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Gangs of America
The Rise of Corporate Power and the Disabling of Democracy
by Ted Nace
Berrett-Koehler Publishers, Inc., 2003
281 pages, hardcover
Review by Jim Walker

Imagine what would happen if corporations enjoyed the same privileges as people do with the Bill of Rights and that the legal system considered corporations as persons. Well, apparently they do! Corporations now enjoy rights normally given to conscious human beings, such as the rights given under the First, Fourth, Fifth, Sixth, Seventh and, Fourteenth Amendments. Corporations also have the power to finance political elections, influence governmental decisions, and even to set state, federal, and even world policy. Corporations even determine policies such as "regime change" and "preemptive war" through development groups working for the military.

In short, corporations now hold more legal rights and power than do people. The corporation now serves as the core institution of the world, more powerful even than religions or governments.

Ted Nace gives us a history lesson about the rise of the corporations, where they came from, how they got so much power, and how we might possibly fight them back. Nace points out that the trigger for the American Revolution actually started as a revolt against the British East India Company that had more control over the British empire than the government did over them (remember that the East India Company shipped the tea for the Boston Tea Party). We learn about Thomas Scott, an obscure business man who invented the holding company; Stephen Field, a Supreme Court judge who developed corporate personhood rights through the Supreme Court ruling in the Santa Clara County v. Southern Pacific Railroad case. The story continues to the twentieth century where court decisions slowly expanded corporate rights. In 2002, corporate mergers and powerful trade agreements added worldwide corporate rights.

Like cells in an organism or bees in a hive, unconscious corporations use people as its basic structural elements, using them for CEOs, workers, lawyers, Supreme Court justices, all to protect itself. Corporations outlive its members and, in principle, can live forever. Scary.

Although Nace provides an ultimate optimistic outlook, using historical references to show that people and public action groups have fought corporations and won, and we can do the same in the future, my fear still overrides Nace's optimism. As Nace correctly points out, the corporations may ultimately know us better than we know them ( I suspect that some corporation already know us better than we know them. How else could advertising work, a practice that people once used to call propaganda). Nace suggests that we can learn to understand them better than they understand us, but can we? Already, corporate computers speak to each other in languages that most of us do not understand. Corporations use projection polls, surveys, and alluring advertising to exploit human desires and beliefs. Look at the explosive rise in the purchasing of SUVs. Does the human desire for owning a large gas guzzler really stem from human interest or does it stem from the auto corporations manipulating human desires for corporate interests? I don't know. Perhaps an unseen hierarchy of corporate structure sits so high above human consciousness that we may never understand its mechanism simply because we do not have a biological means to understand it with.

If any creationist wants evidence for evolution working within the life span of humans, one need only to look at the evolution of corporations. Not only does this represent a new species, but perhaps it better describes a new kingdom, as different from humans as with animals from plants.

Regardless of my pessimism, this book deserves a read, even if it can only help slow the rise of corporate power over human individuals. You will find this book easy to read and actually entertaining in spite of the seemingly boring court cases. Nace did a superb job of research for a subject that deserves far more public attention.

A few quotes from the book:

With a corporation growing into maturity, you definitely feel a sense of creative pride, but alongside that pride you also feel a chill. Something complex and even alive has come into existence, but it is no longer governed by intuitively familiar human motives and values. Instead, it is a sophisticated, complex, adaptive, continually evolving system-- a sort of mindless yet intelligent being-- governed by an array of internal and external programming.

"...I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed." --Abraham Lincoln

...the East India Company is historically significant because, quite simply, it was the most powerful corporation that has ever existed.

To a surprising degree, the American Revolution was directly and explicitly an anticorporate revolt.

Among British and French thinkers, corporate enterprise was considered synonymous with monopoly...

At the time of the Constitutional Convention in 1787, only six business corporation other than banks existed in the United States...

...incorporation of ordinary businesses was rare in colonial America...

...charters tended to be granted sparingly, in keeping with the widespread belief that the potential for corporation to accumulate power rendered them inherently dangerous to democracy.

By 1800, there were 335 business corporations in the county.

Standardization into four continental time zones came neither from an act of congress nor from an executive order by the president, but rather from a joint decision of the country's railroad corporations.

A key difference between the classic corporation and the modern corporation is that the latter, at least in theory, enjoys an unlimited life span.

From a social and legal perspective, perpetual existence creates tremendous difficulties in holding corporations accountable for criminal behavior...

By around 1875, general incorporation had largely replaced the system of individually issued charters, and charters ceased to provide a means for controlling corporate behavior.

In 1980, there were only three acquisitions larger than $1 billion in value. In 1986, there were thirty-four such mergers. As late as 1992, total U.S. merger activity remained under $100 billion. But in the late 1990s, acquisitions exploded, topping $1 trillion in 1998.

By any measure, corporation dominate the world economy...

Sixty-six of the one hundred largest economic entities in the world are corporations; only thirty-four are governments.

Santa Clara was decided by the Supreme Court in favor of the railroad, and it gained mythic status in American political culture as the decision by which corporations won personhood status under the Fourteenth Amendment.

As for the original intent of the Fourteenth Amendment, that of protecting freed blacks from repressive laws, Justice Hugo Black later observed that in the first fifty years after the amendment was adopted, "less than one-half of 1 percent" of the cases in which it was invoked had to do with protection of African Americans, whereas 50 percent involved corporations.

On September 23, 1932, in San Francisco, he [Franklin Roosevelt] noted that six hundred companies controlled two-thirds of American industry...

Founded by conservative leader Paul Weyrich in 1973, the American Legislative Exchange Council originally focused on right-wing causes such as abortion and school prayer. But as numerous corporations began contributing to the council in the 1980s the emphasis shifted to business-oriented issues.

As defined by Campaigns & Elections magazine, an astroturf campaign is a "grassroots program that involves the instant manufacturing of public support for a point of view in which either uninformed activists are recruited or means of deception are used to recruit them."

In effect, the PAC served as a means for a corporation to make direct political contributions-- the exact opposite of the intent of the Tillman Act.

The natural entity theory involved looking not at the shareholders but at the corporation itself as an upstanding, respectable participant in society. Given its central role in society, the corporation deserves the same rights as human beings, even if the Constitution doesn't actually say it does.

Rather than claiming that a corporation has any intrinsic human qualities that would entitle it to human rights, it came up with the roundabout rational that the protections of the First Amendment were protections of speech, not of the speaker.

Like a myopic Dr. Frankenstein, the Court had worked piecemeal and haphazardly, grafting a finger here, an eyebrow there, until the result was a full-fledged legal superperson.

No company in American history has ever been more closely connected at the highest levels of government. [speaking about Enron]

The Bush administration counted five former Enron executives in its inner circles. Over the course of his career, Bush himself had received more money from Enron than from any other contributor.... In preparing the administration's energy policy, Vice President Dick Cheney's staff met six times with Enron representatives. And on the recommendation of Enron CEO Kenneth Lay, President Bush chose Pat Wood as head of the Federal Energy Regulatory Commission, the main watchdog agency to keep tabs on Enron's gas and electricity businesses.

The deeper problem was overwhelming corporate influence in democratic government, which had become so pervasive that the lines separating corporate power and governmental power had become blurred.

Ideas such as "regime change" and "preemptive war" had actually been developed by corporate-supported policy development groups even before the 2000 election.

The defense industry followed a pattern that can be seen in any number of other areas where corporate influence has an overriding effect on public policy: energy, finance, pharmaceuticals, telecommunications, media, agriculture, tobacco, high tech, criminal justice, and many more.

Woldwide, companies operating outside their home country more than tripled in number between the late 1960s and the 1990s.

The regional agreements provide powerful new global rights for corporations-- legal mechanisms that allow a corporation based in one country to overturn the laws or judicial decisions of a different country.

Between 1979 and 1994, 97 percent of the gain in national income had been concentrated in the 20 percent at the top of the income pyramid. By 1998, the top 1 percent of the American population owned more of the country's wealth than the bottom 90 percent.

One way of thinking about the American Revolution is to see it as a reenginering of the state. Like a computer programer debugging a piece of software, the framers of the American system rolled up their sleeves, tweaked this and that, and came up with a new design.

Corporate power is like a germ that develops a resistance to the newest antibiotic.

The best strategy, perhaps, is to assume the role of naturalist and pretend we are looking at a new form of life, a previously unknown organism. We need to study it with fresh eyes.

In many ways the corporation is coming to know us better than we know it.


One: How did Corporations Get So Much Power? In which the author reads a poll, feels provoked and befuddled, and organizes his investigation
Two: From Street Fights to Empire: The British roots of the American corporation (1607-1624)
Three: The Ultimate Reality Show: The brutal history of the Virginia Company (1607-1624)
Four: Why the Colonists feared Corporations... In which the citizens of Boston demonstrate the use of the hatchet as an anti-monopoly device (1770-1773)
Five: ...And What They Did About It: How the framers of the American system restrained corporate power (1787-1850)
Six: The Genius: The man who reinvented the corporation (1850-1880)
Seven: Superpowers: The corporation acquires nine powerful attributes (1860-1900)
Eight: The Judge: Stephen Fiend and the politics of personhood (1868-1885)
Nine: The Court Reporter: Who really decided the Supreme Court's most important corporate case? (1886)
Ten: The Lavender-Vested Turkey Gobbler: How a "majestic, super-eminent" lawyer deceived the Supreme Court (1883)
Eleven: Survival of the Fittest: "People power" versus a social Darwinist agenda (1886-1937)
Twelve: The Revolt of the Bosses: The new mobilization of corporate political power (1971-2002)
Thirteen: Speech = Money: Using the First Amendment to block campaign finance reform
Fourteen: Judicial Yoga: The tangled logic of corporate rights
Fifteen: Crime Wave: The roots of the scandals of 2002
Sixteen: Global Rule: How international trade agreements are creating new corporate rights
Seventeen: Fighting Back: A movement emerges to challenge corporate hegemony
Eighteen: Intelligent, Amoral, Evolving: The hazards of persistent dynamic entities
Appendix A: Supreme Court Decisions
Appendix B: The Bill of Rights and the Fourteenth Amendment
About the Author

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Gangs of America: The Rise of Corporate Power and the Disabling of Democracy