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Private Political Corporations

Created/Modified: 2020-09-22/2020-09-23

This focused almost entirely focused on the Anglosphere, so my European and Asian friends are likely to find it less than accurate or relevant, but it seemed like a useful time to write up a few notes on how I feel about political parties, which requires me to give a brief, incomplete, and probably inaccurate history of corporate organization from the Middle Ages to the present day, because if you don't understand corporate organization, you can't understand modern political parties--at least in Canada--which are in my view nothing but corporate entities of a particular kind.

This view is... not common. Most people place political parties outside of the realm of corporate organization, and I believe this tendency has a pernicious effect on modern political discourse in Canada, as it leads people to think of political parties as ideologically cohesive groups pursuing particular, diverse, notions of the public good, rather than their own corporate interest.

One of the problems with the corporate mode of organization is that the metaphor of the "corporate entity" becomes a little too literal: like the cells of the body, members of a corporate organization can easy be subject to incentives that serve the needs of the corporation as an entity rather than any particular individual or group of human beings. This is particularly true of the private political corporations that we call still call "parties" for purely historical reasons, especially given how weakly regulated they are.

I'll note that I have founded and run a couple of private commercial corporations, so the mechanics of the modern corporation are not an abstraction to me, as they are to a surprisingly large number of people who have very strong opinions on questions of corporate organization. Part of my goal here is to induce people to who believe they hate the corporate form of organization and all it stands for to ask themselves if they are comfortable with the power and status granted to private political corporations in modern Canada. It seems to me more than a little contradictory to rail against "corporate power" from what is in fact a corporate platform, however little-recognized that reality is.

I don't expect to convince anyone with this essay of a view so eccentric coming from someone whose primary area of expertise is poetry, but this analysis does reflect what I believe to be the best way of looking at modern politics in Canada, so it seemed worthwhile to summarize it for the purpose of clarifying my own thoughts, however unconvincing anyone else may find it.

A bit of history

The corporation has been a basic form of human organization since the Middle Ages, where monasteries, municipal corporations, and guilds all experimented with various forms of "a (mostly) voluntary collective that behaves like and is treated in law much like an individual, and is recognized as such by statute," which is a reasonable definition of what "a corporation" is.

The corporate form of organization was powerful, and the outward-facing definition puts some constraints on its internal organization, because it isn't just any collection of people organized any old way that can behave more-or-less like an individual. In particular, corporations are typically hierarchical, with a few senior officers empowered to make decisions for the whole, and enforce policies across the organization.

Medieval corporations were almost exclusively constituted by what might be called "members"--ownership is a specialized kind of corporate membership, but not the only kind. Guilds were originally associations of artisans and tradespeople--so the members were all people of similar trade, and therefore had some interests in common--and municipal corporations were often outgrowths of guild organizations. The City of London Corporation was formed out the London Guildhall, for example. Other cities were "free" in the sense that their corporations were not guild-backed, but their status as municipal corporations was similar to guild-run municipal corporations.

Members of a guild, or a municipal or monastic corporation, would have varying degrees of status within it, but were bound by the corporate rules and also had a degree of influence on them. Monastic communities--and I'll come back to the community aspect below--were not as simply organized as many people think, and local variations in the rule that governed them were the norm.

In the early modern period, the Crown took notice of the power of corporations--which were always a thorn in the royal fundament in Medieval times--and decided it would be good to get some of that. Some municipal corporations and guilds were already being granted royal charters, and it was a small extension of this idea to create a "chartered corporation" that was created not to protect a trade monopoly or municipal tax base, but to monopolize some more specific enterprise.

In Canada, the Hudson's Bay Company is probably the most famous charted corporation, notable--as a good capitalist enterprise--for its relatively benign treatment of the indigenous population, particularly compared to their later treatment by that organization of universal power and good: the government.

The problem with chartered corporations was you had to have a charter, which meant catching the sovereign's ear and convincing them it was worthwhile to give /you/, rather than one of their cronies, the monopoly you sought. This is still an issue in socialist countries where the government controls the means of production, to the extent that one might be tempted to conclude that there are constants of human behaviour that are not much affected by the structure of the economic system beyond the explicit incentives on offer: when corruption pays more than honesty, there will be more corruption.

The general solution to this problem is to create a statutory framework that allows any group of people to "incorporate" for a specific purpose. The first jurisdiction to implement this innovation for general manufacturing, at least in the English-speaking world, was New York State in 1811 although similar more specific acts had been passed earlier dealing religious, municipal, and other corporations.

This act introduced ideas of limited liability and strengthened the notion of the corporation as a legal "individual", capable of entering into contracts and so on. Prior to this--and for some decades more in England, until the Company's Act reforms were passed in the 1850s--collective commercial enterprises were limited to partnerships, which were cumbersome to manage and could not enter into legally binding agreements as such, but only when all of the partners had signed on.

Partnerships and co-operatives have fundamental limitations that makes it very difficult for them to grow larger than Dunbar's number, even in the modern world. The corporation-as-entity and the hierarchical and partial-ownership structure that enabled allowed much larger organizations to thrive, eventually reaching many thousands of owners and--significantly--even more employees, because one of the kinds of legal arrangement that a corporation could enter into was an employment arrangement.

This created a fundamental tension between two types of people that in some respects "constituted" a corporation: owners--who stood in relation to the corporation much like the guild members of old--and workers, whose efforts were necessary to the success of the enterprise, but who had no obvious place in the corporate structure, much like the itinerate labourers who dragged away refuse from the streets but lived outside the city walls were members of municipal corporations a thousand years ago.

This created a structural tension within corporations--and the societies that have become increasingly organized around them--that has persisted to this day, particularly in places that have adopted antagonistic rather than collaborative labour relations as their model for managing the tension. Since--as I'll expand upon below--corporations are a pure artifact of state interference in the economy, there is no justification for any claim that this tension is in any way "inherent" in the corporate mode of organization. It is a contingent fact of history, and can be changed, as can much else. For example, the manufacturing corporations defined by the New York act had a limited lifetime, an restriction that might be worth reconsidering. If a corporation is an artificial individual, surely it is a characteristic of individuals to have a natural span of years?

The statutory creation of the "general commercial corporation" and related innovations around partial ownership of such legally defined entities represented an enormous democratization of commercial power, away from land held by aristocrats and toward "the capacity to build stuff," which is what justifies the existence of corporations. Profit--or power, in the case of political corporations--is the motive for corporate leaders, but the provision of goods and services their purpose.

While a wide freedom to create private commercial corporations solved a lot of problems, it also--unsurprisingly--created others. Some social theorists have declared without evidence that the problems created by the corporate form of organization are unsolvable, much like some technological theorists asserted without evidence that heavier than air flight could never be achieved, and once it was achieved it could never be made generally practical, and once it was made generally practical it could never be made commercially successful, and cone it was made commercially successful it could never be made safe, and once it was made safe that it could never be made cheap, and once it had been made cheap they complained that their travel points programme wasn't generous enough.

It is worth noting at this point that there is a fundamental feature of all corporations, dating back to their earliest days, that is frequently overlooked: all corporations are created by an act of interference in the operations of free and uncoerced trade among sovereign individuals. This was always the case with corporations going back to the original models in the Middle Ages: corporate members were privileged relative to their non-member fellows, and to be a "true" corporation by my definition this privilege had to be protected by law--either royal charter or, in the modern period, statute.

As such, no commercial corporations exist in free markets, and therefore no argument based on the supposed sanctity of free markets apply to them. They can and should be regulated in a manner consistent with their purpose, which is to build things and provide services. They are an extremely powerful tool for doing this, but like an tool have to be used with some care. A chainsaw is a great tool for cutting down a tree, but its very power makes it dangerous. The corporate form of organization is just at tool, regardless of the mystical powers its enemies and defenders imbue it with.

The kind of corporation I've been talking about so far has been the kind that most people think of when they talk about "corporations"--a private for-profit enterprise--but there are other kinds beyond the private commercial corporation. There are public corporations, for example, which may or may not have a commercial element.

CBC TV in Canada is a public corporation that sells advertising and partially funds itself through commercial activity, while CBC Radio does not. BC Ferries used to be a Crown corporation, which is an appropriate way for governments to organize services that cannot be supplied by the private sector (as the disaster of privatization of BC Ferries has demonstrated) but which should also be largely free from political and bureaucratic interference in their day-to-day operations.

And--according to the argument I am making here, at least--there are yet other kinds of corporation that are not generally recognized as such.

Let's get this party started

At the same time as the private commercial corporation was becoming a thing in the early- to mid-1800s, another form of human activity was blindly struggling toward the corporate form of organization. English politics had been organized around informal groups of more-or-less like-minded Members of Parliament since shortly after the Restoration, and formal "parties" didn't emerge until the 1800s. Even then, parties were largely self-organizing: sitting MPs grouped together and elected a leader, but the legal recognition of such groups as entities in their own right was a long time coming, and its history is frankly obscure.

Two major changes happened in the 20th century, however: one is the formal definition and regulation of political parties as forms of corporate organization under the law, although there are still vestiges of their pre-corporate beginnings.

The other is a shift within most of these private political organizations to a system in which corporation members elect the leader, rather than allowing the leader to be elected by MPs who represent orders of magnitude more people. This has shifted the centre of power in private political corporations away form the public (sometimes contemptuously referred to as "the general public" by partisan insiders, who see themselves as constituting "the special public") to the members of the corporation: party members. Since a tiny fraction of the public are active party members at any given time--well under a million people in Canada, where are largest parties have memberships in the low hundreds of thousands--this gives party insiders enormous power in choosing our future leaders. Party insiders do not see this as problem. I do.

In Canada, private political corporations at the federal level are primarily governed by the Canada Elections Act, and similar provincial acts, although there are provisions of the Parliament Act that apply as well. The latter are at times in contradiction with the actual practices of parties as they really exist, since party whips--for example--are a transparent violation of the Parliament Acts' prohibitions on influence, given the corporate nature of modern political parties.

Since hardly anyone recognizes that political parties as they are currently constituted in Canada are undoubted examples of corporate organization, this has hitherto not been an issue, unfortunately: parties are largely treated in Parliament as if they were voluntary associations of MPs rather than blocs of corporate representatives who have all the free will of a flatworm, and voting records to match.

At the federal level, parties are defined as "an organization one of whose fundamental purposes is to participate in public affairs by endorsing one or more of its members as candidates and supporting their election."

It is worth noting that only one of the fundamental purposes is to work toward the election of candidates: this opens up the interesting possibility of a private commercial corporation hiring a slate of candidates and promoting their election. I don't know what the outcome would be, and I wouldn't support such an effort, but there is literally nothing in law to stop it from happening, which given the way the norms of the liberal democratic order are being torn apart by populists from both ends of the political spectrum it cannot be ruled out simply on the basis that no one has done it yet.

There is no requirement for formal registration of a political party, but a so-called "eligible party" (an unregistered party) can't be named on a ballot, although its candidates can. Eligible parties are something closer to partnerships or cooperatives in the world of Canadian politics, but they should not loom too large in any discussion of whether or not Canadian political parties are for all intents and purposes private political corporations because there aren't any of any significance. Anyone who argues "eligible parties are not private political corporations therefore political parties are not private political corporations" is saying something equivalent to "some sharks don't lay eggs therefore fish don't lay eggs", which is stupidly pedantic even by my standards.

A registered party--that is, every party most voters will ever hear of or consider supporting--is clearly a corporation within the meaning of the term as I have defined it here and as it has applied to guilds, municipal corporations, chartered companies, and so on. It acts as a single entity and this is recognized by law. It has certain privileges not otherwise granted and is subject to mildly greater scrutiny in return for those privileges. Like private commercial corporations most of its activities go on under a cloak of profound secrecy, and even more frequently than private commercial corporations, its primary business involves lying to the public about its plans and goals.

In my home province of British Columbia things are much the same as they are on the national stage. Registration of parties is universal, and:

Authority of principal officers
161 Where this Act requires or authorizes an action by a principal officer of a registered political party or registered constituency association, the only individuals authorized to take that action are individuals who are

(a) in fact principal officers of the organization, and
(b) identified as such in the current documents filed by the organization under this Part with the chief electoral officer or identified in documents of the organization being filed at that time under section 159.

So a "political party" is an "organization" with "principal officers" who are authorized to act for "the organization", as if it was an individual.

That is: a political party is a private political corporation. It is "private" because it is a group of private individuals who are gathered in secret to privately make plans. It is "political" because it has as one of its primary purposes to elect MPs or MLAs. It is "corporate" because it has principal officers who are charged with acting on its behalf and those officers are recognized in their special role by statute.

If that isn't a corporation, then I don't know what is.

Furthermore, at the federal level at least (I've not investigated this at the provincial level):

Agents — corporations

397 (1) A corporation incorporated under the laws of Canada or a province is eligible to be

(a) a chief agent or a registered agent of a registered party; or
(b) a chief agent or an agent of an eligible party.

And this is in fact generally the case: there is, for example, a "Federal Liberal Agency of Canada, a corporation incorporated under the laws of Canada, and Chief Agent for the Liberal Party of Canada under the Canada Elections Act."

The specific law is the Canada Not-for-Profit Corporations Act. So the Liberal Party of Canada's chief agent is a corporation, whose goal is not profit, but power, although the Bloomberg corporate profile makes you wonder just what the corporate officers get up to between elections.

So tell me again how parties are just voluntary associations of MPs who choose their own leader in the Commons... which they don't, because that aren't. They are private political corporations.

I presume there is something similar for the NDP, both federally and provincially, but I think it would overload my irony receptors to investigate it too deeply.


Canadian parties are private political corporations, often having corporations as their chief agent. They have followed a somewhat similar evolution into the corporate form of organization that early commercial corporations did, and they have similar strengths and problems.

The corporate mode of organization has a number of well-documented problems, the biggest of which is that the corporation acts too much like an actual entity rather than a legal fiction: it develops interests of its own and evolves internal incentive structures that push its members toward fulfilling those ends. For commercial corporations, those ends are profit. For political corporations, those ends are power.

If someone sees a problem with one of those ends running out of control but not the other, they may be part of the "special public": a party insider who has internalized the perverse incentives of the corporate entity to which they belong.

Unlike private commercial corporations, private political corporations are wildly under-regulated. It is desirable in a free and democratic society to have very weak regulation of political parties, which are voluntary associations or partnerships among individuals. But that is not what modern parties are: they are corporations.

There are at least two ways out of this conundrum. One is to regulate political parties more heavily. This is not a good solution for reasons that should be stunningly obvious.

The other is to de-corporatize political parties, at least by insisting that only sitting MPs can elect a party leader--as the failed Reform Act attempted to do some years ago--and quite likely a few other things as well.

Our democracy has been colonized by private political corporations that behave in pursuit of their own interests, to the detriment of all but "the special public" who belong to them.

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