The Stakeholder Strategy
Changing corporations, not the Constitution, is the key to a fairer post-Citizens United world.
John Bonifaz is a wiry, bespectacled man with graying temples and a hearty laugh that camouflages his seriousness. He’s fought many progressive fights over the years on issues ranging from voting rights (which won him a MacArthur “genius grant”) to Unocal’s liability for human rights abuses in Myanmar (on which we worked together to draft a lawsuit). We’ve been friends for nearly 30 years, ever since we were student activists at Brown University.
These days, however, we find ourselves differing vociferously on what to do about Citizens United v. Federal Election Commission, the 2010 Supreme Court decision expanding the rights of corporations to engage in political speech and campaign spending. John is a leader in the push to amend the Constitution to restrict constitutional rights to natural persons. His idea has gained quite a bit of traction, mostly because so many Americans are rightly concerned about the power of corporations in our political discourse.
Nevertheless, I believe that the move to amend is a bad, even horrible, idea. I agree that the Constitution is meant to protect people. But people organize themselves into groups, including corporate groups, and sometimes those groups deserve protection. The New York Times, for example, should receive constitutional protection for what it publishes notwithstanding its corporate form. Moreover, the Court’s decision in Citizens United did not depend on the “personhood” of corporations; instead, the Court said that corporations are “associations of citizens” and that protecting corporate speech was a way to protect the rights of those citizens.
John and I recently debated Citizens United on television, and during our exchange he said something particularly revealing. In discussing some of the legal arguments in the case, he described shareholders as “owners.” In this respect, he agrees with the Court and conventional wisdom. Shareholders own companies and management speaks for them.
The reality is different. Shareholders are not really owners, and they exercise little control over corporate political involvement. Employees, communities, consumers, and other stakeholders exercise even less. The reason why corporate political speech is so corrosive to democracy is that the benefits and prerogatives of the corporate form are marshaled to bolster the speech of a tiny sliver of the financial and managerial elite. The fact that corporations speak is not itself a problem; whom they speak for is.
This essay urges progressives to cease their efforts to amend the constitution to weaken corporate “personhood.” Instead, we need to focus on changing corporations themselves so that overturning Citizens United would be unnecessary. We should use this historical moment to nudge corporations closer to what the Supreme Court assumed they are in its Citizens United decision—“associations of citizens.” While the constitutional effort is defensive and palliative, a campaign to redesign the corporation itself would be affirmative and transformative. To cure Citizens United, we don’t have to amend the Constitution—we need to rethink corporations.
The Foundational Nature of Corporate Law
It is not surprising that most opponents of Citizens United have focused on constitutional responses. Policy ideas often start in academia, and it is typical, especially in law schools, for the so-called “public law” topics of constitutional law, regulatory law, election law, and the like to be dominated by professors who are left of the ideological center. The “private law” arenas of tax law, contract law, and corporate law are left to professors who generally fill faculties’ ideological right flank (though there have been exceptions: William O. Douglas, for example, taught corporate law at Yale and served as the chairman of the Securities and Exchange Commission before becoming a Supreme Court justice).
These tendencies end up clustering progressive responses to civil, economic, and social ills around public-law ideas like constitutional amendments or top-down, command-and-control regulations overseen by bureaucracies. Often missed are the progressive possibilities in “private” law, particularly the law of corporate governance. Consider the untapped potential of this area, which provides the governing rules for gigantic economic entities, many of which are international in scope, and some of which rival the economic power of nations. (I often begin my corporate law course by noting that only 57 of the 100 largest economic entities in the world are nations; the other 43 are corporations.) For these businesses, corporate law plays the role of constitutional law—establishing their structure, determining who has the power to make decisions, and limiting the purposes for which that power can be exercised.
The answers to these fundamental questions—How are corporations structured? Who gets to decide what they do? What are they for?—affect all of us. If you care about whether corporations exploit their employees, skirt environmental laws, pay their executives exorbitant salaries, manage only for the short term, or manipulate the political process, you should care about corporate governance.
To imagine the promise of this area of law, one has to understand where we start. Here in the United States, the law of corporate governance is among the most conservative and least democratic in the developed world. For example, U.S. employees have no role in corporate decision-making, and U.S. managers are not required even to gather information on the potential impact of their strategic decisions on communities, employees, the environment, or the public interest, except to the extent those impacts might affect shareholder value. There is no federal law making it a crime to lie to employees—a CEO who lies at a shareholder meeting will go to jail; a CEO who lies to a room full of employees has not done anything unlawful.
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