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113 March 11, 1980 THE CORPORATE DEMOCRACY ACT AND BIG BUSINESS DAY Rhetoric vs. Reality I On April 17, 1980, a coalition of self-proclaimed public interest and labor groups will sponsor "Big Business Day a nationwide "day of education and a ctionll to expose alleged abuses of (and by) corporate power in America. The keystone of Big Business Day will be the Corporate Democracy Act of 1980, scheduled to be introduced in the Congress at that time. The act proposes to weaken the powers of manage ment llautocracy,ll causing corporations to be more responsible towards social goals such as environmental concerns, community relations and employee well-being. This paper includes two views of Big Business Day. The first, an analysis of the Corporate De mocracy Act, demonstrates that the 3c is an attack on the profit motive which would reduce economic efficiency and exacerbate the problems the act's authors seek to solve. The second is an examination of the groups and personalities sponsoring Big Busines s Day. Despite Ralph Nader's claim that "The support is America,Il the groups involved are itconcentrated within what any responsible observer must regard as the left of the political and economic spectrum.I I 2 THE CORPORATE DEMOCRACY ACT INTRODUCTION The Corporate Democracy Act drafted by a coalition of self-described public interest and labor groups, is, at present a concept advocated solely by its authors. Although various portions have appeared as bills in past years, the current version has not yet be en introduced in Congress. The proposal would apply to all non-financial corporations with more than 250 million in total assets or annual sales or more than 5,000 employees in any of the three years prior to enactment. The thresholds would automatically i ncrease by 10 percent annually. TITLE I: DIRECTORS AND SHAREHOLDERS The act stipulates that a majority of the Board of Directors must be llindependent,Il i.e not have been employed by the corpo ration or any organization providing services for the past fi ve years In addition, the independent directors cannot have an equity interest in the corporation its own staff, independent of management. The Board shall be provided The act would also require that at least nine board members be delegated the additional responsibilities of investigating corporate performance in relation to 1) employee well-being; 2 consumer protection; 3) environmental protection; 4) community relations 5) shareholder rights; 6) law compliance; 7) technology assessment; 8) anti-trust st andards; and 9) political relations. The proposal would furtf;er require the creation of Audit Nominating, Compensation, Public Policy, and Law Compliance Committees which would only require a majority membership of independent directors, all would be comp osed entirely of independent directors. The Public Policy Committee, for instance, would be responsible for those public or political positions taken by the company that may have a significant impact on employees, consumers suppliers, individual -communit ies and the physical environment I With the exception of the Public Policy Committee Shareholders would be permitted to nominate candidates for the Board of Directors, based on some minimum support requirement A shareholder would be permitted to cast all h is votes in favor of a single candidate, regardless of the number of vacancies to be filled Finally, the Corporate Democracy Act would establish a shareholder referendum on any action, i.e sale, purchase, etc involving ten percent of the corporation asset s or outstanding stock 3 TITLE 11: CORPORATE DISCLOSURE Each corporation would be required to include within its annual report a breakdown of its workforce by sex, race, and job its actual average daily emissions and effluents, and the total of all occupat ional injuries and illnesses. The twenty largest stockholders, the number of shares held, and their addresses would also be required. The annual report would also include the effective annual tax rate, federal contracts, grants and subsidies, and any tax expenditures. Finally, the Securities and Exchange Commission would be Ifauthorized to require further disclosure to enable stockholde r s to make judgments on a firm's social performance and impact on the human and natural environment TITLE 111: COMMUNITY IMPACT ANALYSIS A corporation would be required to give the Secretary of Labor, employees, and community representatives 24 months noti c e of any closing or relocation which results in a loss of 500 jobs within a geographically continuous area or 20 percent of the labor force of a standard metropolitan statistical area. The Secretary would be empowered to appoint an arbitrator with subpoe na power'to investigate the circumstances and consequences of any closing. The corporation would be liable for an unspecified percentage of the local government's tax revenue loss attributable to a closing or relocation. TITLE IV CONSTITUTIONAL" RIGHTS OF EMPLOYEES The act would amend the National Labor Relations Act to prohibit employee termination because of an exercise of constitu tional, civil or legal rights, the refusal to engage in unlawful conduct, or the refusal to submit to a polygraph test or a personal search. TITLE V: INTERLOCKING DIRECTORS AND OFFICERS Any director serving more than two corporations is subject to a civil penalty of not more than $10,000 per day. TITLE VI: CRIMINAL AND CIVIL SANCTIONS A Federal Court may require a corporation convicted of fraud to notify the class of persons affected. The proposal would also require restitution to victims of corporate misconduct. Failure to report a hazardous product or process may result in a $50,000 fine and/or imprisonment of the responsib l e individual. 4 TITLE VII: JURISDZCTION AND PENALTIES The final section of-the proffered legislation establishes jurisdiction, penalties, and gives any individual standing to sue. Finally, it mandates that No firm that regularly fails to meet the standard s of the Securities and Exchange Commission shall be permitted to engage in commerce in the United States." ANALYS IS Advocates of the Corporate Democracy Act base their arguments on two premises. One, corporations are dominated by a management I1autocracy l1 which has successfully insulated itself from not only labor, community, and environmental groups, but also the share holders and directors. Secondly, since the purported cause of the estrangement is state competition for corporate charters, the only vi able solution is minimum, federally-mandated standards of corporate behavior. Implicit within these assertions, and thus the source of their fallacy, is a perception of the corporation as a political rather than an economic entity. The proponents of I'corp orate democracy1' fail to acknowledge, possibly even to realize, that profit maximizing behavior advances the public interest through responsiveness to consumer desires lower costs, more efficient means of production, and greater STATE CHARTERS The compet ition between states it is charged, has resulted in a I'rush tu the bottomll and excessively pro-management corporate charters. Delaware with its inordinate number of corporate headquarters, is allegedly the worst offender. The evidence refutes\\ the claim that states have become increasingly ''pro-management By their definition a Ifpro management" charter, by increasing the discretion of management constricts the rights and duties of shareholders. However, since the equity values of corporations obtaining a Delaware charter have not declined, shareholders must either not find: 1 a Delaware charter I1pro-managementl1 or 2) any significance to the l1pro-managernentl1 bias. In either case, the need for federal legislation to protect the shareholder does not ex ist. CORPORATE AUTOCRACY To support the case for federal restrictions, proponents rely not on quantitative or analytical data, but rather on inci dents or examples such as Love Canal, political payoffs, or defective products. It is claimed existing laws ar e not capable of preventing or penalizing such behavior because the large 5 corporations have become nations unto themselves, governed by a managerial elite, answerable to none. The proper remedy, as perceived by the authors of the Corpor ate Democracy Ac t, is to politicize the internal structure of the corpqration. The composition of the Board of Directors and its committees, the shareholder referendum and information require ments are designed to weaken management's discretionary decision making abiliti es and to invest greater power in the shareholders and outside directors. The desired shift to greater shareholder input is based on the belief that shareholders are not now capable of influencing corporate policy. According to proponents, greater sharehol der and independent director powers will rectify the abuses committed by the managerial elite shareholders already possess the ability to effectively influence management's policies and decisions. Through the sale or purchase of stock, shareholders can ex p ress their satisfaction or dissatis faction with management policies. Furthermore, since the stock market is highly competitive (i-e., ease of entry, accessibility of information, numerous entries), shareholders can influence the policies of a monopoly as easily as those of a highly competitive corporation. The proposition that shareholders will prove more responsive to the social goals in the proposal and less intent on profits than management is refuted by the market. For example, assume that there are m any potential stockholders more interested in social goals than dividends or capital gains. would thus have an incentive to voluntari-ly comply with the spirit ana specifics of the Corporate Democracy Act and, by doing so, attract capital suggests that st o ckholders are more interested in profits and rates of return than in social goals Assume, now, that given some minimum level of return, stock holders would prefer a corporation with the type of policies enumerated in the Corporate Democracy Act. Since so few corpora tions'have voluntarily followed the prescriptions, it suggests that such corporations could not achieve the efficiency and profit performance needed to match the non-complying competitors. This lower performance, when aggregated, would be the t otal social loss resulting from enactment of legislation similar to the Corporate Democracy Act Contrary to the protestations of the act's proponents A corporation The fact that so few have done so strongly BOARD OF DIRECTORS A key element of the act is t he proposed shift in corporate control from management to independent directors. In addition, 6 individual directors would be vested with significant responsibil ities regarding policy toward the environment, the community, and employees. Contrary to the claims of its exponents, a strengthened and specialized group of independent directors would not enhance the shareholders' welfare. The restructured board would more likely pursue policies that conflict with shareholder interests. Further m ore, the expanded power of the independent directors and the potential for stockholder veto would create inefficiencies and increase the cost of decision making As evidenced by corporate efforts to raise capital, stockholder and management goals seem to c o rrespond very closely. Thus, any shift in corporate policy would have to come from the independent directors. The inordinate responsibilities and the nature of the duties, i.e consumer protection, community relations, environmen tal protection, suggest th a t if they are not already biased, the independent directors will acquire a bias in favor of their specialities. Because they hold no equity it might be anticipated that the of the .corporation, but instead their own specialities. The boardroom could very q uickly resemble a political session in which votes are traded for reciprocative actions. Coalitions and voting blocs which either dominate or obstruct management policies could develop assign a greater priority to Ilpublic interestsIl.than to stockholders returns independent directors will pursue not the general interests I In this manner the Board of Directors might A politicized Board of Directors would also reduce the efficiency of the corporation. The existence of special interest coalitions suggests t h at corporate policy could become a matter of compromise. Rather than charting the optimal course towardhn established goal, profits, the Board of Directors would be forced to choose among competing goals, such as profits, environment and community relatio ns. COMMUNITY IMPACT The Corporate Democracy Act would require corporations to provide 24 months notice of any plant closihg or relocation. Furthermore, the Secretary of Labor would be granted subpoena power to investigate the reasons and costs of any clo sing or move It is interesting to note that the act does not create any legal barriers to corporate moves. Thus, it appears that the cyts imposed on both the corporation and the Labor Department could not possibly yield any benefit. The only value of the C orporate Democracy Act in relation to corporate relocation is to serve as a framework from which future restrictions on business mobility might evolve 7 Proponents of the act cite the declining Northeastern indus trial base and rapid development of the Su n Belt as a prima facie case for restrictions on corporate mobility corporate greed and the lure of sympathetic tax policies have motivated the abandonment of the older communities in favor of the non-unionized regions It is charged that The evidence refut e s the charge. Plant closings are not the result of relocation nor is the North in a state of economic decline. Richard B. McKenzie of Clemson University, has found that only 1.5 percent of plant closings are due to relocation He suggests instead that misg u ided or onerous public policies are the major cause of the corporate dissolutions which result in plant closings. In addition, McKenzie found that, contrary to popular perception, the northern economy is actually expanding and wage rates rising. Although the manufacturing sector has faltered, growth in the service industries has more than compensa ted for the decline. Restrictions on business mobility would impose substantial costs on all regions of the nation and all segments of the economy I The attempt to preserve the status quo will 1) impede the competi tive forces which lead to greater economic efficiency and 2 penalize existing corporations and shareholders. For example, a tire manufacturer in Ohio might be able to produce tires more cheaply in Ariz o na. Restrictions on mobility would prevent the Ohio corporation from moving to Arizona. However, there would be no prohibition against a new tire manufacturer developing an Arizona facility. Should that occur, as would seem likely, the Ohio tire producer would lose portions or all of its market. Thus, even with the restrictions against mobility, the center of tire manufacturing would shift and Ohio jobs would be lost. However, by forcing the shift through inferior channels, restric tions against mobility would create significant costs or inequities. A major cost would be the loss of the Ohio manufacturer's expeitise. In addition, shareholders of the Ohio corporation would suffer a legislated loss in the value of their holdings I 4. REGULATION It is inter esting to note that even as public and professional opinion has turned against regulation and its apparent excesses the advocates of'the Corporate Democracy Act would extend the regulatory scope by substituting what are now constraints for corporate goals . Protection of the environment, for instance, currently a duty of the government, would become a duty of both government Richard B. McKenzie, Restrictions on Business Mobility (Washington American Enterprise Institute for Public Policy Research, 1979 D.C. : 8 and the corporation. Although at first.glance this appears to be a meritorious proposal, corporations would inevitably encounter a conflict between discretionary and non-legislated environmental protection and the need for profits. The consumer-voter is capable of influencing corporate activity through two channels shall produce and government, representing the voters, establishes rules of conduct. Thus, the consumer-voter indirectly chooses between economic efficiency and social goals. The Corporate Democracy Act would destroy this balance by requiring corporations to perform a function not only more appro priately pursued by government, but in excess of government Presumably the corporation would be asked to exceed existing legislative constraints. I f not, there is little justification for the Corporate Democracy Act The essence of the act would be to take away the consumer-voter ability to influence the efficiency-social good trade-off. The net effect would be to force the corporation to achieve a h i gher Ilsocial performance than the law demands and consequently achieve a lesser economic performance than the consumer desires Consumers dictate what corporations CONCLUSION the corporation and thereby reduce management's discretionary decision-making ab i lity weakening the powers of the managerial Itautocracyl1 and strengthen ing shareholders and independent directors, the corporation will become more responsive to social goals, such as environmental concerns, community relations, and employee.llwell-bein g .'l The intent of the Corporate Democracy Act is to politicize Proponents of the act claim that, by Unfortunately, the authors of the act are not merely advanc ing social goals which they consider neglected or abused. Rather they are attacking an institut i on, the profit motive, which assures economic efficiency and therefore advances the public welfare. The animus against profits is best revealed in the proposed internal restructuring of the corporation. Rather than constrain profit-seeking through laws an d regulations protecting the environment and the community, the-authors would instead replace the goal of profits with what are now social constraints. The Corporate Democracy Act would reduce economic efficiency by creating numerous barriers and obstacles to profit-maximizing behavior. Corporations, in fact all forms of business organiza tions, provide a unique benefit In pursuit of their own interests, corporations advance the public welfare. Act, by attempting to dictate social goals for corporate manag ement will weaken or destroy the incentive which has produced our material wealth The Corporate' Democracy I Eugene J. McAllister Walker Fellow in Economics 9 THE NEW LEFT AND BIG BUSI.NESS DAY A Preliminary Survey BIG BUSINESS HAS A PLAN FOR THE 1980's: MORE MONOPOLY. WEAK UNIONS. LOWER SAFETY STANDARDS. EXCESS PROFITS So states a brochure currently being disseminated by an organization calling itself Americans Concerned About Corporate Power, organizer of Big Business Day, a nationwide action scheduled for April 17 19 80. The brochure is couched in terms obviously designed to appeal to those whose conception of corporate enterprise is one of lust for power and profit untrammeled by considerations of ethics or decent respect for preservation of the environment or the pu blic health. The following language from the document speaks for itself Some people think that corporate power has been tamed --that state and federal laws, ltcountervailingll forces like labor, and "shareholder democracyll have curbed corporate abuses. If you think they're right, consider the follow ing Last year over 100,000 people died from cancer they got on the job, in the air, in their food. YET BIG BUSINESS HAS LAUNCHED A PROPOGANDA sic] WAR TO UNDERMINE OSHA, TRE CLEAN AIR ACT AND PURE FOOD LAWS While prices jumped 13% this year, take home pay for workers rose less than 9%. YET BIG BUSINESS SPENT ALMOST $500 MILLION FOR PROFESSIONAL UNION-BUSTERS TO CUT WAGES EVEN MORE In the past few years there has been an explosion of corporate crime from 400 companies admitting payoffs to hundreds of chemical timebombs like Love Canal. YET BIG BUSINESS OPPOSES NEW CRIMINAL SANCTIONS AS "OVER-DETERRANCE [sic It to elect their friends to Congress In 1978, big business spent over $20 million YET, IN 1980 THEY PLA N TO DOUBLE THAT POLITICAL ACTION SPENDING From 1975 to 1978, giant conglomerates increased by three fold the number of smaller businesses they gobbled up. YET BIG BUSINESS OPPOSES NEW ANTITRUST LAWS AS VIOLATIONS OF THE "FREE MARKET Make no mistake, big business is on the march. 4 10 To counteract this marching corporate monolith A national Big Business Day' office [in Washington, D.C will coordinate activities, prepare materials, generate publicity, and help local groupsi1 to organize for Ita day of edu c ation and action, of descrip tion and prescriptionll that ,llwill carry the message to other To government and the media." This effort to "FIGHT CRIME IN THE SUITESff is iqtended as Ita kick-off" for a coordinated national campaign Americans. To members o f unions, churches, and citizen groups. Just as Earth Day in 1970 was the start for so many environmental successes in the last decade, Big Business Day is the kick-off for the campaign to curb corporate abuse in the 1980Is. It builds on the effec tiveness of similar events such as Food Day and Sun Day and will leave a similar legacy It is projected that with !'the attention that national leaders can bring and the cooperation of people in communities across America our groupfs efforts will be part of a lar g er stronger coalition challenging corporate abuses.Ir This coalition will help the American people to Wnderstand what big business1 plan for the 1980's is all about1' so that they will I'know about apartheid in South Africa. Or union busting in North Caro lina. Or chemical poisoning in Buffalo. Or 'red-liningl in St. Louis. Or low wages for women and minorities across the country.I1 Further, it will help people "LEARN HOW TO FIGHT BACK." This goal is described as follows Opposition alone to big business is not enough. People need to know the alternative That means telling them about legislation like the Corporate Democracy Act of 1980Il that would make these private governments1' more accountable to their consti tuencies consumers, workers, and local commu nities It means talking about consumer coops, credit unions and small businesses as an alternative and spur to big business It means a people's Energy Corporation of America a kind of TVA for oil and gas to keep Big Oil honest. The basic goals of this cam paign, as well as the fundamental bias of its leaders, were well articulated in a press release issued on December 12, 1979, proclaiming that "NADER, GALBRAITH LABOR ANNOUNCE NATIONAL DRIVE TO REFORM BIG BUSINESS11 and that Broad Alliance Proposes 'Big Bu s iness Day' and 'Corporate Demo cracy Act to fight 'Crime in the Suites I' The release stated that Calling for a public day to Ilexpose and repair big business,It a broad consumer, labor, religious and environ mental alliance today announced plans to hold a "Big 11 Business Day 1980Il next'Apri.1 17 and released a proposal for legislation aimed at reducing corporate abuse The 'Day! and the legislation address the funda mental question of corporate power in America,Il Ralph Nader said We as a nation need to a sk who governs our giant corporations, and how do they in turn govern us? The.bil1 seeks to refofm the corporation by increas ing the accountability of its decision-making process It would grant greater rights of access and voice to the various contituenc ies of the giant corporation workers, consumers, communities, and shareholders. William Wynn, the president of the United Food and Commercial Workers, the largest AFL-CIO member union said, "Just as the 1950s scrutinized the labor movement and the 1970s bi g government, this Day will mark the 1980s as the decade to correct the abuses of big,business. We in the labor movement think it's time for a Landrum Griffin Act for big business.I Professor John Kenneth Galbraith, the noted econo mist and author, said, ItBecause I would like to see big business better understood I urge that we all take a day to se e how it sets prices, persuades consumers influences legislation, and otherwise plans our lives. We want all to realize that the voice of the corporate leader, resonant and with access to the media, regularly gets mistaken for the voice of the masses." Bo th domestically and internationally, 'Ithe inexor able interest of big agribusiness is the control and exploitation of resources, including helpless peasants and God's good earth," Catholic Bishop Thomas Gumbleton of Detroit, president of Bread for the Wo r ld, said These abuses are of enormous concern to the church The same release outlined the projected range of events'to be conducted across.the United States on Big Business Day We intend to do for big business what Earth Day Food Day and Sun Day did for t h eir subjects expose abuses and explore alternatives,I' said Mark Green, the president of Big Business Day's board of directors In hundreds of communities across the nation there will be teach-ins and debates, alternatives-to-big business fairs, the promot ion of small business and appropriate technologies trials' of corrupt companies nominations for a !'Corporate Hall of Shame, symbolic bread lines' at banks that red-line communities, and a compilation of models of corporate social responsibility." The even t will also publish an anthology The Big Business Day Reader," and a book of profiles entitled The 50 Businessmen You Don't Know Who Run America 12 As observed in the February 11, 1980, issue of Business Week, however, the ''centerpiece of the campaign" i s to be the Corporate Democracy Act of 1980, summarized by the magazine in the following passage Among other things, the draft's provisions would enhance corporate accountability by requiring boards to be made up of a majority of independent directors and t o have some of the directors responsible for such things as employee well-being and consumer relations require 24-month notification of plant relocations and closedowns; prohibit discrimination against employees for 'lwhistle=blowing1 prohibit anyone from simultaneous ly serving as a director of more than two companies and provide stiff penalties for violations of environmen tal and o.ther laws, restitution to victims of chemical spills and the like, and disqualification of convicted executives. The coalit i on likens the bill to the 1959 I Landrum-Griffin Act I The basic rationale for the proposed legislation is contained in The Case For a 'Corporate Democracy Act of-1980, an ACACP publication that sells for 10.00 per copy. The title page of this volume refl e cts that the study was prepared by Mark Green of Public Citizen's Congress Watch; Alice Tepper Marlin of the Council on Economic Priorities; Victor Kamber of the Building and Construction Trades Department of the American Federation of Labor-Congress of I n dustrial Organizations; and Jules Bernstein Associate Counsel, Laborers' International Union of North America AFL-CIO. The analysis is predicated upon the assumption that there are two forms of government in the U.S the political government and the econom i c government Inextricably intertwined with this view is the corollary axiom that 'Ithe economic government is largely unaccountable to its constituenciesIt and is thus able to operate effectively above or outside the law in a manner basically antithetical to democratic usages: Wltimately, then, the issue is not.regulation vs. freedom Nor is it capitalism vs. socialism. It is autocracy vs. democracy Plans for Big Business Day have apparently been discussed for a considerable period of time; according to the December 12 1979, release The initiating consumer and labor sponsors began planning the Day six months ago." Also, there appears to be a wide range of support for the effort among consumer, labor environmental, and other special-interest activist organiza t ions and individuals as shown by the following paragraph from the same source About sixty prominent groups and citizens will be contributing resources and time to the Day, including the Building Trades Union, UAW [United Auto Workers, AFL-CIO Public Citiz e n, National Council of Senior Citizens, Consumer Federation of America, Friends of the Earth, Machinists Union [International Association I 13 of Machinists, AFL-CIO], actor Ed Asner, environmentalist Barry Commoner, James Farmer, the founder of CORE Cong r ess of Racial Equality], Patsy Mink, head of ADA Americans for Democratic Action and Rabbi Marc Tanenbaum. Thousands of other groups and individuals are in the process of being solicited to participate in this new consumer-worker alliance, organizers said . The previously-cited '!Nor is it capitalism vs. socialismIt statement from The Case For a Corporate Democracy Act of 1980 is indicative of something lexplicitly stated by Ralph Nader according to the Business Week article: Il'This is not a fringe group,' says Nader, adding The support is America.'Il Obviously, such a statement is mandatory for any individual, organization or coalition that truly wishes to achieve the broadest possible respectability by appealing to the maximum possible numbers of people i n the case of Big Business Day, however, its validity is questionable An undated list of "PUBLIC INTEREST AND LABOR GROUPS INITIALLY SUPPORTING THE CORPORATE DEMOCRACY ACT for example, includes the following, most of which will be readily recognized Congr e ss. Watch-Public Citizen Council on Economic Priorities Consumer Federation of America Environmental Action Environmental Policy Institute/Citizen's Coal Project Equal Justice Foundation National Consumers League Virginia Citizen's Consumer Council Americ a n Federation of State, County, and Municipal Employees Building Trades Department, AFL-CIO Food and Beverage Trades Department, AFL-CIO International Association of Machinists Newspaper Guild United Famworkers Union United Food and Commercial Workers Simi l arly, the December 1979 press release stated that Michael Jacobson, director of the Center for Science in the Public Interest, is the secretary-treasurer of the Day's board of directors; Jules Bernstein, a union attorney, and Victor Kamber, assistant to t h e president of the Building Trades Union, are among the other founding board members; and Michael Schippani, recently with the Amalgated [sic] Clothing Workers, is the event's national coordinator A presumably complete roster of Big Business Day's board o f advisors and board of directors was printed on the !'BIG BUSINESS list with identifying data, is as follows HAS A PLAN FOR THE 1980'S1' brochure cited earlier. The full 14 Board of Advisors Ralph Nader (Consumer advocate John Kenneth Galbraith (Prof. Eme r itus, Harvard University William H. W~M (Pres., United Food and Commercial Workers Douglas A. Fraser (Pres., United Automobile, Aerospace, and Agricultural Implement Workers of America Patsy J. Mink (Pres., Americans for Democratic Action James Farmer (Ex e c. Dir., Coalition of American Public Employees Gar Alperovitz (CO-Dir., Exploratory Project for Economic Alternatives Ira Arlook (Exec. Dir., Ohio Public Interest Campaign Ed Asner (Actor George Ballis (Rural America, National Land for People Richard Bar n et (Co-Author, GLOBAL REACH Julian Bond (State Senator, Georgia Heather Booth (Mid-West Academy David Brower (Founder, Chair of the Bd., Friends of the Caesar Chavez (Pres., United Farm Workers of America Jacob Clayman (Pres., National Council of Senior C i tizens Barry Commoner (Dir., Center for Biology of Natural Systems John Conyers (Member of Congress Ronald V. Dellums (Member of Congress Ed Garvey (National Football League Players Association Robert Georgine (Pres., Building and Construction Trades Bish o p Thomas Gumbleton (Auxiliary Bishop, Archdiocese of Robert Harbrant (Pres., Food and Beverage Trades Department Michael Harrington (Nat. Chair., Democratic Socialist Fred Harris (Prof., University of New Mexico Robert Heilbroner (Prof. New School for Soc i al Research Jim Hightower (Author, EAT YOUR HEART OUT Irving Howe (Prof., Hunter College William Hutton (Exec. Dir., National Council of Senior Mildred Jeffrey (Former Nat. Chair., National Women's Mary Gardiner Jones (Former Commissioner, Federal Trade F r ances Moore Lappe (Co-director, Institute for Food and Robert Lekachman (Prof., City University of New York Joyce Miller (Vice Pres., Amalgamated Clothing and Textile Kathleen O'Reilly (Exec. Dir., Consumer Federation of America Wade Rathke (Chief Organiz e r, ACORN Jeremy Rifkin (Dir., People's Business Commission Arthur Schlesinger, Jr. (Albert Schweitzer Prof. of Humanities Earth Department, AFL-CIO) Detroit AFL-CLO Organizing Comm Citizens Political Caucus Commission Development Policy Workers City Unive r sity of New York 15 Stanley Shei'nbaum (American Civil Liberties Union Scott Sklar (Washington Dir., National Center for Appropriate Timothy Smith (Exec. Dir., Interfaith Center-on Corporate Rabbi Marc Tanenbaum (American Jewish Committee Mary Luke Tobin, S.L. (Thomas Merton Center William W. Winpisinger (Pres., International Association of Jerry Wurf, (Inter. Pres., American Federation of State Technology Responsibility Machinists and Aerospace Workers County, and Municipal Employees Board of Directors I M ark Green, President of the Board (Dir., Public Citizen's Congress Watch Dir., Center for Science in the Public Interest Union Church Trades Department, AFL-CIO Priorities) Workers national Association of Machinists tion Michael Jacobson, Secretary-Treasu r er of the Board (Exec AN1 Beaudry (Conference on Alternative State and Local Policies Jules Bernstein (Associate Counsel, Laborer's International David Burgess (Minister, Newark, N.J Thom Fassett (Board of Church and Society, United Methodist Peter Harnik (Consultant, Co-coordinator of Sun Day Victor Kamber (Asst, to the Pres., Building and Construction Alice Tepper Marlin (Exec. Dir., Counsel [sic] on Economic William Olwell (Inter. Vice Pres., United Food and Commercial Marjorie Phyfe (Rep Non-Partisan P o litical League, Inter Frank Viggiano (Exec. Dir., United States Student Associa Nader, Galbraith, Winn, Fraser, Mink, and Farmer also have been listed as !'Initiating Sponsors11 on literature issued by organizers of Big Business Day. In addition, an undat e d Big Business Day document lists the following as I'New Members of the Big Business Day Advisory Board Marc Caplan (Director, Connecticut Citizens1 Action Group Art Danforth (Cooperative League of U.S.A Joe Fish (Director, Carolina Action An undated but recent Big Business Day literature list and order form printed on the organization's letterhead reflects the addition of the following to the Board of Advisors Fitzmaurice, Ruth Yannatta Goldway, George Hardy, Richard G. Hatcher, Sr. Barbara Lupo, Frank D. Martino, Iris Mitgang, and Carl Scarbrough. This document further reflects the addition of Pat Ford-Roegner to the Board of Directors Representative Jonathan Bingham D-N.Y David J. 16 Monseigneur George Higgins (U.S. Catholic Conference Bruce Ratner (New York City Commissioner of Consumer Affairs Representative Benjamin Rosenthal (D.0N.Y Donald Ross (Director, New York Public Interest Research Group Harold Willens (Chairman, Factory Equipment Corporation Sandra Willet (Exec. Director, National Consumer Le a *e The identifying data as given'in Big Business Day's own substantial number of the movement's'key supporters and organizers effectively rebut Nader's rather sweeping claim that !'The support is America While it may represent a significant element within the overall range of public-policy thinking in the United States support for Big Business Day is demonstrably concentrated within what any responsible observer must regard as the left of the political and economic spectrum literature clearly indicate that the principal affiliations of a I This is indicated also by the fact that seed money for Big Business Day, as revealed in the December 1979 press release, was provided by a grant of 15,000.00 from the Stern Fund, a New York-based tax-exempt foundation tha t has served as a major support for the radical-leftist Institute for Policy Studies,* a Washington, D.C. institution that has served for many years as the principal "think tank" for the so-called New Left in the United States. Stern money also went to sup p ort the frankly revolutionary People's BiCenteMial Commission led by Big Business Day supporter Jeremy Rifkin The successor to the PBC is the People's Business Commission, which operates from offices in the same building in Washington, D.C., that houses t he headquarters of Big Business Day and Americans Concerned About Corporate Power. The same pattern is indicated when one examines the records of those who serve as members of the Big Business Day advisory board. Both John Conyers and Ronald V. Dellums, fo r example, are actively associated with the U.S. Peace Council, an affiliate of the World Peace Council, an international Communist-front apparatus controlled by the Communist Party of the Soviet Union. Both were also prominent supporters of the National P eace Action Coalition an anti-Vietnam war enterprise controlled by the Trotskyite Communist Socialist Workers Party, and endorsers of the founding conference of the National Alliance Against Racist and Political Repression, a nationwide organization contr o lled by the Communist Party, U.S.A.' Conyers. has also been an active member of the National Lawyers Guild, "legal bulwark of the Communist Party.I Edward Asner, in addition to being an actor of note, has supported both the National Emergency Civil Libert i es Committee, cited as a front for the Communist Party, U.S.A and the Political Rights Defense Fund, an adjunct of the Socialist Workers Party For detailed background on IPS and several of its subsidiary operations see Heritage Foundation Institution Anal y sis No. 2 Institute for Policy Studies I May 1977 17 Some members of the advisory board also have ties to the so-called "anti-defense lobby It* Specifically, Harold Willens has also been listed as a member of the advisory board of the Center for Defense I n formation, a project of he leftist Fund for Peace, on whose board Willens' also serves along with Julian Bond and Barry Commoner; another FFP board meniber is Senator Howard Metzenbaum of Ohio, who is expected to introduce the Corporate Democracy Act of 1 9 80 in the United States Senate as part of the Big Business Day schedule. Another FET project is the Center for National Security Studies, nm by Morton Halperin as part of the anti-intelligence lobby; Richard Barnet has been listed as a member of the CNSS a dvisory board. He has also been listed as a member of the advisory board of another Fund enterprise, In the Public Interest, as has Jeremy Rifkin An apparatus which enjoys close ties to various components of the Itanti-defense lobby particularly the Coali t ion for a New Foreign and Military Policy and many of its major affiliates, is the Mobilization for Survival, whose International Co-Convenor is also an activist in the Soviet-controlled World Peace Council and its American affiliate, the U.S. Peace Counc i l. It is noted that among those who attended the third national conference of the MFS in Louisville, Kentucky, in late 1979 was Alice Tepper Marlin, a supporter of Big Business Day who is also President Ex-Officio of the Council on Economic Priorities. Ac c ording to a report on the conference published in the December 28, 1979, issue of the authoritative Information Digest, CEP was among those groups which organized workshops at the conference. The same source further indicates that the following individual s listed as suppor- ters of Big Business Day serve as members of CEP's board of directors: Mary Gardiner Jones, Robert Heilbroner, Alice Tepper Marlin, Richard Barnet, Hazel Henderson, and Timothy 8. Smith. Big Business Day supporters Richacd Barnet and Ronald V. Dellums were listed as speakers for another aggressively leftist operation; the National Conference on Cuba, held in November 1979 at the Riverside Church in New York City under the auspices of the Center for Cuban Studies, a New York-based orga n ization of uro-Castro comDlexion. Accordincr to the November 9, 1979, issue bf Information-Digest, CCS Ifprovides a New York focal point for the Venceremos Bricxade (VB for travel to Cuba, and for Cuban officials at the U&ted'Naiions Mission. I' This- sou r ce reflects that Dellums praised Cuba's 'commitment' to ending 'colonialism and said, 'It is a role that the U.S. should be endorsing and emulating instead of attacking' and further quotes Dellums as saying in his remarks that "Cuba is creating a society t hat was the dream 'of Dr Martin Luther King. I See Heritage Foundation Institution .Analysis No. LO The Anti-Defense Lobby: Part I, Center for Defense Information April 1979; Institution Analysis Xo. 11, "The .Anti-Defense Lobby: Part 11 The Peace Movemen t , Continued September 1979; and Institution Analysis No. 12 The Anti-Defense Lobby: Part 111, Coalition for a New Foreign and Military Policy," December 1979.la Several supporters of Big Business Day have also been actively involved in the Democratic Soci a list Organizing Committee and, its offshoot, the Democratic Agenda an apparatus which works generally within the left wing of the Democratic Party. A Democratic Agenda document circulated prior to the November 1979 Democratic Agenda 1979 Conference in Was h ington, D.C stated that the organi zation is "fighting to make sure the Democrats keep the promises they made US to confront the problems of excessive corporate power, dying cities, soaring prices, growing unemployment and declining public serriceF1f and a dded that '#The problem is the stranglehold big corporations have on the economy and the political system.If According to the December 29, 1979, issue of Information Digest, the Ilinitiators" of DSOC, formed in 1973 as a result of a split within the Socia l ist Party largely over the issue of Ilcooper ation with communists If. include Julian Bond, Heather Booth, John Conyers, Ronald Dellums, Douglas Fraser, Joyce Miller, William Winpisinger, and Jerry Wuf, all of whom are currently supporting Big Business Da y brochure listed Winpisinger, DSOC national chairman Michael Harrington, and Barry Commoner as speakers at conference IfPlenaries If with Big Business Day supporters Mildred Jeffrey, Robert Georgine, Heather Booth, Ira Arlook Mark Green, Jules Bernstein, J ames Farmer, and Marjorie Phyfe listed as IfSpeakers If Conference llInitiatorsll included Booth, Harrington, Jeffrey, Winpisinger Phyfe, and Wurf, in addition to Conyers, Dellums, Fraser, Irving Howe, and Robert Lekachman all of whom are also members of t he board of advisors for Big Business Day The previously-cited Democratic Agenda conference By far the most significant pattern of interlocking affilia tions characteristic of those supporting Big Business Day, however is indicated by the presence of Ann B eaudry among the members of the board of directors affiliated with the Conference on Alternative State and Local Policies no further qualification being provided. In fact, the Conference was founded in June 1975 as the National Conference on Alternative S tate and Local Public Policies and was organized explicitly as a project of the Institute for Policy Studies. IPS, as mentioned earlier, has serred for many years as the principal think tank" for the New Left movement in the United States and has been deep ly involved in the so-called economic democracy movement since its inception an inception in which IPS and its affiliates played a key role.* Today, for example Beaudry is identified simply as being In February 1977, IPS-connected activists played key rol e s in the California Conference on Alternative Public Policy held in Santa Barbara, California, and sponsored by the California Public Policy Center, a major West Coast outlet for IPS programs and activism effort, also known as the "Santa Barbara Conferenc e on Economic Democracy was the Campaign for Economic Democracy. Yannatta chaired one of the conference workshops; and a basic conference Working Paper" entitled TOWARDS CONTROLLING CORPORATIONS prepared by the CPPC and published by it in conjunction with the Santa Barbara gathering bears striking resemblance in emphasis and rhetoric to significant segments of the rationale currently being advanced in behalf of the Corporate Democracy Act of 1980 some observers as probably the birthplace for the "economic d emocracy movement that has now found national focus in Big Business Day and the Corporate Democracy Act Another organization deeply involved in this Big Business Day supporter Ruth This conference provided a major impetus and is regarded by 19 partly thro u gh interlocking relationships with both the Conference on Alternative State and Local Policies and the California Public Policy Center, IPS maintains close ties to the Campaign for Economic Democracy, a burgeoning radical movement led by Tom Hayden and Ja n e Fonda. The general thrusts of IPS material and Big Business Day-related literature are anything but dissimilar a fact that makes it of more than casua1,interest that so many supporters of Big Business Day have also seen fit to involve themselves in acti v ities of the Institute for Policy Studies or its affiliated operations Both Conyers and Dellums, for example, have been among members of Congress who have requested major federal budget analyses from IPS, one issued in 1975 and another, The Federal Budget and Social Reconstruction, published in 19787Among other members of the House of Representatives requesting these studies has been Representative Benjamin Rosenthal of New York, who is expected to introduce the Corporate Democracy Act of 1980 in the House . Conyers was also listed by IPS as an instructor for its Washington 'School during the !!Fall Quarter 1979.l' Other scheduled instructors included Richard Barnet, one of the founders of IPS and Gar Alperovitz, who heads the National Center for Economic Al t ernatives, founded under IPS auspices as the Exploratory Project for Economic Alternatives with a declared goal of achieving Ilfundamental change in the way our economy is organized EPEA and Alperovitz were also actively involved in another operation Amer i cans for a Working Economy, which views the American economic system as one of corporate monopoly power1' that Itproduces corporate profits, but increasingly destroys human lives.Il Both Conyers and Rosenthal have been carried in IPS literature as having participated in seminars and other IPS programs over the years along with such other Big Business Day supporters as Alperovitz and Barnet, James Farmer, Julian Bond, Michael Harrington, Robert Lekachman, Stanley Sheinbaum, Mark Green, and Ralph Nader. Fran ces Moore Lappe and Jeremy Rifkin have contributed articles to Mother Jones, published by an IPS project known as the Founda tion for National Progress A similar interlocking relationship exists specifically with reference to the Conference on Alternative State and Local Policies In May 1978, to cite but one example, Ann Beaudry, Mildred Jeffrey Joyce Miller, Pat Ford-Roegner, Ruth G. Yannatta, and Marjorie Phyfe attended its conference on IIWomen in the Economy and Strategies for Change" in Cleveland, Ohi o ; Beaudry, Miller and Jeffrey served as speakers at plenary sessions of this gather ing Policies Yannatta, William Winpisinger, Barry Commoner, and Ira Arlook served as speakers at the third annual conference of the NCASLPP in Denver, Colorado, in July 19 7 7; among those who partici pated in workshops at this conference were Beaudry (IIFeminist Issues: Legislative Strategies at the State Local Level Commoner ("Federal Energy Policy: Implications for Cities States Yannatta Base Building for Electoral Actionl l Don 20 Ross IIEffective Lobbying for Progressive Policiesl1 and, again Ira Arlook (IIRunaway Shopsll an alumnus of the Hayden-Fonda Indochina Peace Campaign and of the Coalition to Stop Funding the War, a predecessor of the present-day Coalition for a Ne w Foreign and Military Policy, a pivotal part of the anti-defense lobby in Washington, D.C and across the country. The fifth annual conference, held in August 1979 near Phila delphia, Pennsylvania, was attended by Harrington, Ford-Roegner Phyfe, Wade Rathk e, Douglas Fraser, and Heather Booth, who in addition to her support for Big Business Day and the CASLP, heads the Midwest Academy an avowedly radical training facility for community activism in the interests of "the actual redistribution of wealth Schedu l ed speakers, according to the official confer ence program, included the following Big Business Day supporters Gar Alperovitz IIStagflation: The Crisis of the 80 t.s?tl Heather Booth ("Stagflaton: What Implications for the State and Local Agenda Jim Hight o wer The Crisis in American Agriculture Opportunities for Progressive Change Michael Harrington ("The 1980 Presidential Campaign: Perspectives and Issues Ann Beaudry and Ira Arlook ("New Elements of A Program for the, 8OtsIf and Douglas Fraser ("Independen t Politics: Strategies for Progres sive Changett). Both Arlook and Hightower have also been listed as members of the NCASLPP steering committee It is not contended that such affiliations and activities necessarily indicate consciously evil intent; it is, h o wever contended that a definite pattern does exist and that this pattern is of a specifically leftist character, thus rendering overdrawn Ralph Nader's rather grandiose claim that "This is not a fringe group.lI The pattern of involvement in IPS and simila r operations including the CASLP, by supporters of Big Business Day is clear; and it is sufficiently clear and dufficiently extensive --to call into serious question Nader's other statement that support for Big Business Day "1s America'.t1 Support for Big Business Day and for the- Corporate Democracy Act of 1980 may be many things anti-corporate, leftist, even socialist in many instances but it is not, broadly speaking, as Nader would have it, flAmerica.tt I William T. Poole Policy Analyst
113 March 11, 1980 THE CORPORATE DEMOCRACY ACT AND BIG BUSINESS DAY Rhetoric vs. Reality I On April 17, 1980, a coalition of self-proclaimed public interest and labor groups will sponsor "Big Business Day a nationwide "day of education and a ctionll to expose alleged abuses of (and by) corporate power in America. The keystone of Big Business Day will be the Corporate Democracy Act of 1980, scheduled to be introduced in the Congress at that time. The act proposes to weaken the powers of manage ment llautocracy,ll causing corporations to be more responsible towards social goals such as environmental concerns, community relations and employee well-being. This paper includes two views of Big Business Day. The first, an analysis of the Corporate De mocracy Act, demonstrates that the 3c is an attack on the profit motive which would reduce economic efficiency and exacerbate the problems the act's authors seek to solve. The second is an examination of the groups and personalities sponsoring Big Busines s Day. Despite Ralph Nader's claim that "The support is America,Il the groups involved are itconcentrated within what any responsible observer must regard as the left of the political and economic spectrum.I I 2 THE CORPORATE DEMOCRACY ACT INTRODUCTION The Corporate Democracy Act drafted by a coalition of self-described public interest and labor groups, is, at present a concept advocated solely by its authors. Although various portions have appeared as bills in past years, the current version has not yet be en introduced in Congress. The proposal would apply to all non-financial corporations with more than 250 million in total assets or annual sales or more than 5,000 employees in any of the three years prior to enactment. The thresholds would automatically i ncrease by 10 percent annually. TITLE I: DIRECTORS AND SHAREHOLDERS The act stipulates that a majority of the Board of Directors must be llindependent,Il i.e not have been employed by the corpo ration or any organization providing services for the past fi ve years In addition, the independent directors cannot have an equity interest in the corporation its own staff, independent of management. The Board shall be provided The act would also require that at least nine board members be delegated the additional responsibilities of investigating corporate performance in relation to 1) employee well-being; 2 consumer protection; 3) environmental protection; 4) community relations 5) shareholder rights; 6) law compliance; 7) technology assessment; 8) anti-trust st andards; and 9) political relations. The proposal would furtf;er require the creation of Audit Nominating, Compensation, Public Policy, and Law Compliance Committees which would only require a majority membership of independent directors, all would be comp osed entirely of independent directors. The Public Policy Committee, for instance, would be responsible for those public or political positions taken by the company that may have a significant impact on employees, consumers suppliers, individual -communit ies and the physical environment I With the exception of the Public Policy Committee Shareholders would be permitted to nominate candidates for the Board of Directors, based on some minimum support requirement A shareholder would be permitted to cast all h is votes in favor of a single candidate, regardless of the number of vacancies to be filled Finally, the Corporate Democracy Act would establish a shareholder referendum on any action, i.e sale, purchase, etc involving ten percent of the corporation asset s or outstanding stock 3 TITLE 11: CORPORATE DISCLOSURE Each corporation would be required to include within its annual report a breakdown of its workforce by sex, race, and job its actual average daily emissions and effluents, and the total of all occupat ional injuries and illnesses. The twenty largest stockholders, the number of shares held, and their addresses would also be required. The annual report would also include the effective annual tax rate, federal contracts, grants and subsidies, and any tax expenditures. Finally, the Securities and Exchange Commission would be Ifauthorized to require further disclosure to enable stockholde r s to make judgments on a firm's social performance and impact on the human and natural environment TITLE 111: COMMUNITY IMPACT ANALYSIS A corporation would be required to give the Secretary of Labor, employees, and community representatives 24 months noti c e of any closing or relocation which results in a loss of 500 jobs within a geographically continuous area or 20 percent of the labor force of a standard metropolitan statistical area. The Secretary would be empowered to appoint an arbitrator with subpoe na power'to investigate the circumstances and consequences of any closing. The corporation would be liable for an unspecified percentage of the local government's tax revenue loss attributable to a closing or relocation. TITLE IV CONSTITUTIONAL" RIGHTS OF EMPLOYEES The act would amend the National Labor Relations Act to prohibit employee termination because of an exercise of constitu tional, civil or legal rights, the refusal to engage in unlawful conduct, or the refusal to submit to a polygraph test or a personal search. TITLE V: INTERLOCKING DIRECTORS AND OFFICERS Any director serving more than two corporations is subject to a civil penalty of not more than $10,000 per day. TITLE VI: CRIMINAL AND CIVIL SANCTIONS A Federal Court may require a corporation convicted of fraud to notify the class of persons affected. The proposal would also require restitution to victims of corporate misconduct. Failure to report a hazardous product or process may result in a $50,000 fine and/or imprisonment of the responsib l e individual. 4 TITLE VII: JURISDZCTION AND PENALTIES The final section of-the proffered legislation establishes jurisdiction, penalties, and gives any individual standing to sue. Finally, it mandates that No firm that regularly fails to meet the standard s of the Securities and Exchange Commission shall be permitted to engage in commerce in the United States." ANALYS IS Advocates of the Corporate Democracy Act base their arguments on two premises. One, corporations are dominated by a management I1autocracy l1 which has successfully insulated itself from not only labor, community, and environmental groups, but also the share holders and directors. Secondly, since the purported cause of the estrangement is state competition for corporate charters, the only vi able solution is minimum, federally-mandated standards of corporate behavior. Implicit within these assertions, and thus the source of their fallacy, is a perception of the corporation as a political rather than an economic entity. The proponents of I'corp orate democracy1' fail to acknowledge, possibly even to realize, that profit maximizing behavior advances the public interest through responsiveness to consumer desires lower costs, more efficient means of production, and greater STATE CHARTERS The compet ition between states it is charged, has resulted in a I'rush tu the bottomll and excessively pro-management corporate charters. Delaware with its inordinate number of corporate headquarters, is allegedly the worst offender. The evidence refutes\\ the claim that states have become increasingly ''pro-management By their definition a Ifpro management" charter, by increasing the discretion of management constricts the rights and duties of shareholders. However, since the equity values of corporations obtaining a Delaware charter have not declined, shareholders must either not find: 1 a Delaware charter I1pro-managementl1 or 2) any significance to the l1pro-managernentl1 bias. In either case, the need for federal legislation to protect the shareholder does not ex ist. CORPORATE AUTOCRACY To support the case for federal restrictions, proponents rely not on quantitative or analytical data, but rather on inci dents or examples such as Love Canal, political payoffs, or defective products. It is claimed existing laws ar e not capable of preventing or penalizing such behavior because the large 5 corporations have become nations unto themselves, governed by a managerial elite, answerable to none. The proper remedy, as perceived by the authors of the Corpor ate Democracy Ac t, is to politicize the internal structure of the corpqration. The composition of the Board of Directors and its committees, the shareholder referendum and information require ments are designed to weaken management's discretionary decision making abiliti es and to invest greater power in the shareholders and outside directors. The desired shift to greater shareholder input is based on the belief that shareholders are not now capable of influencing corporate policy. According to proponents, greater sharehol der and independent director powers will rectify the abuses committed by the managerial elite shareholders already possess the ability to effectively influence management's policies and decisions. Through the sale or purchase of stock, shareholders can ex p ress their satisfaction or dissatis faction with management policies. Furthermore, since the stock market is highly competitive (i-e., ease of entry, accessibility of information, numerous entries), shareholders can influence the policies of a monopoly as easily as those of a highly competitive corporation. The proposition that shareholders will prove more responsive to the social goals in the proposal and less intent on profits than management is refuted by the market. For example, assume that there are m any potential stockholders more interested in social goals than dividends or capital gains. would thus have an incentive to voluntari-ly comply with the spirit ana specifics of the Corporate Democracy Act and, by doing so, attract capital suggests that st o ckholders are more interested in profits and rates of return than in social goals Assume, now, that given some minimum level of return, stock holders would prefer a corporation with the type of policies enumerated in the Corporate Democracy Act. Since so few corpora tions'have voluntarily followed the prescriptions, it suggests that such corporations could not achieve the efficiency and profit performance needed to match the non-complying competitors. This lower performance, when aggregated, would be the t otal social loss resulting from enactment of legislation similar to the Corporate Democracy Act Contrary to the protestations of the act's proponents A corporation The fact that so few have done so strongly BOARD OF DIRECTORS A key element of the act is t he proposed shift in corporate control from management to independent directors. In addition, 6 individual directors would be vested with significant responsibil ities regarding policy toward the environment, the community, and employees. Contrary to the claims of its exponents, a strengthened and specialized group of independent directors would not enhance the shareholders' welfare. The restructured board would more likely pursue policies that conflict with shareholder interests. Further m ore, the expanded power of the independent directors and the potential for stockholder veto would create inefficiencies and increase the cost of decision making As evidenced by corporate efforts to raise capital, stockholder and management goals seem to c o rrespond very closely. Thus, any shift in corporate policy would have to come from the independent directors. The inordinate responsibilities and the nature of the duties, i.e consumer protection, community relations, environmen tal protection, suggest th a t if they are not already biased, the independent directors will acquire a bias in favor of their specialities. Because they hold no equity it might be anticipated that the of the .corporation, but instead their own specialities. The boardroom could very q uickly resemble a political session in which votes are traded for reciprocative actions. Coalitions and voting blocs which either dominate or obstruct management policies could develop assign a greater priority to Ilpublic interestsIl.than to stockholders returns independent directors will pursue not the general interests I In this manner the Board of Directors might A politicized Board of Directors would also reduce the efficiency of the corporation. The existence of special interest coalitions suggests t h at corporate policy could become a matter of compromise. Rather than charting the optimal course towardhn established goal, profits, the Board of Directors would be forced to choose among competing goals, such as profits, environment and community relatio ns. COMMUNITY IMPACT The Corporate Democracy Act would require corporations to provide 24 months notice of any plant closihg or relocation. Furthermore, the Secretary of Labor would be granted subpoena power to investigate the reasons and costs of any clo sing or move It is interesting to note that the act does not create any legal barriers to corporate moves. Thus, it appears that the cyts imposed on both the corporation and the Labor Department could not possibly yield any benefit. The only value of the C orporate Democracy Act in relation to corporate relocation is to serve as a framework from which future restrictions on business mobility might evolve 7 Proponents of the act cite the declining Northeastern indus trial base and rapid development of the Su n Belt as a prima facie case for restrictions on corporate mobility corporate greed and the lure of sympathetic tax policies have motivated the abandonment of the older communities in favor of the non-unionized regions It is charged that The evidence refut e s the charge. Plant closings are not the result of relocation nor is the North in a state of economic decline. Richard B. McKenzie of Clemson University, has found that only 1.5 percent of plant closings are due to relocation He suggests instead that misg u ided or onerous public policies are the major cause of the corporate dissolutions which result in plant closings. In addition, McKenzie found that, contrary to popular perception, the northern economy is actually expanding and wage rates rising. Although the manufacturing sector has faltered, growth in the service industries has more than compensa ted for the decline. Restrictions on business mobility would impose substantial costs on all regions of the nation and all segments of the economy I The attempt to preserve the status quo will 1) impede the competi tive forces which lead to greater economic efficiency and 2 penalize existing corporations and shareholders. For example, a tire manufacturer in Ohio might be able to produce tires more cheaply in Ariz o na. Restrictions on mobility would prevent the Ohio corporation from moving to Arizona. However, there would be no prohibition against a new tire manufacturer developing an Arizona facility. Should that occur, as would seem likely, the Ohio tire producer would lose portions or all of its market. Thus, even with the restrictions against mobility, the center of tire manufacturing would shift and Ohio jobs would be lost. However, by forcing the shift through inferior channels, restric tions against mobility would create significant costs or inequities. A major cost would be the loss of the Ohio manufacturer's expeitise. In addition, shareholders of the Ohio corporation would suffer a legislated loss in the value of their holdings I 4. REGULATION It is inter esting to note that even as public and professional opinion has turned against regulation and its apparent excesses the advocates of'the Corporate Democracy Act would extend the regulatory scope by substituting what are now constraints for corporate goals . Protection of the environment, for instance, currently a duty of the government, would become a duty of both government Richard B. McKenzie, Restrictions on Business Mobility (Washington American Enterprise Institute for Public Policy Research, 1979 D.C. : 8 and the corporation. Although at first.glance this appears to be a meritorious proposal, corporations would inevitably encounter a conflict between discretionary and non-legislated environmental protection and the need for profits. The consumer-voter is capable of influencing corporate activity through two channels shall produce and government, representing the voters, establishes rules of conduct. Thus, the consumer-voter indirectly chooses between economic efficiency and social goals. The Corporate Democracy Act would destroy this balance by requiring corporations to perform a function not only more appro priately pursued by government, but in excess of government Presumably the corporation would be asked to exceed existing legislative constraints. I f not, there is little justification for the Corporate Democracy Act The essence of the act would be to take away the consumer-voter ability to influence the efficiency-social good trade-off. The net effect would be to force the corporation to achieve a h i gher Ilsocial performance than the law demands and consequently achieve a lesser economic performance than the consumer desires Consumers dictate what corporations CONCLUSION the corporation and thereby reduce management's discretionary decision-making ab i lity weakening the powers of the managerial Itautocracyl1 and strengthen ing shareholders and independent directors, the corporation will become more responsive to social goals, such as environmental concerns, community relations, and employee.llwell-bein g .'l The intent of the Corporate Democracy Act is to politicize Proponents of the act claim that, by Unfortunately, the authors of the act are not merely advanc ing social goals which they consider neglected or abused. Rather they are attacking an institut i on, the profit motive, which assures economic efficiency and therefore advances the public welfare. The animus against profits is best revealed in the proposed internal restructuring of the corporation. Rather than constrain profit-seeking through laws an d regulations protecting the environment and the community, the-authors would instead replace the goal of profits with what are now social constraints. The Corporate Democracy Act would reduce economic efficiency by creating numerous barriers and obstacles to profit-maximizing behavior. Corporations, in fact all forms of business organiza tions, provide a unique benefit In pursuit of their own interests, corporations advance the public welfare. Act, by attempting to dictate social goals for corporate manag ement will weaken or destroy the incentive which has produced our material wealth The Corporate' Democracy I Eugene J. McAllister Walker Fellow in Economics 9 THE NEW LEFT AND BIG BUSI.NESS DAY A Preliminary Survey BIG BUSINESS HAS A PLAN FOR THE 1980's: MORE MONOPOLY. WEAK UNIONS. LOWER SAFETY STANDARDS. EXCESS PROFITS So states a brochure currently being disseminated by an organization calling itself Americans Concerned About Corporate Power, organizer of Big Business Day, a nationwide action scheduled for April 17 19 80. The brochure is couched in terms obviously designed to appeal to those whose conception of corporate enterprise is one of lust for power and profit untrammeled by considerations of ethics or decent respect for preservation of the environment or the pu blic health. The following language from the document speaks for itself Some people think that corporate power has been tamed --that state and federal laws, ltcountervailingll forces like labor, and "shareholder democracyll have curbed corporate abuses. If you think they're right, consider the follow ing Last year over 100,000 people died from cancer they got on the job, in the air, in their food. YET BIG BUSINESS HAS LAUNCHED A PROPOGANDA sic] WAR TO UNDERMINE OSHA, TRE CLEAN AIR ACT AND PURE FOOD LAWS While prices jumped 13% this year, take home pay for workers rose less than 9%. YET BIG BUSINESS SPENT ALMOST $500 MILLION FOR PROFESSIONAL UNION-BUSTERS TO CUT WAGES EVEN MORE In the past few years there has been an explosion of corporate crime from 400 companies admitting payoffs to hundreds of chemical timebombs like Love Canal. YET BIG BUSINESS OPPOSES NEW CRIMINAL SANCTIONS AS "OVER-DETERRANCE [sic It to elect their friends to Congress In 1978, big business spent over $20 million YET, IN 1980 THEY PLA N TO DOUBLE THAT POLITICAL ACTION SPENDING From 1975 to 1978, giant conglomerates increased by three fold the number of smaller businesses they gobbled up. YET BIG BUSINESS OPPOSES NEW ANTITRUST LAWS AS VIOLATIONS OF THE "FREE MARKET Make no mistake, big business is on the march. 4 10 To counteract this marching corporate monolith A national Big Business Day' office [in Washington, D.C will coordinate activities, prepare materials, generate publicity, and help local groupsi1 to organize for Ita day of edu c ation and action, of descrip tion and prescriptionll that ,llwill carry the message to other To government and the media." This effort to "FIGHT CRIME IN THE SUITESff is iqtended as Ita kick-off" for a coordinated national campaign Americans. To members o f unions, churches, and citizen groups. Just as Earth Day in 1970 was the start for so many environmental successes in the last decade, Big Business Day is the kick-off for the campaign to curb corporate abuse in the 1980Is. It builds on the effec tiveness of similar events such as Food Day and Sun Day and will leave a similar legacy It is projected that with !'the attention that national leaders can bring and the cooperation of people in communities across America our groupfs efforts will be part of a lar g er stronger coalition challenging corporate abuses.Ir This coalition will help the American people to Wnderstand what big business1 plan for the 1980's is all about1' so that they will I'know about apartheid in South Africa. Or union busting in North Caro lina. Or chemical poisoning in Buffalo. Or 'red-liningl in St. Louis. Or low wages for women and minorities across the country.I1 Further, it will help people "LEARN HOW TO FIGHT BACK." This goal is described as follows Opposition alone to big business is not enough. People need to know the alternative That means telling them about legislation like the Corporate Democracy Act of 1980Il that would make these private governments1' more accountable to their consti tuencies consumers, workers, and local commu nities It means talking about consumer coops, credit unions and small businesses as an alternative and spur to big business It means a people's Energy Corporation of America a kind of TVA for oil and gas to keep Big Oil honest. The basic goals of this cam paign, as well as the fundamental bias of its leaders, were well articulated in a press release issued on December 12, 1979, proclaiming that "NADER, GALBRAITH LABOR ANNOUNCE NATIONAL DRIVE TO REFORM BIG BUSINESS11 and that Broad Alliance Proposes 'Big Bu s iness Day' and 'Corporate Demo cracy Act to fight 'Crime in the Suites I' The release stated that Calling for a public day to Ilexpose and repair big business,It a broad consumer, labor, religious and environ mental alliance today announced plans to hold a "Big 11 Business Day 1980Il next'Apri.1 17 and released a proposal for legislation aimed at reducing corporate abuse The 'Day! and the legislation address the funda mental question of corporate power in America,Il Ralph Nader said We as a nation need to a sk who governs our giant corporations, and how do they in turn govern us? The.bil1 seeks to refofm the corporation by increas ing the accountability of its decision-making process It would grant greater rights of access and voice to the various contituenc ies of the giant corporation workers, consumers, communities, and shareholders. William Wynn, the president of the United Food and Commercial Workers, the largest AFL-CIO member union said, "Just as the 1950s scrutinized the labor movement and the 1970s bi g government, this Day will mark the 1980s as the decade to correct the abuses of big,business. We in the labor movement think it's time for a Landrum Griffin Act for big business.I Professor John Kenneth Galbraith, the noted econo mist and author, said, ItBecause I would like to see big business better understood I urge that we all take a day to se e how it sets prices, persuades consumers influences legislation, and otherwise plans our lives. We want all to realize that the voice of the corporate leader, resonant and with access to the media, regularly gets mistaken for the voice of the masses." Bo th domestically and internationally, 'Ithe inexor able interest of big agribusiness is the control and exploitation of resources, including helpless peasants and God's good earth," Catholic Bishop Thomas Gumbleton of Detroit, president of Bread for the Wo r ld, said These abuses are of enormous concern to the church The same release outlined the projected range of events'to be conducted across.the United States on Big Business Day We intend to do for big business what Earth Day Food Day and Sun Day did for t h eir subjects expose abuses and explore alternatives,I' said Mark Green, the president of Big Business Day's board of directors In hundreds of communities across the nation there will be teach-ins and debates, alternatives-to-big business fairs, the promot ion of small business and appropriate technologies trials' of corrupt companies nominations for a !'Corporate Hall of Shame, symbolic bread lines' at banks that red-line communities, and a compilation of models of corporate social responsibility." The even t will also publish an anthology The Big Business Day Reader," and a book of profiles entitled The 50 Businessmen You Don't Know Who Run America 12 As observed in the February 11, 1980, issue of Business Week, however, the ''centerpiece of the campaign" i s to be the Corporate Democracy Act of 1980, summarized by the magazine in the following passage Among other things, the draft's provisions would enhance corporate accountability by requiring boards to be made up of a majority of independent directors and t o have some of the directors responsible for such things as employee well-being and consumer relations require 24-month notification of plant relocations and closedowns; prohibit discrimination against employees for 'lwhistle=blowing1 prohibit anyone from simultaneous ly serving as a director of more than two companies and provide stiff penalties for violations of environmen tal and o.ther laws, restitution to victims of chemical spills and the like, and disqualification of convicted executives. The coalit i on likens the bill to the 1959 I Landrum-Griffin Act I The basic rationale for the proposed legislation is contained in The Case For a 'Corporate Democracy Act of-1980, an ACACP publication that sells for 10.00 per copy. The title page of this volume refl e cts that the study was prepared by Mark Green of Public Citizen's Congress Watch; Alice Tepper Marlin of the Council on Economic Priorities; Victor Kamber of the Building and Construction Trades Department of the American Federation of Labor-Congress of I n dustrial Organizations; and Jules Bernstein Associate Counsel, Laborers' International Union of North America AFL-CIO. The analysis is predicated upon the assumption that there are two forms of government in the U.S the political government and the econom i c government Inextricably intertwined with this view is the corollary axiom that 'Ithe economic government is largely unaccountable to its constituenciesIt and is thus able to operate effectively above or outside the law in a manner basically antithetical to democratic usages: Wltimately, then, the issue is not.regulation vs. freedom Nor is it capitalism vs. socialism. It is autocracy vs. democracy Plans for Big Business Day have apparently been discussed for a considerable period of time; according to the December 12 1979, release The initiating consumer and labor sponsors began planning the Day six months ago." Also, there appears to be a wide range of support for the effort among consumer, labor environmental, and other special-interest activist organiza t ions and individuals as shown by the following paragraph from the same source About sixty prominent groups and citizens will be contributing resources and time to the Day, including the Building Trades Union, UAW [United Auto Workers, AFL-CIO Public Citiz e n, National Council of Senior Citizens, Consumer Federation of America, Friends of the Earth, Machinists Union [International Association I 13 of Machinists, AFL-CIO], actor Ed Asner, environmentalist Barry Commoner, James Farmer, the founder of CORE Cong r ess of Racial Equality], Patsy Mink, head of ADA Americans for Democratic Action and Rabbi Marc Tanenbaum. Thousands of other groups and individuals are in the process of being solicited to participate in this new consumer-worker alliance, organizers said . The previously-cited '!Nor is it capitalism vs. socialismIt statement from The Case For a Corporate Democracy Act of 1980 is indicative of something lexplicitly stated by Ralph Nader according to the Business Week article: Il'This is not a fringe group,' says Nader, adding The support is America.'Il Obviously, such a statement is mandatory for any individual, organization or coalition that truly wishes to achieve the broadest possible respectability by appealing to the maximum possible numbers of people i n the case of Big Business Day, however, its validity is questionable An undated list of "PUBLIC INTEREST AND LABOR GROUPS INITIALLY SUPPORTING THE CORPORATE DEMOCRACY ACT for example, includes the following, most of which will be readily recognized Congr e ss. Watch-Public Citizen Council on Economic Priorities Consumer Federation of America Environmental Action Environmental Policy Institute/Citizen's Coal Project Equal Justice Foundation National Consumers League Virginia Citizen's Consumer Council Americ a n Federation of State, County, and Municipal Employees Building Trades Department, AFL-CIO Food and Beverage Trades Department, AFL-CIO International Association of Machinists Newspaper Guild United Famworkers Union United Food and Commercial Workers Simi l arly, the December 1979 press release stated that Michael Jacobson, director of the Center for Science in the Public Interest, is the secretary-treasurer of the Day's board of directors; Jules Bernstein, a union attorney, and Victor Kamber, assistant to t h e president of the Building Trades Union, are among the other founding board members; and Michael Schippani, recently with the Amalgated [sic] Clothing Workers, is the event's national coordinator A presumably complete roster of Big Business Day's board o f advisors and board of directors was printed on the !'BIG BUSINESS list with identifying data, is as follows HAS A PLAN FOR THE 1980'S1' brochure cited earlier. The full 14 Board of Advisors Ralph Nader (Consumer advocate John Kenneth Galbraith (Prof. Eme r itus, Harvard University William H. W~M (Pres., United Food and Commercial Workers Douglas A. Fraser (Pres., United Automobile, Aerospace, and Agricultural Implement Workers of America Patsy J. Mink (Pres., Americans for Democratic Action James Farmer (Ex e c. Dir., Coalition of American Public Employees Gar Alperovitz (CO-Dir., Exploratory Project for Economic Alternatives Ira Arlook (Exec. Dir., Ohio Public Interest Campaign Ed Asner (Actor George Ballis (Rural America, National Land for People Richard Bar n et (Co-Author, GLOBAL REACH Julian Bond (State Senator, Georgia Heather Booth (Mid-West Academy David Brower (Founder, Chair of the Bd., Friends of the Caesar Chavez (Pres., United Farm Workers of America Jacob Clayman (Pres., National Council of Senior C i tizens Barry Commoner (Dir., Center for Biology of Natural Systems John Conyers (Member of Congress Ronald V. Dellums (Member of Congress Ed Garvey (National Football League Players Association Robert Georgine (Pres., Building and Construction Trades Bish o p Thomas Gumbleton (Auxiliary Bishop, Archdiocese of Robert Harbrant (Pres., Food and Beverage Trades Department Michael Harrington (Nat. Chair., Democratic Socialist Fred Harris (Prof., University of New Mexico Robert Heilbroner (Prof. New School for Soc i al Research Jim Hightower (Author, EAT YOUR HEART OUT Irving Howe (Prof., Hunter College William Hutton (Exec. Dir., National Council of Senior Mildred Jeffrey (Former Nat. Chair., National Women's Mary Gardiner Jones (Former Commissioner, Federal Trade F r ances Moore Lappe (Co-director, Institute for Food and Robert Lekachman (Prof., City University of New York Joyce Miller (Vice Pres., Amalgamated Clothing and Textile Kathleen O'Reilly (Exec. Dir., Consumer Federation of America Wade Rathke (Chief Organiz e r, ACORN Jeremy Rifkin (Dir., People's Business Commission Arthur Schlesinger, Jr. (Albert Schweitzer Prof. of Humanities Earth Department, AFL-CIO) Detroit AFL-CLO Organizing Comm Citizens Political Caucus Commission Development Policy Workers City Unive r sity of New York 15 Stanley Shei'nbaum (American Civil Liberties Union Scott Sklar (Washington Dir., National Center for Appropriate Timothy Smith (Exec. Dir., Interfaith Center-on Corporate Rabbi Marc Tanenbaum (American Jewish Committee Mary Luke Tobin, S.L. (Thomas Merton Center William W. Winpisinger (Pres., International Association of Jerry Wurf, (Inter. Pres., American Federation of State Technology Responsibility Machinists and Aerospace Workers County, and Municipal Employees Board of Directors I M ark Green, President of the Board (Dir., Public Citizen's Congress Watch Dir., Center for Science in the Public Interest Union Church Trades Department, AFL-CIO Priorities) Workers national Association of Machinists tion Michael Jacobson, Secretary-Treasu r er of the Board (Exec AN1 Beaudry (Conference on Alternative State and Local Policies Jules Bernstein (Associate Counsel, Laborer's International David Burgess (Minister, Newark, N.J Thom Fassett (Board of Church and Society, United Methodist Peter Harnik (Consultant, Co-coordinator of Sun Day Victor Kamber (Asst, to the Pres., Building and Construction Alice Tepper Marlin (Exec. Dir., Counsel [sic] on Economic William Olwell (Inter. Vice Pres., United Food and Commercial Marjorie Phyfe (Rep Non-Partisan P o litical League, Inter Frank Viggiano (Exec. Dir., United States Student Associa Nader, Galbraith, Winn, Fraser, Mink, and Farmer also have been listed as !'Initiating Sponsors11 on literature issued by organizers of Big Business Day. In addition, an undat e d Big Business Day document lists the following as I'New Members of the Big Business Day Advisory Board Marc Caplan (Director, Connecticut Citizens1 Action Group Art Danforth (Cooperative League of U.S.A Joe Fish (Director, Carolina Action An undated but recent Big Business Day literature list and order form printed on the organization's letterhead reflects the addition of the following to the Board of Advisors Fitzmaurice, Ruth Yannatta Goldway, George Hardy, Richard G. Hatcher, Sr. Barbara Lupo, Frank D. Martino, Iris Mitgang, and Carl Scarbrough. This document further reflects the addition of Pat Ford-Roegner to the Board of Directors Representative Jonathan Bingham D-N.Y David J. 16 Monseigneur George Higgins (U.S. Catholic Conference Bruce Ratner (New York City Commissioner of Consumer Affairs Representative Benjamin Rosenthal (D.0N.Y Donald Ross (Director, New York Public Interest Research Group Harold Willens (Chairman, Factory Equipment Corporation Sandra Willet (Exec. Director, National Consumer Le a *e The identifying data as given'in Big Business Day's own substantial number of the movement's'key supporters and organizers effectively rebut Nader's rather sweeping claim that !'The support is America While it may represent a significant element within the overall range of public-policy thinking in the United States support for Big Business Day is demonstrably concentrated within what any responsible observer must regard as the left of the political and economic spectrum literature clearly indicate that the principal affiliations of a I This is indicated also by the fact that seed money for Big Business Day, as revealed in the December 1979 press release, was provided by a grant of 15,000.00 from the Stern Fund, a New York-based tax-exempt foundation tha t has served as a major support for the radical-leftist Institute for Policy Studies,* a Washington, D.C. institution that has served for many years as the principal "think tank" for the so-called New Left in the United States. Stern money also went to sup p ort the frankly revolutionary People's BiCenteMial Commission led by Big Business Day supporter Jeremy Rifkin The successor to the PBC is the People's Business Commission, which operates from offices in the same building in Washington, D.C., that houses t he headquarters of Big Business Day and Americans Concerned About Corporate Power. The same pattern is indicated when one examines the records of those who serve as members of the Big Business Day advisory board. Both John Conyers and Ronald V. Dellums, fo r example, are actively associated with the U.S. Peace Council, an affiliate of the World Peace Council, an international Communist-front apparatus controlled by the Communist Party of the Soviet Union. Both were also prominent supporters of the National P eace Action Coalition an anti-Vietnam war enterprise controlled by the Trotskyite Communist Socialist Workers Party, and endorsers of the founding conference of the National Alliance Against Racist and Political Repression, a nationwide organization contr o lled by the Communist Party, U.S.A.' Conyers. has also been an active member of the National Lawyers Guild, "legal bulwark of the Communist Party.I Edward Asner, in addition to being an actor of note, has supported both the National Emergency Civil Libert i es Committee, cited as a front for the Communist Party, U.S.A and the Political Rights Defense Fund, an adjunct of the Socialist Workers Party For detailed background on IPS and several of its subsidiary operations see Heritage Foundation Institution Anal y sis No. 2 Institute for Policy Studies I May 1977 17 Some members of the advisory board also have ties to the so-called "anti-defense lobby It* Specifically, Harold Willens has also been listed as a member of the advisory board of the Center for Defense I n formation, a project of he leftist Fund for Peace, on whose board Willens' also serves along with Julian Bond and Barry Commoner; another FFP board meniber is Senator Howard Metzenbaum of Ohio, who is expected to introduce the Corporate Democracy Act of 1 9 80 in the United States Senate as part of the Big Business Day schedule. Another FET project is the Center for National Security Studies, nm by Morton Halperin as part of the anti-intelligence lobby; Richard Barnet has been listed as a member of the CNSS a dvisory board. He has also been listed as a member of the advisory board of another Fund enterprise, In the Public Interest, as has Jeremy Rifkin An apparatus which enjoys close ties to various components of the Itanti-defense lobby particularly the Coali t ion for a New Foreign and Military Policy and many of its major affiliates, is the Mobilization for Survival, whose International Co-Convenor is also an activist in the Soviet-controlled World Peace Council and its American affiliate, the U.S. Peace Counc i l. It is noted that among those who attended the third national conference of the MFS in Louisville, Kentucky, in late 1979 was Alice Tepper Marlin, a supporter of Big Business Day who is also President Ex-Officio of the Council on Economic Priorities. Ac c ording to a report on the conference published in the December 28, 1979, issue of the authoritative Information Digest, CEP was among those groups which organized workshops at the conference. The same source further indicates that the following individual s listed as suppor- ters of Big Business Day serve as members of CEP's board of directors: Mary Gardiner Jones, Robert Heilbroner, Alice Tepper Marlin, Richard Barnet, Hazel Henderson, and Timothy 8. Smith. Big Business Day supporters Richacd Barnet and Ronald V. Dellums were listed as speakers for another aggressively leftist operation; the National Conference on Cuba, held in November 1979 at the Riverside Church in New York City under the auspices of the Center for Cuban Studies, a New York-based orga n ization of uro-Castro comDlexion. Accordincr to the November 9, 1979, issue bf Information-Digest, CCS Ifprovides a New York focal point for the Venceremos Bricxade (VB for travel to Cuba, and for Cuban officials at the U&ted'Naiions Mission. I' This- sou r ce reflects that Dellums praised Cuba's 'commitment' to ending 'colonialism and said, 'It is a role that the U.S. should be endorsing and emulating instead of attacking' and further quotes Dellums as saying in his remarks that "Cuba is creating a society t hat was the dream 'of Dr Martin Luther King. I See Heritage Foundation Institution .Analysis No. LO The Anti-Defense Lobby: Part I, Center for Defense Information April 1979; Institution Analysis Xo. 11, "The .Anti-Defense Lobby: Part 11 The Peace Movemen t , Continued September 1979; and Institution Analysis No. 12 The Anti-Defense Lobby: Part 111, Coalition for a New Foreign and Military Policy," December 1979.la Several supporters of Big Business Day have also been actively involved in the Democratic Soci a list Organizing Committee and, its offshoot, the Democratic Agenda an apparatus which works generally within the left wing of the Democratic Party. A Democratic Agenda document circulated prior to the November 1979 Democratic Agenda 1979 Conference in Was h ington, D.C stated that the organi zation is "fighting to make sure the Democrats keep the promises they made US to confront the problems of excessive corporate power, dying cities, soaring prices, growing unemployment and declining public serriceF1f and a dded that '#The problem is the stranglehold big corporations have on the economy and the political system.If According to the December 29, 1979, issue of Information Digest, the Ilinitiators" of DSOC, formed in 1973 as a result of a split within the Socia l ist Party largely over the issue of Ilcooper ation with communists If. include Julian Bond, Heather Booth, John Conyers, Ronald Dellums, Douglas Fraser, Joyce Miller, William Winpisinger, and Jerry Wuf, all of whom are currently supporting Big Business Da y brochure listed Winpisinger, DSOC national chairman Michael Harrington, and Barry Commoner as speakers at conference IfPlenaries If with Big Business Day supporters Mildred Jeffrey, Robert Georgine, Heather Booth, Ira Arlook Mark Green, Jules Bernstein, J ames Farmer, and Marjorie Phyfe listed as IfSpeakers If Conference llInitiatorsll included Booth, Harrington, Jeffrey, Winpisinger Phyfe, and Wurf, in addition to Conyers, Dellums, Fraser, Irving Howe, and Robert Lekachman all of whom are also members of t he board of advisors for Big Business Day The previously-cited Democratic Agenda conference By far the most significant pattern of interlocking affilia tions characteristic of those supporting Big Business Day, however is indicated by the presence of Ann B eaudry among the members of the board of directors affiliated with the Conference on Alternative State and Local Policies no further qualification being provided. In fact, the Conference was founded in June 1975 as the National Conference on Alternative S tate and Local Public Policies and was organized explicitly as a project of the Institute for Policy Studies. IPS, as mentioned earlier, has serred for many years as the principal think tank" for the New Left movement in the United States and has been deep ly involved in the so-called economic democracy movement since its inception an inception in which IPS and its affiliates played a key role.* Today, for example Beaudry is identified simply as being In February 1977, IPS-connected activists played key rol e s in the California Conference on Alternative Public Policy held in Santa Barbara, California, and sponsored by the California Public Policy Center, a major West Coast outlet for IPS programs and activism effort, also known as the "Santa Barbara Conferenc e on Economic Democracy was the Campaign for Economic Democracy. Yannatta chaired one of the conference workshops; and a basic conference Working Paper" entitled TOWARDS CONTROLLING CORPORATIONS prepared by the CPPC and published by it in conjunction with the Santa Barbara gathering bears striking resemblance in emphasis and rhetoric to significant segments of the rationale currently being advanced in behalf of the Corporate Democracy Act of 1980 some observers as probably the birthplace for the "economic d emocracy movement that has now found national focus in Big Business Day and the Corporate Democracy Act Another organization deeply involved in this Big Business Day supporter Ruth This conference provided a major impetus and is regarded by 19 partly thro u gh interlocking relationships with both the Conference on Alternative State and Local Policies and the California Public Policy Center, IPS maintains close ties to the Campaign for Economic Democracy, a burgeoning radical movement led by Tom Hayden and Ja n e Fonda. The general thrusts of IPS material and Big Business Day-related literature are anything but dissimilar a fact that makes it of more than casua1,interest that so many supporters of Big Business Day have also seen fit to involve themselves in acti v ities of the Institute for Policy Studies or its affiliated operations Both Conyers and Dellums, for example, have been among members of Congress who have requested major federal budget analyses from IPS, one issued in 1975 and another, The Federal Budget and Social Reconstruction, published in 19787Among other members of the House of Representatives requesting these studies has been Representative Benjamin Rosenthal of New York, who is expected to introduce the Corporate Democracy Act of 1980 in the House . Conyers was also listed by IPS as an instructor for its Washington 'School during the !!Fall Quarter 1979.l' Other scheduled instructors included Richard Barnet, one of the founders of IPS and Gar Alperovitz, who heads the National Center for Economic Al t ernatives, founded under IPS auspices as the Exploratory Project for Economic Alternatives with a declared goal of achieving Ilfundamental change in the way our economy is organized EPEA and Alperovitz were also actively involved in another operation Amer i cans for a Working Economy, which views the American economic system as one of corporate monopoly power1' that Itproduces corporate profits, but increasingly destroys human lives.Il Both Conyers and Rosenthal have been carried in IPS literature as having participated in seminars and other IPS programs over the years along with such other Big Business Day supporters as Alperovitz and Barnet, James Farmer, Julian Bond, Michael Harrington, Robert Lekachman, Stanley Sheinbaum, Mark Green, and Ralph Nader. Fran ces Moore Lappe and Jeremy Rifkin have contributed articles to Mother Jones, published by an IPS project known as the Founda tion for National Progress A similar interlocking relationship exists specifically with reference to the Conference on Alternative State and Local Policies In May 1978, to cite but one example, Ann Beaudry, Mildred Jeffrey Joyce Miller, Pat Ford-Roegner, Ruth G. Yannatta, and Marjorie Phyfe attended its conference on IIWomen in the Economy and Strategies for Change" in Cleveland, Ohi o ; Beaudry, Miller and Jeffrey served as speakers at plenary sessions of this gather ing Policies Yannatta, William Winpisinger, Barry Commoner, and Ira Arlook served as speakers at the third annual conference of the NCASLPP in Denver, Colorado, in July 19 7 7; among those who partici pated in workshops at this conference were Beaudry (IIFeminist Issues: Legislative Strategies at the State Local Level Commoner ("Federal Energy Policy: Implications for Cities States Yannatta Base Building for Electoral Actionl l Don 20 Ross IIEffective Lobbying for Progressive Policiesl1 and, again Ira Arlook (IIRunaway Shopsll an alumnus of the Hayden-Fonda Indochina Peace Campaign and of the Coalition to Stop Funding the War, a predecessor of the present-day Coalition for a Ne w Foreign and Military Policy, a pivotal part of the anti-defense lobby in Washington, D.C and across the country. The fifth annual conference, held in August 1979 near Phila delphia, Pennsylvania, was attended by Harrington, Ford-Roegner Phyfe, Wade Rathk e, Douglas Fraser, and Heather Booth, who in addition to her support for Big Business Day and the CASLP, heads the Midwest Academy an avowedly radical training facility for community activism in the interests of "the actual redistribution of wealth Schedu l ed speakers, according to the official confer ence program, included the following Big Business Day supporters Gar Alperovitz IIStagflation: The Crisis of the 80 t.s?tl Heather Booth ("Stagflaton: What Implications for the State and Local Agenda Jim Hight o wer The Crisis in American Agriculture Opportunities for Progressive Change Michael Harrington ("The 1980 Presidential Campaign: Perspectives and Issues Ann Beaudry and Ira Arlook ("New Elements of A Program for the, 8OtsIf and Douglas Fraser ("Independen t Politics: Strategies for Progres sive Changett). Both Arlook and Hightower have also been listed as members of the NCASLPP steering committee It is not contended that such affiliations and activities necessarily indicate consciously evil intent; it is, h o wever contended that a definite pattern does exist and that this pattern is of a specifically leftist character, thus rendering overdrawn Ralph Nader's rather grandiose claim that "This is not a fringe group.lI The pattern of involvement in IPS and simila r operations including the CASLP, by supporters of Big Business Day is clear; and it is sufficiently clear and dufficiently extensive --to call into serious question Nader's other statement that support for Big Business Day "1s America'.t1 Support for Big Business Day and for the- Corporate Democracy Act of 1980 may be many things anti-corporate, leftist, even socialist in many instances but it is not, broadly speaking, as Nader would have it, flAmerica.tt I William T. Poole Policy Analyst
