Felix Salmon

The corporate conscience

By Felix Salmon
January 25, 2010

Justin Fox kicks off his new HBR blog with a cracking post on the jurisprudence of treating corporations as persons. If John Roberts really believes that shareholders control corporations, he says, that’s all the more reason not to allow corporations the rights of individuals — and he uses Milton Friedman, of all people, to make his case:

The “one and only social responsibility of business,” economist Milton Friedman wrote back in 1970 in a New York Times Magazine essay that launched a thousand arguments, is “to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game …” Friedman contrasted this with the multiple responsibilities that an individual — such as a corporate executive — might have “to his family, his conscience, his feelings of charity, his church, his clubs, his city, his country.” …

The individuals who make up the electorate in the United States are, as Friedman described, beings of many facets — their actions and their views shaped by pecuniary self interest but also by values, beliefs, and loyalties that might conflict with that self interest. The ideal for-profit corporation, on the other hand, is out to do nothing but make as much money as it can “within the rules of the game.” It is supposed to behave in a fashion that for an individual would probably be described as psychopathic. And if corporations are allowed to play a decisive role in shaping the “rules of the game,” we have effectively put the inmates in control of the asylum…

If corporations are persons, they are — if they behave as Milton Friedman wanted them to — persons with mental and emotional impairments so severe that any decent judge would feel entirely justified in declaring them incompetent.

There’s a connection, here, to the increasingly conventional-wisdom argument that walking away from a mortgage is perfectly fine since the banks who lent the money in the first place wouldn’t hesitate to behave in exactly the same way. But if Justin is right, we’d have to be psychopaths to treat corporations as our role models in such matters.

Justin’s timing on this is impeccable, as the world’s plutocrats start firing up their private jets to fly in to Davos and pat each other on the back for their efforts to “improve the state of the world” with their “double bottom-line” or even “triple bottom-line” endeavors. It’ll be interesting to see what Davos Man thinks about the ruling in Citizens United vs FEC: the general default position at the alpine gabfest is that successful corporations, acting in their own self-interest, are perfectly positioned to make the world a better place. Maybe giving them enormous influence in US elections will simply help in terms of steering the country towards more enlightened policies!

7 comments so far | RSS Comments RSS

Any relation to this Yaled-up Justin Fox? (Not the same, but related? Son? Nephew?)


Or the Fox-Penner fellow that pops up on Basel-ine Scenario from time to time?

Posted by Uncle_Billy | Report as abusive

“Maybe giving them enormous influence in US elections will simply help in terms of steering the country towards more enlightened policies!”

Wow this looks just like a 70′s style communist paper: it will get worst before it gets better…

Posted by lemarin | Report as abusive


Glenn Greenwald and Kevin Drum make some solid points in support of the Citizens United decision.

They take some rather extreme examples of corporations denied rights – but they are good questions. For example:

“Could Congress pass a law tomorrow providing that any corporation – including non-profit advocacy groups — which criticize American wars shall be fined $100,000 for each criticism?”

I certainly don’t want corporations to drown out all other speech – but I’m not sure the idea that corporations have no rights is the natural fallback position.

And I certainly don’t have a solution – but I’m interested in the discussion.

Posted by murphzero | Report as abusive

That particular example – no war criticism by corporations – is completely beside the point. You see, it is selective censorship by subject. That is always unconstitutional. But if it is content-neutral – you can’t take EITHER side in an election – then there is no problem.

Posted by Dollared | Report as abusive


Greenwald’s original piece was very weak. His entire spiel about how we shouldn’t care about the practical effects of the decision because that’s irrelevant to the constitutionality is dead wrong. The “compelling interest” test that he mentions as if it wasn’t a big deal is the core of campaign finance law. The court decides that certain things are bad enough that Congress can try to stop them (corrupt donations) and other things are not (inequality of voice).

Ultimately, as for your question, I would answer it like this:

(1) There is a public component to the First Amendment. (As Glenn was so quick to point out, it says Congress shall make no law, not that people have a particular right). Thus, the law should fail because it is not viewpoint neutral.

(2) If the law were viewpoint neutral (American corporations shall not take a political stance on wars) – I would allow it. The organization is free to change to another form of governance that doesn’t come with a bevy of tax and financial advantages and limited liability. This is no different than how the law only gives Churches tax exemptions so long as they are not political.

Posted by AnonymousChef | Report as abusive

“If Congress should make no law…” then the entity doing the speaking is irrelevant. Corporations get the same protections as any individual simply because the 1st amendment is a restriction on government.

That would seem to support the Citizens United finding.

Viewpoint neutral is one thing, but subject neutral is I believe the question at hand. Pre-emptively restricting speech because of the subject matter being discussed is the issue.

Again – I was initially strongly against the Citizens ruling, but listening to Prof. Turley and others has made me wonder.

I don’t for a moment imagine that the unrestricted corporate spending on elections is a good thing – but I’m unsure how you could contain that problem without creating other problems.

Posted by murphzero | Report as abusive

murphzero, here’s my two suggestions for containing corporate spending on elections.

1) Don’t make it a tax-deductible business expense. After all, if I as a real person choose to buy an ad denouncing a candidate, I don’t get to deduct it from my taxes.

2) Require the business to include all such spending in its annual reports to shareholders, and its plans for such spending in its public prospectus. If businesses get free speech because they are controlled by shareholders, the shareholders have to be able to know how that right is being used on their behalf.

Hmm, as I consider those, they actually come at the problem from two different directions. Option 1 is for people who think that businesses shouldn’t be able to spend money on elections as part of their business; option 2 is for those who think that it is legitimately part of the business.

Posted by KenInIL | Report as abusive

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