New Milestones in Corporate Personhood

For at least two centuries, corporations have been recognized as artificial persons with the right to enter into contracts, sue, and be sued. But since the 1970s, the Supreme Court has issued repeated rulings that extend this notion, recognizing the “right” of corporations to express their views in the political arena. Because spending money was judged (in the 1976 Buckley v. Valeo decision) to be protected speech under the First Amendment, corporations have gained the constitutionally protected right to influence elections by spending millions of dollars.
Corporate person

This notion poses a major challenge to the idea of American government being “of the people, by the people, for the people”, in the words of Abraham Lincoln. Most people can’t afford to spend the amount of money needed to swing an election. The few individuals who can often do so for selfish reasons, but they may also believe that what they want politically is what’s best for the nation. That sounds optimistic, but at least it has a chance of being true.

Corporations, by contrast, are machines designed to make money. They have no conscience. They are chartered with the expectation that they’ll create and sell goods and/or services, be profitable, and create jobs. Their management actually has the fiduciary duty to maximize shareholder value, which can easily come into conflict with the pursuit of the public interest. For example, if a corporation benefits from government subsidies that distort markets and cause harm to the environment, it will fight to preserve such benefits even though the management may believe personally that they are wrong.

It’s hard to imagine that our founders had corporations in mind when they wrote the Bill of Rights. But as absurd as it is for them to have such heavy political influence, it’s only getting worse. Consider some recent cases in which corporations have asserted constitutional rights beyond the freedom of speech:

In 2014, the state of Vermont passed a law requiring the labelling of all foods containing genetically modified organisms (GMOs), to take effect July 1, 2016. The Grocery Manufacturers Association (GMA), a trade association including Monsanto, Dow, Coca-Cola, and General Mills, filed suit to overturn the law on the grounds that it would violate the First Amendment prohibition against “compelled speech”.

Also in 2014, the city of Seattle decided to raise its minimum wage to $15 per hour, with the new rate being phased in faster for large businesses than for small, local ones. Franchises such as McDonald’s do not qualify as small businesses under this law. The International Franchise Association sued, claiming that its members’ rights of equal protection under the Fourteenth Amendment were violated. The Amendment was passed in 1866 (and ratified in 1868) to guarantee equal rights for freed slaves. Yet there is a long history of corporations trying to use it to further their own interests.

A St. Louis ballot initiative to end tax breaks to fossil fuel and mining companies was stopped when industry representatives obtained an injunction. The judge ruled in 2014 that the initiative conflicts with state law, but also wrote that it would violate corporations’ equal-protection rights, citing the 2010 Citizens United decision.

In late 2010, the SEC proposed a rule requiring any corporation using “conflict minerals” (i.e. resources sold by armed groups to finance ongoing wars) from the Democratic Republic of Congo (DRC) to disclose whether or not its products were “DRC conflict free”. After a public comment period, the rule went into effect in late 2012. The National Association of Manufacturers sued the SEC, claiming that this disclosure amounted to “compelled speech” and was therefore prohibited by the First Amendment. In a 2014 ruling, the judge agreed.

Besides all this, we saw last year that Hobby Lobby successfully argued that its First Amendment “right” to freedom of religion would be compromised by a requirement for certain services to be included in its insurance plan.

What’s next? Will corporations now claim the right to privacy, as well? Oops — that’s already happened. AT&T argued that it did not have to comply with a Freedom of Information Act request thanks to its privacy rights — and the U.S. Court of Appeals for the 3rd Circuit agreed. Fortunately, the Supreme Court overturned that ruling.

But looking at the trajectory of corporate claims to constitutional rights, it’s hard to believe that we’ve reached a new equilibrium. What seems more likely is that we’re in a new era of corporate personhood, where conscience-free entities control our national destiny to an extent our founders would have viewed as absurd.

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2 Responses to New Milestones in Corporate Personhood

  1. Dan Eaves says:

    In the pre-industrial period, the guilds under the sponsorship of the Crown regulated the terms under which a craft could be practiced. This often extended to fair (legal) prices and piece work wages, etc. So the intermingling of the political and the economic isn’t new. Unions also developed (slowly) to collectively represent what might be large numbers of workers for small organizations. There is always an uneasy balance in such legal setups.
    An appropriate example might be the “rotten boroughs” of the late 18th and early 19th centuries. Parliamentary representation was based on parish organizations, etc., and were not revised to reflect electorate shrinkage or growth over time. There might be an electorate of a handful in some cities, and 10s of thousands in the new cities like Manchester. Unfair situations were obvious but required much effort to make progress towards legitimate change.
    The point I am trying to make is that having a just and obvious cause in important political issues doesn’t mean people and organizations benefiting from illegitimate circumstances are going to have the scales wiped from their eyes. Indeed, bricks may become useful. When righteous indignation is everywhere, and legal precedence lives happily at the end of cul de sacs, the conflict is going to be difficult. Contemplating the 150 years of union agitation, (and that ending in Jimmy Hoffa?), is time well spent when feelings that the obvious correctness of one’s position merely needs clear statement to be instantly and universally accepted.

  2. Hamilton Richards says:

    Not all corporations are “machines designed to make money.” Among the many non-profit corporations are the Sierra Club, Common Cause, Planned Parenthood, and CG4TX. There are also Benefit Corporations or B-corporations, now legal in 28 states (Texas not included), which are explicitly “required to consider the impact of their decisions not only on shareholders but also on society and the environment.”

    Also see my post on the article “Let Us Now Praise Corporate Persons.”

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