Adam Winkler, “We The Corporations: How American Businesses
Won Their Civil Rights, Liveright Publishing, 2018, 395 pp.
In “We the
Corporations: How American Businesses Won Their Civil Rights,” Adam Winkler
tells the story of how corporations — legal creations of governments — came to
be seen as “private” economic actors and how they gained political privileges
that today mirror those held by flesh-and-blood citizens. Opponents argue that corporations simply
should not enjoy the political rights of citizens — such as freedom of speech
or religion, or political participation — because their wealth and power
distort popular democracy. Most cases nowadays
that get to the Supreme Court are there because of big-business-supported lawyers
present cases the businesses want there.
In a moment of gigantic corporate
mergers, unabashed corruption and legislative dysfunction, the call to rein in
corporate political power is as loud as ever after the 2010 Citizens United decision
For most Americans, the current debate stems from the
Supreme Court’s Citizens United decision. In
January 2010, a 5-to-4 majority invalidated provisions of the Bipartisan
Campaign Reform (McCain-Feingold) Act of 2002 that prohibited certain types of
“electioneering communications” (basically ads) by corporations and unions, on
the grounds that those groups represented, in Justice Samuel Alito’s words,
“associations of citizens” who enjoyed the right to free speech. (The idea that
spending money on campaigns was an exercise of speech came from a 1976
decision, Buckley v. Valeo. )
As Winkler recounts, the 2010 Supreme Court ruling
sent shock waves through American politics. In an unusual public rebuke,
President Barack Obama called out the justices to their faces during his State
of the Union address, accusing them of upending “a century of law” that
regulated corporate political activity. Just as unusual was Alito’s response,
conspicuously shaking his head and mouthing “not true” at the president.
Quickly, a groundswell of activism pushed back. Groups
like MoveToAmend.org proposed amending the Constitution to clarify that human
beings, not corporations, are the only legitimate bearers of political rights.
In 2014, political scientists Martin Gilens and Benjamin Page escaped the
confines of academia to puncture the progressive consciousness with a
well-circulated report that said economic elites and business interests wielded
outsize influence on policymaking. The report was usually summarized as:
“America Is No Longer a Democracy.”
Virtually unrestricted corporate campaign giving has
exacerbated the hyperpartisanship that defines national politics. As Sen.
Lindsey Graham (R-S.C.) admitted during last fall’s tax bill vote, policymakers
must please their donor bases to secure reelection. And even though Hillary
Clinton and Donald Trump spent less on their campaigns than Obama and Romney
had in 2012, the flood of campaign cash created the structural conditions that
allowed Trump to win the Republican primary contest. With deeper pockets than
in years past, a long list of Republican candidates stayed in the race far
longer than they otherwise would have, dividing the roughly 65 percent of GOP primary voters who did
not support Trump.
For activists, the implication was clear. The country
had lost its way and had allowed a misguided notion of corporate personhood to
take over. We had to return to our democratic values and a less corrupt time when concentrated wealth did not subvert democracy.
Winkler’s book,
however, shows that this fixation on corporate personhood gets it precisely
backward. Yes, American corporations have steadily gained “the same rights as
individuals under the Constitution,” he shows. But the key to their success
lies not in the embrace of corporate personhood but in its rejection.
Winkler, a professor of law at UCLA, roots his history
of corporate civil rights in the two competing concepts of the corporation that
have structured jurisprudence since the early 19th century. “Corporate
personhood” is the more limited of the two. This view conceives of corporations
as legal persons that have specific but limited rights, such as owning property
or suing in court. Historically, opponents of corporate power used this notion
to deny corporate entities more expansive rights, such as voting, speaking, or
religious liberty.
The flip side sees the corporation not as a legal
person but rather as a voluntary association of the human beings who compose
it. Lawyers and jurists refer to this blurring of the distinction between a
corporate entity and its shareholders as “piercing the corporate veil.” And
this, Winkler maintains, is the error that Alito made in viewing limitations on
corporate behavior as restrictions on the actions of actual humans.
My Notes:
Pg. xiii: In
1882 Roscoe Conkling argued before the Supreme Court that corporations like his
client, the Southern Pacific Railroad Company, were entitled to equal rights
under the Fourteenth Amendment. This was
a remarkable claim as the Fourteenth Amendment had been adopted after the Civil
War to guarantee the rights of the freed slaves, not to protect
corporations. Conkling had a lot of
credibility before the Court. He had been
nominated to the Court and the Senate had confirmed him but he had declined,
claiming poverty from his career in public service—becoming the last person to
turn down a seat after having been confirmed.
In any case, he was the only remaining living drafter of the fourteenth amendment
and claimed, falsely, that the word citizen was left out of the amendment and
the word ‘person’ deliberately inserted to thus not exclude corporations. (This was the first instance of treating
corporations as persons.)
Pg. xxiii: The
fight for corporate rights weaves through some of the most important
controversies and turning points in American history: Hamilton and Jefferson’s
battle over the national bank; the fight over slavery before the Civil War; the
trust-busting crusades of Theodore Roosevelt and the demagoguery of Huey Long;
the civil rights revolution; and the emergence of the Tea Party. The nature and growth of corporate
constitutional rights were shaped by those debates, and those debates were
influenced by the struggle for corporate rights.
Pg. 3f: During
the Constitutional convention in 1787 the only discussion of corporations was a
proposal by James Madison to give Congress the power to charter them, a
proposal ultimately defeated. Corporations
were not mentioned in the famed Federalist Papers; apparently it was not even
considered whether the Constitution applied to corporations. There were few corporations around. In the years immediately preceding the
Constitutional Convention, only a small handful of business corporations had
been chartered: two banks, two insurance companies, six canal companies, and
two toll bridge operators.
Pg. 6: The tale
of the Pilgrims easily obscures the truth about America’s beginning. This land was first colonized not by
religious dissenters but by a business corporation thirteen years before the Pilgrims:
The Virginia Company in 1607 settled Jamestown.
Pg. 40: The
Constitution’s Article VI supremacy clause placed the Bank of the United States
(created 1791) out of the control of the States as it was created by Congress
and, ‘the Laws of the US…shall be the supreme law of the land.’
Pg. 49: Today
businesses are controlled through labor laws, consumer protection laws,
environmental laws, workplace safety laws, and alike, but corporations in
the 1700s were regulated primarily through their charters. They had the right to own property and to form
contracts and agreements with others—employees, suppliers, lenders. However, Blackstone wrote that corporate
bylaws ‘contrary to the laws of the land…are void.’
Pg. 63: The Judiciary
Act of 1789 stated that it was the duty of the judicial branch ‘to declare all
acts contrary to the manifest tenor of the Constitution void.’ The 1789 Act authorized the Supreme Court to
review state laws alleged to be ‘repugnant to the constitution, treaties or
laws of the US.’ In Marshall’s opinion in Marbury, he referred to this key
principle that grew out of corporate law.
Over the course of American history the power of judicial review would
be used by the Supreme Court to transform the nation.
Pg. 71: Daniel
Webster argued an extraordinary 223 Supreme Court cases between 1814 and 1852,
a time when the scope and meaning of many provisions of the Constitution were
being interpreted for the first time. No
lawyer has ever equaled his influence.
During Marshall’s tenure on the Supreme Court, Webster enjoyed an
impressive track record of success for his corporate clients. The Marshall court consistently promoted the
powers of Congress and the rights of corporations. But with Marshall’s death in 1835 and his
replacement Roger Taney, appointed by Andrew Jackson, Webster’s influence
waned.
Questions about
the validity of the 14th amendment:
Pg. 124: In
1866 the 14th amendment when presented was predictably voted against
by ten southern states, Tennessee was the sole Confederate state to approve the
amendment—and only then because Tennessee amendment opponents boycotted the
vote in a vain attempt to prevent the legislature from having a quorum. As it became clear that the amendment would
not obtain the three-fourths of the states necessary, the Republicans who
controlled congress responded by passing the Reconstruction Acts, which
effectively disbanded the governments of all the former Confederate states,
save Tennessee. The Reconstruction act
required the exclusion from office of anyone who served in the
Confederacy. Congress also warned the
southern states that they would not be fully admitted back into the Union until
they ratified the Fourteenth Amendment.
Then, after the next elections, New Jersey and Ohio voted again, this
time rescinding their earlier approval. Nevertheless,
in July of 1868, after new Reconstruction governments in North Carolina, South
Carolina, and Louisiana voted to approve the amendment, Congress passed a
resolution declaring the Fourteenth Amendment ratified. The three-fourths threshold was only met by
including New Jersey and Ohio; Congress insisted that states like New Jersey
and Ohio could not change their minds about ratification, even though the
larger ratification process was still underway. (This ignored the changed votes of the
southern states that had originally opposed the amendment & now voted for
it.)
Pg. 157: Over
the two decades following the 1886 Santa
Clara County v. Southern Pacific Railroad and the patently false headnote
the court reporter had affixed stating that railroad corporations are ‘persons’
within the intended meaning of the Fourteenth Amendment, this case was cited
(because of the headnote) and relied on for authority in deciding that
corporations were entitled to the Fourteenth Amendments guarantees of equal
protection and due process—legal principles never endorsed by the decision
itself. The transformation of the
Fourteenth Amendment from a guarantee of equal rights for racial minorities
into a tool for corporations to strike down business regulation was the subject
of a study conducted in 1912. It was
determined the court had heard 604 Fourteenth Amendment cases between 1868 and
1912. A mere 5 percent involved African
Americans and in nearly all of those twenty-eight cases the racial minorities
lost. Corporations were involved in 312
cases which succeeded in striking down numerous laws regulating business,
including minimum wage laws, zoning laws, and child labor laws.
Pg. 159: Plessy v. Ferguson 1896: was the most notorious of the Supreme Court’s
cases upholding Jim Crow laws which established that ‘separate but equal’
government facilities were not prohibited by the Fourteenth Amendment.
Pg. 164: Much
of the Bill of Rights was designed to protect criminals and people suspected of a crime. While Americans today might first
associate the Constitution with rights of personal conscience, such as freedom
of speech and religious liberty, the Founding Fathers were largely focused on
the investigation, prosecution, and punishment of criminals. The Fourth Amendment protects against
unreasonable searches and seizures in investigations. The Fifth Amendment provides that a person
cannot be compelled to incriminate himself.
The Sixth promises a ‘speedy and public’ trial, the right to confront witnesses, and the right to counsel for accused criminals, while the
Eighth outlaws cruel and unusual punishment for those convicted. Now the Supreme Court would have to decide
whether corporations, like individuals, enjoyed those same constitutional
protections. (Today, the Fourth and Fifth Amendments are the most frequently
litigated provisions of the Constitution.
Anytime police search a home, they are required to follow strict rules
on warrants. When they arrest someone,
they must read the Miranda warnings. Pg.
177)
Pg. 165: The
Lochner court drew a new boundary on the scope of corporate rights, ruling that
corporations were entitled to rights of property but not rights of
liberty. The Lochner era is a period in
American legal history from 1897 to 1937 in which the Supreme Court of the
United States is said to have made it a common practice "to strike down
economic regulations adopted by a State based on the Court's own notions of the
most appropriate means for the State to implement its considered
policies," by using its interpretation of substantive due process to
strike down laws held to be infringing on economic liberty or private contract rights.
The era takes its name from a 1905 case, Lochner
v. New York.
Pg. 170: Today,
the tiny state of Delaware, home to less than 1 percent of the American
population, is home to more than 60 percent of Fortune 500 companies (a race to
the bottom in permissive corporate law).
Pg. 177: For
the first hundred-plus years of US history, the Supreme Court held that the
Bill of Rights was only a limitation on the federal government, not on state
and local governments. Over the
course of the twentieth century, the Supreme Court would reverse course and
gradually extend most of the provisions of the Bill of Rights to the state and
local governments.
Liberty Rights for
corporations via the fourteenth amendment:
Pg. 184f: There
never was a question after the Dartmouth
College v. Woodward when Daniel Webster victory prevented New Hampshire’s
attempted takeover of the incorporated school.
Corporations undoubtedly had property rights; that was the original
motive for creating the corporate form.
But liberty rights? Hale v. Henkel used the fourth amendment
to grant liberty rights to corporations and protect them from unreasonable
search and seizure but do not have the Fifth Amendment right against
self-incrimination. Also, until Citizens United, Corporations did not
have the right to influence elections.
Corporate money in
political campaigns:
Pg. 200f:
McKinley’s 1896 campaign, managed by Marcus Alonzo Hanna, versus William
Jennings Bryan was the first time significant amounts of corporate money were
involved. Hanna’s haul was so huge that
no presidential campaign would equal it for nearly half a century. The first federal law requiring any campaigns
to disclose their funders was not enacted until 1910.
Pg. 205: The
most influential book ever written about the corporation in America was The Modern Corporation and Private Property,
published in 1932, which detailed the changing nature of corporate business
around the turn of the century.
Distinctively it was pointed out that the modern, publicly traded
corporation had separated ownership from control.
Pg. 219: The 1907 Tillman Act: was landmark legislation on money in
politics. Outside of civil service
reform, the Tillman Act was the first significant effort by Congress to
regulate how money was raised or spent in election campaigns. The ban set a precedent for federal
regulation of campaign finance that would be followed repeatedly in the years
to come: the Publicity Act of 1910, which required disclosure of certain
contributions; the Taft-Hartley Act of 1947, which prohibited contributions
from labor unions; the Federal Election Campaigns Acts of 1971 and 1974, which
imposed contribution and spending limits; and the Bipartisan Campaign Reform
Act of 2002, whose restrictions on independent expenditures by corporations
would be challenged in Citizens United.
Pg. 231: Footnote Number Four in United States v. Carolene Products Company: Arguably the most important words ever
written by the Supreme Court can be found in a single footnote, which came in a
1938 case little known outside of law schools, and led to Brown v. Board of Education, invalidating racial segregation;
Reynolds v. Sims, establishing one person, one vote; and Obergefell v. Hodges, guaranteeing same-sex couples the right to
marry. This footnote marked the end of
the Lochner era and the beginning of
the Brown era. This footnote in a dissent stated that when
it came to economic matters, the ‘political processes…can ordinarily be
expected to bring about repeal of undesirable legislation.’ If Lawmakers enact bad laws, the people and
interest groups adversely affected by them will have an incentive to lobby,
advocate, and vote for change. There is
little need for the courts to second-guess lawmakers. However, where for example, a law restricts
the normal operation of the political processes, such as by restricting the
free discussion of ideas, the court should exercise very careful scrutiny and
strike down the law if necessary to reopen the pathways of democracy. The court ought to play a similarly
aggressive role, the footnote offered, when reviewing laws targeting ‘discrete
and insular minorities,’ who are too often and too easily subject to
persecution by the majority.
Pg. 234: It
took a demagogue like Huey Long to make Louisiana’s major newspaper companies
look like victims of political repression.
So, nearly seventy-five years before Citizens United, the Supreme Court held that newspaper corporations
had First Amendment rights. Long had
attempted to silence his newspaper critics by imposing taxes on them.
Pg. 238: The
long delay between the adoption of the First Amendment in 1791 and the court’s
embrace of the freedom of expression in the early twentieth century was the
text of the Constitution. It says,
‘Congress shall pass no law,’ suggesting that it applies only to federal
laws. For much of American history, the
federal government did not regulate speech very often, and when it did the
courts usually refused to interfere.
First in 1798 and then again during WWI, with the Espionage Act of 1917
and the Sedition Act of 1918, Congress did enact laws making ‘disloyal’ speech
a crime. (President Wilson had more than
1,500 people prosecuted.) The court began to hold that certain
fundamental rights among the first eight amendments were ‘incorporated’ through
the due process clause of the Fourteenth Amendment to apply to the states.
Pg. 247: Dodge Brothers v. Ford Motor Company is
a 1919 case in which the Michigan Supreme Court held that Henry Ford had to
operate the Ford Motor Company in the interests of its shareholders, rather
than in a charitable manner for the benefit of his employees or customers. This case has become an iconic statement that
corporations have no obligations beyond the bottom line. Genuine corporate social responsibility—done
purely to serve employees, customers, or society, at the long-term expense of stockholders—would
be a breach of management’s fiduciary duties, wrote Milton Friedman in 1970.
Pg. 280:
Tobacco regulation was just one small swell in a tidal wave of populist
reforms enacted in the 1960s and early 1970s that curtailed traditional
business practices in the interests of consumers, workers, and the
environment. In a remarkably productive six-year
stretch, Congress passed the Clean Air Act, the Clean Water Act, the National Environmental
Policy Act, and the Consumer Product Safety Act, along with new regulations
establishing safety standards for automobiles, prohibiting dangerous chemicals
in children’s products, and strengthening food safety. The unquestioned leader of the reform
movement during those years was Ralph Nader.
Pg. 282: The
Warren Court issued a stream of liberal rulings desegregating schools,
expanding the rights of criminal defendants, guaranteeing sexual privacy, and
giving private citizens wide leeway to bring anti-trust suits against
business. Nixon’s court, by contrast,
would end busing, limit the scope of civil rights laws, and curtail securities
fraud and antitrust suits.
Pg. 296: Virginia Pharmacy Board v. Virginia Citizens
Consumer Council (1976): opened the
door for pharmacies, lawyers, etc., to advertise. The United States Supreme Court held that a
state could not limit pharmacists’ right to provide information about
prescription drug prices.
Pg. 324: Citizens
United v. FEC (2010), challenging
the federal law restricting corporate spending on elections, began as a lawsuit
no one thought could be won. Since the
early twentieth century courts had turned away companies that challenged the
Tillman Act and similar state bans. The
Court had consistently ruled that corporations could be subject to special
restrictions in funding campaigns for public office, most recently in 2003,
when they upheld the very same provisions Citizens United would ultimately
challenge. The court rarely reconsidered
its own decisions after only four short years.
In this case, the conservative non-profit organization
Citizens United sought to air a film
critical of Hillary Clinton and to advertise the film during television
broadcasts shortly before the 2008 Democratic primary election in which Clinton
was running for U.S. President. Federal law, however, prohibited any corporation
(or labor union) from making an "electioneering communication"
(defined as a broadcast ad reaching over 50,000 people in the electorate)
within 30 days of a primary or 60 days of an election, or making any
expenditure advocating the election or defeat of a candidate at any time. The
court found (5-4) that these provisions of the law conflicted with the U.S.
Constitution. There has been a
tremendous backlash (eight in ten Americans oppose the ruling) to this ruling
even though it essentially follows a well-established pattern over the previous
two centuries of expanding corporate rights.
(It is estimated that in 2012 there was nearly $1
billion in new political spending traceable to Citizens United. By 2016,
sixteen states had passed resolutions of support for a Twenty-Eighth Amendment
to clarify that constitutional rights belong to human beings, not corporations.)
`Pg. 327:
Increasing polarization between Republicans and Democrats has made
compromise nearly impossible. Perhaps
the most important cause was ‘partisan realignment’—a reshuffling of the
coalitions that form the two main political parties. For most of the twentieth century, both
parties had distinctively liberal and conservative wings. However, as President Johnson predicted, the Civil Rights Act (1964) cost Democrats
the South. The one-party South
switched to the Republican Party.
Meanwhile, northeastern liberals
defected from an increasingly southern-dominated Republican Party to join the
Democrats. Partisan realignment
meant that liberals were nearly uniformly concentrated in the Democratic Party
and conservatives in the GOP. American’s
political attitudes had not necessarily changed that much, but the political
parties had been radically transformed.
Pg. 357: A
long-standing norm of the Supreme Court was that the justices would not reach
questions that had not been briefed and argued by the parties. This was violated in the Citizen’s case. Essentially the five conservative justices,
unhappy with the limited nature of the case, changed the case to give
themselves an opportunity to change the law.
Pg. 380: In Burwell v. Hobby Lobby Stores, Inc. the
Court ruled 5-4 that corporations had religious freedom. Ginsburg in dissent says that now any
corporation, public or private, closely-held or public, could claim those same
rights in order to gain an exemption from other forms of business regulation to
which the company objected.
Pg. 382f: Leo
Strine, Chief Justice of the Delaware Supreme Court, gave a lecture at the Yale
Law School in 2015, a year after the Hobby
Lobby decision, dealing with how the Supreme Court decisions in the Citizens United and Hobby Lobby cases were profoundly mistaken from the perspective of
corporate law. Strine asserted that the
court’s rulings reflected serious confusion about the nature of corporations
and how they operated. He took issue
with the view expressed in Citizens that stockholders unhappy with corporate
political spending could simply sell their shares. The Court had misunderstood how ordinary humans
now invest in corporations and most own stock through intermediaries such as
pension and mutual funds, not directly.
Also, pension and mutual fund investors don’t choose which stocks the
intermediaries invest in or even which intermediary manages their funds in some
circumstances. In the Hobby Lobby case the Court looked right
past the distinct legal status of the corporation and based the decision on the
religious beliefs of the Green family.
By allowing the company to claim the religious rights of its
shareholders, the Hobby Lobby decision abandoned the principles of corporate
personhood. The same Green family that
depends on the separation from the corporation to protect their personal assets
from liability.
Addenda: The recent 2018 Supreme court case, Janus v. AFSCME, centered on the
practice in 22 states, whereby public-sector workers could be forced to pay a
portion of the union dues, even if they didn't join the union. The court ruled
5-4 that this was a violation of free speech because it meant that government
was forcing non-union workers to subsidize political advocacy, candidates and
policies they don't support. (What about
publically traded corporations supporting political positions their stockholders
don’t support? How about Hobby Lobby?)
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