US: Idea of company-as-person originated in late 19th century

The Supreme Court's 5 to 4 decision that rolled back long-standing
restrictions on corporate campaign finance donations has generated a
lot of Sturm und Drang from proponents of campaign reform and the White
House itself. At the crux of the decision was a determination that
corporations have a right to free speech. The court ruled that limiting
the amount that companies can spend promoting their favored candidates
is tantamount to denying First Amendment rights.

Since when do corporations have civil liberties?

Actually, this concept has been coalescing into its current state
since about the late 19th century, and we can thank railroad barons for
this precedent, according to Joel Bakan, a law professor at the
University of British Columbia and author of "The Corporation," a book
and documentary exploring the curious anthropomorphism of corporate

While corporations had been afforded limited rights, such as
property ownership or contract-making, since the Renaissance, the idea
that an inanimate entity was eligible for rights of personhood sprang
from the 1886 case of Santa Clara County v. Southern Pacific Railroad.
The corporation in this case was able to wield the newly minted 14th
Amendment to argue that it, as a corporation, was entitled to the same
tax benefits as individuals.

Southern Pacific was hardly the only corporation to invoke the Bill
of Rights in the name of deregulation, Bakan points out; although the
law had been added to protect the rights of African Americans after the
Civil War, only 19 individuals invoked it for protection between 1890
and 1910. Businesses, on the other hand, claimed 14th Amendment
protection 288 times during that period. A 1976 Supreme Court case, Buckley v. Valeo, explicitly ruled that political donations were free speech and constitutionally protected.

Other aspects of the law treat companies as though they were people. In
last year's settlement with the SEC, Bank of America agreed to pay $33
million in fines over allegations that it had misled investors,
although no individuals were charged with wrongdoing. The inability of
the prosecution to lay the blame at the feet of any actual individuals
exasperated the judge, who sarcastically asked the agency's attorney
whether a ghost was responsible for the malfeasance.

But businesses eschew personhood when it comes to other areas, such
as paying taxes. As an individual, you pay taxes on what you earn as
well as on what you spend. If you buy a TV or hire a nanny, you pay
taxes on those dollars twice. Corporations and some think tanks
disagree with applying this two-tiered taxation system, arguing that it
inhibits commercial efficiency.

Whether you find the idea of company-as-person and the resulting
freedom on political spending troublesome hinges on whether you think
more money buys you a louder bullhorn in the political arena. At least
one ardent capitalist thinks so. Billionaire Michael R. Bloomberg,
who is in his third term as mayor of New York City, is estimated to
have spent hundreds of millions of dollars of his own fortune winning
his position, breaking records with his spending every step of the way.

Some people -- including five Supreme Court justices -- think the
political theater is a level playing field, a street-corner basketball
court where anyone can join a pickup game. Others see it more like a
country club: Unless you have the means to pony up for a membership,
you cannot play.

This worries those in the latter camp, such as Bakan, whose book
went so far as to bring in a psychiatrist -- who conferred a diagnosis
of psychopath on the average modern commercial enterprise. Bakan's not
alone in his concern; in the Supreme Court's dissent, Justice John Paul
Stevens argued that because companies are without feelings, consciences
or desires, they shouldn't benefit from laws that protect ordinary

He's two-thirds right. Corporations don't possess a conscience or
feelings (no matter what that cause-marketing campaign tells you). They
do have one desire, though: earning money. This troubles opponents of
the court's ruling, who predict that companies will flex considerable
economic muscle to chip away at legislation that limits earning
potential in the name of things like environmental preservation and
public safety.

The prospect of these protections undermined in the pursuit of
profit has proponents of corporate regulation -- not to mention
campaign finance reform -- discouraged. On the bright side, though,
freeing corporate coffers to spend all they want on political campaigns
may have come just in time to save the advertising industry.

AMP Section Name:Money & Politics
  • 208 Regulation

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