Milton Friedman and the servile corporation

In support of Friedman´s low view of corporate personality.

The US Supreme Court thinks that corporations are persons with equal rights, in particular political speech.  According to Brad deLong´s instructive paper here, one conservative icon disagreed:

Milton Friedman’s solution:
• The corporation should not speak
• The corporation should not presume to be a citizen ….

Count me in, Milton. Corporations aren´t proper citizens, they are serfs. Serfs enjoy security of residence and access to land to work, in exchange for very onerous but defined duties of service to the lord of the manor, to whom they are permanently inferior. They may have a limited legal right of redress to protect their rights (in Western European feudalism but not Muscovy). Corporations aren´t slaves: they need legal personality to protect the activities for which their founders have created them, but it´s absurd to think of them as fundamentally equal in any way to real people. Step out of my way, churl, and doff your hat while you are about it.

Treating corporations as citizens is a confidence trick. It seems to me that the 14th Amendment closed off one inequality of citizenship from race, slavery and slave ownership, only to open another, for the benefit of the new capitalist elite. Capitalists now get one voice as citizens, and a second voice through the corporations they control.

Can anyone distinguish this morally from the ingenious provisions of the original US Constitution that counted slaves and bonded labourers for the representation of the South in Congress and the Electoral College, but allowed the states to deprive them of actual votes?

Author: James Wimberley

James Wimberley (b. 1946, an Englishman raised in the Channel Islands. three adult children) is a former career international bureaucrat with the Council of Europe in Strasbourg. His main achievements there were the Lisbon Convention on recognition of qualifications and the Kosovo law on school education. He retired in 2006 to a little white house in Andalucia, His first wife Patricia Morris died in 2009 after a long illness. He remarried in 2011. to the former Brazilian TV actress Lu Mendonça. The cat overlords are now three. I suppose I've been invited to join real scholars on the list because my skills, acquired in a decade of technical assistance work in eastern Europe, include being able to ask faux-naïf questions like the exotic Persians and Chinese of eighteenth-century philosophical fiction. So I'm quite comfortable in the role of country-cousin blogger with a European perspective. The other specialised skill I learnt was making toasts with a moral in the course of drunken Caucasian banquets. I'm open to expenses-paid offers to retell Noah the great Armenian and Columbus, the orange, and university reform in Georgia. James Wimberley's occasional publications on the web

21 thoughts on “Milton Friedman and the servile corporation”

  1. There's also the lovely sleight of hand whereby corporations are effectively immune from much criminal prosecution — individual agents of the corporation may be charged, or a corporation may pay a cost-of-doing-business fine, but the enormous damage that a flesh-and-blood person faces when convicted of a crime simply does not touch these virtual persons.

  2. If we want to take the Court at its word, I propose: a corporate death penalty – it addresses the issues Paul raises.

    Using the same logic as conservatives love to apply to real people, once a company has committed three crimes where no human goes to jail, or the sentence is slight for the harm done by the company, its assets are sold and no money goes to shareholders. Funds so acquired are used to compensate for damages, sustain and retrain its wage workers, and if any is left over, retire the national debt (if a federal law) or state debt (if a state law). The company is dissolved and its name retired for a generation. Its top management is prohibited from working together for life. The reasoning is to utterly destroy the culture of corruption that led to this behavior.

    If this is a state law and the corporation is incorporated elsewhere, all its property and assets within the state where it was convicted will be seized and it is prohibited from ever doing business there again. There need be no requirement that the 'three strikes' all be in the same state any more than the three strikes laws require the crimes to have been committed in the same state.

    And if better justices realize that corporations are not legally people, that simply increases the argument for a corporate death penalty. At that point they become analogous to a rabid dog and so need to be put down before they harm others.

    I suspect such measures would pass in a heart beat if they were presented as state initiatives.

  3. I'll sign on, with a few caveats. For-profit corporations, within their legal capacity, need the full property and contract rights of individuals.

    But they don't need any criminal rights (except protection from bills of attainder), free speech rights, interstate rights to travel, religious rights, associational rights, etc. (Not-for-profits are a bit different–religious rights are inherent to some; associational rights to others; and free-speech rights to yet others.)

  4. Let's remember that (despite the Tea Partier's idolatrous adoration of the Constitution of the United States of America) the Constitution was (and remains) a political document, crafted as an exercise in compromise. One of the compromises was that the slave-holding States were allowed to count slaves as 3/5 of a free person for purposes of apportioning the House of Representatives. The Constitution was silent on voter qualifications until women were finally guaranteed the right to vote.

    That left the slave-holding States free to deny blacks the franchise generally.

    One thing the Governor of Virginia did get right: the Civil War was a watershed in American history. Prior to the Civil War, American writers gave the United States a plural verb (the United States of America are opposed the further establishment of European colonies in this hemisphere). After the war, American writers gave the United States a singular verb (the United States of America support the establishment of the United Nations Organization).

    We're one nation, not a collection of miscellaneous squabbling semi-sovereign entities. And the compromises that brought that nation into being are still being negotiated today.

  5. I don't see why freedom of speech is something we should be so afraid of. It seems to me that the New York Times Co. should be largely free to say what it wants, the beer distributing LLC should have the right to advertise its prices, the professional corporation run by my kids' pediatricians shoul be permitted to advocate for vaccination, etc. And yes, the mere fact that someone uses a corporate form to make money is not a disqualification from such right.

  6. After the war, American writers gave the United States a singular verb (the United States of America support the establishment of the United Nations Organization).

    Er, "support" is the plural form of the verb. "Supports" is what you want here.

  7. FloydRayford:

    On freedom of speech, I concede a complete gag is wrong. But why should corporate freedom of speech go beyond the ordinary purposes of the organisation to rent-seeking through politics? And should the same standards of veracity apply to individuals and corporations, since the latters´ resources enable them to shout down the little man? Limited liability is a privilege; it comes with responsibilities and restrictions. Quite what these should be I´m not getting in to here.

  8. "The US Supreme Court thinks that corporations are persons with equal rights, in particular political speech."

    No, they don't. I realize this has become the chosen narative of the "Corporations must be silenced!" crowd, but that is, (Again, examine the site's credo above.) not a fact. It's just a moderately dishonest rhetorical tactic.

    What the Court thinks is that corporations are an instrumentality by which persons exercise their rights, including their right to political speech. The CU decision in no way rests on corporate personhood. Please, read it. And not just the dissent.

    The CU was almost mandated, once the SG argued that the government could ban books without the 1st amendment being implicated, if only they were published by a corporation. Read many books that weren't? The NYT would have published at the government's sufferance, if the minority had prevailed in that case.

  9. FloydRayford: I agree that corporations ought to have free speech rights. What I don't agree with is their hiding behind shells to express their views–which is one thing I take Wimberly's point to be. I also rather like Gus diZerega's proposal to make criminal laws, including forfeiture laws, applicable to corporations…

    The problem with the (current interpretation of the) apparent legal status of corporations is that they seem to be treated as legal persons when that is advantageous for them, but not when it might impose some duties or burdens…

    Or, maybe to put it another way. When corporations can be called for jury duty, then, hell, yes, give them all the rights of actual persons.

  10. I keep thinking about that recent Krugman NYT piece that took down the Chicago School of Economics…

    You know… the economic school of thought based on the idea that humans are perfectly selfish maximizers, despite the fact

    that there is a ton of evidence to the contrary. I found Krug's piece stunning. Not because he did such a good job

    of blowing up the Chicago School. He did just that of course. But because I couldn't believe a major economic theory that was

    so obviously based on faulty assumptions could gain sway over our body politics for 30 years. How dumb was that?

    What's all this got to do with the Court's recent decision?

    Corporations are perfectly selfish maximizers.

    Humans are not.

    Granting these two species the same free speech rights fails to understand the qualitative differences.

    Which is also to say: Five of the Supreme Court justices really aren't very deep thinkers, are they?

  11. Brett: If a corporation exists for the purpose of making a financial profit the investors are involved in the organization for that purpose not for the purpose of political speech and the government also grants legal and financial advantages to that end. The profit motive may be furthered by the corporation's political speech but that is not necessarily the intent of the investors or the government of the people that grats the corporation it's right to exist.

    Political organizations exist for the purpose of political speech and citizens can make their voices heard though that avenue.

    An examination of the limited role of corporations in the early years of the republic shows clearly that corporate personhood as being defined by the court is a perversion of the constitution's original intent.

  12. Interesting comments.

    The history of corporate "personhood" could best be summed up as stemming from a decision written by a totally corrupt corporation's lawyers. It was issued as a decision by the most corrupt sitting court in the history of the United States without even meeting to discuss it.

    I'm pretty sure this is correct, but you might want to research it to make sure.

  13. Bret: If people want to form associations for the purposes of exercising political speech, they are perfectly entitled to do so. If they want to have limited liability, that's something completely different. There are other ways to define the right to publish or broadcast an individual's words than as the free speech of the corporation.

  14. The Court ruled that people, real people, have the right, when associated, to exercise their 1st amendment rights. And that the government can't discriminate among the ways people associate, to deny some associations of real people freedom of speech.

    You might not like this reasoning, but it wasn't based on corporate personhood. Read the blasted decision, why don't you? It was NOT based on corporate personhood. It was based on persons not losing their rights when they associate, and on Congress not having the authority to ban speech outside of very restricted circumstances.

    It was very much a "What part of "no law" don't you understand" decision.

    And, BTW, we really can't analyze the rights of people when they associate in various ways, without looking at the very heavy pressure the government applies to get people to associate in certain ways, and not others.

    Finally, "Bret: If people want to form associations for the purposes of exercising political speech, they are perfectly entitled to do so."

    They do so, and the law in question applied equally to associations like the NRA which were specifically for that purpose. You wanted the Court to re-write McCain/Feingold into something Congress deliberately DIDN'T write, to save it from the fact that Congress set out to do something unconstitutional. The court declined to do this, and rightfully so.

  15. Brett,

    I'll read the CU decision, if you read the Constitution. You cannot equate the New York Times' right to free speech with a generic corporation's. The First Amendment separates freedom of the press from free speech: "Congress shall make no law . . . abridging the freedom of speech, or the press . . . ." You're clearly trained as a lawyer, and you know that statutory language is to be construed as non-duplicative, when possible.

  16. Yes, you can so separate them: Freedom of the press refers to the freedom of people, real people, with respect to use of the instrument called a "printing press", it does not refer to a social institution which started calling itself "the press" long, long after the 1st amendment was written. If people working through corporations do not have 1st amendment rights, they do not have them whether or not the corporation specializes in using printing presses. Archer Daniels Midland has as much claim to 1st amendment rights as the New York Times.

  17. Brett,

    You are trained as a lawyer! Or you play a good one on the blogosphere. But I don't think it works. First, if we're going to use your apparently originalist views, your Constitution sez: individuals and corporations get their mouths and their printing presses. And that's it! Expressio unius est exclusio alterius. No teevee. No radio. No intertubes. (Although I admit that the First Amendment separately protects certain forms of lobbying.)

    Second, I'm not sure it is coherent. Try to imagine what (Bellmore) freedom of the press would look like if there were no (Bellmore) freedom of speech. It this rational? (The converse is admittedly rational–mirroring the common-law distinction between libel and slander.) Remember, there is also a canon against irrational constructions of a statute.

    Keep trying. This is fun!

  18. And, I will remind you, the Solicitor General actually did argue before the Court that the government could, consistent with their view of the 1st amendment, ban books, so long as they were published by a corporation.

    The government's position in the CU case stripped the NYT of 1st amendment guarantees as surely as it did Citizens United. Both would publish on the government's sufferance, which could be taken away at any time.

    "The press" tend to support censorship of (other) corporations. The reasoning, I suppose, is rather the same as worshiping Cthulu: Suck up enough, and you get eaten last.

  19. Nah, I'm not a lawyer, I'm an engineer. I'm just a 2nd amendment activist engineer, which means I've read a frighteningly large number of legal documents and source materials over the decades.Which is why when Saul Cornel misquotes somebody from the revolutionary era, or Scalia gets the holding of some old 2nd amendment court case wrong, I tend to notice.

    "First, if we’re going to use your apparently originalist views, your Constitution sez: individuals and corporations get their mouths and their printing presses. And that’s it! Expressio unius est exclusio alterius. No teevee. No radio. No intertubes."

    By the same principle, of course, you'd be restoring enumerate powers doctrine; Seems like a fair trade, the federal government would be forbidden to interfere with certain modes of communication, and merely lack all authority to interfere with the rest…

  20. Anyway, you'd be wrong about that: Since I can print out any webpage I visit, the internet is just a system for remote typecasting. 😉

  21. Brett gets lots of things wrong, and I usually let it slide. Life, excessive brevity of. But this cannot be passed over in silence:

    The reasoning, I suppose, is rather the same as worshiping Cthulu: Suck up enough, and you get eaten last

    Au contraire.

    What with that, and spelling "Cthulhu" incorrectly, not to mention almost all his opinions about almost everything, it's clear at any rate who is going to be eaten last. Ïa!

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