The corporation is the subject of a growing, spiraling conflict. The streets of Seattle, Quebec, Washington D.C., Cancun, La Paz, Genoa, Seoul, Johannesburg, Buenos Aires, Mumbai, Zurich, Miami, Hong Kong, and many another city, hold the footprints of the contestants over the status of corporations in international law. As is often the case, myriad differences among the many parties have faded in the light of a defining conflict. Two camps remain. One camp, gathering in the World Social Forum process born in Porto Alegre, Brazil, raises as its banners the sanctity of the natural world, and the sovereignty of people over corporations. The other camp, based in the World Economic Forum of Davos, Switzerland, promotes corporate power as the driving force for globalization and economic development. At the center of the battles over the World Trade Organization, Multilateral Agreement on Investment, International Monetary Fund, World Bank, and the many Free Trade Areas, is the relative status of a single institution: The corporation.
Particularly in the United States of America, the corporation is today more contested than at any time in nearly a century. US social movements challenge the corporatization of the media, the military, education, disaster relief, public services, elections, regulatory agencies, research, and the genetic code. Popular outrage names Halliburton, Enron, Diebold, Edison, WalMart, and Blackwater in the same breath as Cheney, Bush, and Clinton. And a growing current in US law and politics seeks the abolition of corporate personhood.
The advent of these new movements has been accompanied by a renewed interest in unearthing the history of the corporation. That history, after all, can inform current efforts to revoke corporate charters, assert community sovereignty over corporations, ban corporate involvement in elections, and broadly redefine corporations under law. The Program on Corporations Law and Democracy (POCLAD) has played a key role in unearthing the most recent period of this history and in bringing it to the people. Through their work, a vital hidden US history has returned to light . . . .
Most of the original colonies were corporations, chartered by the British crown, and governed by appointed, unelected, unaccountable executives. The Boston Tea Party was an act of sabotage targeting what was then the largest multinational corporation in the world, the British East Indies Trading Company. Anti-corporate sentiment was so strong among the revolutionary generations that for nearly a century after independence state legislatures kept corporations on a very short leash.
And then, feeding on the Union’s weakness after the advent of the Civil War, came the corporate counter-revolution. The imperial corporation struck back through the courts, most notably in the US Supreme Court’s Santa Clara decision implicitly recognizing corporations as persons under law, entitled to constitutional rights, and guaranteed protection against government action: Protection against campaign finance and media reform; protection against environmental safeguards; protection against government regulation of all kinds; protection against democratically enacted laws – against democracy itself.
Thankfully, the history of the anti-corporate American Revolution, and of the anti-democratic corporate counter-revolution, is returning to popular knowledge. It would be a major blunder, however, to think that upon gaining an understanding the history of the corporation in the United States one has achieved an understanding of the corporation itself. What of the corporation in world history? What is the essence of the corporation? What can we learn about this creature that increasingly rules our world, so that in confronting its power, we transform, not merely replace it?
<strong>The Roots of the Modern Corporation </strong>
Corporations come in many forms – from business corporations, to schools and hospitals, to advocacy organizations – yet every one of these corporations shares four distinct traits. First among these is corporate work, where multiple human beings contribute to a single body of work attributed to the corporation itself. Second is the corporate charter, which details the extent and limits of the sovereign power’s authorization of the corporation’s work. Third is corporate personhood, which forms the basis for the treatment of the corporation as an entity with rights the law is bound to respect. Fourth is limited liability, wherein most liability for the ill-effects of corporate work is attached to the corporation, not to the individual. All in all, the modern corporation is an association of human beings whose corporate work is given limits, legal personality, and liability by the sovereign power.
Note that each attribute of the modern corporation fundamentally transforms the whole. Without limited liability, the risks inherent in financial speculation, research, resource extraction, and conquest become too great for most individual human beings to bear, and the corporation ceases to be such a useful tool for expansion. Absent personhood, there is no compulsion to balance the public interest with corporate rights, and the protection of individual human rights becomes the liberal state’s primary concern. Freed of its charter obligations, the corporation becomes unaccountable to any sovereign, and defined only by the decisions of its constituent members. Once the concept of corporate work is eliminated, the coordinated labor of individual human beings loses its corporate characteristics, and takes on the properties of social exchange. All of these attributes are fundamental to our understanding of the modern corporation, and yet, historical perspective will find that the idea of the corporation is, as described by the 19th century British legal scholars, Pollock and Maitland, “elastic,” such that, “we are not likely to find the essence of the corporation in any one rule of law.”
One can agree that no single rule of law holds the essence of the corporation, however, without going on to declare it, as Pollock and Maitland once did, “a very contentless ideas, a blank form of legal thought.” In fact, such an examination will show that the history of the corporation reveals a corporate essence: The corporation in any era is an embodiment of the relationship between state power and private organization.
Legal historians have located the appearance of the corporation in many distinct forms over the millennia. Some have placed the original corporation in pre-Roman ancient times, others with the Roman Empire. Other historians have credited the Germanic Gilds or the Catholic Church of the medieval period. Still others consider the trading companies of 17th and 18th century the authentic forbears of the modern corporation. Interestingly, these histories rarely conflict.
Some scholars have argued that the corporation is in its origins an ancient institution. Defining the corporation as an organic confluence of corporate work and corporate personality, Pollock and Maitland write that, “Every system of law that had attained a certain degree of maturity seems compelled by the ever-increasing complexity of human affairs to create persons who are not men, or rather (for this may be a truer statement) to recognize that such persons have come and are coming into existence, and to regulate their rights and duties.” Thus, corporations of one form or another have inevitably emerged in nearly every civilization. The eminent US historian, Sumner Maine, identified the family as the original corporate form, describing the ancient society as an “aggregation of families,” not individuals, and thus, “a system of small independent corporations.”
More often, scholars will place the origins of the corporation in the development and spread of Imperial Rome. While some have suggested that the Romans were not in fact the original creators of the corporation, and that Rome merely redeveloped the Greek association of the etairia in Roman forms, most commentators appear to agree that, regardless of earlier, perhaps looser, forms, the Roman familia, collegium, societas, consortium, and universitas were among the first, and most historically important, early corporate forms.
From Rome, the trail of the corporate form becomes easier to track, leading, as with many Roman institutions, into the formation and development of the Catholic Church. The dean of English law, Blackstone, shows us the way, pointing to the Roman, “corporations of trade, the universitates, which form then became the basis for the ecclesiastical system.” Indeed, scholars have identified the use of the corporate form in almost every aspect of the development of the Roman Catholic Church, including the monasteries, convents, cathedrals, universities, and, significantly, the military-colonial orders that formed the basis for the Crusades. And while the modern corporation may also have had certain origins in Jewish law, a limited inquiry seems to suggest that the very idea of the corporation was anathema to early Islamic law.
The fall of Rome and the rise of the Catholic Church were accompanied by the introduction of another legal tradition to Western and Mediterranean Europe: The law of the Germanic nations. No few historians have argued that the Germanic Gild, or Guild, was the true forbear of the modern business corporation (as well as the trade union), and that the borough gave rise of the later Burgh and burgher municipal merchant class. The ancient Gild was a tribal institution, and not the specialized Guild of artisans and merchants of later years. The early medieval borough was a fortified trading post, not a populated community. However, the historical lineage in each case is clear; the one descended from the other.
Most scholars agree that by the end of medieval millennium, the convergence of the Roman, Catholic, and Germanic legal traditions produced the institution universally cited today as the original business corporation: The trading company. European monarchs, hungry for new sources of wealth, and new destinations for troublesome subjects, recognized that the risks of exploration and conquest were too great for most investors to bear. To the owners of the trading and colonial corporations, the sovereigns of Europe granted the privilege of limited liability. Insulated from liability, and backed by the capital and arms of Europe, these corporations proved pivotal in the colonization of the Americas, where they made an all-too-indelible mark on history.
<strong>The Imperial Corporation </strong>
Imperial Rome was a society of much law, and therefore, of many corporate forms. Among these were the familia and peculium, municipia, consortium, collegium, universitas, stadia, and the societas. Most of these forms, with the exception of the societas (essentially a business partnership), involved a kind of corporate personhood. All of these corporate forms existed within the sovereign confines of the law of the Roman state, by which they were well defined and limited. Thus, in addition to corporate work, the base condition of all corporations, we see in Roman law the elements of both corporate personhood and state sovereignty. Roman law also offered a form of limited liability.
The Roman familia formed the basic building block of Roman civilization. Where the modern liberal state recognizes the rights of individual citizens, Rome recognized the rights of corporate persons in the form of families. Families formed houses, or gens, which in turn formed tribes, which in turn together formed the original Roman commonwealth. Furthermore, Rome vested familial rights - that is, the rights of the family corporate - in the person of the family patriarch. This system was known as patria potestas. Sumner Maine writes that, “The Family, in fact, was a Corporation; and [the pater familia] was its representative or, we might almost say, its Public officer. He enjoyed rights and stood under duties, but the rights and duties were, in the contemplation of his fellow-citizens and in the eye of the law, quite as much those of the collective body as his own.” In essence, the pater familia was a kind of chief executive officer, the familia a corporate person, except that unlike the modern CEO, the family patriarch was accountable to no board of directors. Over time, as Roman marriage and adoption laws relaxed, the system of patria potestas became less a matter of flesh and blood relations, and more a matter of maintaining the legal fiction of familial ties. Maine credits this shift with the rise of the Roman aristocratic class, which thus became, in a real sense, the world’s first corporate class.
It is important to recognize that the Roman familia was not merely a social-political institution, but very much an economic institution, within which vast land holdings and other forms of capital might reside. Commerce was a central function of the familia. In Rome, contractual agreements were made stipulatio, or face to face. In the early years of Rome, stipulatio posed little challenge to commercial exchange, yet as the empire grew, it became a more significant obstacle. There was only so much travel that the pater familia could realistically be expected to undertake. The solution to this problem came in the form of the invention of the peculium, which was essentially a grant of responsibility for capital by the pater familia to another adult family member, or in some cases, to a child, or slave. The peculium then, was a corporate subsidiary. Furthermore, the peculium offered the pater familia one more advantage: A limitation of liability in the form of servii vicarri. In situations wherein the pater familia could show that he was unaware of his peculium institur’s actions, only the assets of the peculium were subject to seizure, and only the institur (manager/captain) was subject to personal liability.
The sovereign state placed limits, however, on limited liability and familial rights. The Roman state barred private ownership of sacral and religious institutions such as res sacrae (i.e. temples) and res religiosae (i.e. burial grounds). While some public property, res publicae, was permitted to pass into private hands (in pecunia populi became res priuta), roads, open spaces, theatres, and stadia, were declared res diuni iuris, and not subject to privatization. The corporations established to create and manage these latter forms of res publicae where therefore not corporate persons, but only public agents, for these forms were the property of the populus Romanus.
The state not only barred privatization of certain form of property, it also defined the organization of trade and craft work into collegium and universitas. Initially, these corporations may have existed autonomously, created by their members, and for their benefit. In short order, however, they became creatures of the state. Indeed, those corporations created under the rubric of Roman law were termed legitimum, while those not so authorized were called collegia illicita. We can only wonder whether the distinction between corporations and organized crime might be described in the same way today.
Each of these corporate forms, and others, arose within the confines of the law of the sovereign state, and most were regarded corporate persons under that law. Rome was clear, however, on the distinction between natural persons and corporations. For example, a will could not designate a municipality as heredes, but municipalities could be designated as legatees. Similarly, the state would not enforce the terms of a corporate will; post-dissolution, the passing on of corporate property was a matter regulated by the state.
Imperial Rome was home to a host of corporate forms. Common to most were all of the elements of the corporation familiar to us today: Corporate work, corporate personhood, limited liability, and the sanction of the sovereign state. With the fall of Rome, no corporation was to re-emerge which shared all four of these elements for another 1,000 years. Nonetheless, the Roman corporation did not die with the empire. The process of Romanization in the imperial provinces meant that even after Rome fell, its law lived on. First in the former Roman provinces. Second, in the so-called barbarian kingdoms beyond the empire. Henry Mather writes that, “In the Germanic kingdoms that replaced the Western Roman Empire in the fifth century, Roman law survived to some extent and was incorporated into written codes; however, what survived was a small part of the legal system developed by the ancient Romans, and even that small part was retained in a crude and simplified form.” Roman law lived on in Rome as well, becoming the personal law of the Romani. Finally, the Roman corporation lived on, and thrived, in the form of the Roman Catholic Church.
<strong>The Corporate Church </strong>
Human beings will build what we know. Many, perhaps most, Christians of the late Roman Empire were merchants and tradesmen. Some were members of the Roman patrician classes. They knew the universitates of commerce, and they knew the patria potestas. They built their church on similar organizational principles. What law of Rome they could and would preserve, they maintained in their Church. Authority over the constitution of their Church they placed with a lawmaker out of Rome, such that the Bishop of Rome assumed the constitutional role abdicated by Rome’s fallen emperors. Thus, the ecclesia replaced the universitates and the familia, and the Roman Catholic Church became a body corporate.
The corporatization of the Church took place not only at the organizational level of the ecclesia, but also at the material level. Churches themselves - the buildings, the land, the property - underwent corporatization. Rather than being a mere place for communal prayer and ritual observance, a church was from its consecration a sacred site. Over time, the clergy interwove the church and its sacral character. A century ago, in examining the ancient history of the corporation, Robert Raymond gave a clear explanation of this process:
<p style="padding-left: 20px;"><em>At first, the land was given directly to God. Such a dedication came naturally and spontaneously. The Deity was vaguely conceived as a property holder; the incidents of ownership were not considered. Sometimes the land was given to a saint; such a saint was frequently buried in a particular church and was supposed to protect and guard it. So little by little, the saint and the church, the actual building, became merged in each other, and finally the church itself was thought of as an actual property holder. The institution, the structure of stone and wood, together with its spiritual attributes, was personified.</em></p>
Pagan Rome protected its sacred places as res sacradae and res religiosae. The Roman Catholic Church followed Rome’s example, building churches on top of druidic groves and other sacred sites, transferring ownership from pagan spirits to Catholic saints, yet all the while maintaining the Roman legal notion of a place incorporated and personified. Furthermore, the church, being a corporate person, must see its imagined interests administered here on earth. Thus, the rectore becomes the guardian of the church, and its administrator, the abbot, the administrator of the abbey, and so on. An ecclesiastical aristocracy emerges, a corporate class of clergymen responsible for the administration and protection of the interests of the Church.
As the Church consolidated its power, it began to find new ways to exert its authority. Both opportune and troublesome to the ecclesiastical order was the monastical system, which maintained a high level of autonomy from the Church hierarchy for centuries after the fall of Rome. Once, the monks had lived solitary, ascetic lives, but by the 4th century AD, at the instigation of St. Pacomus, they began to form the first monk communities, calling themselves cenobites, so as to distinguish themselves from the monk hermits. In 543 AD, the cenobitic movement gave birth to the first Western monastery, founded on Monte Cassino by St. Benedict. With this act, it can be said that the corporatization of the monastic orders began, for St. Benedict’s monastery introduced the concept of stabilitas loci, the Vow of Stability, wherein the monk pledged their lives to the service of their monastery. Here, the return of Roman family values, as G. Roger Huddleston explains:
<p style="padding-left: 20px;"><em>[It] secured in each monastery that continuity of theory and practice which is so essential for the family which St. Benedict desired above everything. The abbot was to be a father and the monk a child. Nor was he to be more capable of choosing a new father or a new home than any other child was. After all St. Benedict was a Roman, and the scion of a Roman patrician family, and he was simply bringing into the monastic life that absolute dependence of all the members of a family upon the father which is so typical of Roman law and usage.</em></p>
The Roman conception of the familia, with the abbot as pater familia, became the corporate concept upon which the Roman Catholic monastery was reorganized.
The monastical orders still maintained some autonomy within the Church, however. They were corporate bodies, with corporate work and corporate heads, and yet, they served God directly, and operated independently of the Bishop of Rome. Their relative independence soon became a thing of the past. Gregory the Great (590-604), the so-called “monk-pope,” and a disciple of St. Benedict, began the process by founding new monasteries and using financial and other enticements to co-opt existing ones. In the process, Gregory brought the monastical orders deeper into the fold of the Church, and turned them to its service. Isolationist, autonomous communities were transformed into evangelist corporate orders. By the apex of the Holy Roman Empire, and the Assembly of 817, the monastery was highly regulated by the Church, not merely so as to insure completion of the Church’s mandates for the monastical orders, but also to provide the model for the ordering of all religious life throughout the empire.
The method of Rome had been replicated: Where the familia had once formed the building blocks of the Roman corporate State, and the universitates, collegium, and other corporations made its agents, so now the ecclesia formed the foundation for the Roman Catholic Church, with the monastery among its agents.
The process begun with the corporatization of the monks and the subjugation of their monasteries was not unique. Similar events transpired in the later emergence of the various military orders, and in the development of the university.
Military orders such as the Knights Templar and Hospitaller were initially chartered on an ad hoc basis in response to the spread of Islam throughout the Mediterranean, yet over time the Church brought greater discipline and regulation to bear on them. The chartering of the orders by prescription (that is, self-chartering) was supplanted, and soon the sovereign, acting at the behest of the Church, assumed chartering authority. As with the monasteries, autonomous Christian orders were transformed into the Church’s crusaders. And as with the monasteries, most military orders operated off of an economic base of operations, which in their case they used to finance and supply their armed evangelism.
The university, like the monastery and the military order, emerged first among its members -- in this case, students -- and only later became a creature of the sovereign. The first universities were more like student unions than the chartered corporate university of today. At a time when professional schools were organized around individual scholars and lecturers organized in professional associations called collegia doctorum, students began to organize themselves into universitas to achieve redress of their many grievances over tuition, teaching quality, and living conditions.
The first university outside the Islamic world was founded in Bologne, Italy, which, as with other early universities, was formed ex consuetudine - that is, as an association without a charter. The Bologne universitas was initially successful, for students won redress by going on strike. However, having made initial gains, the students worried that their universitas would fall prey to the bane of student unionism through the ages: high student transience. The solution came in the form of an appeal to a higher power: The students of the Bologne universitas applied for, and received, a charter from Emperor Frederick Barbarossa in 1158. Other universities followed Bologne’s example, in some cases as universities of students, and others, as with the University of Paris in 1200, as universities of masters. In a very short time period, therefore, students and masters alike had organized themselves into corporate bodies modeled on Roman lines - universitas and collegia - and submitted their corporations for authorization by the sovereign power.
The arc of medieval European history is long, and the patterns of corporatization and subjugation to sovereign authority historically-based. Only a broad survey of this history is possible here. Yet a valuable lesson can be learned all the same: The rise of the monastical orders and their subsequent subjugation occurred in the years immediately following the final fall of Imperial Rome, and during the rise of the Holy Roman Empire, at a time when the Church was very much ascendant. Similarly, the subjugation of the military orders and of the university began to occur in the waning centuries of late feudalism, with the ascendancy of the more centralized monarchies of the late medieval period. Interestingly, this second, secular ascendancy coincided with the revival of classical Roman law.
<strong>The Return of the Strong State </strong>
The law of Imperial Rome passed into the medieval era in various forms. The Church embodied some of it. Aspects of Roman law remained in vulgarized forms in the former imperial provinces. The Franks, Lombards, Goths, Visigoths, and other Germanic nations adopted elements of Roman law piecemeal. Yet until the end of the 11th century, the magnum opus of the Roman legal tradition, the Emperor Justinian’s Corpus Juris, had been lost to medieval Western Europe. This last, essential, Roman influence reemerged through the teachings of a man named Irnerius, who taught law at Bologne. Soon, all the law schools and universities of Western Europe were alive with the revival of the more classical, commercial, Roman law of Justinian.
The recovery of the Corpus Juris came at a moment in which feudalism was already fading, and monarchies ascending. Legal scholars were thirsty for such a body of law. Maine writes that, “The Roman law, more fertile than the Canon Law in rules applicable to secular disputes, was not seldom resorted to by a later generation of Chancery judges, amid whose recorded dicta we often find entire texts from the Corpus Juris Civilis imbedded, with their terms unaltered, though their origin is never acknowledged.” The recovery and spread of Justinian’s code was revolutionary in its effect. The result, as Pollock tells us, was that in France, “the Roman texts gave their powerful aid to the centripetal and monarchical forces,” and in England, “the new learning found a small, homogenous, well conquered, much-governed kingdom, a strong, legislating, kingship.”
Until the recovery of the Corpus Juris, what Roman law that survived did so primarily within the authority of the Roman Catholic Church. The Roman corporation had become the ecclesiastical corporation, and in time, free associations of Christians had been incorporated into the folds of the Church. The recovery of the Corpus Juris, however, led to the Romanization of secular law, and Justinian’s jurisprudence became that not of the bishop, but of the king. An imperial legal tradition, in which corporations served imperial interests - expansion, colonization, and state power - came fully to bear on civil (largely Germanic), not just ecclesiastical (Roman Catholic) institutions. In particular, monarchs began to impose the Roman corporate model on two Germanic institutions: The Gild and the borough.
Germany was many when Rome was one. Where Rome was a unity of city, capital, and empire, Germany was rural, decentralized, and barbarian. Germanic law reflected the condition of the German nations: In a word, self-determination. It is therefore to be expected that self-determination characterized the distinctive corporate forms of the Germanic nations, the Gild and the Borough. The story of the revival of Roman law is thus necessarily the story of the subjugation and transformation of the Gild and the borough beneath an increasingly centralized state.
<strong>The Guild </strong>
The ancient Gild was not at first a corporation, but a ceremonial feast that served a number of important functions. Families, tribes, and nations would gather in Gild to affirm loyalties, make prayers, present gifts, and to propose marriages, as well as raids and conquests. Such Gild commitments were secured by oath.
By the 9th and 10th centuries, the function of the Gild had begun to change. The economic pressures wrought by the economic centralization of the Carolingian era caused artisans throughout Europe to seek new means to safeguard themselves against falling into serfdom. Meanwhile, the military weakness of the state, together with waves of Viking raids, brought on widespread lawlessness. Such lawlessness and economic insecurity led freemen - especially artisans and tradesmen - to demand more of the Gild.
By the end of 10th century, the Gild had evolved from a ceremonial feast into a corporate association, the Frith Gild, a brotherhood modeled on the solidarity of the family. At the head of the Gild stood an elder, an alderman, assisted by stewards. The actions of one Gild member affected the honor of all, and of the Gild itself. The Gild began to take on the qualities not only of corporate work, but also of a corporate person, with rights and duties as a body corporate. Nonetheless, these later Gilds maintained many of the traditions of the old: Feasting, banquet halls, and oath-making.
This period was also a time of greater national and commercial mobility. Outside influences caused the Gild to lose much of its familial and tribal character. The increased intermixing of different peoples that characterized northern Europe at the time resulted in the weakening of the blood family. In England, where the greatest admixture occurred, King Alfred amended the law of the weregild to place a portion of murderer’s blood obligation on the shoulders of his fellow gegilden (Gild brothers), should he have no paternal or maternal family. Another influence was the Christianization of the Germanic tribes, which resulted in the regimentation of giving at Gild functions; contributions became dues.
The ancient Gild ceremonial feast thus became subsumed within a Gild corporate, and soon became the craft and the merchant guilds so essential to the development of late medieval European civilization. This transition was often not easy. At first, Church and monarchical authorities regarded the indigenous Gild, for instance, as a potential threat to their sovereign exercise of power. The Church and the Carolingian kings banned the practice of Gild oath-making, mandating the introduction of written charters in its place. The hostility of the Church ebbed in time, but never vanished. European kings, however, increasingly saw the Gild’s potential value in enriching their domains, and began to mandate that the performance of Gild ceremonies, and the construction of Gild halls, in the towns so as to encourage their development. In this way, the Gild formed an early part of the constitution of medieval municipalities.
By the early 11th century new guild forms, including the craft guilds and merchant guilds, had largely superceded the Frith Gild. Specialization was the order of the day, and it became natural for each trade and craft to form their own special guild. With specialization also came a divergence of interest, with artisans guilds increasingly finding themselves at a disadvantage to the mercantile guilds of the merchants and the merchant guilds of the town landowners. The merchant guilds, too, from time to time, sought protection from each other. In the political vacuum of earlier centuries, such conflicts would have been left to their own ends. By the 11th century, however, that vacuum had begun to be filled by Western Europe’s rising monarchies. The guilds appealed to the king for protection.
The ascendant monarchs were often only too happy to comply. In contests with the aristocracy, and with the Church, monarchs found leverage in the guilds, using them to undermine the power of hostile nobles and clergymen. Monarchs also had an interest in stable economic development, as well as every incentive to extend their sovereignty over the increasingly vital productive forces represented by the guilds.
The monarchy’s granting of privileges and protections became the basis for the subjugation of the guild. Chartering of guilds by prescription (again, self-chartering) soon was supplanted, and then entirely replaced, by the granting of charters by the sovereign.
What the sovereign gives, he may take away. By the end of the medieval period, the guilds found themselves highly regulated. In some instances, monarchs replaced elected guild officials with their own appointees. And in many cases the craft guilds found themselves operating under charters that severely limited their activities, and which thereby encouraged the rise of monopolies of trade.
<strong>The Borough </strong>
The ancient borough was nothing like Brooklyn, Queens, or Manhattan. Like the Gild, it was a site of exchange, located with a people and tradition. However, the borough was not a meeting hall, but a fortified trading post, the center of the local ward or shire. Very few, if any, people lived in the borough. Instead, it served the population of the surrounding countryside. In time, as a particular borough grew in importance, it began to attract residents. Artisans and merchants in particular came to live within the fortifications of the borough, and the borough grew into a town.
For reasons soon apparent, the story of the subjugation of the English borough is most relevant to our interest in the origins of the modern corporation. By the time of the Norman conquest, many boroughs were already on the verge of becoming important cities. A few, such as London, rose where Roman municipia once stood. Yet most were communities of entirely Anglo-Saxon or Danish extraction, bearing no discernible relation to the earlier Roman occupation. Thus, the Norman imposition of a system of Latin counties in place of the shires, and of Latin mayors in place of the Anglo-Saxon shire-reve and port-reve, produced profound effects on the previously autonomous borough communities. For a time, boroughs persisted as municipal corporations chartered by prescription. Yet with the Norman conquest the monarchy grew more powerful, the borough was significantly weakened, and the Normanized monarchy came to exert control over the Saxon borough.
Here is how it happened in practice. Borough elders - the burghers – for one reason or another looked to the monarch for support, protection, and special consideration. The larger boroughs in particular were eager to win new franchise rights - limitations on burgher liability, establishment of a merchant guild, the return of all writs, exemptions from tolls and from agricultural duties, limited taxing powers, and property rights to the surrounding arable land. The boroughs also sought to protect, and in some cases, reestablish, pre-Norman rights, including jurisdictional privileges in the form of recognition of the local moots, the right to hold markets and fairs, the exclusion of outside interference in internal affairs, the right to elect their own officers, including mayors, bailiffs, and eventually, councils, and the right to draft their own bylaws. Franchise rights came at a steep cost. The more evident price was the payment of a fee into the king’s purse. The less evident, yet more expensive price came in the form of the borough’s implied acceptance of its changed status. Now the burghers petitioned for a charter, and the monarch chose whether or not to issue one. Self-determination was a thing of the past.
At the same time, and through much the same process, the borough gained a new quality – that of the corporate person. Burghers died, and yet their descendants continued to exercise the borough’s franchise rights. On occasion, a burgher committed an offense against other residents of the same borough, for which infraction the monarch penalized not the offending burgher, but the borough itself, by revoking or suspending its charter. The borough became a corporation personified in the English law.
By the late medieval period, the English borough was a chartered corporation, a corporate person, a shield from liability, and a subject of the sovereign crown. It had all the key attributes of the imperial corporation of Rome.
The borough also became increasingly entwined with the merchant guild itself. Though they remained separate institutions throughout, the nexus between the borough and the merchant guild was tight: They each in their own way served the same rising corporate class, the burghers, and they both received their corporate rights and duties from the same sovereign. Boroughs borrowed statutes and structure from the constitutions of the craft guilds, and in turn, the boroughs sought authority to establish their own, monopolistic merchant guilds. By the end of the medieval period, boroughs were spinning off and sponsoring new boroughs.
Finally, in the very end, the boroughs began to sponsor new corporate forms: Trading companies, such as the Company Mercantile and the Company of Merchant Adventurers, the predecessors of the modern multinational corporation.
<strong>The Essence of the Corporation</strong>
<p style="padding-left: 20px;"><em>
Natural persons are such as God formed us; artificial persons are such as are created and devised by human laws for the purposes of society and government, which are also called corporations or bodies politic. ~ Blackstone</em></p>
The modern corporation is many things. It is the embodiment of corporate work. It is an entity endowed with rights the state is bound to respect. It is an entity whose existence and status are subject to the will of the sovereign. And it is an entity that the sovereign holds liable for the product of its corporate work. A review of corporate history shows that the modern corporation is neither the rule, nor the exception. What else does this history show?
The history of the evolution of the corporation in all its Roman and Germanic forms demonstrates that the corporation really is as Blackstone described it: Devised by human laws for the purposes of society and government. This dual formulation, of society and government, captures the essence of the corporate form. For those who would replace the modern corporation with something better, that duality is vital; government and society are not one and the same. The spirit of Roman law was empire, and the foundation of empire is the sovereign state. The spirit of Germanic law was self-determination, a condition that relies upon the weakness of the state and the strength of civil society.
If there is a historical essence of the corporation in Western Law, it lies within the relationship between state power and private organization.
Where Roman law was strong, the state subjugated the corporation, and the corporation became an agent of the state. Where Germanic law prevailed, the corporation remained an agent of its members. What then, of the modern multinational corporation, the progeny of Anglo capitalism, the product of these two traditions, imperial and entrepreneurial? What to make of these entities which, in the words of David Korten, “rules the world?”
Consider again the American Revolution of the 1770s-80s. With the abolition of the aristocracy, and the replacement of the monarchy with the democratic republic, the “people” assumed sovereignty. In practice, “the people,” included only a small percentage of human beings alive at the time, yet in practice, the concept of popular sovereignty became the bedrock for democratization for years to come. And in practice, popular sovereignty meant that the new state regarded the corporation as an occasionally necessary evil and often dangerous obstacle to the exercise of the popular will.
Thirty years after drafting the US Declaration of Independence, Thomas Jefferson famously warned of the dangers posed by the corporation, writing of the need to “crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”
Today, instead, the aristocracy of the corporation has grown to full maturity, wielding the power of the state and its laws in the governance of the people. The United States has experienced a corporate counterrevolution, and the entire world is living with the consequences.
What then is the alternative? The motto of the World Social Forum is “Another world is possible,” and the motto of the US Social Forum organizing committee, “Another world is necessary!” What will that world will look like, and how do democrats avoid a repeat of the experience of ‘76 – a democratic revolution followed by a counterrevolution in which the imperial corporation once again strikes back?
It is hard to imagine a society absent corporations of any kind. Human beings will cooperate, and produce things together, and recognize the product of their collective labors as corporate work. Yet history shows that other key aspects of the modern corporation – namely corporate personhood and liability – are neither inevitable nor to be preferred. Indeed, those corporate qualities are correlated with the strong state and empire, hardly friends of democracy.
The difficult question, in the end, is that of sovereignty, and of the relationship between the state and the corporation. Regulation and chartering of corporations in the public interest is a fine thing, but what happens when the regulated capture the regulatory state, and become the regulators? As has occurred in this past century? On the other hand, what fate can be expected of a society that allows corporations to run rampant? In effect creating an environment of corporate mini-states, the very condition which fed the formation of Imperial Rome in the first place?
If not a third way, there is another way. The democratic ideal has always shared certain common elements: Global guarantees of civil rights paired with local economic control; the basic equality of all people paired with the sovereignty of all the people; recognition that violence and democracy cannot coexist. All in all, an alternative to empire and barbarism, a society of democratic corporations organized on the basis of mutual aid; a vision of a federation of cooperatives and of democratic communities – the cooperative commonwealth.
Ben Manski is an attorney with Manski Law & Communications, LLC, and the editor of the Liberty Tree Journal. He is also a member of the Speak Out! speakers bureau: http://www.speakoutnow.org/