How to Think About Corporate Personhood, Part II

I

Last time out I ended on a skeptical note—I had begun to doubt my own deployment of James Madison’s formative distinction between the rights of persons and the rights of property. I concluded that the Santa Clara decision of 1886 conflated these “two cardinal objects of Government,” as Madison called them, and thus had adjourned the debate he had designed to trouble congressional decision-making—the debate he thought would prolong the process of majority formation and prevent the propertied oligarchies that had destroyed the ancient republics by ignoring the rights of persons. After Santa Clara, I suggested, the rights of persons and the rights of property couldn’t be distinguished because the Supreme Court had designated corporations persons whose property was protected by the substantive due process of the 14th Amendment. 

And yet, and yet. The notion—the very idea—of a person was enlarged and enriched in the age of the giant corporations, the twentieth century, and this is not mere coincidence: the contemplation of corporate or collective identities, whether as business firms or trade unions, enabled the concept of a “social self,” an artificial yet real and durable personality constructed through association with others. The pragmatists and feminists of the early twentieth century led the way. They kept claiming that individuality was an achievement, not a given—it was more cumulative effect than prior cause of particular situations and actions. 

To characterize an individual, they showed, was to assess what that individual had actually done, because any reasonable assessment could make sense only after the fact of some action (the exception to the rule was physical beauty—not even grace or wit or intelligence could be assessed apart from particular situations and actions—but beauty as such was itself a historical variable that presupposed cultural consensus). No one could know that another person was brave or kind or homosexual, for example, prior to brave or kind or homosexual acts by that person (or absent criteria of bravery, kindness, and homosexuality, which are themselves cultural artifacts that presuppose one’s immersion in and familiarity with socially determined protocols). No one could come to know herself prior to engagement with and association with others.

John Dewey’s 1926 essay for the Yale Law Journal, and the essays he then wrote for The New Republic which were collected as Individualism Old and New in 1929, suggest how much the corporate legal form informed new, adventurous thinking about persons and personality in the early twentieth century. Morton Horwitz calls Dewey’s law review essay the “last great analysis” of corporate personhood, and remember, it was Horwitz who insisted, in his “Santa Clara Revisited,” West Virginia Law Review 88 (1986): 173-224, here 175, 181, that “theories of corporate personality were associated with a crisis of legitimacy in liberal individualism arising from the recent emergence of powerful collective institutions [pools, trusts, cartels, corporations, and trade unions] .”

Take a merely cursory look at what Dewey is writing in the late-1920s and you can see that he thinks an acceptance of “corporateness”—he prefers the term to socialism or collectivism—is the path beyond the dessicated bourgeois individualism of the pioneer past. I’ve written this up before, though, so if you’re interested, see Chapter 3 of my Pragmatism, Feminism, and Democracy (2001).

II

Having considered my own ambiguities, I read the Bellotti decision of 1978 as carefully as I’ve ever read anything—except maybe Sandor Ferenczi’s “Ontogenesis of the Interest in Money” (1914) or Norman O. Brown’s Life Against Death (1958), don’t get me started—and found that in this strange linguistic space Madison’s distinction is alive and well, and usable. But here’s the thing. The most eloquent and effective defenders of the distinction, at least in this decision, are the most conservative members of the Burger Court—the outspoken dissenters from the 5-4 majority opinion are Byron White and William Rehnquist (Justices Brennan and Marshall signed onto White’s dissent), and Rehnquist cites John Marshall Harlan’s decision in Northwestern National Insurance Co. v. Riggs 203 U.S. 243 (1906) as his principal precedent! Beyond that, the Bellotti majority itself treats corporate personhood with almost hilarious irony, and refuses to base its decision on Santa Clara, saying, repeatedly, that whether corporations are persons or not has nothing to do with its decision.

I’ll work backward from the majority’s irony. The Court overruled the Supreme Judicial Court of Massachusetts, which had upheld a state law restricting the free speech of corporations to “general political issues” that materially affected their business, property or assets, on the grounds that a corporation has more limited First Amendment rights than a natural person. The question the lower court had asked in upholding that law was “whether business corporations, such as [appellants], have First Amendment rights coextensive with those of natural persons.” The Supreme Court of the U.S. summarized the lower court’s logic as follows: “The [Massachusetts] court found its answer in the contours of a corporation’s constitutional right, as a ‘person’ under the Fourteenth Amendment, not to be deprived of property without due process of law. Distinguishing the First Amendment rights of a natural person from the more limited rights of a corporation, the [Massachusetts] court concluded that ‘whether its rights are designated “liberty” rights or “property” rights, a corporation’s property and business interests are entitled to Fourteenth Amendment protection.’” [771]

Notice the scare quotes around person—those were supplied by the Supreme Court’s majority, not the lower court. And notice the distinction that the lower court makes between a natural person and a corporation, limiting the latter’s First Amendment rights, in effect, to the protection of its property, not the protection of its capacity or agency as an individual entitled to free speech.

The Supreme Court’s majority gets more ironic about the personhood of corporations when it displaces what it calls the “principal question” adduced and addressed by the lower court. “The court below framed the principal question in this case as whether and to what extent corporations have First Amendment rights. We believe that the court posed the wrong question. The Constitution often protects interests broader than those of the party seeking their indication. The First Amendment, in particular, serves significant societal interests. The proper question therefore is not whether corporations ‘have’ First Amendment rights and if so, whether they are coextensive with those of natural persons.  Instead the question must be whether ~8 [the section of the statute limiting corporate speech to “general political issues” affecting the business, property, or assets of corporations] abridges expressions that the First Amendment was meant to protect. We hold that it does.” [775-76]

Notice again the scare quotes. The Supreme Court majority is suggesting that the identifiable origin of political expression is irrelevant to deciding whether or not the expression itself deserves protection under the First Amendment.  In this sense, the majority is using a strictly pragmatic logic that gets us to the place Nietzsche first mapped in the Genealogy of Morals: “there is no ‘being’ behind doing, effecting, becoming: ‘the doer’ is merely a fiction added to the deed—the deed is everything.”

Here is how the Supreme Court majority puts it: “The inherent worth of the speech in terms of its capacity for informing the public does not depend upon the identity of its source, whether corporation, association, union, or individual.” [777] Now, all beautiful souls can appreciate this self-evident proposition, and probably agree with it as well. But the “inherent” worth of speech as such is not the vital issue being decided in Bellotti. As the lower court and the dissents make clear—and as the majority itself acknowledges—that issue is whether the resources of corporations, which are always larger than those of natural persons, will disproportionately affect “the discussion of governmental affairs,” that is, the speech that informs electoral politics. So the real question here is whether the inherent worth of speech is a price. To frame the question as Madison might have, can the rights of persons balance the rights of property if the courts no longer observe the difference between these “two cardinal objects of Government”? To frame the question as Marx might have, what follows when the use values of free speech are reduced to exchange values?  

The majority goes on to say that “we need not survey the outer boundaries of the [First] Amendment’s protection of corporate speech, or address the abstract question whether corporations have the full measure of rights that individuals enjoy under the First Amendment.” It then does exactly that in the footnotes, happily contradicting itself throughout. On the one hand, it notes that “certain ‘purely personal’ guarantees, such as the privilege against compulsory self-incrimination, are unavailable to corporations and other organizations because the ‘historic function’ of the particular guarantee has been limited to the protection of individuals. United States v. White 322 U.S. 694, 698-701 (1944).” [779 n. 14] On the other hand, it insists, contra the lower court, that liberty as well as property is protected by the Fourteenth Amendment’s due process clause, and from this premise it concludes that corporations are persons, after all: “It has been settled for almost a century that corporations are persons within the meaning of the Fourteenth Amendment. Santa Clara County v. Southern Pacific Ry. Co., 118 U.S. 394 (1886); see Covington & Lexington Turnpike R. Co. v. Sandford, 164 U.S. 578 (1896).”  [780 n. 15]

III

Byron White’s dissent draws very clear lines: “Indeed, what some have considered to be the principal function of the First Amendment, the use of communication as a means of self-expression, self-realization, and self-fulfillment, is not at all furthered by corporate speech.” White here cites Thomas Emerson’s seminal, Aristotelian work on freedom of speech; but then so did the majority. [804-5, 777 n. 11]

White offers three reasons to believe that corporate speech is detrimental to the expression required by democratic political discourse. First, its purpose is profit, which in principle stands apart from what Emerson called the system of freedom of expression, and in practice often stands athwart that system (after all, the most fantastic private fortunes in history have been generated under the most corrupt and closed political regimes). Second, the diversity of shareholder’s views is erased when managers use corporate rather than personal funds to further a political cause; thus political and ideological diversity is flattened out by corporate speech of the kind outlawed by the Massachusetts statute and upheld by the lower court. Third, corporations “are artificial entities created by law” which have impersonal attributes—limited liability, perpetual life, etc.—that confer upon them a “special status.” And this status “has placed them in a position to control vast amounts of economic power which may, if not regulated, dominate not only the economy but also the very heart of our democracy, the electoral process.” [804-09]

White actually runs the numbers in contemplating the potential effects of “unrestrained corporate expenditures in connection with ballot questions,” in Massachusetts, California, and, of all places, Montana. In Massachusetts, the referendum of 1972 proposed to amend the state constitution to allow a graduated income tax on both individuals and corporations. In California and Montana, the referenda of 1976 proposed legislative approval of nuclear plant sites.  In Massachusetts and Montana, the ratio of corporate vs. personal spending was approximately 100 to 1; in California it was 2 to 1. All three measures were defeated. [810-11 and 811 n. 11]

White then goes on to invoke the Corrupt Practices Act of 1907, which “has consistently barred corporate contributions in connection with federal elections,” but has never been adjudicated by the Supreme Court as to its constitutionality, noting meanwhile that the common law itself has been “generally interpreted as prohibiting corporate political participation.” [811-12, 819]  And he concludes by predicting Citizens United: “If the corporate identity of the speaker makes no difference, all the Court has done is to reserve the formal interment of the Corrupt Practices Act and similar [state-level] statutes for another day.” [821]

IV

William Rehnquist’s dissent is even more interesting. Here’s how it begins:

“This Court decided at an early date, with neither argument nor discussion, that a business corporation is a ‘person’ entitled to the protection of the Equal Protection Clause of the Fourteenth Amendment. [Santa Clara citation omitted] Likewise, it soon became accepted that the property of a corporation was protected under the Due Process Clause of that same Amendment. See, e.g., Smyth v. Ames 169 U.S. 466, 522 (1898). Nevertheless, we concluded soon thereafter that the liberty protected by that Amendment ‘is the liberty of natural, not artificial persons.’ Northwestern Nat. Life Ins. Co. v. Riggs 203 U.S. 243, 255 (1906).” [822]

So a corporation can be a person at the law, but as a special case—only to the extent that its property is protected by the due process imperative of the Fourteenth Amendment. Its liberty, or rather it rights as an artificial person, are derived from, and limited to, the scope of it effective claims on property.

Rehnquist makes another, more subtle distinction between natural persons and corporations in view of White’s citation of Emerson. “Since it cannot be disputed that the mere creation of a corporation does not invest it with all the liberties enjoyed by natural persons, United States v. White, 322 U.S. 694, 698-701 (1944) . . .our inquiry must seek to determine which constitutional protections are ‘incidental to its very existence.’ Dartmouth College, supra, at 636.”  [824] The reference here is to John Marshall’s famous 1819 dictum, whereby a corporation becomes “an artificial being, invisible, intangible, and existing only in contemplation of law,” and, as such, “possesses only those properties which the charter of creation confers upon it, either expressly, or as incidental to its very existence.” [cit. 823] With or without Marshall’s severe judgment, which was superseded by “natural entity” theories of the corporation in the 1890s and after, Rehnquist can go on to ask whether political as against commercial speech is, in fact, “incidental to the business of a commercial corporation” [825]—to ask, in other words, whether the protection of its property requires more than the narrow freedoms of commercial speech. Unlike an individual, who requires access to political speech to fulfill her functions as citizen and to realize her capacities as a human being—to achieve liberty—a corporation does not.

V

In short, Rehnquist elaborates on White’s dissent in ways that open up the question of corporate personhood. Both of course insist on the distinction between the rights of (natural) persons and the rights of (corporate) property—that’s where they begin and end.  For me, though, what is most interesting about these dissents is their illumination of the profound ambiguities in the law of corporations since 1886, and in the majority opinion of Bellotti itself.

Let me summarize what we can learn from this case in thinking about corporate personhood. First, Bellotti is too ambiguous and too evasive on this question to serve as an unproblematic precedent for Citizens United, or for any unqualified statement about corporations and their legal standing. Second, Madison’s distinction between the rights of persons and the rights of property is alive and well in the case law, particularly in Riggs, but also in Bellotti itself, in the majority opinion as well as the dissents. Third, the issue of the broadly political as against the strictly commercial speech of corporations is unresolved.  Fourth, and finally, the very idea of a person at the law—the doer behind the deed—remains unsettled, and thus open to rethinking with the precedents at hand.