Last month, the local Occupy movement participated in the Occupy the Courts protest, a one-day rally to raise awareness for the Supreme Court decision in Citizens United vs. The Federal Election Commission.
The 2010 decision equated money with free speech and also ruled that it was unconstitutional to limit the amount of money corporations can spend in an election. Citizens who disagree with this decision are putting forth initiatives to amend state constitutions to revoke corporate personhood in hopes of eventually making a national amendment.
Since those first days in October, I have been following the opinions and passions of the protesters. The corporations, however, have remained unusually quiet.
Ever vigilant about attempting to present a balanced story, I scoured the Internet for rebuttals to the homemade signs of the Occupiers and their claims of corporate evil. I found a Wall Street Journal editorial, which I quoted in the Jan. 26 issue of The Free Weekly when we revisited the Occupy Movement during Occupy the Courts.
Here is the text from the article:
“(Bradley A.) Smith makes the point that corporate personhood is not synonymous with international conglomerates or billion-dollar businesses. He argues that by completely eliminating the ‘legal fiction’ of corporate personhood, the rights of nonprofit groups and special interest groups would be at stake.
“Incorporated churches would have no right of worship,” he writes.
In the days that followed, Smith’s opinion weighed on my mind. If there were validity to his statement, the move to end Corporate Personhood would, at the very least, need to rethink its strategy; and at the very most, would be delegitimized.
I contacted law professor Stephen Sheppard at the University of Arkansas to gain legal insight on how the rights of corporations, unions and nonprofit organizations would be affected by ending corporate personhood.
“Would incorporated churches lose the right to worship?” I asked.
“The short answer is no,” he replied. “The long answer is ‘Hell no.’”
The vibrant response only whetted my appetite for a further understanding, so I sent him an email asking him to explain how revoking free speech from corporate entities would affect other organizations, such as labor unions.
“As you know, the Supreme Court has declared corporations to have rights, which is not a problem. Corporations have powers, such as the power to sue and to be sued, and so they also have rights, such as a right to fair notice of a lawsuit. The federal court has, however, seemingly declared these state-created entities have federal constitutional rights, which is a problem.
“The difference is this: the corporation is created by states, under state law. They can give a group of people the power to organize themselves in a legally created association that accepts liability but limits the organizers or owners from that liability.
“Traditionally, in return, the people who organized it accepted certain limits on what they could do with that organization, because they could only enter it according to the procedures and powers conferred by a statute. Now, the Supreme Court has said that when people organize a corporation under state law, they gain federal rights for the corporation in addition to the rights they have themselves as individuals.
“It is a bit like the monster of Dr. Frankenstein: once the state makes it, it loses control over it. But that is now the law of the land, at least for certain election laws. Now, could that be rolled back without affecting the rights of individuals or other groups? Of course it can. There are profound differences between corporations and the others you list. One difference is that there is a significant divorce between the owners and the officers of a corporation, but the greater difference is that the corporation exists ONLY with such powers as the government gives it. There is no inherent power in a corporation, or at least there wasn’t until the line of cases that led to Citizens United.“
Perhaps the biggest difference in a corporation and a labor union or nonprofit organization is that corporate leaders are legally bound to make profits.
For me, this was the missing piece of the puzzle. The actions of corporations are constrained to those that are in the “best interest of the corporation,” a principle established in the 1916 case of Dodge vs. Ford in which Henry Ford was sued for actions that would favor his customers over his shareholders. The ruling made the financial security of stockholders the legal bottom line for publicly owned companies.
Corporations are bound by profit. Even if corporate leaders are concerned about their companies’ environmental or humanitarian practices, they cannot make a drastic change in policy that would damage the investment of shareholders.
Regulations and punitive fines are the boundaries for corporations, and until an operating method is financially damaging, the practices will continue. That is why regulations and government policies are crucial to setting operating standards. The government is in place to represent the best interest of the people and to provide corporations with appropriate boundaries to balance financial and humanitarian interests.
However, as Professor Sheppard suggests in his Frankenstein metaphor, the financial interests of corporations are beginning to overpower the interests of their creators.