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America’s New Corporate Tyranny

The American political and legal systems are working just fine, despite a few hiccups. Meanwhile, American corporations are depriving citizens of basic rights and freedoms and destroying our democracy.

Michael Lind
January 15, 2021
Josh Edelson/AFP via Getty Images
Josh Edelson/AFP via Getty Images

Imagine that you are a resident in a low-population county in 1950. You run afoul of the small group of families who are effectively in charge. Your political and legal rights are unimpaired. You are free to vote and you are free to sue in municipal and county and state courts. The police treat you with unfailing courtesy and respect.

But strange things start to happen. The only newspaper in the county refuses to take ads for your business. The only bank in the county announces that it is closing your account and calling in your mortgage. Your car breaks down and the only garage and service shop in the county refuses to repair it. The only general store in the county refuses your patronage and the few restaurants in the county turn you away at the door. After you lose your business to the newspaper advertising boycott, you try to get a job, but discover that you have been blacklisted by all of the employers in the county. Nobody will hire you.

Are you free, in this scenario, just because there is no official interference with your voting rights and your civil rights? Private power is power, no less than government power. You can be immobilized, impoverished, humiliated, tormented, and perhaps driven to suicide by hostile businesses and banks in an otherwise functioning liberal democracy, just as surely as by the police or military in a dictatorship.

The United States in 2021 is a continental nation-state with nearly 330 million people. And yet its social system today, in disturbing respects, resembles that of my imaginary county in 1950. Instead of one general store, there is Amazon with its dominant online position. Instead of one local newspaper, there is Google, which serves as the 21st-century version of the old Yellow Pages. Instead of one county bank, there are a handful of giant banks and credit card companies. As in the old 1950 county, if one essential firm spurns you there may be no alternatives in that industry who want your business, as a practical matter. If one or all of these national monopolies and oligopolies turn against you, for whatever reason, your business or your reputation or your life can be destroyed.

Following the Capitol riot on Jan. 6, the world was doubly shocked by the attack on the seat of American power and by the power of America’s irresponsible corporations, which are accountable to nobody except their shareholders. The president of the United States—who has been impeached for the second time by the House but has yet to be removed by the Senate or officially accused of any specific crimes in a court of law, much less convicted—was banned by numerous media platforms, including Twitter, Facebook and Spotify (he can’t even share his music lists!).

The purges and proscriptions have not been limited to Trump or to the criminals involved in the Capitol riot, or in planning others. The dragnet has been widened to include Republicans and conservatives in general, as well as figures on the dissident noncorporate left. Parler, a social media app favored by the right as an alternative to Twitter, was destroyed by Apple and Amazon. The baseball legend Curt Schilling claims that AIG Insurance cut off his family health plan because of his pro-Trump tweets.

Many tech tycoons and companies insist that their mass purge even of conservatives and Republicans was necessary to prevent fascists from organizing insurrections against the federal government. But tracking potentially violent criminals and terrorists and foiling their plots is what the folks at the FBI, Homeland Security, NSA, and CIA, along with state and local police, are paid to do. Who needs the FBI when Spotify can save America from a fascist putsch?

The truth is that the corporate proscriptions, purges, and deplatformings were a brutal exercise of raw power by a few very rich people who share jurisdiction over the citizens and residents of the United States under the corporate constitution.

Today Americans live under two constitutions: the political constitution and the corporate constitution. The political constitution is functioning reasonably well. The corporate constitution, by comparison, is a lawless realm of out-of-control tyranny.

The American political constitution’s system of checks and balances is not perfect, but it has been vindicated during the four tempestuous years of the Trump presidency. Donald Trump lost power in a free and fair election. Numerous courts and state officials and his own vice president have rejected his claims that the election was illegally stolen. He has now been impeached a second time, and his violent supporters who stormed the Capitol on Jan. 6 are being arrested and those who committed crimes against persons and property will receive due process under the law.

But if our political constitution is that of a flawed but functioning democracy, the same cannot be said of our corporate constitution. In our corporate constitution, giant oligopolistic firms that are essential to commerce, communications, and finance operate in many cases without any regulations other than those which they themselves make.

Most of the attention has focused on Twitter and Facebook, because so many American journalists, academics, activists, and politicians live online. But the importance of social media is exaggerated. According to Pew, only about a fifth of Americans are on Twitter and 10% of the users generate 80% of the tweets. Individuals, parties, and movements were able to communicate easily before Twitter was created in 2006. Getting banned from Twitter is a nuisance, not the death of free speech.

Of graver concern in a democratic republic should be arbitrary powers exercised by companies in the real economy against dissident individuals or unpopular businesses or organizations. If businesses are banned from advertising their goods and services on electronic platforms and other forms of media; if authors of controversial books can be banned from online and physical book distributors; if political groups are banned from making electronic transactions, or having bank accounts; if individuals who hold the wrong opinions can be denied health insurance; if lenders deny credit cards to people who voted the wrong way in the last election or said something inflammatory on social media, then the United States is now a tyranny, even if the courts are open and elections are free.

Was there an alternative to allowing a dystopian informal corporate constitution to emerge and engross more and more of the American economy and society like a black hole devouring a galaxy?

This raises two questions: How did our tyrannical corporate constitution arise, and what must be done about it?

More than a century ago, the development of modern infrastructure industries like electricity and telephony and national banking created predatory businesses like Samuel Insull’s Midwestern electrical empire that were as out-of-control as many tech giants are today. The phrase “robber baron”—inspired by medieval German barons who exacted tolls from travelers on the Rhine—is most apt when it is applied to tycoons who control essential infrastructure that society cannot do without.

During and after the New Deal, essential industries were tamed and regulated under our political constitution. Today you do not fear that your water or electricity or gas will be turned off because the local providers do not like your political views. Both publicly owned and privately owned water, electricity, and gas firms are regulated by public utility commissions that set their rates and rules..

In the science fiction of the mid-20th century, it was usually assumed that the “central computer banks” of the future would be boring regulated public utilities more like the old highly regulated Ma Bell telephone monopoly than like Samuel Insull’s electrical industry holding company or Jack Dorsey’s Twitter. If they were dangerous, it was because the computers themselves might run amok, or perhaps because they were used by a despotic government, not because the new technology would empower individual plutocrats to lord it over their fellow citizens in an Ayn Rand fantasy come to life.

Beginning in the 1990s, however, the new digital infrastructure industries were neither incorporated into existing systems of regulation of old infrastructure industries like radio, TV, and telephones, nor restrained by new regulations. Instead, these new industries of the information era were given special privileges that the older industries of the mid-20th-century electromechanical era were denied. Amazon grew in part because many states for a number of years exempted online commerce from the sales taxes that brick-and-mortar stores had to pay. Section 230 of the Communications Decency Act of 1996 allowed internet platforms like Facebook and Twitter to be free of the regulations that deter libels and pornography in the case of old-fashioned print publications and their online versions.

As quaint as it seems in retrospect, American policymakers were swept up by the silly romance of the “new economy.” Back in the 1990s and 2000s, you could meet serious people who believed that “cyberspace” was a parallel universe that was somehow real and distinct from the territorial state (at the time I enjoyed pointing out that, thanks to Gutenberg tech, by reading a printed book you can leave the United States and enter the unregulated dimension of bibliospace).

Putting an “e” in front of something for “electronic” (ooh, electronic!) provided a get-out-of-regulation-or-taxation free card in the era of Newt Gingrich and Bill Clinton and their neoliberal and libertarian successors. Amazon isn’t a retailer that should collect and pay state sales taxes. It is … e-commerce! Uber isn’t a taxi company subject to taxi company regulations … it’s a tech company! If an online payday lender charges 3000% annualized interest, the government shouldn’t do anything about it because … it’s fintech!

For the past three decades, many of America’s elected officials, Democrats and Republicans alike, have rejected the argument that new essential economic infrastructure industries should be regulated like the old ones. They have claimed that the infant internet economy was so fragile that it would be crushed under the regulatory burdens that apply to old-timey electrical utilities or book publishers. Some of the politicians of both parties who made such arguments just happened to receive massive amounts of Silicon Valley cash, or were given shares of companies before their IPOs, or were hired after serving in government as managers or consultants or lobbyists or put on corporate boards by the same companies that they regulated, or rather, refused to regulate.

The result is our present situation, in which some of the indispensable industries in the U.S. economy, social life, the media, and politics are allowed to make their own rules, in the form of ever-changing “terms of service” that nobody reads; allowed to subject themselves to oversight by commissions which they themselves appoint; and allowed to deputize themselves as vigilantes protecting us from any enemies of the people whom they happen to designate.

Was there an alternative to allowing a dystopian informal corporate constitution to emerge and engross more and more of the American economy and society like a black hole devouring a galaxy?

In the case of Munn v. Illinois in 1876, the Supreme Court upheld the right of government to regulate industries that affect the common good or public interest (in this case, private grain storage facilities that all local farmers depended upon). Drawing on centuries of British common law precedents that justified regulations of privately owned ferries, wharves, and the like, the majority of the court declared that “when private property is devoted to a public use, it is subject to public regulation.” It is for legislatures and the executive agencies they empower to decide whether particular industries are so “clothed in the public interest” that much of society is dependent on fair access to their goods or services on reasonable terms to be set by government, not by the owners.

Traditionally two kinds of private industries have been deemed to be “clothed in the public interest.” One consists of “common carriers,” the other “public accommodations.” A common carrier like a railroad cannot refuse service to passengers or cargo, with narrow exceptions. And a public accommodation like a hotel or a restaurant or a grocery store cannot reject paying customers, with narrow exceptions.

In practice, extending our imperfect but somewhat accountable political constitution to replace the wholly despotic digital corporate constitution is difficult, given the financial control that tech firms and tycoons exercise over our politicians and our media. In theory, however, it is easy to strip the protective “e” away from tech companies and define them either as common carriers or public accommodations. There is no need to invent any new categories or concepts. The old common law concepts are flexible and will do as the basis for new legislation—with one exception.

The exception consists of social media platforms like Twitter and Parler and YouTube and Facebook, which allow individuals to put up material without prior editorial or curatorial approval. Their business model exists only because they are exempt from the legal regime regarding libel and obscenity that governs regular magazines and book publishers. If Section 230 is repealed, these sites will shut down or become conventional online magazines or media firms, whose lawyers will ensure that all material is carefully vetted before it goes up online.

Good. Traditional publications don’t publish things written under aliases by people whose identities they don’t know. I have no right to publish a libel against someone in the pages of a magazine without editors and possibly lawyers seeing it first. Why should I be able to publish the same libel on Twitter or YouTube, and force the victim to lobby for its deletion only after the damage has been done?

The CEOs and especially the staffs of Twitter and YouTube and Facebook tend to be Democratic partisans, hostile to conservatives and Republicans. Fine. Turn Twitter and YouTube and Facebook into the equivalents of regular online left-of-center magazines like The Nation and Salon and Jacobin, and let them explicitly reject conservative content. Let the right have its own magazines and media outlets.

Political movements rose and fell for generations in the United States by using newspapers and magazines and radio and broadcast and cable TV, even with prior editorial and legal vetting and with government regulation of profanity, obscenity, and libel. Turning Twitter or YouTube into traditional curated publications or media companies that make public only what they approve in advance is not a threat to legitimate public discourse—however much it may inconvenience a few YouTube celebrities and ranting anonymous posters and dent the profits of some digital behemoths.

The remedies for arbitrary corporate power in the new infrastructure industries, then, are simple and straightforward. Define online opinion and video platforms as regular publishers, subject to traditional publishing regulations that seek to deter dissemination of libels, profanity, obscenity, intellectual property theft, and so on. And define all the other big tech firms either as common carriers or public accommodations that are clothed in a public interest.

Oh, and one more thing. If you thought this essay was worth reading, you might wish to print out a paper copy before it vanishes from the internet.

Michael Lind is a Tablet columnist, a fellow at New America, and author of Hell to Pay: How the Suppression of Wages Is Destroying America.