The Fascinating History of How Corporations Became "People" -- Thanks to Corrupt Courts Working for the 1%
Perhaps there were truly free markets before the industrial revolution, where townspeople and farmers gathered in a square to exchange livestock, produce and handmade tools. In our modern world, such a market does not exist. Governments set up the rules of the game, and those rules have an enormous impact on our economic outcomes.
In 2007, the year of the crash, the top 1 percent of American households took in almost two-and-a-half times the share of our nation's pre-tax income that they had grabbed in the 40 years folliwing World War Two. This was no accident – the rules of the market underwent profound changes that led to the upward redistribution of trillions in income over the past 30 years. The rules are set by Congress – under a mountain of lobbying dollars – but they are adjudicated by the courts.
The Supreme Court, with a right-wing majority under Chief Justice John Roberts, has become a body that leans too far toward the “1 percent” to be considered a neutral arbiter. So whether they know all the ins and outs of the court's profound rightward shift or not, those protesting across the country as part of the Occupy movement are motivated by its corruption as well.
While conservatives constantly rail against judges "legislating from the bench," it is far more common for right-leaning jurists to engage in “judicial activism” than those of a liberal bent. That's what a 2005 study by Yale University legal scholar Paul Gewirtz and Chad Golder found. According to the scholars, those justices most frequently labeled "conservative" were among the most likely to strike down statutes passed by Congress, while those most frequently labeled "liberal" were the least likely to do so.
A 2007 study by University of Chicago law professor Thomas J. Miles and Cass R. Sunstein looked at the tendency of judges to strike down decisions by federal regulatory agencies, and found a similar trend. The Supreme Court's "conservative" justices were again the most likely to engage in this form of "activism," while the "liberal" justices were most likely to exercise judicial restraint.
The most notorious case of activism by the Roberts court was its ruling in Citizens United v Federal Election Commission, which overturned key provisions of the McCain-Feingold campaign finance law, rules that kept corporations -- and their lobbyists and front groups (as well as labor unions) --- from spending unlimited amounts of cash on campaign advertising within 60 days of a general election for federal office (or 30 days before a primary).
At a 2010 conference, former Rep. Alan Grayson, D-Florida, put the potential impact of Citizens United in stark terms. “We’re now in a situation,” he told the crowd, “where a lobbyist can walk into my office…and say, ‘I’ve got five million dollars to spend, and I can spend it for you or against you. Which do you prefer?’”
To arrive at their ruling, the court’s conservative majority stretched the Orwellian legal concept known as “corporate personhood” to the limit, and gave faceless multinationals expansive rights to influence our elections under the auspices of the First Amendment.
“They wanted to hear the possibility that that’s the way the constitution would read to them,” said Grayson. “So they picked an issue out of the air that nobody had conceived of [as a First Amendment case] because 100 years of settled law meant that corporations cannot buy elections in America, and they not only allowed corporations to buy those elections, but they made it a constitutional right.”
Early on, the plaintiffs themselves had decided not to base their case on the First Amendment. It was the conservative justices themselves who ordered the case re-argued fully a month after a ruling had been expected, asking the lawyers to present the free speech argument they’d earlier abandoned.
In his dissent, Justice Stevens noted that it was a highly unusual move, and that the court had further ruled on a Constitutional issue that it didn’t need to consider in order to decide the case before it -- the diametric opposite of the principle of “judicial restraint.” He charged that the conservative majority had "changed the case to give themselves an opportunity to change the law."
That's nothing new. The Citizens United decision simply advanced a bizarre legal doctrine, developed during the last 150 years, that effectively codifies the power of corporate interests.
Corporate personhood's origin in English law was reasonable enough; it was only by considering companies “persons” that they could be taken to court and sued. You can’t sue an inanimate object.
During the 19th century, however, the robber barons, aided by a few corrupt jurists deep in their pockets, took the concept to a whole new level in the United States. According to legal textbooks, the idea that corporations enjoy the same constitutional rights as you or I was codified in the 1886 decision Santa Clara County v. Southern Pacific Railroad. But historian Thom Hartmann dug into the original case documents and found that this crucially important legal doctrine actually originated with what may be the most significant act of corruption in history.
It occurred during a seemingly routine tax case: Santa Clara sued the Southern Pacific Railroad to pay property taxes on the land it held in the county, and the railroad claimed that because states had different rates, allowing them to tax its holdings would violate the Equal Protection Clause of the 14th Amendment. The railroads had made the claim in previous cases, but the courts had never bought the argument.
In a 2005 interview with BuzzFlash's Mark Karlin, Hartmann described his surprise when he went to a Vermont courthouse to read an original copy of the verdict and found that the judges had made no mention of corporate personhood. “In fact,” he told Karlin, “the decision says, at its end, that because they could find a California state law that covered the case ‘it is not necessary to consider any other questions’ such as the constitutionality of the railroad’s claim to personhood.”
Hartmann then explained how it was that corporations actually became “people”:
In the headnote to the case—a commentary written by the clerk, which is not legally binding, it’s just a commentary to help out law students and whatnot, summarizing the case—the Court’s clerk wrote: “The defendant Corporations are persons within the intent of the clause in section 1 of the Fourteenth Amendment to the Constitution of the United States, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws.”
The discovery “that we’d been operating for over 100 years on an incorrect headnote” led Hartmann to look into the past of the clerk who’d written it, J. C. Bancroft Davis. He discovered that Davis had been a corrupt official who had himself previously served as the president of a railroad. Digging deeper, Hartmann then discovered that Davis had been working “in collusion with another corrupt Supreme Court Justice, Stephen Field.” The railroad companies, according to Hartmann, had promised Field that they’d sponsor his run for the White House if he assisted them in their effort to gain constitutional rights.
Hartmann noted that even after the ruling, the idea of corporate personhood remained relatively obscure until corporate lawyers dusted off the doctrine during the Reagan era and used it to help reshape the U.S. political economy.
Nike asserted before the Supreme Court . . . as Sinclair Broadcasting did in a press release last month, that these corporations have First Amendment rights of free speech. Dow Chemical in a case it took to the Supreme Court asserted it has Fourth Amendment privacy rights and could refuse to allow the EPA to do surprise inspections of its facilities. J.C. Penney asserted before the Supreme Court that it had a Fourteenth Amendment right to be free from discrimination—the Fourteenth Amendment was passed to free the slaves after the Civil War—and that communities that were trying to keep out chain stores were practicing illegal discrimination. Tobacco and asbestos companies asserted that they had Fifth Amendment rights to keep secret what they knew about the dangers of their products. With the exception of the Nike case, all of these attempts to obtain human rights for corporations were successful, and now they wield this huge club against government that was meant to protect relatively helpless and fragile human beings.
Such is the power of a corrupt judiciary.
Returning to the present, while Citizens United is arguably the Roberts court's most widely criticized ruling, it was not the only time the majority has bent over backward to protect the interests of corporate America and the 1 percent. Legal reporter Dahlia Lithwick, writing on Slate, condemned the court's “systematic dismantling of existing legal protections for women, workers, the environment, minorities and the disenfranchised.” Those who care about spiraling inequality, she wrote, “need look no further than last term at the high court to see what happens when—just for instance—one’s right to sue AT&T, one’s ability to being a class action against Wal-Mart, and one’s ability to hold an investment management fund responsible for its lies, are all eroded by a sweep of the court’s pen.”
The takeaway is that those camping out in town squares across the country must direct their energy not only at Wall Street, but also at its enablers, in Congress, and ultimately, at the high court.