There is a hidden power available, which transcends what we assume is necessary to achieve political change. This power has to do with forces of culture and meaning. At this present moment of history, culture and meaning are in great flux. Those who take true hold of these forces will have the strongest position in determining the future of our civlization.

The old way is "activism", with its dangerous brother, the tempation to hurry things through radical action (revolution). Ghandi was for a free India. Because of this, he was greatly opposed. Those who sought to oppose him, failed, floundering on the rock of his will. Ghandi was not against the English.

The state of the world is already an ongoing process of social metamorphosis. This process leads through degrees of chaos and anarchy, naturally. What it (the process) wants is new forms of order.

We create new order by what we give ("render"). Modern politics suffers because most people are too busy demanding "rights", rather then giving duties. No society thrives when its members only take.

A comparable analogy can be found in the idea of tools. We, at the present moment, lack the cultural and social tools to make the tools to make the new social forms.

For this process of tool making, the AfD needs many talents: activists, philosophers, thinkers, doers, democratically oriented, republically oriented, lawyerly oriented, and so forth.

We are a group of people who have imagined a quite wonderful house; but who have among us those who want to play in the house, others who are digging the foundation, and still others who aren't yet satisfied with the plans. We can't live in the house until it is built, and if we rush too fast we will build it on sand.

The first tool we have to learn to use is the dialogue. (for more on detail on these themes see: Song of the Grandfathers.

Of course, there will be those who will not consider these matters problems at all. Others will not accept that this writer's understanding could be any better then their own, and therefore what I identify as disharmonies below are nothing more than mere opinion. Since I do not consider my views mere opinions, or to be mistaken in any essential sense, perhaps, right at the beginning, I ought to justify why what is written here should be paid careful attention by the membership of the AfD.

Let me begin with an analogy. No one in their right mind, when a medical crisis is present, would place the health of themselves, or their child, in the hands of someone who has no training as a doctor, or surgeon. Knowledge and expertise are givens in this modern world.

However, when it comes to our public life, especially to the social/political dynamics of the modern world, anyone who can vote frequently imagines themselves capable of all those judgments they need their public servants to make. Political dialogue is often filled with assumptions as to the ease and simiplicity of finding what the needed action should be in any given situation. In the dialogues of the AfD, the most complicated social/political realities are resolved with the flick of an opinion, and without much sense of either the impossibility of accomplishing the wished for result, or the real world consequences if in fact that opinion were to become public policy.

Perhaps it will help to look at it this way. We all start out life ignorant of many things. As we begin to really think for ourselves, in adolescence, we also begin to acquire (somewhat) freely chosen opinions, which we add to the already existing influence of culture and family on our views. Over the rest of life, education, both formal and self directed, as well as personal experience, may mature our ideas about the world. At any stage of life, the view we hold may run from mere opinion and prejudice, to a deep and wise knowledge.

The last is not acquired without effort. At each stage of growth, what has been thought, has to be able to give way to something new. Fixed views, which cannot give way to new facts, or to a deeper understanding, are the sign of a rigid mind. What a politician calls his position on an issue can be just that - a rigid ideology having no relationship to the real world. Many people have strong views on political and social issues, yet at the same time may know almost nothing about the realities involved. Passion is no substitute for sustained effort at seeking understanding and truth.

Even so, the powerful feelings that drive these opinions to the surface, regardless of their lack of wisdom in so many instances, these feelings are completely meritorious and righteous. Human beings seem to have a sense of rightness about matters, that it is very wise to trust. However, that sense may mislead if it urges us to abandon the search for true understanding. We do, through our sense of what is right, often know what the result should be; but the path to actually realizing that result is not to be found without sacrifice and effort, and real knowledge of how human societies work.

This same absence of appreciation of the realities already lives in the current elites who hold power. They are, themselves, no more clear or understanding of just with what they are dealing, than the ordinary voter. The politician is just as frequently clueless as everyone else, when it comes to the deep questions underlying modern social/political truths. Attempts are often made, usually by members of our intellectual elites, to think through to wise pathways leading toward good results (e.g. George Will's: Statecraft as Soulcraft); and, even Newt Gingrich has tried, through his association with Alvin Toffler, to find deeper and more pertinent ways of understanding.

Yet, despite these efforts, modern poloticians, and modern voters, in the main possess only superifical views of the human nature, history, sociciolgy, religion, science, and all that must be integrated into a whole, in order to find a way to a wise guidance of modern civilization.

Almost no one understands the true dynamics of our mutual social and political existence. Many people have pieces of understanding. And, because the social/political reality is plastic, that is, it is malleable, the situation itself adapts to our ill use of it.

For example: the Great Society, fostered by Lyndon Johnson et.al., was ill conceived; its authors hardly understood at all what they were about. Their intentions were admirable, but their real knowledge abysmal. Few programs worked; most promises could not be kept. Many people's expectations were raised, and when the hoped for results did not materialize, the anger and the frustration was all the greater.

Does this common ignorance mean there is no hope? Of course not. But we will only begin to find the right first steps when there is an acknowledgment of the absence of understanding. If I think I know everything, I will not be open to learning anything new.

Consider modern medicine, for all its flaws. Public health over the world is much better then it was a hundred years ago. Individuals live longer, more children survive childhood. A perfect world? Of course not, but there has been real progress in our medical understanding and real progress in our public application of solutions.

One can go to school and learn medicine. One can go to school and learn public health. But where can one go to school and learn, really learn, how societies - as complicated as this modern world is - how these societies work?

The answer to that question is: Nowhere. Not the Kennedy School for Government, or Wharton School of Economics, or any other formal structure of which you can think. Why is this?

Because, in the first place, while many pretend, no one really knows. Human knowledge, while complicated and enormous (in some instances) does not encompass all that we need to know. In the second place, our systems of education lead toward specialization, when what is called for is not a specialist, but a generalist. Instead of asking what someone, who might want to understand modern social/political dynamics, should know, we ought to ask: What shouldn't they know?

Now lest someone wants to suggest that modern society already works, and what's there to know, my question to them is:: If it already works, why does everyone want to fix it?

Do I claim to know? Is this paper asserting that its author has this knowledge which is so missing from the minds of so many others? No, I won't claim it. But, at the same time, I won't deny the very broad education that providence has granted me; or the questions that have driven me from my earliest years; or the talents I seem to have that few others have; or that I have, in fact, spent years (most of my life - probably at least 40 years) trying to answer just those needed questions: What is a society? What is civilization? How did the world get the way it is? What is human nature/psychology? How do religious impulses figure into to how the world works? What do the scientific ideas of the 19th century contribute to this matter? What is the role of art and culture? What is law, as a social process? Why do political parties tend to become mere enforcers of ideologies, rather than being realists? What is really happening in human societies in the present? Is a society a living organism, i.e. does it follow laws similar to those we see in biology? What is the relationship between my own thinking and the social/political world I observe? If I change myself, in what way should I change, and how will that effect what I know or don't know? Does the world need any longer the same kind of leaders it needed in the past? How do groups function and communities function in a world were individualism seems so out of control? How does something like homelessness and poverty arise in the world? What is evil? What is truth? Why do we dream things we cannot manifest? How can we manifest things we do dream? Is civilization sick? Does it need some kind of social doctor? How could one know the health of a society?

Now perhaps, if one lived with these questions burning in the soul for many years, and if perhaps providence aided them in their quest for answers, just maybe they might know something others could find useful and helpful, if these same others could bother themselves to recognize their own limits, and their need for some source, or someone to break the ice and raise the deep questions, and invite the deep dialogue, which will then get us away from this superficial assumption that we already know better how to make the world the way it should be, and that we should be in charge because we've got the answers.

The first act on the path to wisdom is humility. The world doesn't need more know-it-alls; it needs wisdom, temperance, honesty, truthfulness, sacrifice and hard work.

If the AfD can reign in its rush to solve all the world's problems, and, become more modest in its expectations of itself, so that instead it discovers its true, but yet hidden, assets and purpose, just maybe it might perform a service the world needs.

So what are the disharmonies of the AfD mentioned above? Well, I just went over some of them. They're normal human problems. Nothing unusual. We care deeply and then rush in when we ought to pause and realize our ignorance. We confuse what we wish the world was, for the answer to our hurt. Corporations didn't arise in the world overnight, and the social forces driving their existence and their tendencies are not understood by the world in general, much less the Alliance. All we are doing is demonising them - they're the current bogey man. We can blame them all we want, but the fact is that they are only part of the problem; and, if we abstract them out of the context in which they exist (the current conditions of modern civilization), then we falsify our understanding and thereby doom our hopes from the start.

Anti-corporate rhetoric is no answer to what ails our society. It is a superficial analysis of something whose dynamics are several orders more complex. Its like looking at your hand and seeing a wart and thinking cutting off the finger with the wart is the way to cure the wart. I am not saying that multinationals aren't running amuck, but attacking them is not only futile, it misses the point. Corporations are embedded in the economic structure of the modern world, and they are a minor social organ within a greater and more complex order, but they are not the cause of pollution, or disease, or poverty or any other social problem. These causes lie deeper, and since I know that everyone not only wants, but needs to think these things out for themselves, all I am going to say is this: yes, but, ... please think about it. And think it through and think before you act, and understand the difference between feeling and thinking, and don't dismiss your feelings, because the heart knows much the head does not; but at the same time don't confuse the immediate thoughts those feelings cause for the answer to anything.

We feel the worlds pain, and our own. That is being human. Okay, let's fix the cause of this pain, if we can, if that's possible. But the elimination of suffering and evil from the world is a problem that has perplexed the best: Christ and Buddha, just to give a couple of examples. And those two, they don't make it simple and they don't tell us to go after the other guy. The wise ones are pretty consistent on this, you clean your own house first, and that, folks, is no small or easy task.

So...okay, I've said anti-corporate stuff is a wrong path, so now what smart guy? Good question. Baby steps first. Up the level of the dialogue. I just gave out, above, enough deep questions to keep the dialogue going for several years. But what about the bad guys, they're still making a mess of the world, we've got to do something!

Sure. That's right. We've got to do something, because if we don't act, we will go crazy. And all those things that we are doing and we want to do, we should continue doing. Just, don't think that is the whole of it. Just recognize that as we learn, we'll change what we do, and get more effective at doing that. As long as a healthy dialogue is going on at the same time, as long as we are learning, and not stuck in the old, then our doing will change, will deepen and will work.

Of course, some of what to do also depends upon what you are willing to do. Blaming all the world's ills on the other guy is pretty easy. Really looking at yourself, and what changes you can do at home, that's hard.

One of the major characteristics of modern life is our individualism. We want our own thoughts, our own space, our own control over the various factors of our existence. We want the news to be different too. We want Africa fixed, the politicians out of office, Russia cured, cancer and Aids eliminated, corporations doomed, poverty and homelessness gone. Okay, in order to get these things, what price are we (am I) willing to pay?

Go to a modern American grocery store. We eat food raised solely to sell to us, by companies in third world countries that won't pay decent wages, and which use the local land to grow food for export while their own people starve. Do we like fast food? How much rain forest was destroyed make space to grow the beef? In these circumstances how culpable are we? And, even more important, can any answer we give to such questions be generalized? Is there some answer which everyone is compelled to follow? Should I tell you what to do? Or you me?

One of the wise things which appeared in the last few years was the idea, think globally, act locally. We can't fix Washington, or Russia, or anyone else but ourselves. So we have local AfD chapters, and these groups can act and dialogue, together. Local action. Whatever they choose as a group. Not some policy from the top down, because in a democracy, and in true populism, there is no top. (See my essay: Pragmatic Populist Politics: or, It isn't Easy Being Green)

Every time someone in the AfD, or elsewhere for that matter, says some form of the following statement: "we should do ... ", meaning by this we either: the AfD as a whole, the American People as a whole, or the world as a whole, that someone has mis-spoke themselves. Even when I say it, as I have above, its a mis-statement. There is no such we. A local group, face to face, struggling to consensus can form such a we and find out how to act as such a we, but the Alliance can have all the conventions it wants and not find or create a social organ (functional community of common interest) of this kind.

Let's think a little more about this. I lived in Berekely California in the late '60's and through the '70's. I sat-in, marched, made plans, dreamed dreams, hoped hopes, and always we talked about what we should do. The reality is that all that energy - the millions all over this nation which believed "we could change the world" - all that energy failed. The fact is that the nature of the American government turned to the right. It did not become progressive, the establishment did not retreat, but rather it, in fact, grew in strength and held the White House (except for the blip that was the four years of the Carter administration) from 1968 until 1992. Not only that, but during those same years it become clear that there were not two political parties, but just one, so that the Clinton administration, while offering hope, basically was the final betrayal of everything which those who lived and marched in the '60's/'70's dreamed.

It really becomes necessary to know why this happened before dreaming dreams again of making the world good and healthy and whole. Something else is going on beside what sits on the surface, and if that is not understood, is not sought for and wrestled with, then all the good wishes will just lead to more frustration and hopelessness.

So what is the AfD in the light of this, and what can be done at a "convention", which seems to mean a great deal to people. I am not suggesting by this that conventions are useless. Once the limits are understood, the hidden potential can emerge. What are the limits? The convention can't create or form any idea or action which those not present should agree with or consent to. As long as the convention doesn't violate this principle, then its participants can do what they choose. They can try to make the Alliance stand for anything they want, but, just like the modern politician, I don't have to like it or consent to it. There is nothing in populism or democracy that says it has to take a republican, i.e. representative form. Lets do real democracy. When and if, the right ideas or actions are found, nobody will need to be persuaded, or have a vote. There will then be a WE based on a common understanding - worked out over time - it will be populism in fact, not in theory or in hope or wishful thinking or just asserted as if it was some kind of new magic word.

[as an aside: about the convention, that group will fool itself to the extent it tries to form binding order, either on itself or on the local AfD chapters. The convention can practice dialogue. Its attendees can learn the necessary process. Much can be shared, and brought back to the local chapters. But it can't decide things. It can't fix them, set them in stone. Better is: we did this locally and it worked or failed. Better is building relationships. Better is seeking wisdom.]

At a recent meeting of the San Francisco AfD, with some East Bay and on-line folks, and with Ronnie Dugger, some very interesting things were said. And, while not stated quite so explicilty, this scenario was assumed: 1) in order to solve modern social problems we have reform corporations which are in control; 2) in order to reform corporations we have to (a) fix the campaign finance laws, and (b) acquire real political power; and 3) to do this last, we have to find issues that will draw vast numbers of voters to our cause, and then with this mass of voters we will sweep away the old and replace it with utopia (yes, folks, the word utopia was used several times).

In the light of what really happened in the '60's/'70's, this, above, to me, is just a fantasy. The heart forces, which are truly magnificent, know the world is amiss, and needs redirection. In this our feelings are completely correct. But the heart forces can't create the scenario that leads from the present situation to the new conditions. All the heart forces can do is provide the emotional energy, and the sense of direction - "we go feeling this and we go toward that". At the same time as we feel, our thinking has to spend the effort to understand, and such understanding can only come by being willing to give up the superficial views we already have. Unless we can sacrifice our fantastic visions of how this is going to come about, we'll never find that which we need to really bring our dreams to incarnation.

Baby steps. Deeper dialogue. Local action. Patience, humility, forbearance and sacrifice. Let me throw out some examples, so that this last is more concrete.

There was a posting a while ago to the On Line Chapter (number1) of AfD. It was a copy of an editorial written by a Marjore Kelly, in Businesss Ethics, Jan-Feb. 1997 (reproduced in appendix 2, below), which gave a very beautiful description of the realities underlying the stock market and the ideas related to stock purchase and capital needs. Along the way it showed that all the typical political and economic rhetoric was illusory. Here was a fine and wise act of deep thought, which penetrated the smoke and mirrors and made sense out of something which very much needs to be made sense of.

There needs to be a lot more of this kind of "veil lifting" work. This work does not have an agenda by the way. Rather it seeks to find the truth of the matter and to present that in a fashion in which the ordinary person can understand. It leaves it to the reader to determine how to act in the face of the true.

Were the AfD to take up tasks like this, to speak truth (not anti-corporate rhetoric), this truth speaking when then draw others, like a warm fire draws others on a cold night. It is an act of service, not an act of advocacy.

Several years ago, a friend of mine told me of a meeting he and a small group of others had with a minor official from the Federal Reserve Bank of Boston. This official, who possessed a penetrating and straight forward mind, reportedly said two very interesting things. (1) In America there are probably over 40,000 CEO's etc. of financial institutions, of which, perhaps, less then 40 actually understand finance. (2) That if the America public were to be informed of the true nature of banking and finanace, which could be done in a fairly simple way in perhaps a hour and a half television show, by the next morning all the banks in the country would be burned to the ground.

This is a bit of an exageration, I suspect, but not by much. What does this all mean?

The darkness in the world obtains its greatest power over ordinary people, because it is able to hide and mask its way of operating. The light of truth has the capacity, not to eliminate the darkness, for the darkness has a necessary place, but rather to force that darkness back from the excessive control it has over our individual lives in modern times. But truth speaking is not advocacy. Advocacy says "this" is the solution. Truth speaking simple lays bare what really goes on underneath the surface of our illusory views of politics, economics and so forth. Truth speaking leaves to the individual the determination of how to act in the face of the truth. (For more on this theme see my essay: A Forgotten Resource: The American Spirit)

Truth speaking is also called upon to be complete. Anti-corporate rhetoric leaves out the good that is done and has been done through modern economic processess. Its not all bad, and it is a terrible lie to suggest it is all bad. Moreover, in the matter above, concerning the information which might lead to burning the banks down, that kind of truth speaking would be a disservice. To be complete, it would be necessary not only to unveil the truth about modern finance, but to show how it could be changed into something else.

I have often wondered, what might happen if we started the whole thinking process from another direction. Instead of trying to figure out how to defeat the bad guys, we started out by defining what we thought ought to be the good life - Recognizing the enviormental problems and the world wide distribution problems.

Can we all own cars? Can we have individual houses? Can one person earn more than another? Can one person's children have better schools? What about a triage system? Nobody gets rich until everybody has the minimum. No, I not suggesting an utopia. I trying to get us to start by defining something we are for, something that includes everyone. What is right for one, should be what is right for all.

In my opinion, if there's anything to be gained from working together as the AFD it'll only happen when we've learned to work together, whatever that means. But whatever it means, it probably means learning how to focus our energies in some kind of coherent fashion. >>Gary Berlind

***And mainly, I hope we can stop thinking EITHER/OR for long enough to start/continue THINKING - so that we don't have to remain in an EITHER/OR situation forever. >>Gary Berlind/

IMO the nature of corporate control is more economic than political. Political solutions on their own are a set up, destined to be outflanked. The way to reduce corporate power is not to invest in them, not to work for them, and not to buy from them. If you will excuse the military language, the battleground is economic. You can win the election and lose the battle. The end game is economic: a structural adjustment for corporations instead of national or community economies.>>John Rogers

I can't believe we'll ever accomplish any permanent change as long as our legislative machinery--both state and Federal--is controlled by corporate money and power. Martha Avery

Please don’t attempt to pull us together too soon. Do nothing but support aberrant factions until we can all agree what sticks. Yes, even agent-provocateurs deserve their own factions for the time being. As soon as one horse decides to pull off in another direction, we must (1) make enough room for him, (2) provide enough support, (3) keep communications open and (4) honor his judgement and values as we would have him honor our own. In short, please help us create a way for all to live in continuing alliance. >>Mike Barrit

All corporations are shells. They are the same virtual monoliths as Toto uncovered for Dorothy just before she clicked her heels one final time. They do not really exist. They are figments in the minds of their workers, customers and media subjects. Corporations only own us (sic) because we agree they should. As with any corporation, there is no AfD unless we all agree there is one. Rather than making it one I recognize or you recognize, it is our job to look closely at what AfD already is and fully describe it—no matter how daunting this task may appear. We have to let information filter up to find out who we really are. >>Mike Barrit

I am for self-rule. I will oppose majoritarian tryanny with all the strength I posses. If the source of "authority" in AfD ever becomes something other than face to face reasoning together, I will work to see it destroyed. >>John Lowry

We all have things to learn from and with each other. We all have individual characteristics which we can improve upon. Hard as it may be on a gut level, our work is to "live the words" with each other; here, now, and in alliance. >>Edmundo Norte

I agree Gar. More power to those who have morals and visions, but I think for the movement to grow, we must have an issue based broad appeal, and not pidgeon hole ourselves into a narrow category. To exclude or offend those who do not share our group or individual vision or morality unnecessarily limits our appeal. I think favoring expanded economic and political democracy is sufficient for a populist movement. >From there we fill in the details. >>Ed Rollins

That democracy is more than a Constitution, elections, and institutions; it is a recognition of the dignity, worth, and ultimate wisdom of the people. It is an expression of love for humanity (the recognition of the miracle of intelligent and conscientious life, the only example we yet know in all of vast and virtually infinite universe) and the desire that governments do all that is possible to allow human beings to live in dignity, safety, and with equal opportunities to develop their mental and social capacities as far as they want to carry them. If this is not a "spiritual" value, I do not know where any other can be found. And if we do not possess it as the very foundation of our reason for being a part of the AfD movement, and if it isn't articulated in some way in all that we propose, we are doomed to failure. >>Ed Plunkett

I'm sorry, but the last thing an organization trying to unite on issues needs is a spiritual vision. I think spiritual and moral matters are best left to the individual.

I suspect that what an organization such as ours can come together around are issues, and perhaps tactics, and that any shared spiritual or moral vision needs to remain I think shared moral or spirtual ground needs to be defined implictly rather than explicitly. >> Gar Lipow

End corporate domination of culture. >> Mike Barrett

I am pleased and proud to be a member of the Alliance for Democracy. I agree wholeheartedly with its basic sense of where our society is, and with its assessment of what the problems are. However, the CURE for this pervasive and grave social, economic, political, and cultural malaise is not so easy to envision, let alone bring about. A group of highly intelligent and informed persons who realize the gravity and urgency of the situation cannot - unfortunately - organize and command an army of political soldiers to prosecute a campaign to effect change - from the top down. It won't work. It isn't working. We need to consult together in depth and at length, to clarify and define what the structure and functions of the national Alliance should be. We desperately need to slow down now, or we will never get up to speed in the future. >> Charles Johnson 

My personal opinion is that our task is to coalesce a certain body of thought and build a movement with it, to reinvigorate the grass roots through movement building. Party political activity just doesn't make sense to me right now. (On the local level, however, I am intensely involved in electoral politics, where a handful of grassroots activists can still make a difference and where the amounts of money in campaigns are still relatively balanced. In fact I am an expert at utilizing voter registration databases for local political activity.) >> Ben Sher

Allow me to make a prediction. Those fortunate enough to be at the upcoming convention will find themselves in one of the most demanding and intense experiences of their lives. The wish to resolve it all before going home will be strong. I feel that wish should be valiantly resisted, and those present should use their time together to be clear in their own thinking and spare in speaking - and cultivate the quietness necessary for truly respectful listening.

> On 9/6/97 Judith Simpson (of tns-consultants) wrote: > >I guarantee that if ten or fifteen people sit together in a circle and speak > >together (about the fourth systems condition), using all of the guidelines to > >dialogue: no interruptions, temporarily set aside judgement, listen deeply, > >speak > >what you are feeling and thinking without defending what you say, and respect > >each person equally; that a deep and personal truth will develop among those > >people. They will learn together, and will discover something new to each > >person there. If they repeat this process a number of times, each > >conversation will be new, and each person will learn more and more deeply > >what the (systems condition) really means. And, at a certain time, when the > >group has learned together, it will act.

This description of guidelines for effective and creative dialogue contains the basic elements of interpersonal communication that really "works." I think we in the Alliance should study this kind of process - even practice it at the convention ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! >>Charles Johnson

The corporations have grown out of control because of the way "private property" has come to be interpreted. But it seems the people may be ready to move away from outdated interpretations of old rules. They seem ready to say corporations are not "private property," and should not be treated as such, at law or in equity. Soon, hopefully, someone will find the right words. >>John Lowry

OK, it's a sad, crazy world, and we live here. "Consciousness" may not be what it seems. People may not mean what they say. We overthrew the King but are quite comfortable with lords of the land. Go figure.

I think a culture is a living entity acting out some "manifest destiny" supported by the rituals, literature, myths, etc. "Democracy" is ours. But we are not there yet, and our vision is obscured by knowing just small parts in this story, and not the whole plot, which remians to be cast.

We are creatures of habit, and can change established behavior patterns only with dedication and will. The way we think is also mostly habit.

To change our minds, to change the cultural story we act out in social relations, we will first have to face the fear of having no story, of being dis-oriented. I think this is the fear being expressed in the current discord. >>John Lowry

This is one reason I was disappointed that the discussion about whether AfD should form an organization at all never took place. If we didn't form an organizaton, we wouldn't have consitutions, bylaws, and elections. There are other alternatives. Think of all the extra time we would have to work on issues. >>Genevieve Marcus

Basically, I think we need to change the world's mind, to identify and discredit corporate rule and the corporate structure itself, and to precipitate and organize a critical mass of the people to break free of corpo-think and the consumerist culture. This requires us to keep our appeal broad by focusing on central commonalities that bring people together, rather than by trying to advance the program of any particular ideology. (sorry I seem to have lost who wrote this; if your recognize it slip me an e-mail and I will correct the ommision)

To judge by the current arrangement, one might suppose capital creates wealth -- which is odd, because a pile of capital creates nothing. Yet capital-providers, stockholders, lay claim to all wealth public corporations generate. They also claim the more fundamental right to have corporations managed exclusively on their behalf. Corporations are believed to exist for one purpose: to maximize returns to shareholders.

This message is reinforced by CEOs, The Wall Street Journal, business schools, and the courts. It is the guiding idea of the public corporation, and the law of the land -- much as the divine right of kings was once the law of the land. Indeed, the notion of "maximizing returns to shareholders" is universally accepted as a kind of divine, unchallengeable truth. It is not in the least controversial. Though it should be.

What do shareholders contribute, to justify the extraordinary allegiance they receive? They take risk, we're told. They put their money on the line, so corporations might grow and prosper. Let's test the truth of this with a little quiz: Stockholders fund public corporations -- True or False? False. We speak as though it were true: "I have invested in AT&T," we say -- imagining AT&T as a steward of our money, with a fiduciary responsibility to take care of it. In fact, dollars don't go to AT&T, but to other speculators. "Investments" reach a public corporation only when new equity is issued -- a rare event.

Public corporations need capital to operate -- $555 billion in 1993, for example. According to the Federal Reserve, equity contributed 4 percent of that. Borrowing provided 14 percent; retained earnings, 82 percent. From 1987 to 1994, corporations bought back more equity than they issued. Dividends flowed out in generous streams: $1.2 trillion. Capital gains piled up. But the flow of funds the other way was nil.

Well, yes, critics will say -- that's recently. But stockholders are pocketing gains today, because they funded corporations in the past. Not so. Take the steel industry. A study by Eldon Hendrickson examined capital expenditures from 1900 to 1953, and found that common stock provided only 5 percent of capital -- over the entire first half of the 20th century.

Equity capital is one relatively minor source of funding, vital at a certain point. Yet it entices holders to suck out all wealth, forever. Equity investors essentially install a pipeline, and decree that corporations' sole purpose is to funnel wealth into it. The pipeline is never to be tampered with -- and no one else is to be granted access (except CEOs, whose function is to keep it flowing). With the exception of initial public offerings, the commotion on Wall Street is not about funding corporations. It's about extracting from them.

The productive risk in building businesses is borne by entrepreneurs and their initial venture investors, who do contribute real investing dollars to create real wealth. Those who buy stock at sixth or seventh hand, or 1,000th hand, take a risk -- but it is a risk speculators take among themselves, trying to outwit one another, like gamblers. It as little to do with corporations, except this: Public companies are required to provide new chips for the gaming table, into infinity.

It's odd And it's connected to a second oddity -- that we believe stockholders are the corporation. When we say "a corporation did well," we mean its shareholders did well. Employees might be shouldering an outsized workload, getting by without health insurance, doing without a raise for three years -- still we will say, "the corporation did well." One never sees rising employee income as a measure of corporate success. Indeed, gains to employees are losses to the corporation. Employees can go to work for twenty years, using all their energy to create wealth for a company -- yet not really be considered part of that corporation. They have no claim to wealth they create, no say in governance, and no vote for the board of directors.

Investors, on the other hand, may not know the names of the companies they "own."They may not know where "their" companies are located, or what they produce -- and they may hold stock for only a day. Still, corporations exist to enrich them alone. Only those who own stock can vote, like an earlier time in America, when only those who owned land could vote. Employees are disenfranchised.

We think of this as the natural law of the free market. It's really the government-made law of the corporation. And it violates free market principles. In a free market, everyone scrambles to get what they can, and keeps what they earn. In the artificial construct of the corporation, one group gets what another earns. One group contributes nothing, never lifts a finger, and takes no responsibility ("limited liability'') -- yet has a "legitimate" right to siphon off all wealth. Another group does all the work, and makes the corporation a success -- yet counts itself lucky not to be thrown off the premises in a layoff.

The oddity of this is veiled by the incantation of a single, magical word: "ownership." Because we say stockholders "own" corporations, they are permitted to contribute nothing, and take everything.

What an extraordinary word. One is tempted to recall Lycophron's comment, during an early Athenian movement against slavery. "The splendor of noble birth is imaginary," he dared to say, "and its prerogatives are based upon a mere word."

Marjorie Kelly is the editor of Business Ethics, 52 S. 10th St., Suite 110, Minneapolis, MN 55403, U.S.A. For a free copy of Business Ethics send an e-mail request with your address to BizEthics@aol.com.

Author's Note: I'm working on a book about this and would like to find colleagues to discuss early drafts. E-mail MarjorieHK@aol.com ) or fax (612) 962-4706. Don 't call! Let's be old-fashioned and write.

Federal Reserve Statistics are from Bureau of the Census, Statistical Abstract of the United States, 1994.