“With this extremely timely and immensely readable book, Harry Glasbeek does for the lay reader what he has done for generations of his law students Deploying loads of fascinating cases from Canada and around the world with great felicity, profound insight, and charming wit, he lifts the veil of legal jargon to explain in the clearest terms how corporations and states intertwine through laws and regulations, courts and tribunals, to allow corporate executives and directors, shareholders and investors, to systematically screw workers, consumers, and citizens, and to accumulate wealth and power at the public’s expense.” — Leo Panitch, senior scholar and emeritus distinguished research professor, York University “Through his consistently forensic use of legal methodology, real conceptual sophistication, and via a wealth of data, Glasbeek comprehensively—with fury, irony, disgust, and humour—reveals how corporate capitalism is no more and no less than a system that privileges the shareholding class Challenging the bases of toxic class privilege—the edifice that is the corporation, and the subservient complex of bourgeois law—this majestic text reinvigorates the belief that a better world remains within our grasp.” — Steve Tombs, professor of criminology, The Open University, UK “With deep insight and biting humour, Glasbeek exposes the ideological myths of corporate law, which allow flesh and blood capitalists to voraciously pursue profits without responsibility for the inevitable harms their activities impose on the rest of us This book is essential reading for anyone who wants to understand how law belies its promise of equal justice for all and instead protects the interests of the few.” — Eric Tucker, professor, Osgoode Hall Law School, York University “Class Privilege provides a stunning critique of corporate capitalism and the controlling shareholders hiding behind the bourgeois legal categories of corporate personhood and limited liability to reap massive financial rewards whilst routinely evading responsibility for the many and devastating harms generated by their corporation Glasbeek’s work is a much-needed corrective to the “thinking capitalists” and their state enablers who desperately plead their case for saving corporate capitalism and to the corporation’s many academic cheerleaders who naively cling to the belief that we can somehow rid the corporation of its predatory instincts so that it might finally realize its social and economic benefits Class Privilege is a must-read for those who find themselves questioning the legitimacy of the modern corporation and for those currently struggling against the capitalist status quo in the hopes of realizing a better, more just alternative.” — Steven Bittle, associate professor, Department of Criminology, University of Ottawa “Harry Glasbeek has written an accessible guide to how the law creates and sustains class privilege through corporate capitalism Shining a light on controlling shareholders, this book exposes how, through law, the real human beings behind the corporate veil are shielded from accountability for social and economic harms In demystifying this technical knowledge, Glasbeek identifies practical points of leverage and legal principle that can be harnessed for real change.” — Fay Faraday, social justice lawyer, visiting professor, Osgoode Hall Law School, and Packer Visiting Chair in Social Justice, York University “Harry Glasbeek’s meticulously argued and supremely convincing book exposes one of the great political and economic deceptions of our time: that the corporation is somehow autonomous from the people who own and profit from it Class Privilege literally tears away the corporate veil with finely crafted analytical precision that allows us to see exactly how shareholders hide behind a machinery of economic growth and human waste that is quickly pushing us to extinction In demystifying this dehumanizing machine that we call the corporation, Glasbeek shows us how we can be truly human again: by taking back control of our lives and livelihoods from the wealthy minority who hide behind the corporation This book does not trivialize or oversimplify the enormity of the task that confronts us in beginning to dismantle corporate power; by not shirking from a full exposition of what needs to be done, Glasbeek gifts us with a clear set of instructions that tell us where to start.” — David Whyte, professor of socio-legal studies, University of Liverpool, UK and coauthor of Corporate Human Rights Violations: Global Prospects for Legal Action “This book is a contemporary Mirror for Magistrates for all professionals and regulators who could expose the falsehoods, fictions, and fallacies of corporate law and regulation but choose not to It is the current honest politicians’ and ethical citizens’ guide to corporate capitalism and the reform of its unethical and unsustainable values It highlights the legal incentives for controlling shareholders to be careless with others’ lives and well-being It illustrates how limited liability and separate legal personality confer immunity for their dishonest conduct It illuminates how they lead to unfair inequalities in wealth It sets out in plain and urgent language the necessary reforms to make controlling shareholders, like other citizens, responsible and accountable for their actions refuting the arguments that this is too hard.” — Neil Andrews, professor of law, Victoria University, Australia and past editor of the Australian Journal of Corporate Law Class Privilege: How Law Shelters Shareholders and Coddles Capitalism © 2017 Harry Glasbeek First published in 2017 by Between the Lines 401 Richmond Street West Studio 281 Toronto, Ontario M5V 3A8 Canada 1-800-718-7201 www.btlbooks.com All rights reserved No part of this publication may be photocopied, reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, recording, or otherwise, without the written permission of Between the Lines, or (for photocopying in Canada only) Access Copyright, 56 Wellesley Street West, Suite 320, Toronto, Ontario, M5S 2S3 Every reasonable effort has been made to identify copyright holders Between the Lines would be pleased to have any errors or omissions brought to its attention LIBRARY AND ARCHIVES CANADA CATALOGUING IN PUBLICATION Glasbeek, H J., author Class privilege: how law shelters shareholders and coddles capitalism / Harry Glasbeek Includes bibliographical references and index Issued in print and electronic formats ISBN 978-1-77113-307-4 (softcover).—ISBN 978-1-77113-308-1 (EPUB).—ISBN 978-1-77113-309-8 (PDF) Corporations—Corrupt practices Corporate power Social responsibility of business Capitalism I Title HV6768.G54 2017 364.16’8 C2016-907422-6 C2016-907423-4 Text and cover design by David Vereschagin, Quadrat Communications We acknowledge for their financial support of our publishing activities the Government of Canada through the Canada Book Fund, the Canada Council for the Arts, which last year invested $153 million to bring the arts to Canadians throughout the country, and the Government of Ontario through the Ontario Arts Council, the Ontario Book Publishers Tax Credit program, and the Ontario Media Development Corporation To my parents, who taught me an unshakeable optimism, and to la famille Souquet, who showed me the decency and compassion of which people are capable Contents Introduction PART I Chapter Chapter Chapter PART II Chapter Chapter Chapter PART III Chapter Chapter Chapter Chapter 10 Chapter 11 Chapter 12 Chapter 13 Confronting Flesh-and-Blood Targets The Corporation: Law’s Gift to Capitalists A Corporation Is Born Cooking the Books Gaming the System The Shareholder: The Privileging of a Class The Shareholder as Gambler The Shareholder as Toxin The Shareholder as Victim The Corporate actor: Piercing the Veil The Ideal of Individual Responsibility The Ideal Abandoned Too Hard to Find? The Anecdotal Riposte Too Hard to Find? The Empirical Riposte The Role of Limited Liability Social Welfare A Step off the Road to Serfdom Acknowledgements Notes Index Anti-capitalist activists are preoccupied with the for-profit corporation Their language makes this plain: the corporate agenda, corporate culture, corporate rule In many progressive circles, it is a putdown to describe a way of doing things as “corporatized.” And the modern corporation is all around us Its presence and potency influence everything we It is in our minds when we think about social, political, and economic activities It crops up in any conversation about economic growth, technological innovation, employment, or taxation It factors in sport sponsorship, government regulation, social programs, philanthropy, and funding of political causes, parties, or candidates The corporation is accepted as a vitally important institution We have been taught to think of the modern corporation as a normal, natural, and pivotal component of our society And to a goodly extent, we have internalized this message It is understandable, then, that anti-capitalist activists demonize the corporation An identifiable enemy is needed to coalesce resisters, and the vehicle through which perceived wrongs are wrought appears to be a good target But this tendency to focus on the corporation as the enemy is, conceptually, a misreading of the situation The corporation is only an instrument for the system; it is not itself the system It is capitalism’s tool, and it has identifiable beneficiaries The corporation is the tool through which individual capitalists maintain and perpetuate their dominance, the instrument which they use to enrich themselves obscenely and to impoverish almost everyone else Capitalism’s agenda, the endless pursuit of private accumulation of socially produced wealth, is felt by many to be unjust But in daily life, capitalism appears as a concept, not as a target with a defined shape or body Capitalism—as a system, as an “ism”—is indifferent as to how wealth is created and accumulated We are to compete with each other to get more; we are to exploit our physical and cultural environments to get more This competition is not waged on an even terrain Riches and talents were unevenly distributed from the start, leading to increasing imbalance over time While oft-noted, the validity of those unequal starting points has not come under serious challenge Thus it has come to pass that today, a very few people, those we call capitalists, control vast amounts of wealth The system, capitalism, imbues them with a spirit of indifference to others and to their cultural and physical environments Greed is the pivot of the system that maintains and drives capitalists It is a carcinogenic starting point In 1921, British historian R.H Tawney observed that it made for sick social relations: By fixing men’s minds…upon the exercise of the right to pursue their own self-interest, it offers unlimited scope for the acquisition of riches, and therefore gives free play to one of the most powerful of human instincts…It assures men that there are no ends other than their ends, no law other than their desires, no limit other than that which they think advisable…Under the impulse of such ideas men not become religious or wise or artistic; for religion and wisdom and art imply the acceptance of limitations But they become powerful and rich They inherit the earth and change the face of nature.1 The few, the capitalists who own the bulk of the means of production, rule the roost They dictate how we live, materially and spiritually They idolize money and the power it gives them They prosper in a system of naked self-interest and impose its logic on all of us This is wrong It is a system that abjures ideals such as sharing, mutuality, respect, and compassion It denies our potential for nobility As French Resistance fighters Stéphane Hessel and Edgar Morin have lamented, “humanity is unable to attain humanity.”2 But knowing that something is wrong is not enough We need to know how to change it It is hard to fight the system as a system We are not only subjected to it, we are part of it We are both coerced and co-opted into compliance and acceptance This makes it difficult to see capitalism as a tangible enemy What we see is its tool, the corporation for profit Capitalists have made their dominance appear natural and unchangeable, in large part, by hiding themselves from legal view They have succeeded in making the invisible, ethereal corporation into a shield behind which, if seen at all, they are seen as passive beneficiaries of corporate activities But if capitalism is so great and capitalists are so good for us, why such a great need for conjuring tricks? Why the need to hide? The corporation serves the capitalists’ purposes much as the ink-like fluid emitted by an octopus serves it to fool its enemies Capitalists are like the Romulans of television fame who are equipped with a cloak that renders them invisible to their favourite prey, the Starship Enterprise For a capitalist, the corporation is what the ink is to the octopus; it is what the cloaking device is to the Romulans It is meant to hide, to distract so that they can what they like If we want truth and justice, the shield of the for-profit corporation needs to be removed This book argues not only why this should be done but also how it might be done The book’s focus is, as it should be, modest I am a lawyer who studied labour and corporate law I want to assist, first, those who want to defend us against the immediate impacts of corporate capitalism, and second, those who want to change it forever The work utilizes such expertise as I have to highlight how, whatever goals they have set themselves, whatever tactics and strategies anticapitalists choose, their cause might be advanced by changing the ideological context of their resistance While the corporation serves market economic functions that supposedly yield material benefits for all of us, the brute fact is that the corporation ensures that the owners of wealth will get the lion’s share of that material welfare Moreover, because of its centrality to the political economy, the corporation also has political and cultural impacts Through it, dominant capitalists hold sway over elected politicians and moulders of public opinion We are conditioned to live within a corporate political culture, largely reduced to fighting its excesses from within its self-perpetuating logic This deepens the power of the corporations’ hidden masters Political theorist Hannah Arendt observed that corporate culture is “the rule of nobody and for this reason perhaps the least human and most cruel form of rulership.” Capitalists, as we will see, benefit enormously from the transliteration of capitalism into corporate capitalism The corporation is portrayed as a mechanical device created by the state to serve its functions and, therefore, as one expected to behave in accordance with that state’s goals and aspirations This suggests that capitalists employing the corporation share the values and norms of the state’s citizens When the workings of the corporation are examined, though, they reveal that they necessarily involve a betrayal of the very values and norms that, for their legitimacy’s sake, capitalists purport to share One of capitalism’s potential weak spots, then, is the perverting economic, political, and ethical role played by the prime instrument of private wealth accumulation, the legal corporation Once the corporate mask is ripped off, those who hide behind it become visible Stripped of their protective garb, capitalists—the few who own the means of production—will be as naked as the rest of us are when we face their corporations The enemies may become more real, less distant, and weaker This book sets out to humanize capitalism Not to make it more acceptable, not to make it gentler and kinder, not to help it to perpetuate itself The aim is the very opposite: to help people rid themselves of the system which, because all of us are enveloped within its embrace, does not present us with easily hittable targets I set out to help activists identify some of their powerful antagonists, the few who truly profit from capitalism’s reign, namely those who control corporations Corporate capitalism is not an ungoverned, naturally existing system, but one that is run by and for the benefit of a very few human beings We should go after controlling shareholders This goal should have visceral appeal, and it may help militants confront capitalist relations of production more effectively The task is difficult because law, an institution of unparalleled prestige, allows capitalists wrapped in corporate clothing to convey the impression that they are just as helplessly bound by the iron laws of capitalism and its corporations as its more obvious victims and opponents are Law suggests that flesh-and-blood capitalists should rarely be blamed for the many hurts inflicted by corporate capitalism The argument is not that the law instrumentally sets out to favour capitalists and their corporations over everyone else Law could not fulfill its primary functions if it was so blatant It is more subtle In Anglo-American jurisdictions—Canada, New Zealand, Australia, the United States, the United Kingdom, as well as other jurisdictions that share a common legal historical and cultural background3—law portrays itself as the institution that protects and maintains liberal values, values that posit the equal sovereignty of all individuals and eschew coercion of any kind This is most obviously reflected in the adherence to what is called the rule of law Law is wedded to fair processes and neutral applications of the law by neutral adjudicators who treat all individuals as equals before, according to, and under the law As law is both created by the state and provides the mode of exercising state power, it plays a role in ensuring that that state’s inherent coercive power does not undermine the goals of law and its liberal project That coercive state power is kept in check by judges and constitutional bills of rights More directly relevant here, as the state is the only legitimate repository of coercive powers in a liberal polity, the state’s use of those powers to punish errant citizens, to treat them as criminals, is sought to be contained by law and its attendant processes It is an attractive, seductive message Law—and thereby, the institutions it spawns and the activities it controls—is given a difficult-to-challenge authority Law’s edicts have sway with the Baran, Paul, 237 Barclays Bank, 95, 139, 285 Barrick, 81–2 Bazley v Curry (legal case), 111, 114–15, 116 Bergoglio, Jorge Mario, 245 Berle, Adolph A., 58, 202, 203, 273–4 Bierce, Ambrose, 198 birth of corporations, 11–16 Blankenburg, Stephanie, 249 Blodget, Henry, 67 BNP Paribas Group, 98 board of directors See directors bonds, 14, 89–91 See also securities; shares bonuses, 140 book summary, 250–1 Borstal Boys, 110 Brace, Charles Loring, 63 Brambles Ltd., 34–6, 265–6 Brandeis, Louis, 77 Brennan, Jordan, 180 Bre-X, 134–8 bribery, 221 Bris, Arturo, 138, 187 British American Tobacco Australia, 99 British Virgin Islands, 20 Brock, J.W., 96–7 brokers, 89–92, 135, 320–1 See also financial institutions Buffet, Warren, 209, 238 Burger King, 158–9, 294 Burkhardt, Ed, 149–50 buy-backs, 203 bylaws, 49 capital See financial capital capitalism: agenda, 2–3, 212; alternatives, 234–5, 239–40, 247, 249–52, 323–4; beginning of, 256–7; corporation as instrument of, 1–2, 3–4; and “dangerous classes,” 63; economics integrating politics, 24; fighting against, 3, 239, 240, 243–5, 246, 249–52, 325–7; and governments, 23, 64; humanizing, 4; as impairing morality, 56; Marxist view of, 272; as natural, 3, 4, 73; reforms, 244–5; self-reliance, 199; transactions vs products, 227; weak spot, 4; and wealth, 205, 208–9 Capitalism and Freedom (Friedman), 257 car dealerships, 316–17 car manufacturing, 212–14, 317 Carney, Mark, 244 Cassel, Doug, 120 Caterpillar, 120–1 Cayman Islands, 17, 18–19 Center for Corporate Policy, 66 Chase Manhattan, 139–40 chemicals, 39–40, 83–5, 218, 219–20, 318 Chevron, 122–3, 309 Children’s Foundation, 114–15, 116 Chiquita, 121–2 Chrysler, 317 Citigroup, 139, 257 class actions, 136, 138 class privilege, 51, 54, 63, 212, 238–9, 245–6 See also shareholders and privilege classical liberal economics, 13 Clement, Walter, 237 clothing industry, 37–9, 108, 215, 267, 290 Cold War, 279 collateral impacts, 216–17 commissions, 227 commodities, 68, 225, 229 competition, Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 119 computers, 226, 320–1 concentrated ownership, 180–9, 307–11 consultants See professional consultants contracts, 36–9, 267–8, 269–70, 304 contrariness, 60–1 controller and owners gap, 58, 177, 273–4, 307 controllers See directors; shareholders, controlling controlling shareholders See shareholders, controlling conventional wisdom vs reality, 49, 60, 74, 104 corporate class, 158, 208 corporate families: creation of, 16; franchisees, 293, 294; manipulation, 41; offshore subsidiaries, 18–20, 40, 123, 126–7, 258, 262–3, 267, 289–90, 292–3, 309 “Corporate Fraud Demands Criminal Time” (report), 262 corporate responsibility See criminal responsibility; individual responsibility; shareholders responsibility; social responsibility corporate veil, 41–2, 48, 126–7, 178, 195, 249 corporate-owned life insurance (COLI), 72–3 corporations: as blobs, 13, 16, 43; as capitalists, 13, 16, 237, 241 (see also corporations and capitalists); conditions for creating, 11–13, 259; creating markets, 71; ease at becoming, 12; functions of, 3–4; as important, 210; as influential, 1, 23–6, 79–82, 119–20, 122–3, 126, 132–3, 232; large, 179–84, 201–5, 211–12; legitimacy, 24, 32, 36, 56–62, 232–3; measurements of size, 176–7; number in Canada, 11; vs partnerships, 166–8, 303–4; as political, 24–5, 66, 71–2; presumption of innocence, 66–7; as protected, 32–3, 38–9, 219, 247; as proxy, 171–2; self-serving, 15, 26–7, 39, 71; shares in other corporations, 185; small, 176–9, 197–8, 210–11; and society’s welfare, 210–16, 219; and stock market, 203; summary, 60–1, 166, 205–6, 237; terminated, 270; as unaffected by shareholders, 60; as undemocratic, 232; variations, 57; wealth contributions, 210–16 corporations and capitalists: capitalists guiding corporations, 43–4, 47, 160; and citizens, 4, 26, 41; fetters, 236; harm incentives, 6, 39, 41; hiding, 3, 4, 6, 7, 20, 133, 137, 172, 240–2; impacts, 4; instruments, 1–2, 3, 43, 48, 170, 171, 236; justifications, 7, 26–7, 59–60, 223, 226, 236, 251; “one size fits all,” 175–6; profits, 69; responsibility, 167–8; summary, 14–15; threatened, 232–4, 247, 328; and wealth, 209–10, 235 corporations as people: absurdity, 44, 260; artificiality, 259; constitutional amendment, 261; as distinct, 11, 30–2, 33–6, 38, 42, 48–9; guided by capitalists, 47; hiding shareholders, 48, 170; immortal adult, 15–18; and law, 138, 170; limitations on, 210; summary, 12–14, 205–6; and taxes, 22–3; as unimportant point, 168–9 “corporatized,” Corrections Corporation of America, 69–70, 280 cost-cutting, 159–60, 190, 215, 267–8, 293–4 Cox, Edward, 197–8 CP Rail, 309 creditors, 15, 40–1 crimes, 77–8 criminal responsibility, 112–13, 124–9, 141–2, 143–7, 149–50, 298, 300–2 cultural impacts, Curragh Resources, 132–3 currencies, 95, 139 Daly, Herman, 217 deaths: “accidents,” 222; child labour, 215; Chiquita, 121–2; ExxonMobil, 78–9; Hudbay Minerals/Fenix, 126; Lac-Mégantic tragedy, 147, 148–9, 150, 301–2; Metron Construction, 143–5; pollution, 218; Rana Plaza, 108–9, 291; Tampaco Foils Inc., 290; Unocal, 119; Westray, 131–3; Zyklon B, 124 debts, 30–3, 42, 56, 61 defence budgets, 279 defined benefit movement, 101, 316 democracy, 25, 232 deregulation, 23, 224, 229, 301 derivatives, 225–6, 250, 320 Desmarais, Paul, 156–7 deterrence, 141, 144, 145 deviance as norm, 77–82, 89–94, 97–8, 221, 277–82 Devil’s Dictionary (Beirce), 198 Dietrich, Joachim, 108 directors: balancing shareholders, 311; and controlling shareholders, 140, 147; criminal responsibility, 113; as employees, 87; and financial institutions, 92–4; law violation, 74, 97, 142; legal status, 192–3; policies of, 151; punishment, 84–5; and rights of shareholders, 15, 49–50, 65; self-serving, 86–9; and share value, 62; and social responsibility, 100–1; summary, 13, 270–1; working as owners, 58–9; working for themselves, 169 The Divide (Taibbi), 95 Double Dutch Irish Sandwich, 19 Dream Office REIT, 293–4 drugs, 67–8 Dzimwasha, Taku, 139 Eckbo, B.E., 187 Eckersley, Robyn, 209 economic power, 157–8, 185–6 economies, 4, 13, 24–5, 94, 209, 228 See also market economy; political economy efficiency: decision-making, 232; as excuse, 40; financial institutions, 141; general welfare, 241; legal actions, 170; oppression remedy, 152; outsourcing, 38–9; of private sector, 75; shareholders’ investment, 103; virtues, 256 See also inefficiency Einstein, Albert, 233 electoral system, 25 Eliot, Charles W., 273 Eliz World, 37–9 embezzlement See fraud empirical riposte of shareholder responsibility, 53, 154–5, 184, 194 employees See workers Employment Standards Act, 31–2 Engels, Friedrich, 319 Engler, John, 311 English Board of Trade, 93 entrepreneurs, 45, 47, 49, 56 environmental damage, 78–9, 81, 89, 119, 150, 217–18, 220, 248 EpiPens, 277–8 ESL Investments, 182–3 ethical living, 233, 324 Evans, Linda, 280–1 executives See directors Extraordinary Popular Delusions and the Madness of Crowds (Mackay), 57 ExxonMobil, 78–9 family ownership, 188, 189, 308, 317 Fang, Lee, 279 Felderhof, John, 134, 136–8 Fendler, Lothar, 124–5 Fenix, 126–7 Ferdinand Porsche, 317 Ferguson, Charles H., 97, 142 feudalism, 325 Fiat Chrysler, 213 financial capital, 14, 204–5, 222–31, 321 financial crisis (2008), 94–5, 97, 139, 142, 228, 234 financial institutions: anonymous depositors, 20; car dealerships, 316–17; and corporation directors, 92–5; currency manipulation, 139, 285; customer information, 21; deviance as norm, 286–7; illegal fees, 286; and investment funds, 227; loans, 14; payment protection insurance, 285–6; privilege, 141; terrorism, 294–5 See also brokers; individual banks FIRE (finance, insurance, real estate), 227 Fitoussi, Jean-Paul, 234 Fitting, Peter, 242 Flannigan, Robert, 311 Fonseca, Mossack, 21 food industry, 110, 121–2, 158–60, 188, 208–9, 214, 293, 294 Forbes, Robert, 181–2 Ford, 317 Fox, Justin, 201–2, 204 Frame, C.H., 132–3, 298–9 Francis, Diane, 189 fraud: accounting scams, 91–2, 93, 96; bank fees, 286; as business model, 96; companies named, 96–7; currencies, 95, 139; insurance, 285–6; loans, 316–17; mining, 134–8; money laundering, 98; mortgages, 94–5, 97, 139, 142, 228, 234; as normal, 97–8, 286–7; securities, 96 See also tax scams freedom, 22, 40, 257, 324 Friedman, Milton, 257, 269, 276–7 Frieman, Jonathan, 17–18 G20, 21 Galbraith, John Kenneth, 97 gambling, 50–2, 98, 225, 271 See also shareholders as gamblers gaming the system: reducing costs, 36–9; restructuring, 40–1, 139; shifting costs, 29–36; shifting risks, 39–41, 199–200, 215, 227–8 GDP (gross domestic product), 208–9, 221, 224 Geis, G., 74 General Electric, 20, 74, 281 General Motors, 98, 213, 216–17 Gibson, Carl, 19, 215 Gibson, Diana, 21 Gindin, Sam, 204 GlaxoSmithKline, 221 goals, other, 101 Godfrey, Paul, 161 Goldberg, Eve, 280–1 Goldcorp, 79–80 Google, 19 Gordon, Diana, 63 governments: bail-outs, 139, 142, 248, 287; belief in private sector, 75, 132–3, 174; and capitalism, 23, 64; complicit with risks, 147–8, 296, 301–2; and corporations, 23–4, 26; defence budgets, 279; and foreign shareholders, 153–4; influenced by corporations, 23–4, 26, 79–82, 119–20, 122–3, 126, 132–3, 232; and neo-liberalism, 219; policy-making, 126–8; power, 5; and privatization, 228–9; privileges from, 12; protecting corporations, 32–3, 219, 247; services, 69–71; and taxes, 20–1; ties to corporations, 287; trade, 26 Graeber, David, 323–4 Graham, Coral, 235 greed: capitalism’s motivator, 2; confronting, 7; and corporations’ souls, 43; defined benefit movement, 316; as endless, 64, 73; eras of excessive, 97; formalized, 66; “good greed,” 53, 75; as noble, 62; as restricted, 51; and risk, 6; as unfavourable, 255–6 Greenfield, Kent, 212 Greider, William, 203 gross domestic product (GDP), 208–9, 221, 224 growth, 208–16, 215, 220, 223–4, 226, 234–5, 317 guinea pigs, 219–20, 318 guns, 279, 293 H&M, 215, 290 Hadden, Tom, 96, 181–2 Hanauer, Nick, 235 happiness, 234 Harlan, Chico, 280 Harmes, Adam, 190 Hay, Doug, 6, 240 Hayek, Friedrich, 239, 277 hedge funds, 161, 182–3, 227–8, 229–31, 235 Heinzerling, Lisa, 218, 220 Henwood, Don, 203 Hershey, 221 Hessel, Stéphane, High Frequency Trading (HFT), 320 Hill, Jennifer, 191 Hobsbawn, Eric, 237 Hofsetter, Karl, 292 Holder, Eric, 172–3 Honda, 213 HSBC, 315 Hudbay Minerals Inc., 126–8, 295–6 Hudson, Michael, 228–9 Hugo, Victor, 66 human rights, 78–80, 120, 191, 290, 296 Hurt, Christine, 272 Hyundai, 213 illth, 216–22, 232 immigration, 70 Inclusive Capitalism Initiative, 245 Indigenous peoples, 126, 243 individual responsibility: admitting to, 140; controllers general, 291–5; corporations as tool, 34–6; corporations vs partnerships, 167–8; corporations vs shareholders, 170–1; debts, 30–1; directors vs shareholders, 138–9; due to social values, 109, 116–17; expectations, 110–11; foreseeable harm, 127–8, 147–8; and self-serving organizing, 117; shielding, 125, 127; shifting, 39–40, 199–200; subsidiaries, 119–29; uncertainty, 109, 148; as unrealistic, 276–7 See also limited liability; shareholders responsibility; vicarious liability industry of incorporation, 20–1 inefficiency, 57, 58, 169, 170, 174, 188 See also efficiency inequality, 2, 243–4 Inside Job (film), 97 insider trading, 137–8 institutional investors, 190–2 insurance, 68–9, 72–3, 227, 278–9, 285–6 intellectual property rights, 277 International Consortium of Investigative Journalists (ICIJ), 20–1, 261–2 intervention See regulations investors See shareholders Ireland, 19, 262–3 James Hardie Group, 39–40, 83–5, 284–5 John Shaw & Sons (Salford) Ltd v Shaw (legal case), 270–1 Johnson, Robert, 235 Johnson & Johnson, 19–20 JPMorgan, 139, 221 Just Energy, 266 Kaplan, Lewis, 123 Kasperkevic, Jana, 20 Kazenelson, Vadim, 144, 147 Kelly, Marjorie, 203 Keynes, John Maynard, 100, 212 Kinsley, Michael, 74 Kiobel (legal case), 121, 122 Krippner, Greta R., 321 Kurland, Nancy B., 90 La Porta, Rafael, 184 labour costs, 36 Lac-Mégantic tragedy, 147–50, 301–2 Lagarde, Christine, 244 laissez-faire, 27, 160, 172, 174 Lampert, Eddie, 182–3 Lanchester, John, 285–6 law: and activists, 248–9; amendments, 131, 133; as authority over corporations, 5–6, 243; bylaws, 49; as class transcending, 6; concentrated ownership, 184–5; corporations abiding, 26, 27, 73; corporations as people, 13, 138, 170, 267; corporations as tool of, 9, 32, 240; corporations violating, 77–8, 89; criminal vs regulatory, 74–6, 145–6; directors violating, 74, 97, 142; endangering principles, 31; evasion vs avoidance, 22–3; and fair competition, 52–3; financial capital, 231; hiding capitalists, 41–2; impacting profits, 27–8; labour law, 31–2; manipulated by professionals, 27–8, 73, 91–2; piercing corporate veil, 42, 127, 178, 195; policy choosing, 126–8; precedent, 107–8; protecting corporations, 32–3, 38–9; reforming, 151–2; researching corporation problems, 58; responsibility, 34–6, 110–17, 291–5; and risks, 165–6; rule of law, 5; and social relations, 240; and social values, 100–10, 116; summary, 5–6; worker safety, 265–6 law and capitalism: as authority over capitalists, 5–6, 243; blame, 5; as capitalism tool, 75, 295; economics/ politics, 24–5; hiding capitalists, 6, 131; life insurance, 72; lobbying, 23, 25, 66, 70, 72; prosecuting corporations, 76 The Law and Practices of Joint Stock Companies (Cox), 197–8 law and shareholders: definition of shareholders, 52; indifference, 65, 75; legal power, 49–50, 58, 192–3; privilege, 45, 56; protection, 48, 62, 88–9, 103, 133; shareholder status, 192–3 Lebowitz, Michael, 247 Lee v Lee’s Air Farming Ltd (legal case), 33 lenders, 14, 15 liability See limited liability; vicarious liability liberalism, 5, 30–1, 57–8 LIBOR (London Interbank Offered Rate), 94–5, 285 licences, 117–18, 132, 291–2 liens, 14 life insurance, 72–3, 278–9 limited liability: benefits, 195–7; as effective, 273; large corporation, 204–5; modifying, 207; partnerships, 167–8; and raising capital, 204–5; shareholders privilege, 55–7, 175, 196–7; small corporations, 198–9; summary, 55–6, 206–7, 250, 312–13; and volatility, 197; and wealth, 196–7; and workers, 200 See also individual responsibility; vicarious liability limited liability partnership (LLPs), 168, 304 loans, 14, 15, 316–17 Loblaw Companies Ltd., 188 Lopez-de-Silanes, Florencio, 184 Lorsch, Jay W., 201–2, 204 losses, 19, 42, 81–2, 85, 111–12, 135–6, 139, 227 Lux Leaks, 261–2 Macdonald, David, 188–9 Mackay, Charles, 57 MacMillans, 299 Madrick, Jeff, 325–6 Magna International, 162–4 managers See directors manipulation See gaming the system market economy, 30–1, 172, 178, 197, 233, 256 See also economies markets: corporations creating, 71, 72; market economy, 30–1, 172, 178, 197, 233, 256; regulations of, 160, 172; rigging, 94–6; stock markets, 203, 223–4, 225–7, 319–21 Marxism, 204, 244, 272, 274–5, 319 Maxima, 110 Mayans, 126 Mayer, Colin, 89 McCain Foods, 188 McCollish, John, 198 McDonald’s, 214, 293 McDougall, Barbara, 256 McMurtry, John, 219 Means, Gardiner C., 58, 273–4 media outlets, 160–1, 188 Meier, Robert F., 74 Metron Construction, 143–7 Microsoft, 19, 20 Mining Resources Corporation, 298–9 MiningWatch Canada, 79–82 Mishan, E.J., 69 Mitsubishi Motors, 317 Monbiot, George, 277 money laundering, 98 money managers, 190 Montreal, Maine & Atlantic railway (MMA), 147–50 MONY, 229–30 Mooves, Leslie, 279 Morck, Randall K., 181, 182, 185 Morgan, Edward, 125 Morin, Edgar, mortgages, 94–5, 97, 139, 142, 228, 234 Moyers and Company (TV show), 172–3 multinational corporations See corporate families Mylan, 277–8 national improvements, 21 neo-liberalism, 219, 229, 247 Netherlands, 19 new markets, 71, 72 Nixon, Richard, 162 numbers vs names, 12 Obama, Barak, 19, 262 Occupy Wall Street, 232 offshore tax havens See tax scams oppression remedy, 152, 165–6, 309–10 options, 225–6 Oracle, 19 Ostrom, Elinor, 324 outsourcing, 36–9, 108–9, 197, 267, 293–4 owners and controllers gap, 58, 177, 273–4, 307 Palestine conflict, 292 Panama Papers, 21, 261, 263–4 Panitch, Leo, 204 paramilitary groups, 50, 121–2 Parenti, Michael, 245 partnerships, 166–8, 198 Patrong, Kofi, 115 payment protection insurance (PPI), 285–6 Peladeau, Pierre Karl, 194 pensions, 135–6, 164, 191, 321–2 The Pervert’s Guide to Ideology (Žižek), 242 pharmaceuticals, 277–8 Philip Morris, 67, 277 Plesch, Dan, 249 Polanyi, Karl, 233 political economy, 4, 24, 228 political impacts, 4, 231–2 politicians, 25 politics and economics, 24–5 pollution, 119 Pontell, Henry N., 262 Pope Francis, 245 Porter, Eduardo, 100 Porter, John, 181 Posner, Richard, 282–3 Postmedia Network, 160–1 poverty, 238, 249 power, 2, 5, 49–50, 58, 102, 157–8, 185–6, 192–3 PPI (payment protection insurance), 285–6 Predator Nation: Corporate Criminals, Political Corruption and the Hijacking of America (Ferguson), 97, 142 price-fixing, 74 prisons, 69–71, 125, 280–1 private corporations, 182–3 privatization, 69–71, 228–9, 248, 280–1 Privy Council, 33 productive capital, 204–5, 321 professional consultants, 27–8, 40, 73, 90–2 profits: benefiting shareholders, 55, 59, 65–6; and citizens, 137; and controlling shareholders, 136–7; at expense of morals, 68–71, 92–3; laws impacting, 27–8; as primary goal, 99; and securities, 52; summary, 14–15 In the Public Interest, 70–1 public services, 229 punishment, 84–5, 298 pyramids, 185–6, 188, 310–11 Quebecor Inc., 194 railroads, 147–50, 301–2, 309 Rana Plaza, 108–9, 291 Rao, P.S., 181 Refac Industrial Contractors Inc., 31 Refac Industrial Contractors Inc (legal case), 30–1, 36 reforms, 25, 102–3, 151–2, 200, 244–5, 246, 247–8, 286, 290–1 regulations: vs criminal actions, 145–6, 281–2; and growth, 220, 317; as ineffective, 100, 102, 220–1; as inefficient, 174; limiting corporations, 25–6, 84, 86–7, 101; of market, 160, 172; professional consultants, 91; safety and clean up, 118–19, 131–2, 143–4, 147, 150, 265–6, 290–1, 301–2, 318; and small corporations, 211 Reich, Robert, 228, 263 Reitmans, 267 religion, 99 remuneration, 87–8 resource extraction, 78–9, 83–5, 122–3, 126–8, 131–3, 134, 215, 295–6, 298–9, 309 responsibility See criminal responsibility; individual responsibility; social responsibility restructuring, 139, 205 Ringleb, A., 199 “The Rise and Fall of the Widely Held Firm” (report), 181 risks: avoiding, 31, 34–6, 45, 55, 167, 230; controlling, 114–18, 119, 147; creation of, 38, 118–19, 128, 133, 165; and criminal responsibility, 113; and greed, 6; and harms, 220; and limited liability, 199–200; and losses, 111–12; love of, 98; other people’s money, 135; shareholders as gamblers, 14; shifting, 9, 39–40, 199–200, 215, 219–20, 227–8, 268 The Road to Serfdom (Hayek), 239 Rockefeller, Nelson D., 282 Roe, Mark J., 199 Rogers, A., 201 Rogers Communications, 188 Romney, Mitt, 44 Roosevelt, Theodore, 271 Royal Bank of Scotland, 139 rule of law, Ruskin, John, 217 Sandel, Michael, 68 Sanders, Bernie, 96 scams See fraud; tax scams Scheer, Robert, 20 Schumpeter, Joseph, 316 Sears, 182–3 secrecy, 3, 4, 6, 7, 20 securities, 52, 54, 224–7 See also bonds; shares Securities and Exchange Commission, 20 Sembhy, Ravender, 139 Sen, Amartya, 234 Senate Committee on Manufactures, 313 “Shareholder Democracy in Canada” (report), 99–100 shareholders: as board members, 85; as capitalists, 6, 47–8; class action, 81; and concentrated ownership, 180–9, 189–90, 307–11; as contracting principles, 48; and controlling shareholders, 151–3, 307–11; corporations as tool of, 48, 152, 170; corporations hiding, 48; definition in law, 52; as individuals, 189–90; as irrelevant, 201–4; legal power of, 192–3; losses, 135–6; managing corporations, 49–50, 59, 61, 85; as owners, 169–70; owners and controllers gap, 58, 177, 273–4, 307; profits benefiting, 55, 59, 65–6; rights of, 15, 49–50, 53–5, 61, 65; roles of, 15; selling interests, 60; summary, 60–1, 192–3, 206; as targets, 5, 138, 141 shareholders, controlling: becoming, 153; compensating, 136–7; as concentrated, 180–9; confronting, 7; defending themselves, 150; and directors, 140, 147; foreign, 153–4, 160–1; legal status, 194; and other shareholders, 151–3; and profits, 136–7; protected through pyramids, 185–6; self-serving, 152, 164–6 shareholders, identifying: controlling shareholders, 3, 159, 160–1, 176–9, 180, 183–4, 194, 231, 246–51; shareholders general, 170, 307–11 shareholders and privilege: as absurd, 176; amorality, 67–8; as common knowledge, 206–7; concerns, 56; in defence, 250–1; and laws, 45, 56; limited liability, 55–7, 175, 196–7; pleasing shareholders, 104; profit without work, 52, 53, 62, 175, 202; protected, 48, 62, 88–9, 103, 133, 185–6 See also anecdotal riposte of shareholder responsibility; class privilege; empirical riposte of shareholder responsibility; shareholders responsibility shareholders as gamblers: capital raised by, 53; idea promoted, 50, 52, 271–2; liability, 55–7; manipulated by professionals, 135–6; and profits, 55, 59; risks, 55, 56, 74–5; summary, 14 See also gambling shareholders as toxin, 65–71, 75, 77, 80–1, 277–82 shareholders as victims: and directors, 85–9, 151–2; entitlement, 85; losses, 81–2, 85; market rigging, 95; as powerless, 50, 58, 102; protection, 103; of scams, 93 shareholders responsibility: controlling shareholders, 125, 129–30, 133, 136–7, 145–7, 151; shareholders general, 45, 80–1, 104, 138–9, 150–1, 170–1, 222; summary, 61–3, 154–5 See also anecdotal riposte of shareholder responsibility; empirical riposte of shareholder responsibility shares: corporations holding, 185; directors and value, 62; financial institutions, 92; and growth, 223–4; and hedge funds, 229–30; maximization, 93–4; raising capital, 203–4; summary, 54; tiered, 162–4; voting, 161 See also bonds; securities Shaw Engineering, 93 Shearn, Ian T., 78–9 Shell, 309 shell corporation, 22 shirk and loot, 58–9, 86–9, 169–70, 273 Shiva, Vandana, 208–9 Shkreli, Marin, 277 Shleifer, Andrei, 184 Silver, Charlotte, 292 Simmonds, Ralph, 181–2 Sing, Lee, 181 Singer, Peter, 233 Skolnick, Jerome H., 51 slave wages, 215 The Smartest Guys in the Room (Mclean & Elkind), 91 Smith, Adam, 13, 57, 178, 233, 256 SNC-Lavalin, 221 social contract, 244 social relations, 2, 36, 64–5, 233, 240, 248 social responsibility: defined benefit movement, 101, 316; and directors, 100–1; excluded in growth measurement, 215; and limited liability, 57; and maximizing profits, 27–8, 65–8, 89, 98–102; mining companies, 191; and money managers, 190; reformers expectations, 26; starting point, 219 social welfare: and collateral impacts, 216–17, 220, 316–22; and corporations contributions, 219; and financial capital, 222–31; and growth, 208–16; happiness, 234; illth, 216–22; indifference to, 65; political impacts, 231–6; as wrong, 174–5 Scotiabank, 221 sources of capital, 14 Speri, Alice, 280–1 Stanley, Christopher, 240 state See governments Stein, Kara, 141 Stewart, James B., 98 Stiglitz, Joseph, 26, 234 stock markets, 203, 223–4, 225–7, 319–21 stocks See shares Stout, Lynn, 229, 319 Strangeland, David A., 181, 182, 185 Stronach, Belinda, 164–5 Stronach, Frank, 162–4 subcontracting See outsourcing subprime mortgages, 94–5, 97, 139, 142, 228 subsidies, 212 Sun Media, 160–1 Supreme Court of Canada, 42, 111, 114–15, 116, 123 sustenance economies, 209 Suzuki, 317 Swartz, Joel, 145–7 Sweezy, Paul, 237 Tabb, William, 239 Tahoe Resources, 79–80 Taibbi, Matt, 95, 97, 139–40, 280 takeovers, 159, 163, 187 Tampaco Foils Inc., 290 Taub, Jennifer, 190–1 Tawney, R.H., tax scams: amount overseas, 258; combating, 21; companies named, 19–20; Double Dutch Irish Sandwich, 19; evasion vs avoidance, 22–3; HSBC, 315; industry of incorporation, 20; James Hardie, 40, 83–5, 284; as legal, 23; Luxembourg, 261–2; Panama Papers, 21, 261, 263–4; secrecy, 20; and trade, 26; Ugland House, 17, 18, 19 See also accounting scams taxes, 17–23, 139–40, 261–3 terrorism, 294–5 Texaco, 122–3 Thatcher, Margaret, 324 They Live (film), 242, 328 Tillman, Robert H., 262 Tim Hortons, 158–60 TINA (there is no alternative), 7, 239, 240, 246–7, 249, 250 tobacco, 66–7, 99, 277 Tokyo Electric Power Co, 293 Tombs, Steve, 76 Tory, John, 188 Tosel, Andre, 327 Toyota, 213 trade, 26 train accidents, 147–50, 301–2 trust, 211, 227 “Two Myths That Keep the World Poor” (article), 208–9 Ugland House, 17, 18, 19 unions, 12, 31, 188, 194, 267, 290 United Airlines, 287 Unocal, 119–20 Unseen Power (Harmes), 190 U.S Supreme Court, 42, 120, 121, 125, 166, 295 Valeant, 277 values, corrosion of, 25, 27–8, 73–6 Vatican, 243, 245 Vestager, Margrethe, 262–3 viaticals, 68–9 vicarious liability, 110–19, 126–8, 292 See also individual responsibility; limited liability visibility, Vogel, David, 100–1 Volkswagen, 213–14, 317 voting, 15, 25, 161, 162–4, 184–5, 190–1 Walgreens, 262 Walmart, 214, 278–9 Walsh, David, 134, 136–7 wealth: divided, 257–9; growth, 208–16, 220, 223–4, 226, 234–5, 317; and illth, 216–22; limited liability, 196; private accumulation, 9, 205, 209; and shares, 53, 228; transfer, 224, 227, 319 The Wealth of Nations (Smith), 13 welfare See social welfare well-being, 209 Well-Known Seasoned Issuers, 141 Wells Fargo, 286 West, Michael, 309 Westland, Rick, 267–8 Weston, Galen, Jr., 188 Westray Coal Mine Project, 131–3, 298–9 “What Good Are Shareholders?” (article), 201–2 whistleblowers, 21 Who Owns Canada Now (Francis), 189 Whyte, David, 76, 222 Wiggins S., 199 WM/Reuters scandal, 95 Wolff, Robert Paul, 180 Wong, Rebecca, 37–9 Woodruff, Betsy, 280 workers: Brambles Ltd., 34–5, 265; Children’s Foundation, 114–15, 116; Dream Office REIT, 293–4; Eliz World, 37–9; employees vs contractors, 267–8; as guinea pigs, 219–20, 318; H&M, 290; life insurance, 72–3, 278–9; and limited liability, 200; Loblaw Companies Ltd., 188; Metron Construction, 143–5; Montreal, Maine & Atlantic railway (MMA), 149–50; Quebecor Inc., 194; Rana Plaza, 108–9, 291; Refac Industrial Contractors Inc., 31; and reforms, 248; shifting risks onto, 200, 219–20; Tampaco Foils Inc., 290; vicarious liability, 111–15; wages, 29, 87–8, 214, 215, 229, 280–1, 294; Walmart, 278–9; Westray Coal Mine Project, 131–2 World War II, 124–5 Wright, Erik Olin, 324–5 Yeung, Bernard, 181, 182, 185 zero-sum game, 224, 226 Ziegler, Jean, 238 Žižek, Slavoj, 242 Zucman, Gabriel, 22 Zyklon B, 124 ... bibliographical references and index Issued in print and electronic formats ISBN 97 8-1 -7 711 3-3 0 7-4 (softcover).—ISBN 97 8-1 -7 711 3-3 0 8-1 (EPUB).—ISBN 97 8-1 -7 711 3-3 0 9-8 (PDF) Corporations—Corrupt... its attention LIBRARY AND ARCHIVES CANADA CATALOGUING IN PUBLICATION Glasbeek, H J., author Class privilege: how law shelters shareholders and coddles capitalism / Harry Glasbeek Includes bibliographical... Victoria University, Australia and past editor of the Australian Journal of Corporate Law Class Privilege: How Law Shelters Shareholders and Coddles Capitalism © 2017 Harry Glasbeek First published