Towards a New Corporate Constitutionalism

Towards a New Corporate Constitutionalism

Daniel Greenwood: Towards a New Corporate Constitutionalism

Ronald Dworkin begins his critique of Citizens United, the Supreme Court case that declares that corporations have a First Amendment right to spend corporate funds on election campaigns, by stating that corporations are “only fictitious persons created by the law.” Dworkin is quite correct that the Citizens United opinion is an attack on democratic self-rule as we know it.

But our major multinational business corporations are not “fictitious”. They are quite as real as any institution that dominates our lives. They are enormously wealthy and powerful bureaucratic institutions, making decisions that affect our lives in vital fashion, and, if we do not get control of them, they threaten to destroy our very ecosystem in a fossil-fueled gust of hot air.

Most of us work for corporations; most of our economy is dominated by corporations; most of the products and services we depend on and many that we do not are produced by corporations. Major business corporations collect information about us virtually without restraint; maintain secret and semi-secret files of our prior contacts with them and trade this information with other business corporations through credit rating agencies and other information depots with a facility that would bring awe and admiration to the soul of any secret police force. They control more security forces than most governments: Private police vastly outnumber public police. They pay their leaders, as we have become increasingly aware of in recent years, vast sums that are–necessarily–extracted from customers and employees by the raw exercise of power that could not exist in a competitive market.

These are power structures, every bit as important and quite a bit more scary than virtually all governmental entities. To be sure, municipal corporations–cities–have the power to tax, and Microsoft or the electric company do not. But when the municipal corporation wishes to tax you, there are multiple safeguards including, ultimately, the power of citizens to replace decision-makers by a democratic vote and, if that doesn’t work, the right of residents to move. When a business corporation decides to raises prices on a commodity that we need, or to manipulate its pricing so that we don’t understand what we are agreeing to pay until it is too late, or to organize itself in a way that creates the appearance (or even reality) of crisis so as to browbeat employees into reducing their wages or government officials into offering taxpayer funded bailouts, the coercion is just as real, but the safeguards are quite a bit weaker.

The key difference is that we have no vote in determining the decision-makers of the corporations–only shares, not people, vote, and most shares are controlled by institutional decision-makers (in other corporations or corporate-like entities) who are legally obligated to set aside their politics and ours, and encouraged if not mandated to vote in favor of short-term profit maximization no matter the cost to environment, citizenry, employees, or even the survival of the institution itself.

To treat these powerful, state-like, dysfunctional bureaucracies as if they were mere “legal persons” is to miss the central point. Our eighteenth century Founders fought to tame government and force it to serve the people–they taught that government existed not for the enrichment and aggrandizement of the king and his cronies, but to promote the common welfare. In the twenty-first century, as our headlines are dominated by our banks and other financial institutions skimming profits from every financial transaction while threatening to destabilize, or worse, the world economy, and our energy companies advertise their “green credentials” while assiduously working to strip resources regardless of environmental impact, our mission must be to extend the eighteenth century ideas of limited and responsive government to multinational public corporations. The task of democratic republicans is to convert these last bastions of autocratic, autonomous, and exploitative rule into public servants–to win the vote for those who are most affected by them and to hedge in their leaders with norms and expectations that they’ll place the common good above private profit.

Citizens United‘s assault on our eighteenth-century republic, rewarding the most corrupt of these institutions by giving them the most power to influence our politics, could yet inspire the first steps towards our New Corporate Constitutionalism. The court has recognized, correctly, that our major business corporations are major political players. We must now apply ordinary democratic norms to these quasi-sovereign institutions: Corporations that choose to participate in politics, whether by lobbying or campaigning, should do so under the control of the human beings affiliated with them, investors and employees alike, electing managers on the ordinary basis of one citizen one vote.


Wurgraft | University of California Press Lima