Posted by The PRW Staff on August 25, 2011

The Center for Media and Democracy is reposting a new in-depth report by Greenpeace's Charlie Cray about the corporate blueprint, known as the "Powell memo," for the "corporate takeover" of public institutions through the creation of entities like the American Legislative Exchange Council (ALEC). This is part of CMD's effort to report on and gather reporting about these activities through our ALECexposed.org work. This story was originally published by Greenpeace.


Justice Lewis F. Powell, Jr. Forty years ago today, on August 23, 1971, Justice Lewis F. Powell, Jr., an attorney from Richmond, Virginia, drafted a confidential memorandum for the U.S. Chamber of Commerce that describes a strategy for the corporate takeover of the dominant public institutions of American society.

Powell and his friend Eugene Sydnor, then-chairman of the Chamber's education committee, believed the Chamber had to transform itself from a passive business group into a powerful political force capable of taking on what Powell described as a major ongoing "attack on the American free enterprise system."

An astute observer of the business community and broader social trends, Powell was a former president of the American Bar Association and a board member of tobacco giant Philip Morris and other companies. In his memo, he detailed a series of possible "avenues of action" that the Chamber and the broader business community should take in response to fierce criticism in the media, campus-based protests, and new consumer and environmental laws.

Environmental awareness and pressure on corporate polluters had reached a new peak in the months before the Powell memo was written. In January 1970, President Nixon signed the National Environmental Policy Act, which formally recognized the environment's importance by establishing the White House Council on Environmental Quality. Massive Earth Day events took place all over the country just a few months later and by early July, Nixon signed an executive order that created the Environmental Protection Agency (EPA). Tough new amendments to the Clean Air Act followed in December 1970 and by April 1971, EPA announced the first air pollution standards. Lead paint was soon regulated for the first time, and the awareness of the impacts of pesticides and other pollutants -- made famous by Rachel Carson in her 1962 book, Silent Spring -- was recognized when DDT was finally banned for agricultural use in 1972.

The overall tone of Powell's memo reflected a widespread sense of crisis among elites in the business and political communities. "No thoughtful person can question that the American economic system is under broad attack," he suggested, adding that the attacks were not coming just from a few "extremists of the left," but also -- and most alarmingly -- from "perfectly respectable elements of society," including leading intellectuals, the media, and politicians.

To meet the challenge, business leaders would have to first recognize the severity of the crisis, and begin marshalling their resources to influence prominent institutions of public opinion and political power -- especially the universities, the media and the courts. The memo emphasized the importance of education, values, and movement-building. Corporations had to reshape the political debate, organize speakers' bureaus and keep television programs under "constant surveillance." Most importantly, business needed to recognize that political power must be "assiduously cultivated; and that when necessary, it must be used aggressively and with determination -- without embarrassment and without the reluctance which has been so characteristic of American business."

Powell emphasized the importance of strengthening institutions like the U.S. Chamber -- which represented the interests of the broader business community, and therefore key to creating a united front. While individual corporations could represent their interests more aggressively, the responsibility of conducting an enduring campaign would necessarily fall upon the Chamber and allied foundations. Since business executives had "little stomach for hard-nosed contest with their critics" and "little skill in effective intellectual and philosophical debate," it was important to create new think tanks, legal foundations, front groups and other organizations. The ability to align such groups into a united front would only come about through "careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and united organizations."

Before he was appointed by Richard Nixon to the U.S. Supreme Court Powell circulated his call for a business crusade not only to the Chamber, but also to executives at corporations including General Motors. The memo did not become available to the public until after Powell's confirmation to the Court, when it was leaked to Jack Anderson, a syndicated columnist and investigative reporter, who cited it as reason to doubt Powell's legal objectivity.

Anderson's report spread business leaders' interest in the memo even further. Soon thereafter, the Chamber's board of directors formed a task force of 40 business executives (from U.S. Steel, GE, ABC, GM, CBS, 3M, Phillips Petroleum, Amway and numerous other companies) to review Powell's memo and draft a list of specific proposals to "improve understanding of business and the private enterprise system," which the board adopted on November 8, 1973.

Historian Kim Phillips-Fein describes how "many who read the memo cited it afterward as inspiration for their political choices." In fact, Powell's Memo is widely credited for having helped catalyze a new business activist movement, with numerous conservative family and corporate foundations (e.g. Coors, Olin, Bradley, Scaife, Koch and others) thereafter creating and sustaining powerful new voices to help push the corporate agenda, including the Business Roundtable (1972), the American Legislative Exchange Council (ALEC - 1973), Heritage Foundation (1973), the Cato Institute (1977), the Manhattan Institute (1978), Citizens for a Sound Economy (1984 - now Americans for Prosperity), Accuracy in Academe (1985), and others.

Because it signaled the beginning of a major shift in American business culture, political power and law, the Powell memo essentially marks the beginning of the business community's multi-decade collective takeover of the most important institutions of public opinion and democratic decision-making. At the very least, it is the first place where this broad agenda was compiled in one document.

That shift continues today, with corporate influence over policy and politics reaching unprecedented new dimensions. The decades-long drive to rethink legal doctrines and ultimately strike down the edifice of campaign finance laws -- breaking radical new ground with the Roberts Court's decision in Citizens United v. the Federal Election Commission -- continues apace.

Although many new voices have emerged in the 40 years since it circulated Powell's memo, the U.S. Chamber has expanded its leadership position within the corporate power movement, leading dozens of judicial, legislative and regulatory fights each year. Measured in terms of money spent, the Chamber is by far the most powerful lobby in Washington, DC, spending $770.6 million since 1998, over three times the amount spent by General Electric, the second-largest spender. At the same time, the Chamber has reinforced its lobbying power by becoming one of the largest conduits of election-related "independent expenditures," spending over $32.8 million on Federal elections in 2010. The Chamber sponsors the Institute for Legal Reform, which has spearheaded the campaign for tort "reform," making it more difficult for average people who have been injured, assaulted, or harmed to sue the responsible corporations. Along with well over a dozen legal foundations, the Chamber has also helped shape the powerful "business civil liberties" movement that has been a driving force behind the Citizens United decision and other judicial actions that have handcuffed regulators and prevented Congress from putting common-sense checks on corporate power.


Cited Sources:

Jack Anderson, Washington Report, Volume 12, No. 24, November 26, 1973

Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan. New York: W.W. Norton, 2009

Jeff Krehely, Meaghan House and Emily Kernan, "Axis of Ideology: Conservative Foundations and Policy," National Committee for Responsive Philanthropy, 2004

Michael Waldman, Executive Director of the Brennan Center for Justice at NYU School of Law cites the Powell memo as the inspiration for the ideological war waged on behalf of the "free market" approach to the First Amendment that has elevated the rights of corporate speakers. See Waldman's introduction to "Money, Politics and the Constitution: Beyond Citizens United," by Monica Youn (ed.), New York: Century Foundation Press, 2011

Additional References:

Nan Aron, "Justice for Sale: Shortchanging The Public Interest for Private Gain." Washington, DC: Alliance for Justice, 1993

Oliver A. Houck, "With Charity for All." New Haven, CT: Yale Law Journal, Volume 93, No. 8, July 1984


Originally published by Greenpeace on August 23, 2011.

Comments

We took time to read the long and tedious 1971 Powell "manifesto".

Today, Big Business (aka corporations) account for only 25% of the economic base (jobs) inside the United States.

Since 1981 (ten years after the Powell memo to the chamber of commerce)---and with the undertaxing of Big Business and overtaxing of Small Business on the immediate horizon at that time---American "enterprise" as Mr. Powell refers to it began to shift to Small Business.

Big Business took tens of millions of American jobs overseas, thereby gradually muting the portal of upward mobility for the American working class into the middle class---the latter shrinking over the next 30 years.

Today, Big Government, Big Business, Big Politics, Big Media, Big Legal (Powell's supreme Court) and what Powell referred to in so many words as Big Education...well...they just don't get it yet---even now after the bottom fell out beginning in 2007 when the Dow fell off a cliff and into a chasm from 14,000 to 6,500.

A still undertaxed Big Business and debilitatingly overtaxed Small Business (the latter accounting for the other 75% of jobs inside the United States) is the destabilizing mix that is going to be the undoing of the United States of America in the 21st Century---unless the following take place:
1. Import tariff's must be raised to reduce the market presence of cheap overseas goods produced by the tens of millions of dormitory housed foreign workers @ $1/hour...yes, those selfsame workers that supplanted the tens of millions of American middle class workers whose jobs Big Business exported overseas along with its manufacturing operations and taxes. We are speaking of overseas workers, most of whom cannot even begin to afford the products that they themselves manufacture for export to the United States---and therefore certainly cannot afford products that U.S.-based manufacturers wish to export in the other direction.
2. Small Business whose net profits are below the top marginal threshold of $379,150 must have their taxes cut to no more than 10% (the latter right now being the rate on only the first $17,000 of Small Business Schedule "C" net income).
3. Big Business whose net profits are above the top marginal threshold of $379,150 must have their taxes raised from 35% to the historical top marginal average rate of 70% (the top rate from the early 1960's to 1981...91% having been the top rate before that, and going back to the Korean War and World War II).

The following reflects a perilous path for the United States of America:
1. Wealthy Americans and American-in-name only corporations with taxable incomes (including capital gains) and net profits above the top marginal threshold of $379,150 (currently taxed at 35%) are the financial mainstay of political candidates' campaign coffers in Washington, D.C.
2. America will NEVER recover its Small Business middle class manufacturing base and will therefore NEVER halve middle class unemployment from 9% to at least 4.5%---until after the aforesaid tariffs are put in place.
3. America will never put such tariff's in place until the U.S. Government stops borrowing operating revenue from China and other cheap-goods producing countries.
4. America will never stop borrowing until it raises the top marginal federal income tax rate from 35% to the pre-1981/pre-Reagan historical average of 70% on 16th Amendment "INCOMES, FROM WHATEVER SOURCE DERIVED", i.e., taxable incomes (including capital gains) and net profits above the top marginal threshold of $379,150 (currently taxed at 35%).
5. This brings us back to paragraph 1, above, and point of beginning---to include the post-1981/post-Reagan massive borrowing and "printing & minting" that have together 1) put America in debt up to her neck [$15+ trillion U.S. Public Debt, e.g., China; Social Security Trust Fund ($2.5 trillion) compounded by $1+ trillion annual budget deficits] and 2) reduced the purchasing power of the U.S. dollar by 150% since 1981, whereby it takes $2.50 today to purchase what $1.00 purchased in 1981.

Bill Moyers presents "United States of ALEC," a report on the most influential corporate-funded political force most of America has never heard of -- ALEC, the American Legislative Exchange Council.