The corporation, like the church and monarchy in earlier times and places, is the dominant institution. It’s all-pervasive. 

It wasn’t always like this.

In the early days of the American republic, legislators granted few corporate charters, and only after debate. The privilege of incorporation was granted selectively and predominantly to enable activities that benefited the public, such as the construction of roads or canals—infrastructure projects that the states did not have the money to build themselves. 

And the states imposed conditions: limiting charters to a fixed number of years, setting limits on commercial interest, denying them ownership of stock in other corporations, or prohibiting political contributions intended to influence law-making. The power of large shareholders was also limited by scaled voting, so that large and small investors had equal voting rights. Owners were held personally responsible for violating laws.  

According to legal historian Brian Murphy, America’s Founding Fathers saw corporations as corrupting influences on both the economy and on government. The American Revolution against the colonial British Empire was invoked because of the tyranny of the East India Company, which led to the Tea Party revolt. They viewed the company as a “state within a state,” and didn’t want to repeat the situation.

The Founding Fathers were wary of corporations that would concentrate economic and political power in potentially unaccountable institutions. Thomas Jefferson’s vision for a bill of rights included “freedom from monopolies in commerce,” except the wording wasn’t incorporated into the final version that was ratified on December 15, 1791.

Through the early 1800s, corporations were generally constrained to act within reasonable civic boundaries. But as industrialization gathered pace, a great deal of capital was needed so many more companies were formed to facilitate business activity: railroads, banks, steel producers. Corporations took off, growing significantly in size, number and influence. 

As the Civil War raged, in a letter to colonel William F. Elkins dated November 21, 1864, President Abraham Lincoln warned of the dangers ahead:

We may congratulate ourselves that this cruel war is nearing its end, but 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 powers of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in the hands of a few and the Republic is destroyed. 

I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war.

After the war ended, the 14th Amendment was passed in 1868 to protect the rights of the freed slaves. It was the most important constitutional change in the country’s history since the Bill of Rights, extending “equal protection” to all American citizens: “No state can deprive any person of life, liberty, or property without due process of law.”

Years later, in 1881, California imposed a special tax on railroad property, and the Southern Pacific Railroad Company pushed back with a bold case to be treated under the law as a legal “person,” reasoning that just as the 14th Amendment bars discrimination on the basis of racial identity, so does it bar discrimination on the basis of corporate identity. 

The Supreme Court went along with it, and the decision was used as a precedent to grant constitutional protections to corporations. Constraints that had historically been placed on the corporate form were thus removed, and corporations obtained many of the same legal rights as people: to own property, borrow money, and buy and sell goods in their own right.

Corporate personhood became the legal illusion that a corporation is a person, just as slavery was a legal fiction that viewed persons as property. By 1912, the Supreme Court applied the 14th Amendment on 28 cases involving the rights of African Americans, and an astonishing 312 cases on the rights of corporations. 

Mark Twain dubbed the decades after the Civil War the “Gilded Age”—an era of rapid industrialization and the growth of America’s first giant companies, but also a time characterized by corruption, materialism, and growing inequality. More and more wealth was concentrated in the hands of fewer and fewer people. 

By 1890, the richest 1 percent of Americans owned more property than the remaining 99 percent and received the same total income as the bottom half of the population. Two of the most well-known corporations were Andrew Carnegie’s steel company and The Standard Oil Company, founded by John D. Rockefeller.  

According to historian Eric Foner, one of the leading causes of the shift of American values and the destruction of the American dream was the rise of corporations.  

Americans found themselves at odds as they grew in awe, admiration, and hostility. Corporate leaders such as Carnegie and Rockefeller were considered robber barons who wielded power without any accountability in an unregulated marketplace. Mostly hated for their domineering positions, repressive mentalities towards laborers, and display of selfishness, corporations were thought to undermine the ideas of political and economic freedoms as fair competition was altogether shattered in the face of monopolies.

Corporate control over the political and economic realms was so vast that President Woodrow Wilson (1913-1921) described, “a very different America from the old … no longer a scene of individual enterprise, individual opportunity, and individual achievement,” but a country in which “comparatively small groups of men,” corporate owners, “wield a power and control over the wealth and the business operations of the country,” becoming “rivals of the government itself.” 

In the 1960s and 70s, corporate America was further mobilized as Milton Friedman and other economists of the Chicago School promoted ultra-free-market capitalism based on neoliberal ideas of deregulation and privatization. In his book Capital and Freedom, Friedman wrote, “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits.” 

The sole mission of business became “profit maximization.” Economic efficiency and productivity was elevated over human dignity. Author and social activist Naomi Klein described the neoliberal set of ideas as “a rationale for greed.” 

The inequality gap grew faster, but conventional wisdom at the time was that things had to get worse before they got better, and more growth was to make things better. This theory was known as the “Kuznets Curve,” resembling an upside-down “U”—inequality first rises, then levels off, and ultimately starts to fall. 

The economist Simon Kuznets said that his work was 5 percent empirical and 95 percent speculation, and “some of it possibly tainted by wishful thinking,” but it became the most widely invoked justification for trickle-down economics.

Nevertheless, inequality in America grew to be “higher than in any other society at any time in the past, anywhere in the world,” Thomas Piketty observed in his book Capital in the Twenty-First Century. He claimed that there is no reason to assume that capitalism will ever be able to tackle the problem of inequality, which is primarily a corporate phenomenon.

The purported founding father of laissez-faire capitalism, Adam Smith, never used the terms “laissez-faire” or “capitalism” in his two books, The Theory of Moral Sentiments (1759) and The Wealth of Nations (1776), which are full of lamentations of the moral, social, and political ills of what he called “commercial society.”

Corporations have gained additional rights in recent years, including freedom of speech, religious liberty, and the scope for nearly unlimited political contributions. “This is a corporate coup d’état,” says Klein. 

We see no reversal of this trend on the horizon.