not the citizens themselves. In a Newsday poll, 93.7 percent of Americans polled disagreed with the decision.
This is a clear example of oligarchy subverting democracy. The relationship between democracy and oligarchy was classically discussed by Aristotle, who wrote that "There are, broadly speaking, two kinds of constitutions, 'that of the people' and 'that of the few', democracy and oligarchy." He noted that there were both examples of moving from democracy to oligarchy and from oligarchy to democracy, either by revising an existing constitution or by adopting a new one.
Aristotle, as well as many of the American founders, believed that neither pure oligarchy nor pure democracy (majority rule) could last long and that an appropriate balance had to be struck between the people as a whole and those with the means to build and accomplish. "Nevertheless democracy is steadier and less liable to revolution than oligarchy." (1) At the Consitutional Convention, Benjamin Franklin even suggested that the Senate, like the Roman Senate, should represent the interests of the wealthy class, while the House represent the interests of the people. This would ensure that legislation would not be passed unless it truly served the interests of all.
In the present case of the United States, the body of Supreme Court decisions considered to be constitutional law has, over time, reversed the founder's desire to make protection of private property one of the pillars of government and instead allows the concept of "public good" as defined by elites to trump individual property rights.
The concept of eminent domain has been around a long time. However, it has traditionally only been justified in the United States when the property stood in the way of a public development that was clearly for the equal benefit of all citizens: a highway, a park, or a library. The use of eminent domain in such circumstances is appropriate for a democracy, since the decision is by and for the people.
However, the new definition of the term "public good" adopted by majority decision of the Supreme Court written by Justice John Paul Stevens is one in which a private developer promises a city more jobs and revenue. This is a case in which the citizens of a municipality are told by elites what will be good for "their" city.
Some individual states, like Minnesota, have gone farther. One property owner in Brooklyn Park, Minnesota had his shopping mall taken under eminent domain by the city even though the city had no clear plan for its use. He was given "fair market" value as determined by the city's appraisal, not by the open market. To contest the decision, the victim, a Laotian who had fled the arbitrary appropriation of land by communists there 25 years earlier, had to hire lawyers at his own expense--not something a middle class citizen can easily afford. He compares the March 2005 seizure of his land to the actions of the government of Laos from which he fled, never imagining this could occur in the United States.
The issue of eminent domain is a symbol of a larger problem related to the regulation of financial power and corporations in the United States. In 2001, Americans were outraged by the Enron scandal which caused thousands of individual citizens to suffer because of corporate malfeasance. The debates about controlling corporate fraud in Congress that led to passage of the Sarbanes-Oxley Act, put government control of financial power on the center of the stage of public political debates at the turn of the twenty-first century.
The Supreme Court was by no means unaminous in its decision and in fact the decision was a split 5-4, with Justice Sandra Day O'Connor voicing a strong dissent. Strong popular opposition also sparked discussion in Congress about whether legislation should be passed that would block the court's decision.
Many Americans wonder if it is too late to do anything or whether corporations and wealthy elites have taken control of the United States. How much power do corporations really have? What allowed the present situation to develop? Can corporations be regulated? Is the United States really a democracy or an oligarchy?
How did the United States change from a nation in which protection of private property was a fundamental pillar to one in which the wishes of the wealthy could trump individual property holders? This has been a gradual process related to the rise of the modern industrial state, with periods of tightened regulation of corporations after serious problems occurred. The following sections of this article provide a brief history of the process.
THE COLONIES WERE FOREIGN CHARTERS
Prior to the seventeenth century, corporations in the colonies were limited to non-profit institutions like schools and hospitals. However, commercial corporations based in other countries did business in the colonies.
After Britain gained control of the seas when the Spanish Armada was sunk in 1588, the East India Company was chartered by Queen Elizabeth I in 1600. The charter was given to merchant adventurers who pooled together private stock to finance trading operations with Asia. England claimed the Atlantic coast of North America. It was a commercial monopoly on tea and other products, designed to bring wealth to the King and other members of the English aristocracy who were shareholders. The colonists, who wanted to compete on the market with their own products, viewed the corporation as unjust exploitation. However, the New England colonies were themselves land charters granted by the King of England.
The West India Company was established in the Netherlands in 1621 and controlled all settlements in New Netherlands. A patroon system was established whereby large tracts of land on the Hudson River were given to people who could organize these estates for farming. The patroon was bound to provide a farm ready stocked for each of his tenants. The tenants were temporarily serfs, as they were obliged to remain on the land for ten years. Some of these patroons became the wealthy noble families of America: for example, the Van Rensselaers, the Schuylers, and the Livingstons. New Netherlands was run on the model of Old World feudalism. In 1664 the Dutch were defeated by the English and the colony was given to the Duke of York.
The Hudson's Bay Company, chartered in 1670, is the oldest existing merchandising joint-stock company in the English-speaking world. The fur trade, exploration, and development of Canada are thoroughly intertwined in its history.
Thom Hartmann, a critic of corporate behavior, has described the Boston Tea Party as "America's first anti-globalization protest."
Conventional wisdom has it that the 1773 Tea Act--a tax law passed in London that led to the Boston Tea Party--was simply an increase in the taxes on tea paid by American colonists. In reality, however, the Tea Act gave the world's largest transnational corporation--The East India Company--full and unlimited access to the American tea trade, and exempted the Company from having to pay taxes to Britain on tea exported to the American colonies. It even gave the Company a tax refund on millions of pounds of tea they were unable to sell and holding in inventory. (2)
Hartmann further says that not only were Americans worried about paying the taxes, they were concerned because as a large, government-supported monopoly, the East India Company had an unfair advantage over smaller American companies that were unable to compete.
The American Revolution eliminated all of these corporation charters and the colonies adopted new constitutions as states. A republican form democracy was formed with the purpose of giving citizens political power. The operation of the Hudson's Bay Company and the East India Company were outlawed.
CORPORATIONS AND MONOPOLIES NOT GOVERNED BY THE US CONSTITUTION
The Constitution of the United States did not directly address the issue of financial power, except for the purposes of regulating the printing of money and commerce among the states. There were several reasons for this.
First, many felt that regulation of business should be left to individual states and not viewed as the proper dominion of the federal government.
Second, large corporations, to the extent they had previously existed, had their life at the bequest of the King of England, and were viewed as anathema by the Americans. Most Americans were farmers or ran family businesses and wanted nothing to do with corporations. They would not be part of the new nation.
Third, the issue was divisive between Federalists like Alexander Hamilton and those democrats like Thomas Jefferson who opposed concentrations of power. The Federalists were the realists of their day and believed that the United States should be set up as a nation modeled on England. The Anti-Federalists were wary of centralized government and corporate power and wanted to fashion the United States into...
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