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Wednesday, January 27, 2010

Strategic CSR - The Rights of Corporations

Last week, the U.S. Supreme Court decided an important case on the free speech rights of corporations. This topic was discussed in a CSR Newsletter about the case last October, which featured the objections of the NYT to the proposed changes (copied below).

Like most rules or laws, there is the theory (which may be defendable) and the reality (which may be subject to abuse). This decision by the Court seems to fall under these concerns.

The article in the url below is an NYT editorial castigating last week’s decision that allows corporations greater freedom to finance political ads/campaigns (for more background, see these related news articles that appeared in the NYT on the same day: and The NYT editors are not happy, to say the least:

“With a single, disastrous 5-to-4 ruling, the Supreme Court has thrust politics back to the robber-baron era of the 19th century. Congress must act immediately to limit the damage of this radical decision, which strikes at the heart of democracy.”

The core of the issue centers on whether corporations enjoy the same first amendment rights to free speech protection as individuals. Although the majority in the decision used well-established Supreme Court precedent to claim that they do, it is harder to understand why the decision to treat corporations as individuals was made in the first place:

“The founders of this nation warned about the dangers of corporate influence. The Constitution they wrote mentions many things and assigns them rights and protections -- the people, militias, the press, religions. But it does not mention corporations.”

The NYT characterizes the Supreme Court’s decision to accept the case and use “a narrower, technical question” and to elevate it “to a forum for striking down the entire ban on corporate spending” as “shameless judicial overreaching.” In short:

“The majority is deeply wrong on the law. … It was a fundamental misreading of the Constitution to say that these artificial legal constructs have the same right to spend money on politics as ordinary Americans have to speak out in support of a candidate.”

The consequences of the decision are projected to alter the face of political campaigns, increasing the numbers of attack ads and favoring those candidates that support corporations. The NYT accuses the “conservative majority” on the Court of having:

“… distorted the political system to ensure that Republican candidates will be at an enormous advantage in future elections.”

The editorial does not mince its words in calling for a legislative response. However:

“The real solution lies in getting the court's ruling overturned. The four dissenters made an eloquent case for why the decision was wrong on the law and dangerous. With one more vote, they could rescue democracy.”

For a calmer perspective on what corporations can and cannot do in relation to political ad spending as a result of the decision, and an argument that the consequences of the Court’s decision will not be as momentous as the NYT editorial implies, see:

“As the court noted, 26 states and the District of Columbia already permit independent corporate and union campaign spending. There have been no stampedes in those states’ elections. Having a constitutional right is not the same as requiring one to exercise it, and there are many reasons businesses and unions may not spend much more on politics than they already do.”

Take care

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
(c) Sage Publications, 2006

The Court's Blow to Democracy
836 words
22 January 2010
The New York Times
Late Edition - Final

From: David Chandler {msbbe096}
Sent: Monday, October 26, 2009 9:16 AM
Subject: Strategic CSR - The Rights of Corporations

The article in the url below is a recent editorial in the NYT that discusses “the rights of corporations” in relation to a case the U.S. Supreme Court is currently hearing:

“… the court is considering what should be a fairly narrow campaign finance case, involving whether Citizens United, a nonprofit corporation, had the right to air a slashing movie about Hillary Rodham Clinton during the Democratic primary season.”

Instead of deciding the case in terms of this narrow point of law, however, the Court decided to expand its consideration to include broader implications under the legal doctrine of “corporate personhood”:

“The courts have long treated corporations as persons in limited ways for some legal purposes. They may own property and have limited rights to free speech. They can sue and be sued. They have the right to enter into contracts and advertise their products. But corporations cannot and should not be allowed to vote, run for office or bear arms. Since 1907, Congress has banned them from contributing to federal political campaigns -- a ban the Supreme Court has repeatedly upheld.”

It would be interesting to see an editorial from the WSJ on the same case to see an alternative perspective (for an op-ed piece, see:, but it is clear that the NYT does not think the Court’s current view of corporate rights should be expanded. The NYT also thinks a narrow interpretation of a corporation’s rights represents a purer reflection of the original intent of the Constitution:

“John Marshall, the nation's greatest chief justice, saw a corporation as ''an artificial being, invisible, intangible,'' he wrote in 1819. ''Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence.''”

In particular, there are strong arguments to be made that corporations are not the same as individuals in their ability to amass resources that can then be used to distort the political debate. As such, the editorial argues that, in areas of political speech in particular, the Court should be wary of expanding corporations’ Constitutional rights to allow these kinds of polemical statements to be made.

Take care

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006

The Rights of Corporations
623 words
22 September 2009
The New York Times
Late Edition - Final

For an article that highlights the broader implications of a change in the campaign finance law regarding corporations, see: