The Unintended Benefits of Corporate Free Speech

Much ink has been spilled over the merits of Citizens United v. FEC - the Supreme Court's recent opinion extending First Amendment protections to corporate (and labor union) political speech. Some herald the decision as a victory for liberty - others see the decision as a setback for democracy. Few, however, appear to be considering the importance of the decision from another angle: its effect on the very nature of corporations themselves. I suggest that in the long run, the impact of Citizens United could have positive effects not currently envisioned.

What exactly is a business corporation? What is its role in society? For whose benefit is it to be managed? Courts and commentators have wrestled with these and related questions for decades - if not centuries. And today, the lack of a clear and stable understanding of the nature of the business corporation persists.

As a result, corporate law is marked by some serious contradictions. On the one hand, directors (the individuals primarily entrusted with overseeing corporate management) are told that they have a fiduciary duty to maximize shareholder profits. But on the other hand, directors are told that they may temper that duty out of a concern for other, nonshareholder constituencies (such as corporate employees). On the one hand, laws are passed limiting the ability of corporations to make campaign contributions (out of a concern, among others, that this essentially forces shareholders to support candidates and causes that they might be opposed to). But on the other hand, laws are passed empowering directors to donate corporate funds (essentially shareholder money) to charities of their choice. Shareholder proposals that are not "significantly related" to a company's business are supposedly improper, yet the SEC and courts routinely approve shareholder proposals that are primarily political in nature and have little if anything to do with the corporation's business (such as proposals regarding universal health care legislation). And in both the academy and the media, corporations are criticized as "soulless" profit-maximizers, yet are expected and called upon to act with a conscience and to be socially responsible.

Thus, corporate directors receive mixed signals from bench and bar regarding the norms of director behavior, and the role of the corporation in society. Some voices demand that directors chart an unrelenting course in pursuit of profit, while others exhort directors to steer toward the fairer waters of good, responsible corporate citizenship. As would be expected, directors appear to be split on which voices they hear and heed. This explains why some corporations rank among the noblest institutions in our society, while others rank alongside the very worst. Sadly, even in the latter case, many directors are probably doing what they understand is demanded of them given the duties of their office.

All this suggests that the nature of the business corporation, and its role in our society, has not yet been fixed. We are at a crossroads. Under existing law (as promulgated, interpreted, and understood), the business corporation need not be an intrinsically greedy and selfish enterprise, existing only to generate shareholder returns. Such impulses can lawfully be moderated. Corporate directors need not check their morals at the boardroom door and decide all questions unidimensionally, with regard solely to whether a particular course of action increases or decreases profitability. Rather, directors are empowered to bring their consciences to bear upon their decision making just as each and every one of us (hopefully) does so in all the decisions we make throughout our days. A critically important question for our society is whether directors will guide their companies down this road of enlightened self-interest, versus the alternative road of putting profits ahead of people and principles.

And this is where Citizens United comes into play. For it has long been observed that individuals tend to conform themselves to their perceived roles. People commonly rise (or descend) to what is expected of them. (In fact, studies have shown that students majoring in economics, when simply taught that human beings are intrinsically self-interested, actually become more self-interested themselves.)

Businesspeople are not immune from this phenomenon. If corporate managers and directors are expected to play a particular role, they generally will. All things being equal, they will generally conform to the norms of their profession - fulfilling their duties as best they understand them. As discussed, the precise nature of that role and these norms is currently unclear. Citizens United may help clarify both in a positive direction. Citizens United stands for the proposition that business corporations are not inherently suspect entities. They are not expected to act in such a sub-human fashion as to justify stripping from them the free speech protections enshrined in the First Amendment. Their participation in our nation's political process is welcomed because they genuinely have (or, more accurately, can genuinely have) something of value to add to public discourse. Had Citizens United come out the other way, it very well could have tipped the balance against more socially responsible corporations, cementing Michael Moore's caricature of the corporation and its role in the minds of both directors and jurists.

In short, by treating business corporations like citizens, the Supreme Court may have unwittingly encouraged business corporations to act more like citizens. And that would be a good thing.

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