Ridenbaugh Press/Northwest

On its face Washington House Bill 1111 sounds just short of facetious, and has been derided already as a waste of time. It is not. It could be one of the most important – in a longer-term sense – pieces of legislation the Northwest sees this year, because it goes to the core of what corporations are all about.

We tend to think now of corporations as almost a creature of nature, that has always been with us as it is now: Legally, a “person” under the law, the same as you or I, but also with extraordinary advantages you and I do not have. We live in an aquarium so dominated by corporations of one type or another that we barely imagine anymore that things could be different.

They were in this country, and for a long time. Corporations of a sort existed before the Revolution, but they were far different from those we have today. They were much more difficult to establish, they were far more limited in scope (geographically, financially, legally) and were a much smaller part of society. The change came in the Gilded Age, the latter 19th century, when the legal authorizations – coming by way of Congress and the courts – immensely expanded what corporations can be and do. And corporations ran with it: Some of the results have been highly positive (a bit chunk of this nation’s economic development can be attributed to the rise of the corporation) and some highly negative (such as the consolidation of industries we see today). [Highly recommended reading on this subject: The polemical but clear and straightforward Gangs of America: The Rise of Corporate Power and the Disabling of Democracy, by Ted Nace, Berrett-Koehler Publishers, 2003.]

The point is that the corporation – the legal structure used overwhelmingly by larger businesses in this country – is a construct of law. It developed as it did largely because of the way business leaders pushed for it, but it could be something else entirely. Suppose, for example, laws were passed in the 50 states – they being the administrators of corporations – requiring that, equally alongside financial profit, corporations would be required to consider and respond to the needs of local social areas and groups? America’s corporations, all of them, would be legally bound to do that: It would constitute a DNA injection into the corporation’s very guts. That is not the way it is now, of course. Most publicly-traded corporations, for example, are required, as a matter of law, to put “shareholder value” – high price and value of shares – above all other considerations. That is the way it is; but it need not be that way.

Enter Washington House Bill 1111.

Introduced by Representatives Jeff Morris, D-Mount Vernon, Kelli Linville, D-Bellingham, and Brian Sullivan, D-Mukilteo, the bill amends the ways Washington-based corporations can think: It’s prospectively an injection of new DNA. It adds this language:

In determining the best interests of the corporation, a director, in addition to considering the interests of shareholders, may consider any of the following factors:
(a) The interest of the corporation’s employees, customers, suppliers, and creditors;
(b) The economy of the state and the nation;
(c) Community and societal considerations, including, without limitation, the impact of any action upon the communities in or near which the corporation has offices or operations; and
(d) The long-term as well as short-term interests of the corporation and its shareholders, including without limitation, the possibility that these interests may be best served by the continued independence of the corporation.

This is radical stuff: Corporate directors (who at least supposedly are in charge) will be required to consider the effects of their actions on the state and the nation, on their customers and employees and suppliers as well as stockholders; the long-term as well as the short-term. It may not seem radical to many fair-minded Americans, but it would represent a radical change in corporation law.

The bill is scheduled for public hearing this Friday in the House Judiciary Committee. So far it has gotten little attention; it merits more.