In Citizens United, the Supreme Court held, by a five-to-four vote, that the free speech clause of the First Amendment requires legislatures to allow corporations to spend their funds to influence electoral campaigns. Somehow, free speech?originally the protector of the opposition essential to democracy and the critical dissent that defines freedom?was transformed into a license for corruption. This week, the five justices who decided Citizens United refused to reconsider that wrong decision. The Court summarily reversed the Montana Supreme Court, which had held that at least in Montana restrictions on corporate electioneering were essential to limit actual, historical corruption of the democratic process by outside mining interests.
Money is not speech. The Court has created tremendous problems by trying to force economic regulation, which always must adjust to changes in the economy, into the fixed and abstract rules of the First Amendment. Treating limitations on campaign spending, vote buying, or bribery as if they were censorship just doesn’t make sense, whether the money is corporate or individual. We don?t need censorship. But we do need limits on money in politics. If wealthy companies and individuals can use past success (or luck, inheritance, theft, or exploitation) to buy political favors and laws that benefit them or hurt their competitors, they will rapidly turn market capitalism and democracy into crony capitalism and plutocracy: a government and an economy run for the benefit of a tiny elite, not We the People.
Giving corporations constitutional rights to influence political campaigns makes even less sense. In a democracy, political rights belong to citizens, not the institutions they create. Corporations are not citizens. Under a market-based system, they should not participate in politics at all. And in the modern era of giant multinationals, corporate employees and investors are likely to come from all over the world?but should have no more right to influence U.S. politics than any other foreigner.
More important, U.S. law requires corporate decision-makers to focus on the interests of the corporation?not the values of the country. We depend on law to ensure that corporate profits come from things we want?giving people good jobs producing products and services?and not from things we don?t want, like monopoly exploitation, pollution, immoral or addictive products, or unsafe workplaces. Markets must be guided by law, not the other way around, or they will quickly stop being competitive markets at all.
Citizens United thus raises a broader issue about the place of corporations in the U.S. constitutional system. Do, or should, corporations have constitutional rights at all?
Obviously, corporations, which are creatures of statute, must have legal rights. The statutes make a corporation into a single legal actor by creating four special rules. First, the law empowers the board to speak for all the corporation?s employees and investors and customers without having to get their actual agreement (?centralized management?). The law then grants the board the capacity to make contracts, acquire and use property, and sue and be sued in the corporation?s name (?legal personality?) without becoming (or making investors or employees) responsible for those contracts or the misuse of that property (?limited? or ?entity? liability), and without requiring renegotiation each time the people associated with the corporation change (?life?). Without these statutory grants, corporations would be little more than a mob. Even if it managed to act as one body, it would probably amount to an illegal conspiracy in restraint of trade: ordinarily, the common law bars people from joining together to negotiate as a single person. In any event, non-statutory corporations would quickly cease to exist. No one would enter into a contract with an entity that had no right to sue or be sued in court.
These corporate legal rights come from the legislatures, which regularly tinker with them. Constitutional rights, however, are rights against the legislatures: they are rights we have even if our representatives try to take them away. As a result, constitutional rights are also rights defined by judges, who are supposed to determine the content and limits of the rights by interpreting the text of the Constitution.
The U.S. Constitution does not mention corporations at all. (Corporate law has changed so much in the last century that even if it did, it would be referring to something quite different from contemporary business corporations.) The few state constitutions that do, or did, mainly do so to restrict corporations?for instance, banning monopoly or corporate use of hired Pinkertons as private anti-union armies.
This silence is not surprising. It is hard to see why anyone would want to fossilize corporate law in our hard-to-amend Constitution, let alone give judges primary responsibility for regulating large economic enterprises. Economic regulation must be forward looking, taking into account how the economy is changing. Judges declaring constitutional law, however, must look backward. They aren?t supposed to make new law. It is hard to see why anyone would think that even the most careful reading of the Bill of Rights or the Civil War Amendments is the right way to make corporate law. Looking backward is a terrible way to drive the economy forward. No matter how carefully the judges read the words ?Freedom of Speech? or ?person? or ?due process,? they still will not know whether unannounced inspections of workplaces or compulsory public disclosure of corporate finances?regulations that would clearly be unacceptable if applied to citizens? homes?will lead to a more affluent, more egalitarian, cleaner, and safer society or to the opposite.
Yet the Supreme Court has repeatedly declared that corporations have constitutional rights. In most instances, the Court has simply assumed that granting rights to corporations is the same as granting them to people. But granting a right to an organization?whether state agency or business corporation?is never the same as granting it to a person.
The privacy of a public corporation has no necessary connection to any individual?s privacy. On the contrary. Corporate privacy does not stop corporations from snooping on their employees or reading customer emails. Instead, it allows corporate executives to hide safety lapses, pollution, bad working conditions, poor quality control, cooked books, simple incompetence, and gross misdeeds. That reduces the rights of all those dependent on the good faith and competence of managers: employees, investors, customers, and the country as a whole. Worse still, privacy for the corporation may lead managers to feel compelled to lead the corporation to misbehave whenever anti-social activities are profitable. Corporate law, after all, requires executives and directors to act in the interests of the corporation, not according to their personal notions of what is good for the country.
Corporate ?speech? works the same way. Innovation and competition are hard. Why spend money on expensive research and development, quality control, or employee benefits if it is cheaper to influence politicians to change the rules of competition in the firm?s favor? Threatening attack ads unless the company gets a tax break, subsidy, patent or copyright monopoly, ?tort reform,? or ?regulatory simplification? that amounts to an exemption from ordinary rules is far more likely to be profitable than actually competing. The easiest way to win a game is to corrupt the umpire.
Most people understand that cheating is bad. An economy based on corruption is no more likely to be vibrant or attractive than a fixed game is likely to be fun. But corporate directors and employees have a fiduciary obligation?created by law and ordinary norms alike?to set aside their own views and work in the corporation?s interest. If they don?t, they can be replaced by someone who will. Thus, they are likely to feel compelled to use corporate money in politics, especially if other companies do. Lower level employees will have to go along, or be replaced by those who will. We all pay higher prices, take lower wages, earn less in investment returns, and suffer from a diminished economy and less democracy as a result.
Freedom for corporations?like freedom for governments–often conflicts with freedom for the people who depend on them. Like the government itself, corporations are powerful tools we create in our pursuit of our happiness?not theirs. Like any powerful tool, they can be used for good or evil. To treat them as having rights of their own against their creators is a form of idolatry, setting up our creations as our masters.
Daniel Greenwood co-authored a brief on behalf of Free Speech For People in American Tradition v. Bullock urging the Supreme Court to overturn Citizens United. This post reflects Greenwood?s personal views. Click here for more information on Free Speech For People?s campaign to amend the Constitution to overturn Citizens United.