a critique of corporate governance

I was recently involved in a discussion on reddit.com (my profile) regarding the extent to which socialism is to blame for the perceived downfall of America. My counterpart, arealrevolutionary, argued vehemently for the transfer of power from elected officials and our current system to a form of corporation-based governance that he was utterly convinced would stop local cops from killing innocent people. He also argued that a completely open drug market functioning outside of any governmental control, as opposed to our current situation in which the US federal government supposedly controls drugs, would greatly alleviate our crowded prison system and basically fix most of society's problems. He was also against low-income housing, arguing that, well, I'm not sure he was arguing anything other than the fact that he doesn't like low-income housing as it is not a profit-making enterprise. (His primary source book is: Enterprise Law, by Benson)

["A Critique of My Adversary:" The main thing that bothered me about our discussion was the fact that arealrevolutionary never answered my questions, although I asked him several. He always skipped direct answering and instead posed a counter-question based partially on the question I had asked him. While this is a good tactic occasionally, when you need to buy some time to formulate an answer or when you are simply drawing a blank, constant use of this tactic indicates a lack of courage when making direct statements; also, it indicates that you have not thought out fully the breadth of your viewpoint, and that you are incapable of direct and honest debate. A second thing that bothered me about this person's viewpoint (which I pieced together based on his counter-questions) is that] :

He supposes that corporation-based governance (CBG) would by far trump our current system of elected officials and (albeit very 18th century) representative government. He argues that a local police force owned by a corporation would never allow psychopathic or otherwise dangerous people into their ranks who might shoot an innocent person for no reason, as such behavior would negatively affect their profit-margins (presuming that all local residents have purchased the services of the corporate police force, which they would likely be forced to if they lived in a certain area). While I see his point, I cannot but shiver at the thought of granting the right to execute law and order to a for-profit enterprise that might at any time close down your local branch due to cost-cutting measures. (Consider this: you are traveling outside of your corporate police force's area and are questioned by a different corporate police force. Would they treat you kindly and with common decency? Would they be able to incarcerate you on false charges (which would, supposing that the corporation owned the jails, increase the corporation's overall profitability and therefore fit into their profit-motive) if they knew they would not face repercussions from a person not in their corporation or on her board of directors?)

Basically, the CBG system has not been tried on a national scale ever in the history of America, and therefore, as a theoretical model, it is unproven. Governments large and small have been experimenting with aspects of socialism for over a hundred years now, and while socialism has led to the betterment of countless lives (as well as to the death of equally countless lives, but so it goes), we are still experimenting with the notion of common goods and how to finance them, and American society is still to a significant degree socialist. Furthermore, neither the Constitution nor the Declaration mention anything about CBG, so attempts to establish this theory on a national level would presuppose complete abandonment of our nation's founding principles as well as the founding of a new nation (which is granted to us in the Declaration, but which should not be done for light or transient causes).

One of the dangers within this theoretical model would be the takeover of local corporate governments by larger and better financed corporations that would not be willing to adapt to the demands of each location (due to operational streamlining that mitigates losses to the profit-margin), forcing local individuals to live by the rules the corporation thinks is best rather than by rules that would best apply to their unique situations, a problem still prevalent in our current society.
Another danger of this model is the path required to reach it (think complete societal breakdown, civil war in the US, chaos on a global scale, upheavals lasting for decades). Furthermore, corporations are focused nearly exclusively on maximizing their profits. An economy, unlike the one we have today, that is supposedly free from oversight and control, would be rife with faulty and dangerous products that could kill and maim innocent people until enough were killed and maimed that someone would raised her voice and would perhaps even band together with others to boycott or close the offending manufacturer, at which point people would begin demanding quality controls on consumable products, at which point the market stops being free and socialism rears its ugly head.
One could argue that in the above case the individual would be able to sue the manufacturer, but corporations generally have vast resources and can therefore hire skilled and numerous lawyers who would relentlessly pursue the accuser and drag her name through the mud, provided of course that lawyers would still exist in this theoretical model and that they would have a place to meet and do their lawyering and someone with the authority to distribute justice to whom they could plead their case.

The counterargument to the above case will be this: corporations would not sell faulty products because they need to keep the customers happy so that their profit-margins stay high. The way to increase your profits is to sell cheap stuff that soon breaks, forcing the customer to buy new cheap stuff. This is the way it is now, and no mythical free market is going to cure corporate greed or customer acquiescence. Americans have become used to the sad reality of cheap products; we expect it and live with it.
Would we acquiesce to our local CBG shutting down because of a hostile takeover? Would we still enjoy the rights and freedoms we have today? Would our children sing songs to the heroes of Big Tobacco or to the Pioneers of the Microchip? Would we take up arms to defend the interests and boundaries of our corporation, even if the boundary cut through our neighbor's house? Would corporations wage wars not just of the purse-strings and of market-shares, but live wars with dead people and carpet-bombing?
This thought experiment about the potential benefits of CBG is still evolving within my brains; the above are some contemplations. (For a glimpse at a fictional CBG world, read Snow Crash, by Stephenson.)
word is bond.
JP