LadyEllen
Posts: 10931
Joined: 6/30/2006
From: Stourport-England
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An essay I wrote about the SCOTUS ruling - which finds that corporate freedom of expression is largely irrelevant and something of a red herring in resolving the true problem of the capacity of corporations to sponsor, and the duty of corporate officers to invest in, the making and amending of legislation to the benefit of the corporation's purposes, and which recommends not a clarifying amendment to the Constitution but a revision and amendment of corporate law.
Corporation Not A Natural Person
A Corporation is a legal person, convened by its members (shareholders) according to the law governing such entities from time to time. As such it is a distinct person from its shareholders, and also a distinct person from the officers appointed by the shareholders to conduct its purpose, within the company constitution and rules agreed by the shareholders, to the ends agreed by the shareholders.
This means that although the shareholders own the company, the company owns its assets in its own name and therefore, it is the corporation itself which decides on the best use of those assets to the purposes set by the shareholders. This however presents a problem in that the company has neither the mind with which to formulate a decision nor the means to execute a decision. It is for this reason that the shareholders appoint officers to act as the mind and limbs of the corporation.
The shareholders in this arrangement enjoy a special privilege unavailable to other entities, that of limited liability. Whereas a natural person or partnership is liable for the entire extent of his liabilities, the shareholder in the corporation has limited liability to the extent of the value of his shareholding. This makes the corporation an attractive entity through which to conduct business, relieving the participants from the risks of losing everything should the business fail.
The US Constitution, in the amendments known as the Bill Of Rights, clearly refers to “persons” and so may be interpreted to mean both natural persons and legal persons, however it is equally clear that the Constitution refers in its intent to natural persons rather than legal persons, when the amendments are interpreted together, having been passed together as one piece, as well as in many instances being impossible to apply to legal persons.
Capacity Of Corporation To Participate In Politics
If we are to hold nevertheless that a legal person is included in the Bill Of Rights then we run into an issue regarding the capacity of the corporation to formulate views and to express them alike with the problem described above. The corporation has neither a mind nor a means of expression, but relies on its officers for these functions.
Doe v Rowe (US District Court For The District Of Maine, 2001) provides guidance in this respect. The case was brought to challenge the electoral rules of Maine, whereby those under the guardianship of the state for reasons of mental health issues were denied their right to vote, the reasoning being that such persons were unable to properly formulate views to express at the ballot box.
The court found against Rowe, the attorney general for Maine, in that the denial of the plaintiffs’ rights had been arbitrary, with no discernment between individuals’ personal situations, conditions and abilities. The result of the ruling has been to prompt the psychiatric profession to propose methods of enabling such discernment such that those able are not prevented from political participation, with the recognition remaining that some persons are truly unable.
We therefore have a position whereby it is entirely possible to deny persons the right to participate in the political process, notwithstanding their qualification otherwise to do so, on the grounds that they lack capacity to formulate views to express. We might therefore suppose that a corporation, lacking utterly as a person the capacity to formulate views of any form, let alone political opinions, may be similarly denied such a right.
To note however is that the right withdrawn in this instance is the right to vote, which no corporation currently enjoys, or should gain by the current ruling, but which in theory it must should the judgment be followed to its natural conclusion.
It is clear then that a corporation may not vote, however this does not indicate that it may not take part in expressing political views and indeed in funding political activity as it is directed to do by its officers who furnish it with its mind and limbs.
At the same time though it is important to note that the officers of the corporation are not the corporation itself, which is a distinct person whom the officers serve. As such the officers have a duty to the corporation to act at all times according to its best interests according to the purpose of the corporation and its rules as determined by the shareholders.
Whilst therefore the CEO of a corporation may say what he pleases and donate what he pleases of his personal monies, to any campaign or party - just the same as any other citizen according to his own interests as an individual, he and his board must look to the interests of the corporation should they decide on its behalf to participate in the political process. This in turn may mean that the personal decisions of the CEO and his board may not be in agreement with the decisions they make for the corporation.
Officers Bound To Invest In Policy Making
The officers of a corporation are under a duty to use its assets to provide the best possible return on shareholder investment, and if it may be of benefit to the corporation to influence legislation such that the profit making activity is maximised, then those officers will have failed in their duty should they not act to that end. This duty entirely supersedes any prohibition that otherwise might be interpreted, or legislated for, regarding the participation of the corporation as a legal person in the political process.
It must then be entirely legitimate that the officers act in the interests of the company in using the assets to secure a more favourable business environment by lobbying and donating to campaigns in favour of this end. Such actions are not political activity per se, but rather the fulfilment of the duties of the officers to the corporation and its shareholders in the course of business, and as such are unaffected by issues of freedom of expression.
As such in turn it is largely irrelevant to argue that the enormous finance available to a corporation with which it may sponsor political activity of benefit to it, is unfair as compared to the comparative power to engage in sponsorship of other parties and individuals. The amendment to the Constitution, should we argue on the one hand that this is a freedom of expression issue, is clear in that no law restricting free speech may be enacted. And on the other hand, should we agree to legislate such that a legal person may not enjoy such a right, the corporation is still left free to act where its sponsorship is conducted with the benefit of the corporation in mind and may spend as it pleases within its capacity.
Dangers Arising To Democracy
However the episode highlights a problem that needs to be fixed to maintain the rights of the people in this respect for in theory it allows not only a corporation to influence the political process to a greater extent than the people but it also allows me as a Brit a greater influence than you as a US citizen.
Like the corporation, I also have no vote. On the reasoning here, this should not and does not prevent me from taking part - as far more than an observer and commentator - in the process of elections in the US. All I need to do is set up a front company somewhere in the US and then use my considerable wealth to exercise a greater influence on policy making than you or most other private citizens have. This was clearly not the intent of the Bill Of Rights, however the matter might be argued.
And this of course is to not mention so far the further and more domestic problem of US corporations themselves and the degree of their participation in the US economy rather than in say, the economy of China, India or other developing nations. Clearly it should not be equitable to permit a US corporation to influence US policy making when its interests are bound up not with the greater interests of the people but with some foreign country in relation to which it should inevitably seek more favourable conditions at odds with the interests of the people.
Even so, a solution must address the two basic issues; the apparent right to expression of a corporation and the definite right of the corporation (and duty on its officers) to invest assets in the political process in order to maximise shareholder returns.
Revision to Corporate Status & Officers’ Powers
A corporation is a legal, not a natural, person - as such it exists only in law and as such it may be subjected to whatever laws are thought fit to enact to govern its existence, since it only exists under those laws. Absent those laws it ceases to be.
It is therefore not beyond the legislature and president to look at corporation law and revise it, amending it such that corporations are maintained in all other respects as now to invest, but restricted from participation by way of sponsorship and other means of inducement in the political process, which is the sole right of the people. Similarly it is available to the legislature and president to amend corporation law insofar as it places duties on officers of corporations to define for this purpose that there should be no duty to, and in fact a prohibition on, influencing or attempting to influence a candidate, party congress or office holder.
At the same time however it is important that government has access to often very specialist advice available only from those employed by corporations in making and enacting policy. No office holder can be expected to be so expert in every matter that they should not require such advice from time to time. As in the case of every other form of consultation, such corporations as are called on to provide employees for this purpose should receive a fee; there is no reason to prohibit such advice after all, it is merely the inducement to make or amend policy for the benefit of a corporation or sector that must be resolved.
We are left then with the problem of freedom of expression attributed to corporations. Should we follow the judgment of the SCOTUS, as we must it seems, then the only resolution here is to make a clarifying amendment to the Constitution such that it may be understood that persons refers only to natural persons. Again this is not beyond the powers of the legislature and president.
Corporations Involved In Political Reporting
Some corporations are of course involved indirectly in politics, having as their business activity the production and publication of news, documentary and comment on political matters. Clearly it is impossible by way of a blanket ban to deny freedom of expression to corporations, without this affecting the legitimate and rightful freedom of expression conducted by the media.
However, being concerned with such an activity is not the same as sponsoring a candidate or party, lobbying for the sake of a business interest or attempting to bring about or amend legislation by way of inducement.
We might make an allowance with regard to news, documentary and commentary operations where the sole purpose of the business is the production and publication of such material, however it should not then be beyond the wit of corporations normally outside of the media to acquire or establish control of such an activity for themselves in order to benefit from the preservation of freedom of expression afforded to the media.
From this, we can see that in reality the freedom of expression of a corporation, though repugnant to the intent of the Constitution, is not truly the issue at hand. Rather it is the influence of a corporation on the political process by way of its active sponsorship of parties aspiring to or holding power which offer it a return on that investment by making or amending legislation favourable to its cause – investment which the officers must make in order to fulfil their duties to the corporation and its shareholders.
The Constitutional ruling therefore is not very important insofar as it relates to a legal person having the same right to expression as a natural person, and therefore in this respect there is no cause for an amendment to the Constitution.
What is required is a revision of corporate law as described above.
The Treatment Of Unions & Alike Associations
It is difficult in this regard to recommend changes to corporate law to prevent or limit the ability of corporations to influence and induce the making or amendment of legislation, without having to turn also to the question of unions and like associations involved in a similar manner in such sponsorship activity.
The members of a union are alike with the shareholders of a company, and the officers of the union are alike with those of the corporation. Whilst the union therefore may enjoy freedom of expression, it may act only in accordance with its purposes under its rules and it could be said that the union officers are similarly bound to invest in policy making just as the company officers are.
Therefore any legislation amending corporation law to the ends described must be mirrored in similar changes to union law on the same grounds.
Conclusions
The Constitutional ruling is largely unimportant and at best difficult to overturn in any meaningful way that should have the effect of restoring power to the people.
What is important is that the capacity of corporations and unions to sponsor or induce the making or amending of legislation, and the duty of officers to invest in this way for the benefit of the organisation, must be eliminated or at the least strongly limited and defined by means of changes to corporate and union law respectively.
E
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In a test against the leading brand, 9 out of 10 participants couldnt tell the difference. Dumbasses.
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corporate free expression - a red herring? - 
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