Tag Archives: theories

Exceptionalism, Corporate Edition

Only in America. No other nation gives its corporations as many rights as we do.

Before you launch into a knowing and cynical “sure–big business bought our lawmakers,” consider the fact (highlighted in a recent article in the Journal of Law and Courts) that these expansive rights are almost all the result of federal court decisions, not legislation.

The privileges currently enjoyed by the fictitious “persons” we call corporations weren’t a result of our Constitution, either.  According to David Ciepley, author of the referenced article,

“the framers were so concerned about the possibility of privileged monopolies squeezing out ordinary citizens that they did not endow Congress with the traditional right of Parliament to charter corporations, let alone expressly extend constitutional rights to corporations.”

There are three theories about corporations and their rights: the associational theory (corporations are constituted by their members and thus deserve the same rights as those members); the “real entity” theory (a corporation is distinct from its members–a separate, albeit fictional, “person” entitled to the rights accorded to “persons” under the 14th Amendment); and the grant theory (corporations exist because government has created them, and they have only the powers with which their creator endowed them).

The legal problem with the associational theory is that in the U.S., rights are individual. My family doesn’t have a right to free speech–although each member of my family does. The practical problem with basing a corporate right to free speech on the First Amendment rights of its shareholders is obvious: those shareholders are likely to have different opinions (especially on public policy issues) and to want to say different things.

The notion that a corporation is somehow an organic “person” separate from both government and its shareholders and entitled to 14th Amendment protections is so historically and logically flawed as to require little rebuttal–especially in an era where Justice Scalia remains ambivalent about including living, breathing women within that Amendment’s protections.

The only theory that accords with both history and logic is the grant theory. Governments  created corporations in order to encourage commerce–in large part by limiting the liability of individuals. (We are more likely to innovate if a failure won’t entirely wipe us out.) Corporations should have all of the rights that are required to fulfill their purpose, which is to do business–the right to own property, to contract and to engage in commercial speech.

The Supreme Court has gotten two things very wrong: money is not speech, and corporations are not people. (I have to agree with a popular Facebook slogan: I’ll believe corporations are people when Texas executes one.) Those two errors have massively distorted our politics and corrupted our governing institutions.

The Court failed to recognize the contemporary operation of the golden rule: He who has the gold, rules.