How To Think About Corporate Personhood: Part 1

In Zucchotti Park on October 5th, 2011, I saw a young woman holding a scrawled cardboard sign that read: “I’ll believe corporations are persons when Texas executes one.”

It made me laugh out loud, so I took a picture of it.  Six weeks later, November 17th, on the night of the second big Occupy march to and from Foley Square, you could see those words everywhere you looked, now neatly stenciled and mass produced, a sign of the times.

Meanwhile, in my big survey class at Rutgers, “Development of the US to 1865,” I was lecturing about the making of the U.S. Constitution, and more particularly the anguished mind of the founder, James Madison, who kept asking how to reconcile—or rather, how to codify the tension between—the rights of persons and the rights of property because he knew that republics, both ancient and modern, inevitably became oligarchies when they chose to sacrifice the rights of persons to the rights of property.  I was quoting from a letter Madison wrote to Thomas Jefferson in October of 1788 when one of my students raised his hand and asked, “But weren’t you saying last time that the law makes corporations persons, what’s the deal there?”

Yesterday my old friend Mike Fennell, a contractor in Charlotte, North Carolina, told me that one of his employees was so worried about what he’d heard on the radio—the Supreme Court says corporations are persons whose campaign money is a kind of speech to be protected by the First Amendment!—that he had to write his congressman.

We’re all worried about it.  Herewith, then, a short course—some Cliff Notes—on how to think about corporate personhood.  Full disclosure before the fact: you’re not going to like what I’m about to tell you because I’ll be suggesting that “original intent” is a useful device in adjudicating the divergent claims of all parties.

(1)  Citizens United v. Federal Election Commission 558 U.S. 1 (2010) is not a repudiation of stare decisis.  In fact, it’s a very conservative argument that overturns Austin v. Michigan Chamber of Commerce 494 U.S. 652 (1990), and a part of its more recent progeny, McConnell v. Federal Election Commission 540 U.S. 93 (2003), by demonstrating that Austin was a “significant departure from ancient First Amendment principles” and claiming that the Bipartisan Campaign Reform Act of 2002, Section 441 b, which bans “electioneering communication” by corporations, is at least inconsistent with the First Amendment as long as the identity of the speaker cannot determine whether speech must be protected.  It relies on and restores the balance of precedent, particularly but not only First National Bank of Boston v. Bellotti 435 U.S. 765 (1978) [see CU, 26-31, esp. the long line of precedent cited at 26-27].  There’s not much that is new here, in other words, except a disturbing clarification of what corporate personhood implies.

(2)  Citizens United contains and purveys a picture of the modern-industrial market that is naïve at best, particularly when the figure of the corporation must be the logical and historical pivot of the decision, and when new communication technologies—cable TV, the Internet, YouTube—are acknowledged as significant devices in delivering political opinions [on the technology, see pp. 36-37, 48-49, 55].  For example: “All speakers, including individuals and the media, use money amassed from the economic marketplace to fund their speech.” [35]  This is of course untrue of most individuals who, as “natural persons,” cannot or do not “fund” their speech with money unless they have a lot of it.  Everyone knows that the economic marketplace is not a level playing field because corporations have vastly more resources than individuals unless those individuals can pool their resources on the scale that corporations routinely deploy their earnings (or pool the resources of their shareholders) for political purposes.  Just ask the late Irving Kristol, the founding father of neo-conservatism, who, in argument with Friedrich Hayek and Milton Friedman, said this: “There is little doubt that the idea of the ‘free market,’ in the era of large corporations, is not quite the original capitalist idea.  . . .[The] concentration of assets and power—power to make economic decisions affecting the lives of tens of thousands of citizens—seems[s] to create a dangerous disharmony between the economic system and the political.” [Two Cheers for Capitalism (1978)]

(3)  Still, the question here is whether associations as such can be barred from engaging in political speech.  The decision quotes Pacific Gas & Electric Co. v. Public Utility Commission of California 475 U.S. 1 (1986) to drive home the point: “The identity of the speaker is not decisive in determining whether speech is protected.  Corporations and other associations, like individuals, contribute to the ‘discussion, debate, and the dissemination of information and ideas’ that the First Amendment seeks to foster (quoting Bellotti, 435 U.S. at 783).  The Court has thus rejected the argument that political speech of corporations or other associations should be treated differently under the First Amendment simply because such associations are nor ‘natural persons.’”  The Court then cites United States v. CIO 335 U.S. 106 (1948) and United States v. Automobile Workers 352 U.S. 567 (1957) to remind us that the collective identities or unnatural persons we know as trade unions or labor movements are as susceptible to the sanctions of 441b as corporations[see 26-28].

(4)  The Court is no less confused about the meanings of corporate personhood than all the precedents cited, about which more to follow.  Apart from corporations, the words used to describe the source of the speech to be protected by the First Amendment are numerous: individuals, persons, entities, associations, citizens, and especially speakers [see 22-26].  But the figure of the individual seems to retain the meaning of “natural person,” because when it appears, either metaphor rules, as in corporations are “like individuals” (Bellotti), or the conditional/subjunctive mood takes over: “If ~441b applied to individuals, no one would believe that it is merely a time, place, or manner restriction on speech.  Its purpose and effect are to silence entities whose voices the Government deems to be suspect.” [23]  The question begged here by the quotation of Bellotti is, how are corporations like individuals?  Corporate legal theory between 1886 and 1926, from Stephen J. Field of the 9th Circuit and the Supreme Court to John Dewey of Columbia University, was animated by the assumption that these new corporations were nothing like the individuals of old.  And of course if 441b applied to individuals, we’d be worried about our civil liberties—the point is that it presupposed, and promised to enforce, a practical distinction between corporations and individuals.

(5)  Morton Horwitz is particularly insightful when he frames his analysis of Santa Clara County v. Southern Pacific R.R. 114 U.S. 394 (1886), the locus classicus of modern corporate theory, as exemplifying a “crisis of legitimacy in liberal individualism arising from the emergence of powerful collective institutions.”  [Santa Clara Revisited: The Development of Corporate Theory,” West Virginia Law Review 88 (1986): 173-224, here 181.]  This is the Supreme Court decision written by Field that repudiated the narrow construction of the 14th Amendment offered in the Slaughterhouse Cases, among which the most important was Munn v. Illinois 94 U.S. 113 (1877), and tersely defined the corporation as a person deserving of substantive due process protection according to the Amendment’s second clause.  When conjoined with Chicago, Milwaukee & St. Paul Railway Co. v. Minnesota 134 U.S. 418 (1890), which broke from the common law to define property as the probable expectation of income from the use of material assets—as “good will,” not merely the material assets themselves—the corporation seemed an impregnable legal fortress.  [See John R. Commons, Legal Foundations of Capitalism (1924).]  And yet, as Martin J. Sklar has shown, its standing at the law and in the political culture was anything but clear until 1911, when the Supreme Court restored the Rule of Reason—the common law distinction between lawful and unlawful combinations in restraint of trade—in ordering the breakup of the Standard Oil Co. [The Corporate Reconstruction of American Capitalism, 1890-1916: The Market, the Law, and Politics (1988)]

(6)  For the corporation was not the only powerful collective association convened in the very late 19th century to contest and create the meanings of modernity.  The constant accompaniment to the “trust question”—can social mobility survive these new concentrations of wealth?—was the “labor question”—can the republic survive the emergence of a permanent working class, with all that entails for bourgeois individualism and the natural right of property?  Writers, philosophers, and artists at the turn of the last century grasped the consequent crisis in liberal individualism as an opportunity as well, as the occasion for rethinking the material foundation of subjectivity and thus entertaining an “imaginary femininity” or a “double consciousness” as an alternative to the singular Man of Reason, the white male proprietor of himself.  Jane Addams and Theodore Dreiser and W.E.B. Du Bois went even further than William James and John Dewey in exploiting this opportunity, but every sentient being knew that the old individualism was at risk in the new world wrought by powerful collective associations.  Corporate personhood was just one version of what came to be known as the “social self”—it was just one component of what James called a “pluralistic universe,” what Horace Kallen called “cultural pluralism,” and what we have come to know and love (or loathe) as “identity politics.”

(7)  Here’s how A. Lawrence Lowell, the president of Harvard University, characterized the possibilities of the newly pluralistic political universe in 1913: “The last century has certainly been marked by an apparent increase of corporate, as compared with personal, motives.  A hundred years ago democratic theories were individualistic.  They treated the state as a sum of equal and independent units.  Now we have learned that man is a social being, not only in Aristotle’s sense, that he is constrained by his nature to be a member of a state, but also in the broader sense that he is bound by subtle ties to other and smaller groups of persons. . . .We have learned to recognize this, and what is more, with the ease of organization fostered by modern conditions, the number, the complexity, and the aggregate strength of such ties have increased.  No one can have observed social life carefully, under any aspect, without seeing that cooperative interests have in some measure replaced personal ones, that in its conscious spirit western civilization has become less individualistic, more highly organized, or, if you will, more socialistic.” [Public Opinion and Popular Government (1913)]

(8)  I said I was going to recommend “original intent” as a useful device in adjudicating the claims of all parties.  By this I mean, of course, to step outside the language of the Constitution itself and to track its origins in the larger discourse of the day—specifically, in James Madison’s advice to Thomas Jefferson of October 1788, in a ten-page letter called “Remarks on Mr. Jefferson’s Draught of a Constitution.”  Here Madison noted that both “experience and investigation”—both first-hand observation of the Revolution and second-hand study of republics ancient and modern—had taught him that “in all populous countries, the smaller part only can be interested in preserving the rights of property.”  Even Kentucky, almost Eden in the rhetoric of the founders, was already approaching this divided and divisive stage of development, he reminded Jefferson.  So, what was to be done when the “two cardinal objects of Government, the rights of persons and the rights of property,” were already diverging?  Madison’ solution was to divide the legislative branch against itself—talk about a separation of powers—in the hope of prolonging the debate between these “two classes of rights.”  As he explained to Jefferson:

“The first question arising here is how far property ought to be made a qualification [for voting].  There is a middle way to be taken which corresponds at once with the Theory of free Government and the lessons of experience.  A freehold or equivalent of a certain value may be annexed to the right of voting for Senators, & the right left more at large in the election of the other House. . . .This middle mode reconciles and secures the two cardinal objects of Government; the rights of persons and the rights of property.  The former will be sufficiently guarded by one branch, the latter more particularly by the other.”

(9)  When corporations became persons at the law, ca. 1886-1910, the difference between the rights of persons and the rights of property—the difference Madison both recognized and inscribed in his design of an extensive republic, as the material condition of popular government—was effectively erased.  Thus the tension between the two classes of rights was effaced.  The either/or choice was resolved in favor of property.  In Madison’s terms, the republic had devolved into an oligarchy: “the poor were sacrificed to the rich,” as he put it to Jefferson in describing the choice the ancient republics had made.

(10)  But not so fast.  Neither the conventional 18th-century notion of a person nor the natural right of property survived what we call the rise of corporate capitalism, ca. 1886-1910.  Property was socialized by the separation of ownership and control; meanwhile selfhood was socialized by the decay of the family’s economic functions and the emergence of new associations and identities, trends that together made for a dispersal of power from the state to society.  So to reinstate Madison’s distinction between the rights of persons and the rights of property is harder than it looks at first glance: original intent has its limits.  Still, the 14th Amendment is the place to start, speaking of origins.  If corporations are persons, why not tax them at rates permitted by the personal income tax code?  But what, exactly, is a person at the law?  An individual? What makes corporations “like individuals”?  Why can’t the identity of the speaker determine what protection it receives under the First Amendment, especially in view of the exemption from 441b that accrued to media corporations?

(11)  This is just the beginning.  For my part, I don’t want Texas to execute a corporation.  I just want to figure out where corporations belong in a pluralistic universe.  Along the way, I’d like to understand what a person is, too.  And its rights.



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4 responses to “How To Think About Corporate Personhood: Part 1

  1. Mike

    Your last sentence sums up the problem nicely. The predicate “Its” sounds like it’s in a lot of pain from the heavy lifting it’s doing. “Their” would have made no sound at all, but would have made no sense either.

    Now that we’re through the “It depends on what ‘it’ is” Looking Glass, I’d like to say that I do want Texas to figuratively execute a corporation.

    Why don’t the criminal laws apply to all “persons”? If corporations are persons why can’t the state deprive them of life and liberty (as well as property) like any other citizen?
    That there is no death penalty for corporations or even a way to put them in jail, makes their citizenship impossible. Criminal statutes, not the tax code, are where the real meaning of “person” at the law can be found.

    There was a sort of thought experiment on this at emptywheel yesterday.
    Citigroup gave almost $25 million in material support to terrorists – a crime for which US citizens are subject to indefinite detention, military trial, life in prison or even the death penalty. But “citizen” Citi isn’t going to jail for this or any other crime because there is no “person” to charge, much less incarcerate, under the law.

    • This is what I mean about the confusions attending the meaning of “persons.” Individuals are what the law in the form of the criminal code produces, but the law of corporations is different, no matter how many times a decision uses the word “person.” And notice that not once does the body of Citizens United use that word!

  2. bill wolfe

    What about the history of corporations and publicly issued charters?

    I’ve heard that the late 19th century Supreme Court case that first gave corporation rights was mistaken result if a clerical error – true?

    Basically some meaningless text got misconstrued as law?

    • No, that 1886 decision was no clerical error–mysteriously brief and cryptic, but no mistake. And you’re right to note a fundamental shift in the way corporations get chartered. After 1889 with the New Jersey statue, drafted by James B. Dill of the North American Trust Co. (NY), the state is in no position to sanction a corporation for exceeding its “grant,” that is, its economic limits and public duties as specified in a charter.

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