If you and I enter into a contract for me to paint your house for $400 then you know with some reasonable assurance that you’re getting your house painted. I know that I’m about to get $400 bucks. This is a great thing for both of us. Let’s assume you enter into a contract with the CEO of Delta to sell Delta 4 million gallons of jet fuel. Delta now knows that it has solved its jet fuel issue. You have some assurance that you’re about to make millions of dollars for your sale.
Let’s say the CEO of Delta leaves and the new CEO refuses to honor the contract. Suddenly all of those business promises you made on the basis of the contract with Delta have fallen through. You’re late on your mortgage. Your finances are falling apart. You decide to sue Delta. Delta claims that it’s not bound by the contract created by an individual who happened to work for the company at some prior date. The new CEO didn’t like the agreement. You can have fun in bankruptcy court or sue the former CEO individually.
What happened? Can’t we just sue Delta?
Not unless Delta is an entity capable of being sued. This is example provides one of the fundamental reasons that we have corporate personhood. In order for commerce to exist, we need to have stability and security in our system of interstate commerce. Corporate personhood allows you to enter into a contract with the CEO of Delta and have some security knowing that the company will honor the contract even after he’s gone. This applies to CEOs, middle managers, and other people with the authority to bind the company to contracts. Corporate personhood is necessary for commerce and a fantastic innovation brought to you by lawyers.
Corporate personhood is what’s commonly referred to as a “legal fiction.” This means that we all understand that Delta is not a thing that we can physically touch, but we all agree exists. Corporate personhood allows Delta to file taxes, pay taxes, get sued, enter into long standing contracts, and survive changes in management without having to renegotiate every single agreement. This is necessary.
What rights do corporations have in their capacity as “persons?” The correct answer is “Some, but not all.” This is the crux of the argument in the Citizens United decision. A lot of people are unhappy at the fact that a corporation can contribute billions of dollars to political campaigns to sponsor friendly candidates for public office. This arguably puts corporations at an unfair advantage when contributing to elections.
But how did corporations get involved in campaign contributions in the first place? That has nothing to do with commerce or the free flow of services between businesses and clients. The Supreme Court ruled that corporations are permitted to contribute to political campaigns under their First Amendment Rights.
Should corporations have First Amendment Rights? Sure, of course they do. You wouldn’t want Comedy Central banned by the FCC for broadcasting The Daily Show. We all recognize that comedians should have the right to lampoon our overlords. Comedy Central needs that freedom in order to continue to provide us with culturally relevant satire. The First Amendment is the only clause in the Constitution precluding the government from shutting down your favorite political talk show.
So, the issue with Citizens United isn’t so much whether corporations should have Constitutionally protected rights, but how many they should have. The Roberts Court provided corporations with nearly infinite ability to finance politically friendly legislators. The ruling provides for funneling more money into elections than ever before. The Founding Fathers were of the opinion that the best cure for bad speech was more speech. In that light, the Citizens United decision was in keeping with our American traditions.
On the other hand, Citizens now provides privileged entities unprecedented access to TV, radio, and online advertisements in order to blast voters with more campaign ads than in the history of the world. The Supreme Court has ruled several times that our First Amendment Rights are not infinite (e.g., you can’t yell fire in a theater). There is a strong argument that unlimited ability to create political speech will change the political landscape in favor of the very few privileged corporations with billions to spend at the expense of the rest of our political speech.
It’s virtually a guarantee that the Citizens decision will not stand the test of time. Whether it’s overturned during the tenure of John Roberts or in the next court remains to be determined. Regardless, the only reason that this case matters is because corporations are “persons” under the law. So there you have it. Corporate personhood is both a necessary tool to provide stability to our complex economy and one of the great existential threats to our democratic rights as a free citizenry.
Stay tuned for our next installment explaining corporations’ illusory existence.