Book Review
We the Corporations: How American Businesses Won Their Civil Rights
By Adam Winkler
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Around 300 B.C., the Romans invented a new way for a group of people to buy property and enter into contracts. Instead of making deals with a partner or a set of partners, people could use a legal fiction that they were an entity, a societas publicanorum. This new institution was owned and controlled by investors, but legally separate from them. The privilege to act as a societas publicanorum was rare, and required a decree by the Roman Senate or the emperor.
Nearly 2,000 years later, versions of this legal innovation came to be used by English businesses, churches, guilds and cities, and by the investors behind the Virginia Company in colonial America. They were known as corporations. Like the societas publicanorum, corporations required a special charter from the king, giving its owners powerful but limited rights: the right to collectively hold property, form contracts and have access to the courts. Corporation were quasi-public, and each corporate charter was unique, comprising highly detailed rules including how much the corporation could charge for its products. Eventually, corporate investors gained a special prize: the privilege of limited liability, which allowed them to avoid personal legal responsibility for the corporation’s actions.
These corporations did not merely come to America; according to Adam Winker, a law professor at the University of California, Los Angeles, arguably they founded it. From 1607, when the Virginia Company established the Jamestown colony, corporations have been inextricably embedded in American life, Winker maintains in his excellent and timely new book, “We the Corporations.” The corporation of the British East India Company inspired the colonists in a different way. The bailout of the company by England ? including the Tea Act of 1773, which lowered the price of tea in the colonies while preserving the tax colonists paid on it ? infringed the colonial charters and led to the protest that were instrumental in starting the Revolutionary War.
Winkler’s chief contribution is to show how corporations have been some of the most important innovators in American law, sharping it for good and often ill. Since the early days of the Republic, corporations have invested substantial capital in some of the country’s most talented and charismatic lawyers, pushed risky lawsuits and been on the “cutting edge” of rights-making. They have not been passive recipients of legal change but, rather, among its most significant architects.
Winkler frames this history provocatively, as a continuing “civil rights” movement for corporations, which “have pursued a longstanding, strategic effort to establish and expand” their rights in American constitutional law. He proves his thesis by recounting two dozen critical moments when corporations pushed the limits of existing law and mostly won new rights. While the corporation of early America was an “artificial person” ? Blackstone’s term ? for purpose of property ownership, contracts and lawsuits alone, Winkler shows how “today corporations have nearly all the same right as individuals: freedom of speech, freedom of the press, religious liberty due process, equal protection, freedom from unreasonable searches and seizure, the right of counsel, the right against double jeopardy and right to trial by jury.” ?
Corporations have rarely won rights by trumpeting their own importance, or openly arguing for civil rights. Instead, over generations, they have succeeded by claiming that corporate rights are necessary and useful tools for vindicating the rights of others ? of people. In the first major corporate-rights case, in 1809, the issue was whether a bank had the right to sue in federal court. Given the politics of the time, the bank was likely to lose in state court. The problem was that the Constitution gave access to federal court only to “citizens.” Instead of trying to argue that a corporation is a person qua person, the bank’s lawyers insisted that the rights of the owners ? an association of people ? would be trampled on if the bank couldn’t be heard in federal court. The Supreme Court acquiesced.
One hundred and seventy years later, in another bank case, the question was similar but more momentous: Did Massachusetts have the right to limit corporate spending around popular referendums? In this case, First National Bank of Boston v. Bellotti, the Supreme Court concluded that it violated the First Amendament rights of the people of Massachusetts for the state to discriminate among sources of information. It was not that the bank had a right to speak but that the public had a right to hear the views of the bank, and the state had no right to outlaw those communications merely because they came from a corporation. The bank won the lawsuit, because it stood in for the rights of the people who might want to hear its political views. Winkler contributes fascinating original reporting to this case, uncovering notes between justices and clerks that changed the outcome of the case, which in turn laid the groundwork for the decision in Citizen United.
Much of the value of Winkler’s book lies in his elegant stitching together of 400 years of diverse cases, allowing us to feel the sweep and flow of history and the constantly shifting legal approaches to understanding this unusual entity ? Blackstone’s “artificial person.” Four hundred years is a lot of time, and Winkler does a wonderful job of finding illustrative details without drowning in them, and of giving each case enough attention to make it come alive. However, there is one somewhat shocking lacuna. He fails to consider the revolution in monopoly law in the last 40 years. Beginning in the 1970s, a group of activist lawyers associated with the University of Chicago persuaded courts to gut well-established principles designed to protect open markets and decentralized power, and to replace them with an ideology of efficiency that has contributed to our current crisis of monopoly capitalism and inequality. Winkler mentions the Chicago school in passing, but he doesn’t address the post-1980 antitrust cases, a striking oversight because they fit neatly into his theory: Corporate monopolies gained rights by asserting that they benefited the rights of others (in this case, consumers).
Despite this omission, Winkler’s book provides a masterful retrospective map at a time when people are feeling bewildered and enraged by growing corporate power. In essence, he offers an important answer to the question “How did we get here?” Of course, there are two kinds of answers to that question ? the literal and the structural. The literalist will tell you what buses and trains and ferries you took to get from your old house to your new house; the structuralist will explain why you moved across the country in the first place. Winkler is largely in the literalist camp. One case follows another; the justices change; a mistake is made and exploited and ripples through time; a magnetic lawyer sways the Supreme Court. History is made by people, by accident, by ambition, by carelessness, even by lies repeated often enough that they become true ? a mishmash of purpose, greed, intelligence and errata.
Winkler’s historical lens is both maddening and refreshing, for the same reason. It’s maddening because he often deals lightly with major forks in the road. In 1946, the Supreme Court justice Hugo Black proposed an alternative way to think about big corporations, as quasi governments. Black wrote the majority opinion in Marsh v. Alabama, arguing that when corporations take on the role of governments, they must be subject to the limitations we put on governmental power. Had Black’s logic been taken more seriously, it would have reshaped American rules regarding corporate power. Winkler spends several pages on the case but doesn’t persuasively explain why Black’s argument never took hold. In Dartmouth College v. Woodward, a pathbreaking case from 1819 establishing that corporations are private entities over which a state has limited control, much of Winkler’s narration focuses on Daniel Webster’s mesmerizing advocacy skills. History has reasons, but in Winkler’s telling those reasons are often depended on individuals, not broad ideological shifts.
Yet this breeziness is refreshing because the book is anti-deterministic. Winkler chronicles the comically bad legal arguments made by the ethics-challenged Louisiana attorney general Gaston Porterie in a 1936 case about the constitutionality of an advertising tax ? and the scope of the freedom of the press protection. If something as small as Porterie’s gaffe in citing the wrong clause of the Constitution changed history, history can change again with a strong push in a different direction. By nailing down such absurdities, Winkler allows us to see how the future becomes more open.
Americans need neither abolish corporations nor accept them as they are; they can instead fight for new laws and for new Supreme Court justices. If they don’t like how corporations have appropriated civil rights in the name of citizens, they can change that.
