Gangs of America | Ted Nace

Summary of: Gangs of America: The Rise of Corporate Power and the Disabling of Democracy
By: Ted Nace

Introduction

In ‘Gangs of America: The Rise of Corporate Power and the Disabling of Democracy,’ Ted Nace dissects the birth, growth, and influence of corporations from the thirteenth century English Guilds to present-day corporate giants. Nace emphasizes the similarities between these historic guilds and modern corporations, including aspects like their power dynamics, lobbying, exclusive nature, and their perennial quest for monopolies and trading privileges. Through the lens of history and applicable legal frameworks, he explores how corporations have leveraged their substantial power to bend democratic institutions in their favor and undermine political systems.

The Power of Corporations

Ted Nace, the former CEO of Peachpit Press, became concerned about the power of corporations after selling his small company to a large, multi-national corporation. He researched how corporations had amassed so much power in a democracy and was scared by what he found. He discovered that corporations are considered legal persons, even though the Supreme Court did not explicitly say so. Additionally, a major Supreme Court decision relied on fraudulent evidence to grant corporate rights. The perpetual existence of corporations creates difficulties in holding them accountable for criminal behavior and allows them to benefit from previously legal behavior. The scheme to empower corporations has been underway for over a century, and corporations and their legal advisors are clever in their tactics. Nace is struck by the paradox that even destructive corporations are filled with friendly and caring people.

The Evolution of Corporations

The origins of modern corporations can be traced back to early English guilds. These guilds were exclusive, hierarchical, and spent large sums on lavish banquets for public officials, similar to modern lobbying. During Queen Elizabeth I’s reign, the concept of monopoly power was introduced, and the highest bidders were granted monopolies to sell approved products. In 1505, the Merchant Adventurers, an umbrella organization for independent traders, was formed, which paved the way for numerous trading companies to be established. The British East India Company became the most prominent trading corporation. The evolution of corporations is a crucial aspect to consider in today’s world and should be of concern to those worried about runaway technologies.

The Rise and Fall of the British East India Co.

The British East India Company used innovative financing techniques to become the most powerful corporation in history. Their pioneering use of permanent stock meant that the company surpassed its owners in significance, building its own army and territory in India. The company’s actions led to global political strife and directly triggered the Opium War in China.

The Virginia Company’s Disastrous History

The Virginia Company, backed by notable figures such as William Shakespeare, aimed to establish a settlement in Virginia in hopes of discovering precious metals or creating a profitable industry. Similar to the British East India Company, it had absolute power in its sphere. The Company relied on virtual slave labor, including children as young as eight. Anyone caught eating grapes or corn while working faced capital punishment. Despite the optimistic PR materials, about 80% of the 6,000 people shipped to the colony died from various causes. Additionally, the Company engaged in piracy against the Spanish. Furthermore, seven state constitutions applied double liability to all shareholders in banks, and some states also required specific liability for shareholder wages in manufacturing and utility companies. The book highlights the depressing history of the Virginia Company with harsh discipline, corrupt management, and a legacy of death and misery.

The Truth Behind the Boston Tea Party

The traditional understanding of the Boston Tea Party as a symbolic protest against the crown’s tea taxes is inaccurate. In fact, the event was a violent and destructive economic rebellion against the British East India Company and the corporate system. Most colonists did not pay the tax and relied on smuggled tea. The Company’s plan to dump tea in the colonial market and undercut Dutch prices threatened the commercial elite, including John Hancock. This led Hancock and Samuel Adams to join forces and dump 45 tons of tea into the harbor, which was approximately 8% of annual consumption in the colony. Thus, the Boston Tea Party was a rebellion against corporate power, and politics came later.

The Founding Fathers’ Fear of Corporate Power

The American founding fathers feared corporate power as they were aware of the exclusivity and anti-competition regulations of corporations, which could result in a company as powerful as the British East India Company. To prevent this, the fathers insisted that states would control the power to charter corporations, so representative legislatures had to be careful with what was allowed. State charters for corporations consisted of metrics for performance and metrics for limiting profits. Corporations had to reapply for their charters after ten or twenty years and were limited in size, ownership, and their ability to own only property related to chartered functions.

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