The Rise of Corporate Power and the Disintegration of American Democracy
by Anthony Higueruela
“No thoughtful person can question that the American economic system is under broad attack”.[1] These words open the Powell Memorandum’s “Attack on American free enterprise System”, written by Lewis Powell and sent to the United States Chamber of Commerce in 1971. Lewis Powell would become one of four justices Richard Nixon appointed to the United States Supreme Court that would gradually dismantle the more liberal leaning Warren court of the 1950s and 1960s.[2] For Powell the sources of the assault on American business were wide and varied. “They include, not unexpectedly, the Communists, New Leftists, and other revolutionaries who would destroy the entire system, both political and economic”.[3] Powell is thorough in his inquiry into the many forces at work throughout the United States hell-bent on upending the capitalist order. He states that: “Yale, like every other major college, is graduating scores of bright young men who are practitioners of despair. These young men despise the American political and economic system… their minds seem to be wholly closed. They live, not by rational discussion but by mindless slogans. A recent poll of students on 12 representative campuses reported that: almost half of the students favored socialization of basic U.S. industries”.[4] The Powell Memorandum would prove to be a rallying cry for big business and global corporations to assert their rightful place in the sphere of American economic and political life. Powell argues in almost Orwellian tones that the battle for corporate dominance must be waged on multiple fronts: that textbooks in universities should be kept under surveillance, television networks closely monitored and scholarly articles propagated on the positive benefits of a capitalistic system.[5] He urged corporations to take a page out of the playbooks of labor and realize that political power is essential for corporate growth and must be meticulously cultivated.[6] The Powell Memorandum is essential because it provides a framework for business interests to utilize and manipulate the existing framework of the United States legal system to gain rights that would become akin to corporate personhood. One can think of Powell’s letter to the Chamber of Commerce as both a rallying cry and a blueprint for corporate America in order to gain greater hegemony in the United States. The purpose of this paper is to argue that through corporations’ utilization of the legal system to gain personhood and the rights that accompany it, the political and economic welfare of the American citizen has been jeopardized.
The first battles in the war for corporate supremacy would be waged on the legal front. Corporations used the court system to gain access to rights historically reserved for United States citizens. With the continual accruement of First Amendment speech rights, corporate America argued that monetary contributions by business is protected free speech guaranteed by the constitution. This came to have disastrous consequences for the future of America’s political and democratic systems. As corporations grew more powerful they were able to use the wealth and resources at their disposal to buy political influence and favorable legislation.
The first defining court case appeared in 1976, a few years after the establishment of the Federal Election Campaign Act (FECA). FECA’s primary goal was to establish new standards for fundraising and influence in the political spheres, much of which grew out of the reforms post-Watergate scandal.[7] This act mandated public disclosure of contributions, made campaign contributions over a certain amount of money illegal and set caps on the amounts for campaign spending.[8] The most ardent opponents of FECA were anxious that the law could be used as a tool by established politicians in order to maintain their own stranglehold on power.[9] Their main concern lie in the fact that if the government could enact punitive measures on political communication, then entrenched politicians could utilize spending limits on insurgent political operatives in order to hold onto their own power.[10] This law would eventually be challenged in the United States Supreme Court with the case of Buckley v. Valeo. On January 2, 1975 a suit was filed in the U.S. District Court for the District of Columbia by New York Senator James L. Buckley and Eugene McCarthy.[11] The plaintiffs in this case argued that the Federal Election Campaign Act of 1971 and the Presidential Election Campaign Fund Act were unconstitutional.[12] The Supreme Court upheld the majority of the law, however it struck down the spending limits on grounds of the First Amendment.[13] The Supreme Court reached the conclusion that legislatively passed limits on spending were unconstitutional due to the fact that they infringed on the First Amendment and were not adequately related to solving the issue of corruption.[14] Buckley would serve as a starting point for the Supreme Court’s jurisprudence on money and political affairs.[15] The influence of money and monetary contributions to politicians had far reaching consequences to the U.S. political system. Robert Kaiser’s So Damn Much Money makes note that “the more important money became to the politicians, the more important the donors become to them”.[16] This new setup, although beneficial to corporate America, was problematic to the health of American democracy and the right of the average citizen to have fair representation. With the growth of corporate donors and their extensive resources which allow them to donate large sums of money to political campaigns, one must ask the question—what does this do to the balance of influence between people and corporations? This answer is simple: it dramatically shifts it in favor of corporations.
The culmination of over three decades worth of litigation would result in Citizens United v. FEC (2010). This seminal case proved to be the crowning victory for corporate America’s right to donate unfettered amounts of money based on their first amendment rights to freedom of speech. Just as Bellotti opened up a loophole for corporations to donate money in ballot measures, Citizens United threatened to do the same for corporate money in campaign elections.[17] The case that would forever alter the landscape of campaign finance law began when a conservative nonprofit corporation sought to air a ninety minute movie about Hillary Clinton on DirecTV.[18] Citizens United also wished to air thirty second advertisements for their movie regarding Hillary Clinton on cable television.[19] The Federal Election Committee (FEC) sought to block both the movie and the television ads on the basis that they violated the Bipartisan Campaign Reform Act (2002), which did not allow corporate funded campaign ads within thirty day of a presidential primary contest.[20] Citizens United challenged the decision handed down by FEC on the basis that it was a documentary and not offered on broadcast television, therefore BCRA was not applicable.[21] The government, however, argued that it was a ninety minute advertisement designed to damage Clinton in the primaries and its distribution did indeed count as broadcast.[22] Ted Olsen, one of the leading lawyers for Citizens United argued that the law had no justification since there was no quid pro quo when corporations donate money to campaigns.[23] His argument rested on the fact that Congress’s power to limit corruption in elections rested on their power to punish and deter clearly explicit bribes, anything else could not truly be counted as corruption.[24] Olson went so far as to tell the court that the Bipartisan Campaign Reform Act was essentially a ban on the free speech of corporations, and that the government had distinctly prohibited speech.[25]
Proponents of Citizens United often attempt to downplay the damage it did to democracy. In the Wall Street Journal, Bradley Smith argues that the ruling allowed corporations to make independent expenditures in campaigns and elections.[26] He also argues that Citizens United opened the door to new political challengers and is quick to dismiss any critics as simply being put off that their preferred candidates did not win.[27] What Smith fails to recognize is that the ruling from Citizens United puts corporations and wealthy individuals at a disproportionate advantage when compared to the ordinary citizen. Citizens United essentially gave big business and special interests a pass to legally bribe politicians for legislation favorable to their interests. This in turn diminishes the political rights of the American citizenry.
Citizens United is unique in the sense that corporations are described as associations that have taken on corporate form.[28] Historian Adam Winkler noted, “if the first amendment has any force, Kennedy read aloud from his opinion, it prohibits Congress from fining or jailing citizens or associations of citizens for simply engaging in political speech” (Winkler 364). What is significant in this fact is that by defining corporations as associations of citizens, it allows them to subsume the rights of other people, in other words the corporations own members.[29]
One must then examine the implications of allowing corporations to assume rights of multiple individuals. If a corporation, as an association of individuals, can assume their collective rights then what recourse is left to individuals within the corporation to seek redress from grievances perpetrated by the corporation? If all rights belonging to individuals within a corporate framework are taken by the corporate entity then workers and employees are left powerless against corporate abuse and excess. The adoption of corporate personhood and corporate legal speech rights to utilize money in campaigns robbed the average citizen of their rights to a free and fair democracy. According to Zephyr Teachout, “while corruption has narrowed to quid pro quo, free speech has expanded to encompass all money spent on communication”.[30] Large corporations, due to their wealth and resources, are at an unnatural advantage when compared to the average citizen in terms of spending money on campaigns and referendums. This undermines democracy as it creates rule by a few large corporate entities as opposed to rule by the people. It also allows corporations to buy greater access to political candidates in order to secure favorable legislation towards their own interests. Taken a step further, Teachout argues, “because of Citizens United it is not illegal for a corporation to spend millions of dollars to punish a congressperson who voted against their interests”.[31] This only further increases the power of corporations at the expense of the American citizens due to the fact that corporations are able to use their money and lobbying power to ensure favorable outcomes for themselves in regards to legislation.
[1] Lewis Powell, greenpeace.org, 1.
[2] Adam Winkler, We the Corporations (Liveright Publishing Corporation, 2018)
[3] Lewis Powell, greenpeace.org, 3.
[4] Powell, 3.
[5] Winkler, 286-87
[6] Winkler, 287.
[7]Teachout, 206.
[8] Teachout, 206-07
[9] Teachout, 207
[10] Teachout, 207.
[11] Fec.gov, 1.
[12] Fec.gov, 1.
[13] Teachout, 207.
[14] Teachout, 207.
[15] Teachout, 207.
[16] Teachout, 209.
[17] Winkler,
[18] Teachout, 229-230
[19] Teachout, 230
[20] Teachout, 230
[21] Teachout, 230
[22] Teachout, 230
[23] Teachout, 231
[24] Teachout, 231
[25] Winkler, 361
[26] Bradley Smith, “The Incumbent’s Bane: Citizens United and the 2010 Election”, Wall Street Journal, 2.
[27] Smith, 2.
[28] Winkler, 364
[29] Winkler, 364
[30] Teachout, 241.
[31] Teachout, 112.
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