2/1/2010 10:9

Corporate Democracy

The Supreme Court of the United States recently ruled that corporations not only are people under the law, not have rights of free speech, but have identical rights of free speech with natural persons.

The rather rancorously decided case ("Citizens United v. Federal Election Comm'n", 08-205) pertains specifically to campaign financing and for that reason has aroused much heat and some cynicism among the many persons who believe that elections in the United States are being unduly influenced by other persons (other than themselves).

The Court explained its decision strictly in terms of promoting freedom of speech, saying, "more speech, not less, is the governing rule". The minority, in between tossing red-hot firebrands at their colleagues' legal competence, argued that the case is less about free speech and more about distinctions between natural and fictive persons. Justice Stevens, dissenting, says "The conceit that corporations must be treated identically to natural persons in the political sphere is not only inaccurate but also inadequate ... Although they make enormous contributions to our society, corporations are not actually members of it." Stevens adds that "this Court did not recognize any First Amendment protections for corporations until the middle part of the 20th century".

While the Justices of the Supreme Court are thus arguing past each other, addressing different issues in the same case, another question occurs to me. That is, is there any direct relevance of incorporation to the processes of democracy?

My immediate reaction, especially in the context of campaigning, is to suppose that corporations (and unions, which are given a slightly different corporate identity and structure) will be inherently disruptive of democratic governance because the concentration of wealth is coupled with narrow interests. Historically and in current law, most corporations are defined by the objective of making money for their stockholders; the corporate officers maybe held to account if they spend the owner's funds with any other purpose in view. This is a legitimate concern, and was I believe addresses in the findings of Congress prior to enacting that law which is now struck down.

At second thought, however, I see an alternative understanding. Consider that corporations are inherently democratic in conception. It is true that the modern business corporation is designed solely to address financial gain (and other types of corporate persons exist for equally narrow purposes). On the other hand, it is also true that corporations were created to involve large numbers of ordinary citizen in these purposes.

Even the earliest, individually chartered corporations wer created in order to jointly finance grand schemes, such as the colonization of North American by the English, which at earlier times would have been the sole province of the rich and powerful nobility. By means of the corporate structure, many thousands of people gained vested interest in these ventures. They also gained standing to participate in shaping the endevor, at least by representation.

There is, therefore, a kind of corporate empowerment which exists separately and in parallel with citizenship. One view is that these 2 should be rigorously separated so that each can flourish in its own way. Another view is that government, the political empowerment of citizens, may direct and control corporations (business corporations specifically) but that influence in the other direction must be prevented. The attitude of the Court last month suggests rather that both kinds of public empowerment ought to compete and cross-influence each other.

The problem in actual reality is that we have not done any of the experiments which would be needed to demonstrate which of these positions will most likely yield the benefits which we might choose to favor. Actual reality is the the experiment.