Why incorporated entities do not get a vote in the Fractal Economy Cooperative

Within the Fractal Economy Co-Operative Ltd (FEC), incorporated entities (which shall simply be called corporations) do not have membership status and do not have a vote. They are registered as ‘partners’. Some people may believe that incorporated entities should get a vote within the FEC. This article puts forward the argument as to why they shouldn’t be entitled to vote.

Firstly, what is to be gained by giving corporations the vote?’ Behind every corporation stands persons and they already are entitled to vote. So the ‘voting direction’ of the corporation is already expressed through the individuals behind it or supporting it – owners of businesses, members of cooperatives and NFPs, etc.

Perhaps there is a sense that corporations – profit making ones – contribute in important ways to the cooperative, namely through the transaction tax. No taxation without representation, as the saying goes. It will be shown later that the payment of taxes by corporations is in lieu of the tax that the owners (individuals) pay.

As is embodied in our name, the FEC is a fractal copy of what should be done on a national level. To be very precise, we are carrying out actions that are normally assigned to two collective entities: national governments (governance, plus tax collection, plus public spending) and central banks. Both institutions have been taken over by concentrated economic wealth, and we are to carry out the practices which would be undertaken by these institutions if they were healthy.

If we take the notion of a fractal economy very seriously, we should imagine that we would not be utilising any principle that would be out of place if practised on a national level. At no point in the history of democracy has it ever been considered that corporations are entitled to vote at the level of national government; and as a fractal, we should be thinking the same.

Voting replaced the principle of absolutism (monarchs etc) in which power was concentrated in a strict hierarchy terminating in one person at the very top. The right to vote has always been assigned to persons who were considered to have ‘arrived’, persons who had matured sufficiently to be considered to have earned the right to take part on an equal basis to other voters. In the past such persons who were considered to have arrived was restricted to land owning men. In recent centuries, it was finally conceded that women were not hysterical beings who couldn’t be entrusted with the role of governance. Later still, coloured people were considered similarly. Keep those thoughts in the background.

Now what is a corporation? Our body of national laws in principle represent the balance of laws which considers every person equal in the political sense. In previous times, corporations got their charter from a monarch, i.e. from an absolutist form of government. Today the corporation gets its charter from the body of national laws which in principle represents us as individuals equally. As a mathematician would put it, every individual corporate charter is a subset of the national laws. Nothing in any corporate charter is supposed to transgress national laws. There should be nothing in a corporate charter that the national law has not reviewed and passed.

A corporate charter is necessary because it regulates (or sets a framework) for multiple relationships – between owners, workers/employees, creditors, suppliers, customers etc. So a corporation is thus a legal framework which enables people to conduct economic activity in a manner that they can trust. There is no person in this legal artifice.

In the same vein, and to return to an earlier point, the taxes that a corporation pays is in lieu of the taxes that the owners, as individuals, would pay (and co-workers would likewise in a cooperative).

One can examine the phenomenon of capitalism many number of ways. If we look at the conflict between capitalism and democracy, we can sum up the basis of this conflict like this: In a democracy, voting rights is ascribed to persons on the basis of equality (one person, one vote); on the other hand, capitalism gives voting rights to equity, or ownership of property. (Equity and equality have the same etymological root.) ‘Property’ means of course, shares. Transferring the right to vote from persons to property is, when one thinks about it, something of an ethical travesty.

Through the principle of cross ownership (share owned corporations owning each other and thus controlling each other) and interlocking directors (directors who sit on more than one board), the corporations amass much more power than the sum of their shares would indicate. The non-institutional owners are irrelevant with regards to their right to vote associated with their shares. The above practices means that broadly speaking, the corporations can think and act as one in a kind of conspiracy against the general public. (Any CEO or board of directors which doesn’t toe the line get tossed out immediately.) Hence it is that they can implement free trade agreements with no real government input – not to mention citizen input. Get the picture? A corporation and its charter is supposed to be a subset of national laws which are regulated, in theory, by a democratic government. These beasts amass such power that they can impose inter-national laws which govern the very thing (democratic governments) that are supposed to govern them. Trace this chain of events backwards and you will see that it starts with our national laws recognising that property (shares) has voting rights.

It kind of looks innocuous enough right? People who put in shares to start a company should get voting rights proportionate to their share holdings. From this legal anomaly of voting rights, the share owned corporations (which include banks) amass untold power. (To be fair, people should be able to apportion voting rights in proportion to share holdings if they use their own money. It would be an infringement on their freedom if we banned the practice. However if we create a commons bank and claim credit creation to be the sole right of the commons, then we would never lend money to such a corporation but instead lend money to cooperatives which are not owned by anyone. It is pretty impossible for a large corporation to survive without a line of credit).

The above thoughts may appear theoretical or ideological to some people. Let’s consider it from a very ‘practical’ point of view, and see how silly things might end up if corporations get to vote.

A person becomes a member of the FEC and gets voting rights. He is also one of five directors on a corporation. He effectively gets 1.2 votes. He has a small business which is also a FEC member. He now has 2.2 votes. He and his brother start up an importing company and even though they haven’t actually imported or sold anything yet, the company is entitled to a vote as well. So the same person has another half vote which brings his tally of votes to 2.7 votes. The process just gets ridiculous.

It is broadly considered a legal and moral travesty that corporations have the right to free speech in the U.S, just like individuals. This only happened because Supreme Court judges are very much in bed with the corporations. (This ruling could easily be overturned if direct democracy was practised.) Giving corporations the right to vote is pushing the boundaries even further in recognising their ‘person-hood’.