Silent Coup How corporations overthrew democracy

On New Year’s Day, 1994, two forces collided: NAFTA reshaped global power in favor of corporations, while Zapatistas rose in defiance. The book Silent Coup: How Corporations Overthrew Democracy unravels this unfinished battle for our future.

The stories we tell in Silent Coup are unfinished. They also began long before the period of time that the book covers. Stepping back, we seem to be in the final act of an epic saga that stretches back centuries, throughout which corporations have amassed new powers and sought, not only to free themselves from the control of states but also to reshape the world in their interests. Around the world, however, people and communities have also resisted this power grab. Sometimes, they’ve had victories too. To have hope for a better future we must know more about both of these things: how corporations have stolen our power, and how we can work to get it back.

Consider the curtain rising, for the final act of this saga, on New Year’s Day, 1994. That was when the North American Free Trade Agreement (NAFTA) came into force. It was the first deal of its kind between one developing country (Mexico) and two richer ones (the US and Canada). While called a trade deal, it also expanded a supranational legal system which is a major focus of this book. This is the so-called ‘investor-state dispute settlement system’ via which multinational corporations can bypass local courts and take entire countries to shadowy tribunals to protect or advance their interests. NAFTA didn’t create this system, but it was a watershed moment, inspiring other such deals and a dramatic rise in such cases (challenging everything from taxes companies don’t want to pay to environmental regulations). 

NAFTA was signed in the wake of the end of the Cold War and the dissolution of the Soviet Union: in the early years of a new era. Gone was the dominant international opposing power to the US, and its fiercely-marketed brand of deregulated capitalism. US conservative political theorist Francis Fukuyama famously declared the ‘end of history’, arguing that we had reached ‘the end-point of mankind's ideological evolution’ and there was no longer a real debate about how societies should be structured.1 In the years that followed, state-owned enterprises – and these significant sources of public revenue – were privatised en masse around the world.2 Corporations gained new powers within, between and even above states.  

During the Cold War, which lasted for decades from the late 1940s to 1991, the major conceptual framing of where power lay was with states – with the US on one side internationally, and the Soviet Union on the other. The supranational infrastructure that we investigate in Silent Coup, which was established in this period, seemed to lay largely dormant. It was then ‘activated’ to facilitate a historic shift from state to corporate power on a global scale, and with aspirations and institutions to make it last forever. Each of the areas of global corporate power we look at – control over laws, economies, territories and the use of force – reached dizzying new heights.  

Like much of what we look at in this book, though, NAFTA wasn’t created overnight. The idea for such a North American regional treaty had been conceived more than a decade earlier. It had been included in Ronald Reagan’s 1980 campaign for US president, for example, and it had been pushed for years after by conservative lobbyists, including from the Heritage Foundation think tank.3 (It was also Reagan’s administration that launched the Uruguay Round of multilateral trade talks in 1986, which would lead to the creation of the World Trade Organisation). At the same time, meanwhile, something else that would shape the next period was also under development, thousands of miles south of Washington DC. 

Other revolutionaries assembled and began to plan their own historic moves in the 1980s, in the jungle in Chiapas, Mexico. Near the border with Guatemala, the EZLN (the Zapatista Army of National Liberation) formed as a small guerrilla group named after Emiliano Zapata, the early 20th-century Mexican Revolution hero who had fought for ‘tierra y libertad’ (‘land and freedom’). Its members took up arms after previous, peaceful movements for land reform failed. While rich in resources, Chiapas had extremely unequal distribution of land and high levels of poverty. Like NAFTA, they would also take the world stage thirty years ago, on New Year’s Day, 1994. 

As dawn broke, the EZLN army of primarily Indigenous peasants, about a third of whom were women, emerged from the jungle in the southeastern Mexican state of Chiapas. They occupied several cities and towns, took over government buildings and began freeing prisoners from jails.4 From the balcony of the municipal palace in San Cristóbal, Subcomandante Marcos read out their Declaration of War, explaining: ‘Today the North American Free Trade Agreement begins, which is nothing more than a death sentence to the Indigenous ethnicities of Mexico.’ That is why, he said, the rebels had chosen ‘that same day to respond to the decree of death… with the decree of life that is given by rising up in arms to demand liberty and democracy.’5  

The EZLN accused the Mexican government of siding against the people, and of embracing a neoliberal form of economic globalisation that would privilege large corporations and worsen the situation of Indigenous and peasant communities. They connected this to a very long history of oppression and resistance, starting with the ‘discovery’ and conquest of the Americas by Europeans from the 15th century, and said: Ya Basta (Enough)! Their war declaration cited Mexico’s Constitution, which came from the early 20th-century Mexican Revolution, and its Article 39 that states: ‘National Sovereignty essentially and originally resides in the people. All political power emanates from the people and its purpose is to help the people. The people have, at all times, the inalienable right to alter or modify their form of government.’6

Also on 1 January 1994, the first issue of the EZLN’s newspaper, El Despertador, detailed new ‘revolutionary laws’ they sought to enact under which, for instance, ‘large agricultural businesses will be expropriated and passed to the hands of the Mexican people, and will be administered collectively by the workers.’7 The Mexican army moved in quickly to fight the EZLN in Chiapas and stop their rebellion from spreading; in the end, the uprising lasted just twelve days – though its effects were neither brief nor narrow. The Zapatistas continued their struggle and to reach out to other people’s movements internationally, combining new technologies (the Internet, in the ‘90s) with old-fashioned, face-to-face organising. In 1996, they held their ‘First Intercontinental Gathering for Humanity and against Neoliberalism’. In the process, they ‘helped jumpstart a worldwide anti-globalisation movement,’ said author Hilary Klein, who called the Zapatistas ‘one of the first peoples’ movements to recognise neoliberalism as a dangerous new stage of global capitalism’.8

The Zapatistas and the alter-globalisation movement popularised defiance towards global corporate power as well as the idea that ‘another world is possible.’ Popular education and mobilisation went hand-in-hand and sometimes, people won. The World Trade Organization (WTO) has been more-or-less stalled since the ‘Battle in Seattle’ shut down its talks in 1999. Peoples’ opposition also led to the failure of the proposed Free Trade Area of the Americas (FTAA), which was the target of large protests, including in Quebec City in 2001, and collapsed a few years later. Among the reflections of the EZLN’s legacy are judgments from researchers that they’ve been ‘a driving force in Mexico’s democratisation, even more significant than opposition parties’.9 They’ve also been called an inspiration for the Occupy movement in 2011;10 and ‘a huge influence on many left-wing movements in Europe too’.11

We are all still living in the world that NAFTA helped to create in the wake of the Cold War’s end. Thankfully, we are also still living in the world that the Zapatistas helped to shape with their defiance – refusing to accept that the story was over, insisting that alternatives are possible and boldly proposing ways forward. In their 1994 war declaration, they also called themselves ‘a product of 500 years of struggle’ – in reference to the late 15th century end to the ‘pre-Columbian period’ when the Americas were ‘discovered’ and became a focus of European imperialism and colonisation, in which forerunners to modern corporations were heavily involved. This is the backstory to Silent Coup: how corporations gained their power. 

This history goes back more than 500 years. None of what we describe in Silent Coup would have been possible without the invention of the modern corporation. For the Americas, the key year is 1492 when Christopher Columbus famously set sail across the Atlantic Ocean, seeking an alternative route to the East Indies and the spice trade. The Spanish royal family sponsored his journey, though Columbus was born in Genoa, Italy, which is also credited by many academics as being the place where the concept of a joint-stock company first emerged, or took root.12 The idea of such a company – which can raise money for its activities by selling stocks, in exchange for shares of future profits – then spread and was crucial in the phase of history that came next, and which saw Europe seek to colonise much of the world. It is still the corporate form of choice for contemporary giants like Apple and Google. 

From the 16th century onwards, joint-stock companies were increasingly organised to undertake ventures such as long journeys that required large amounts of money up-front. In 1555, Queen Mary Tudor granted the Muscovy Company a ‘charter’ with a monopoly over trade routes with Russia and the ability to finance its journeys by selling tradable shares. The Virginia Company (AKA the Society of Adventurers) also financed its colonisation of what is now Virginia in the US by selling shares in the early 1600s after receiving a ‘charter’ from King James I. The form became popular in the Netherlands too, which is why Amsterdam is home to what is considered the oldest modern stock exchange – created in the early 17th century.13 But only a few, favoured companies such as the British East India Company (established: 1600) were granted limited liability – meaning that their investors only risked their initial investment and were not liable for other losses or actions by the business. By 1700, it controlled 50% of British foreign trade.14 Along with becoming an enduring symbol of British imperialism, it inspired other companies and has been credited with spurring the development of London’s capital markets.15

It wasn’t until the 19th century that legislation was passed in the UK and other countries to free the multiplying number of such joint-stock companies from state control. In the UK, a specific charter had to be granted, or specific state permission otherwise received, to form such a company until the 1844 Joint Stock Companies Act was passed, enabling anyone to register such an entity. This ‘marked perhaps the first time in English legislative history that parliament enabled a new business form, rather than proscribed it’, according to the Institute of Chartered Accountants in England and Wales (ICAEW).16 An updated version of the Joint Stock Companies Act, passed in 1862, is still considered the foundation of contemporary British companies law; it changed the game further by adding open access to limited liability too. 

British business leaders had pushed for these changes. Prominent liberals like John Stuart Mill had also argued that limited liability would open up the world of business to the poor because it would lower their risks.17 Robert Lowe, in William Gladstone’s Liberal Party, is meanwhile described by ICAEW as the ‘Father of the Modern Company,’ having returned to England after years in Australia, which gave him ‘negative experiences with strong labour unions and exposure to a relaxed class system [which] made him an ardent opponent of social democracy and universal male suffrage.’ Lowe’s interest was the company and freeing it from state control. He thus pushed for legislation for the ‘development of power centres within society that were largely independent of the national state. Companies became small societies within the larger society, answering to shareholders… rather than the public.’18

Though there were also prominent critics of limited liability’s expansion. In the late 19th century, Gilbert & Sullivan premiered their comic opera Utopia, Limited at the Savoy Theatre in London. It satirised government action to make profit-making less risky, as well as the UK’s role in the world and its sense of superiority. In particular, it took aim at the 1862 Joint Stock Companies Act and how limited liability gives owner-shareholders routes to profit without even basic responsibility for corporations’ actions, which can promote speculation and corruption. While full of references to specific things happening at the time, its themes are still strikingly relevant today.

When Gilbert & Sullivan were working on the production, Princess Kaiulani of Hawaii (before it was annexed by the US) arrived in England to study. Her arrival was in the news and seemed to have partly inspired the story, which begins with the King of a fictional South Pacific island called Utopia sending his eldest daughter to an English boarding school. She then returns with six British men who take up key roles on the island. One of them, Mr. Goldbury, explains the British law enabling limited liability companies and how it offers great rewards with little risk:

Bank, Railway, Loan, or Panama Canal. 

You can't embark on trading too tremendous 

It's strictly fair, and based on common sense

If you succeed, your profits are stupendous 

And if you fail, pop goes your eighteenpence.19

The King is taken by the idea and decides to go further and transform his entire country into a limited liability company – and an even ‘more perfect’ replica of Britain. Reading the script now, rather than a plot twist, it seems like a chilling prediction of dystopian but real ventures that we describe in Silent Coup, to create whole cities and territories run by corporations, with CEOs in lieu of elected representatives.

Along with legislation freeing corporations from state control, and from unlimited liability, courts and lawyers were also involved in developing, defining and enshrining ‘rights’ for these businesses. In the late 18th century, for example, London-based Scottish lawyer Stewart Kyd published his pioneering Treatise on the Law of Corporations, defining a corporation as ‘a collection of many individuals united into one body, under a special denomination, having perpetual succession under an artificial form.’ Kyd’s definition added that the corporation is also ‘vested, by the policy of the law, with the capacity of acting, in several respects, as an individual’ including in the sense of ‘enjoying privileges’ and of ‘exercising a variety of political rights.’20 

On both sides of the Atlantic in the 19th century, judgments in court cases then recognised corporations as legal ‘persons’, with corresponding ‘rights’ and protections. In the US an 1886 Supreme Court judgment, in a dispute on railroad taxation, wildly accepted that the Constitution’s Fourteenth Amendment (which had been introduced to protect the rights of freed slaves) should also apply to private corporations. In the UK, another legal case resulted in the recognition that ‘the company is at law a different person altogether’ from its shareholders, with its own rights. In 1896, a House of Lords judgment in the case (Salomon v Salomon & Co), in the words of academics Dan Plesch and Stephanie Blankenburg, completed ‘the transformation of corporations from privileged monopolies, brought into existence by a grant or charter of the monarch or state, into a ‘person’ and a legal entity of its own’.21

Other significant rulings followed from courts, not parliaments (and thus from legal professionals and not from elected officials). They include the 1916 Michigan Supreme Court case (that the Dodge Brothers brought against Henry Ford) in which judges asserted that the purpose of a corporation is ‘primarily for the profit of the stockholders.’ This has been interpreted to mean that the corporation is legally required to maximise its profits – any other interests and concerns be damned.22 By the turn of the 20th century, ‘holding companies’ emerged and corporate mergers resulted in the creation of larger corporations; conglomerates began forming along with transnational networks of corporate entities. These are the foundations on which today’s multinational corporations were then built and expanded globally. 

Silent Coup thus tells the latest part of a story that began long ago, and was intertwined with imperialist projects from the start. Over this long period corporations have become increasingly free from the states that created them. Now, they appear to have completed (or be on the verge of completing) their power grab, including through supranational institutions and strategies that can insulate them from challenges – or can punish those who dare to defy or resist them. 

How Corporations Overthrew Democracy is our book’s subtitle. ‘What do you mean by democracy?’ someone asked after one of the first talks we gave about it. We’re not aware of any country that has fully realised this promise. And yet, the status quo is not bad for everybody either; if it were, it would be easier to resist and change. On the other side of violations of and threats to rights are those who benefit from them, directly and indirectly. Those who benefit from the current situation include the world’s largest companies and most elite individuals. It serves their interests for people not to know where power lies today, and how it is exercised to serve them and not us. 

Take for instance a recent case against Mexico that is going through the international investor-state settlement system, lodged by the world’s largest direct-selling company: Amway (Access Business Group), which sells various health, beauty and home care products and had $8.9 billion in revenues in 2021.23 At the top of that company are the uber-rich DeVos and Van Andel dynasties, which have been described by CBS News as ‘longtime financial stewards of the Republican National Committee’.24 The DeVoses became better known under the Trump administration because of their donations to his campaign and as Betsy DeVos, daughter-in-law of Amway co-founder Richard DeVos, was Trump’s education secretary (she is also the sister of Erik Prince, founder of the notorious private military contractor Blackwater). You can’t really get closer to the heart of American corporate and political conservative power, a position these people worked for decades to reach. Even compared to “other far-right mega-donors,” a 2018 Vanity Fair investigation said the DeVos “dynasty stands apart – for the duration, range and depth of its influence.”25

The case Access Business Group LLC v United Mexican States was filed on 15 May 2023 at a branch of the World Bank that this book dives deep into. The headline should grab attention: ‘Trump donors sue Mexico for $3 billion in land dispute with peasants’. The story would also have attention-grabbing, international characters including the DeVoses and context including the NAFTA deal (which the company says Mexico violated) and the Mexican revolution (which had enshrined land distribution in the constitution). Yet, this case was not covered by any major English-language media outlet in 2023. In Mexico too, coverage was very limited. It is thus a prime example of how the stories we tell in Silent Coup are still unfinished, and how they are too often unfolding above our heads and in the shadows. 

Amidst negotiations over NAFTA, the then-Salinisas administration in Mexico had successfully proposed changes to the constitution to enable members of ejidos – Mexican farms or ranches under the collective control of those who work them – to rent, mortgage or sell individual plots. This was described as ‘a radical and controversial step’ in a report commissioned by the UN’s Food and Agriculture Organization. While farmers across Latin America were ‘struggling to adjust to neo-liberal policies,’ it said that ‘the situation of Mexican farmers appears exceptionally difficult.’26 The constitutional changes effectively ended decades of land redistribution, wrote James J. Kelly in the Columbia Human Rights Law Review in 1994, and ‘paved the way for mass transfer’ of land to multinational corporations.27 

The San Isidro ejido community in Jalisco, in western Mexico, was one of the many affected by these changes – as well as incomplete land distribution that preceded them. In 1939, the community had been granted 536 hectares by the government but had never been able to access all of it. Then, about half of this territory came under the control of Amway, which the community said had ‘illegally’ purchased it. They’d formally denounced the company, including at the United Nations, for violating their rights to use the land to grow food but also to access water and move across the area. Finally, in 2022, the federal government intervened and said that Amway should return the ejido land it was using. A deadline was given for the handover but, when it came, only some of the land was actually returned. Company’s security guards were still harassing community members trying to grow food or walk through the area.28 Then, the company’s parent corporation, Access Business Group, threatened and then filed their suit at the World Bank.29

We know this because, while media outlets have failed to cover the case, activists have been doing the hard work to document what’s at stake. In 2023, a delegation from the small international non-profit GRAIN visited the San Isidro ejido community at the centre of the dispute.30 Along with a chronology of events leading up to the international tribunal case, they collected testimonies from those affected. Raúl De la Cruz Reyes, Chairman of the San Isidro Ejidal Commissariat, told them:

“This land has been stolen, first by the landlords of the hacienda, and then came the worst, when the government handed over the land to a transnational company instead of us peasants, and this company destroyed everything, the fauna, everything. We see that they take the product but the people remain poor because the wealth is taken abroad. What is left here are people who are worn out from work and a few elites who are filling their pockets with money.”31

This is far from the only example, however, of an outrageous, unfinished and untold chapter in the ongoing story of corporations’ silent coup against democracy. Another example, which is also related to the corporate takeover of physical space that we look at, centres on another international investor-state dispute filed against Honduras at the same branch of the World Bank. In that case, the poorer Central American country is facing an even bigger $6 billion claim from a US company that builds dystopian special economic zones and ‘private cities’. Its controversial project on the island of Roatán was blocked by the government amidst growing popular opposition that corporate carve-outs were not the right direction for the country.32 Why are these stories not more widely known? Such questions have haunted us since we first got stuck into the investigations that led to this book. So much of what occupies newsrooms can seem small in comparison to the threat to democracy and rights posed by global corporate power – supported by and exercised through systems and strategies that are remaking the world in their interests. This must change.

NAFTA no longer exists, but the world it helped to remake in favour of transnational corporate power is still with us. That landmark treaty was officially terminated in 2020 and replaced with a new deal (called the United States-Mexico-Canada Agreement, or USMCA) which does not give foreign investors the same access to international tribunals.33 But NAFTA’s provisions remained in force for three years under a ‘sunset period’ during which numerous investors – including Amway – filed challenges. Mexico is still vulnerable to investor suits in some cases under the new deal, as well as under others such as the mega Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) between 11 countries including Canada.34 

While we worked on the investigations that led to this book, in Ecuador, under then-President Correa, a commission comprehensively audited the international investment treaties that the country had signed and came to the same conclusion: that these treaties and the supranational corporate justice system they enshrine are deadly for democracy. In 2017, Correa ordered the termination of these deals. However, a new government then came to power, and very soon after, reversed this position and signed new international investment treaties to replace those cancelled.35 Such examples show how entrenched global corporate power now is, and how hard it can be to secure changes that are long-lasting, even when a popular government comes to power and really tries to grab back control from corporations.

They also show, however, how this story is not over – and how the world the Zapatistas helped to remake, in favour of transnational people power, is also still with us. NAFTA was terminated off the back of increasingly popular opposition to such deals that also led to the demise of the proposed Trans-Atlantic Trade and Investment Partnership (TTIP) mega-deal, between the US and Europe, which would have further enshrined the supranational corporate justice system we investigate in this book.36 In 2024, other cracks in this system widened as the UK confirmed it was joining a growing number of countries in officially withdrawing from the Energy Charter Treaty which enables cases through this system on behalf of multinational energy investors including fossil fuels giants that object to environmental and climate action. 

Around the world, there are local initiatives focused on concretely ensuring peoples’ access to water, energy, housing and food, and that these are not captured by corporations – including by reversing the privatisation of basic services. At the international level there have also been major moves to challenge and end corporate impunity. In 2018, the first full draft of a new binding international treaty to regulate the activities of transnational corporations was released by a UN working group, off the back of a long process led by Ecuador and South Africa, supported by human rights and social justice activists and opposed by corporate lobby groups. 

With climate change there is actually a ticking clock on this story: the UN’s Intergovernmental Panel on Climate Change has said that greenhouse gas emissions must peak before 2025, and decline 43% by 2030, to limit global warming and prevent climate change impacts from becoming much more severe.37 If our societies and systems remain beholden to corporations, we will not be able to meet these targets. Many people fear this and that’s why there has been a groundswell of local activism to protest not just climate change but the unjust power structures that have brought about the current crisis. Examples include initiatives around the world to declare ‘Fossil free zones’ where no fossil fuels are produced or consumed, and to push local representatives to support a global fossil fuels non-proliferation treaty. 

Such initiatives and movements importantly seek to do two things at the same time: block or dismantle structures benefiting corporations at the expense of people and the environment, while also building new structures and rewriting the rules for a better future. But, while corporations have gained and exercised new powers above our heads, much of this action is happening under-the-radar. Currently neither side of this story is well-known enough: to our detriment. 

It can seem as if there is a depressingly epic clash of timescales in which corporate interests have far outpaced the people’s, with plans laid much longer ago to enshrine and advance them. Though, as the Zapatistas asserted, there is also a very long history of peoples’ struggles against oppression to build on. Somehow, we need to hold both of these at the same time: realism about where power lies, and what struggles for rights and justice are up against, and hope that change can happen. There are examples around the world of local communities winning, against the odds, battles against transnational corporate power. Things would have been much worse without their resistance and this is why it can’t stop, won’t stop. Thankfully, what comes next in this story is not foretold. Hidden scripts and untold stories – once found – can be torn up, or built on. We must still believe, and demand, that another world is possible. 

Claire Provost and Matt Kennard

Turin, Italy, September 2024