The armed corporation

A common fear statists have of a free society is that a corporation, or some other large entity, would one day take up arms and attack and control people. In effect, this fear is the same as the fear of a government: that a small group will get together to take money and power away from a larger population. I agree that we must remain vigilant about such things, which is why free communities have many options for dealing with such a scenario.

As I explain in my post on human nature, humans have a sense of reciprocity: you help me and I will help you. The good guys, and good businesses that provide value to their customers, are the ones that succeed over time. That is why the image of the free market as the “law of the jungle” is erroneous. The law of the jungle is where the powerful come to dominate others, which is what a state enables. A free market means businesses would need to provide value, or they would not make money.

There are some psychopaths out there. We do not want to give psychopaths the means of violence, which is the main reason we should deny them access to the levers of the state. But they may also have access to large amounts of money through a corporation on the free market. They will lose from any customers who consider their actions illegitimate, but it is possible those customers will not know. That is why we have the media.

The huge variety of media in our society, from Democracy Now to Fox News to our friends and family, are one way to tackle organisations that act immorally, because consumers will withhold their dollars if they are deeply opposed to a business’s actions. Many consumers make choices based on their impressions of the companies they buy from. There have been a number of successful boycotts, which give more credence to the fact that businesses a) are beholden to the market and b) can be pressured by small numbers of ordinary people into changing for the better. Business groups such as the Better Business Bureau ensure that ethical businesses get certain benefits of belonging to clubs and the unethical ones get shunned.

All manner of organisation can use boycotts, along with public shaming of people involved, if their rules for ethical behaviour are broken. Shaming can actually be a powerful weapon, as we see when we see a man’s bad cheque on the side of a cash register. It can be used against those who violate the non-aggression principle, as has been suggested regarding police who use pepper spray on unarmed protesters. We need good reputations in life to be able to sign contracts, and we sign many of them in our lives. (Two people who have thought and spelled out the problem well are Stefan Molyneux on dispute resolution and David Friedman on private law.)

Since the people who own and run corporations would no longer have limited liability or other legal protections, the same rules apply to them as to corporations themselves, and anything I say about corporations must apply to the people who make them up. Through private law, people would be able to sue individuals working in the businesses who perform acts of aggression, rather than just suing the corporation. No corporate personhood, no bailouts and other transfers from taxpayers to corporate executives, no regulations preventing small businesses from entering the market: corporations would be far weaker without the state.

They would also have no legal mandate to make a profit, though it is more accurate to say that at the moment they must do what their shareholders want. As not all shareholders of all corporations are purely interested in making money, and others believe ethical behaviour is a way to make money, some of them have taken to shareholder activism, and have made positive changes in the corporations they own that way. Here we have yet another check on corporate power, and I see no reason to believe it would disappear without a government.

The idea that we should worry about private armies is misplaced. Whom does the national military serve? The elite control the state. The state and all its institutions serve the elite. A national military is the private army of the elite. It is paid for by the taxpayers, rather than the elite. In fact, the elite would probably not make money if they needed to pay for their wars themselves.

Some businesses benefit when a state goes to war, but not many. It is usually only the select businesses whose executives and shareholders belligerent governments are beholden to. But the question people who fear a corporation might go to war fail to ask is, who pays for modern war? Taxpayers gain nothing from war; they only lose. Businesses only profit when they get someone else (ie. taxpayers) to pay for it. If Halliburton had armed itself and gone into Iraq for oil, the costs would have far outweighed the benefits. It could have just traded with free people for it and saved millions on weapons. (See my take on the case of Iraq here.)

At the moment, some big corporations, usually oil companies, do attack people indirectly. They move into an area of people with no means to defend their land and the local government defends them against possible peasant unrest. It is possible to blame the corporations that bribe the state to use violence against these innocent people. However, if the state did not exist, the means of violence would not be paid for by the taxpayer. It would be paid for by customers, who would pay higher prices, and employees, whose wages would be lower. In effect, the tax would shift from individuals who do not benefit to those who do, and the prices might be exorbitant.

Moreover, bad PR costs a lot. People of conscience who find out that corporations are employing violence can boycott the corporations. All these things hurt sales. But we cannot force the people in the state who use violence to pay for it themselves, nor can we boycott the state. If a corporation stops caring about making money in the marketplace and only extracts it by force, it has become a state. Thus, the argument that if the state no longer existed, corporations would be just as able to commit violence does not follow. One way or another, anarchists oppose the initiation of force when done by anyone, be it a government, corporation, gang or otherwise.

But even with all this evidence corporations would not have unchecked and indominable power, it is still possible that corporations would commit overt violence, as if they were a government or a mafia, because they would probably still be disproportionately commanded by psychopaths, have lots of money and struggle for dominance. That is why the problem is not government per se, but the initiation of force. I do not care if it was a government or a corporation or just one person who killed 100 peaceful people; the problem is that they were killed. It could be hard to check corporations, like it is hard to check them and governments and other groups today. Not all information would reach everyone affected; not everyone would join in every boycott; not everyone would change due to public disgrace. So we need more ideas.

A stateless society would not be a completely peaceful utopia. How could it? When will we end aggressive behaviour? Few anarchists I know would even try. A lot of them believe that communities should separate from the state and become autonomous. Suffice to say, communities of free people would defend themselves against an aggressive corporation in the same way that they would defend themselves from any state or empire. That is something they have been doing for thousands of years. They or any anarchic society would need to have some kind of protection. That protection could come from the free market, as corporations competing for business would provide their customers with the protection they need. I understand the worry that those corporations could just turn on their customers and steal from them. However, businesses in a free market will provide enough customers with what they want that their owners will not want executives to start killing people. As Robert Murphy explains in detail, there is a market for security, and it could work very well against a corporation or any other organisation that wishes to harm people.

If a security company (or any other company that depends on repeat customers and good reputations, which is all successful ones not receiving state protection) kills or steals from or even enslaves a bunch of people, there are two problems. First, they will have less profit. I don’t think greed is necessarily bad: it depends how it is channeled. If you want to maximise profit, the rational solution might be to be a highly ethical corporation. In theory, and usually in practice, wherever free markets have existed (today’s markets are not very free), people are far wealthier, partly because they can pursue their self interest, partly because their motivation and creativity are higher, partly because they are forced to compete with others if they wish to remain profitable. If corporations want money, they are better off being good businesses and providing what the customers want, and if they do, the customers will come back.

Likewise, most corporations find that being good to their employees pays dividends in employee loyalty and motivation. If they start killing employees, or even just thwarting their attempts to unionise, employees must make a decision: stay here and risk getting bullied or murdered by this corporation, or quit and find another way to make a living. That is their decision. But as competition for workers grows, corporations need to provide better wages and working conditions. A major reason the vast majority of businesses do not regularly cheat customers and shoot employees is that it is not in the interest of their owners to do so.

Communities would still have rules, just like all societies have rules, and they could decide one of those rules would be no Walmart. That could mean no Walmart stores, no Walmart goods, and even no Walmart employees if they felt that strongly, would be allowed in the town. Every community that shunned Walmart in this fashion would mean that much less money, and thus power, for Walmart. Of course, we might not be able to get every community to push away our hypothetical violent or otherwise unethical corporation, but surely we should not force them to believe what we believe. If we are right, people might see it in time; and if they do not, they probably cannot be saved anyway.

The second solution to the problem of protection against a violent corporation is for people to defend themselves. Attempting violence against free people would probably lead to anyone sympathetic’s helping them out in the name of ending injustice, just as abolitionists used to attack slave owners in attempts to free slaves. People should really be able defend themselves anyway, at all times, whether there is a government or not, because violence can be committed whether there are 1000 police on the street or none. History shows that people band together in times of crisis, which include villages or cities allying to repel aggressors. And if they did so and had any chance of winning, where would this leave the business? It would need to reconsider any kind of violent campaign, and if a business is supposed to make money, waging its own war is clearly not the answer.

People could defend themselves, of course, but they could also have competing private defense agencies. If there is no central authority with a monopoly on the means of violence, a variety of organisations would have those means. They already exist to provide security guards, cameras, and so on. If one of them tried to attack people, the people could hire one or more of the many other organisations to defend themselves. If for some reason one turned belligerent, people could call another, or several others. And if worst came to worst, they could take up arms themselves.

In sum, it does not follow that corporations would make things much worse without a coercive state. Corporations would have far fewer unearned benefits without the state. Oversight is provided by journalists and consumers, and is spread by the innumerable media we have at our disposal and by word of mouth. There are already rules of ethics that would continue to govern the actions of consumers and executives, and when the people make rules for themselves and their communities, they can back them up by defending themselves from greedy outsiders with force if they need to.

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  1. May 29, 2012 at 9:23 am

    Excellent essay! How’s your book coming?

    • May 29, 2012 at 9:34 am

      Getting to the last section now. I will need everyone’s help, so please comment!

      • May 29, 2012 at 10:19 am

        I’ll be glad to help any way I can.

      • May 29, 2012 at 10:28 am

        Most of the posts on this blog will be modified and elaborated on for my book. If you have any suggestions or sources, I’d love to hear them.

  1. August 19, 2012 at 2:14 pm
  2. April 25, 2013 at 11:35 pm

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