Associational speech: Citizens United vs. FEC

The Supreme Judicial Court (SJC) decision is quite interesting and may open up some interesting topics. The basic argument that is rather valid is the right to associational speech in addition to individual speech. In the old set of campaign finance restrictions, there were all sorts of loopholes carved out for associational speech such as PACs and issue-oriented NGOs. The Right has argued that corporate speech is also associational speech and should not be denied simply because the association is a for-profit corporation rather than an NGO or the like. The entry point for a ‘teachable moment’ is: why does the Left or progressives so vehemently oppose corporate speech when the Left does support the general principle of associational speech?

When the supporters of corporate speech gave a “lawyer’s list” of arguments, one of the arguments was that corporations are (legal) persons and thus should, qua persons, have First Amendment rights. Many of the progressives who should have known better took that argument as if that were THE argument for corporate speech and thus fell into the silly lefty discourse taking corporate personhood as THE problem. But corporate personhood, properly understood, is not at all a problem and in fact worker co-ops and the like are also corporations. Moreover, that is not the basic argument for corporate speech. The basic argument is that the corporation, like other organizations, is an association (ultimately) of natural persons and why shouldn’t people be able to exercise their First Amendment rights through their associations rather than just individually (the latter would definitely favor the rich). Also the majority opinion in the SJC case does not even mention the silly corporate personhood argument, and the dissenting opinion written by Justice Stevens explicitly notes that majority opinion “elides” that argument (I had to look up that word which means “omits”).

So what is the basis for the liberal-progressive anathema to corporate speech? As usual, there is probably a mixture of reasons. If corporations were overwhelmingly progressive, then I doubt we would hear such a hue and cry from the Left which means that much of the opposition has just been “pragmatic.” For instance, the modern legislation had to include labor unions along side corporations in the restrictions in some sort of crude symmetry or parity. But if the SJC decision had freed up unions but kept the same restrictions on corporations, I doubt we would hear such a hue and cry from the Left–but the Right would then be screaming about it.

Hence insofar as the Left has a principled argument, then it must be that corporate speech is in some sense not associational speech. When the corporation is a small closely-held entity, then corporate speech is essentially the speech of the controlling owners and thus should be protected by First Amendment rights (assuming they are citizens). The more interesting case is publicly-traded companies where, as Berle and Means put it long ago, there is a separation of ownership and control. The “ownership” is spread thinly over a wide public of individuals of all stripes and other corporations (e.g., mutual funds, pensions, non-profit endowments, etc.), but the control is effectively exercised by a small group of essentially self-appointed managers and directors. Since they would be making the decisions about how the general funds of the corporation are spent on political matters, it is not the associational speech of the “members” (shareholders) but the “speech” of the corporate oligarchs, and using “other people’s money” to boot.

Now the plot gets a little more interesting. Instead of attacking the absence of “shareholder democracy,” the liberals posture as protectors of shareholders rights who object to corporate political expenditures as being something that the shareholders did not authorize and did not “buy into” when they bought shares for investment purposes. The same argument would not apply as much to labor unions but unions had to be included in the old legislation for “symmetry” reasons. We see this reasoning not only in the dissenting opinion but also behind legislation being prepared reacting to the SJC decision which requires some form of shareholder consent (still playing along with the fiction that the corporation is an association of shareholders).

It is interesting to place these liberal arguments along side the arguments over corporate social projects and charitable donations in the name of corporate social responsibility. Here the liberals have been quite supportive of corporate charity-giving while the conservatives, like Milton Friedman, have been adamant that the business of corporations is to make a profit, not to choose which charities to support. Conservatives argue that since the shareholders would disagree on specific charitable uses, the money otherwise given to charities should be distributed to the shareholders who can then choose which charities, if any, to support. Those same conservatives will now probably support the other side of the argument allowing corporations to make political donations (but not charity donations), even though the shareholders would also have quite different ideas about which issues and candidates to support and thus might well prefer to have any such funds distributed to them to make individual decisions.

Since the argument, that corporate speech is not really associational speech of the “members,” applies largely to publicly-traded companies, another line of counterattack which some liberals will favor (e.g., Barney Frank) is to change Federal law for publicly-traded corporations rather than try to again change campaign finance law.

Thus one emerging topic is the contrast between the realities of managerial capitalism and the myth of shareholder-democracy capitalism.

While that debate might have some interest, there is a much deeper topic lurking nearby. That point is that even if “shareholder democracy” functioned perfectly, it would be like the people of Russia ‘democratically’ electing the government of Poland. And here we also get the real asymmetry in the “symmetry” between corporations and labor unions. The people governed by the management of a union are the members of the union who elected them, but the people governed by the management of a corporation are not the members of the corporation (i.e., the shareholders who, in theory, elect the government of the corporation) but the employees of the corporation. Hence a conventional corporation is not even democratic in theory just as Poland would not be a democracy even in theory if the Russian people went through all the motions of ‘democratically’ electing the Polish Government.

That is a rather basic point to raise, an argument that neither the liberals nor conservatives want to engage. One way to probe the real reasons for the Left’s opposition to the SJC decision would be to posit the totally hypothetical situation that all corporations were democratic worker cooperative corporations, like say the Mondragon cooperatives. Then it is easily argued that the political speech of such corporations is a form of associational speech and thus should be allowed. If liberals and progressives agree, then it is not corporate speech per se but the nature of the conventional corporations that is the root issue so let’s have a public debate about that.