Learning Objective III: Discuss how the federal government empowered corporations with the 14th Amendment. Explain how the federal government empowerment of corporations was an expression of Social Darwinism.
How the corporation came to be. Originally, corporations were set up to serve the public good. Corporation lawyers gained rights through the US Supreme Court using the 14th Amendment (set up to protect slaves) that gives them the rights of a person. In the last century, the corporation is given more and more rights while people are increasingly stripped of theirs.
Having acquired rights of immortal persons, what kind of person is the corporation? By law, the corporation can only consider the interests of their shareholders. It is legally bound to put its bottom line before everything else, even the public good.
What is an externality? Milton Friedman describes it as the effect of a transaction between two parties on a third party who is not involved in the transaction. A technical
sounding term that basically means let somebody else deal with the problems the corporation creates.
Originally adopted after the Civil War to protect the rights of formerly enslaved people, the 14th Amendment has exponentially expanded the protection of civil rights for all Americans over the past 150 years. It’s been cited in more litigation than any other amendment to the U.S. Constitution, and has been at the center of many of the most famous Supreme Court decisions, including school desegregation (Brown v. Board of Education), abortion (Roe v. Wade) and same-sex marriage (Obergefell v. Hodges).
Under U.S. law, these essential rights belong not only to American citizens, but also corporations—thanks to a few key Supreme Court cases and a controversial legal concept known as corporate personhood.
So, what is the 14th Amendment again?
Ratified in 1868, it was one of three amendments to the U.S. Constitution designed to grant full citizenship rights to formerly enslaved people. While the 13th and 15th Amendments were relatively limited in scope—the first abolished slavery and the second granted voting rights to black men—the 14th Amendment exponentially expanded the protection of civil rights for all Americans.
The two most important provisions of the 14th Amendment guarantee that states, like the federal government, cannot “deprive any person of life, liberty or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”
What is due process and how does it work?
The fundamental principle of due process goes back to the Magna Carta, the 13th century English charter that inspired the framers of the U.S. Constitution. Due process ensures that all levels of government operate within the law and provide fair procedures for everyone. In practice, the Supreme Court has used the Due Process Clause of the 14th Amendment to guarantee some of the most fundamental rights and liberties we enjoy today. It protects individuals (or corporations) from infringement by the states as well as the federal government.
In Griswold v. Connecticut (1965), the Supreme Court ruled that a state ban on the use of contraceptives violated a couple’s right to marital privacy, which according to the Court was an essential liberty protected under the 14th Amendment’s Due Process Clause. The ruling famously drew that right to privacy from the “penumbras” (or shadowy zones) cast by other specific guarantees in the Bill of Rights, including free speech (First Amendment), freedom from forced quartering of troops (Third Amendment), unreasonable searches and seizures (Fourth Amendment), forced self-incrimination (Fifth Amendment) and other unenumerated rights (Ninth Amendment).
Later verdicts would expand this right to privacy, including Roe v. Wade (1973), when the Court found that a woman’s right to an abortion fell within the zone of privacy protected under the 14th Amendment.
How “equal protection” has played a key role in Supreme Court decisions.
Originally aimed at guaranteeing all the rights of citizenship to formerly enslaved people, the Equal Protection Clause has played a leading role in many landmark civil rights cases. In perhaps the most famous, the U.S. Supreme Court ruled unanimously in the 1954 case Brown v. Board of Education that segregated school facilities were unconstitutional, as they failed to protect black and white students equally under the law.
The Equal Protection Clause would also play a crucial role in major Supreme Court rulings involving interracial marriage (1967’s Loving v. Virginia), affirmative action (1978’s Regents of the University of California v. Bakke) and same-sex marriage (2015’s Obergefell v. Hodges).
An 1886 headnote forever shifted the meaning of the 14th Amendment.
Corporations aren’t specifically mentioned in the 14th Amendment, or anywhere else in the Constitution. But going back to the earliest years of the republic, when the Bank of the United States brought the first corporate rights case before the Supreme Court, U.S. corporations have sought many of the same rights guaranteed to individuals, including the rights to own property, enter into contracts, and to sue and be sued just like individuals.
But it wasn’t until the 1886 case Santa Clara County v. Southern Pacific Rail Road that the Court appeared to grant a corporation the same rights as an individual under the 14th Amendment. The case is remembered less for the decision itself—the state had improperly assessed taxes to the railroad company—than for a headnote added to it by the court reporter at the time, which quoted Chief Justice Morrison Waite as saying: “The Court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution which forbids a state to deny to any person within its jurisdiction the equal protection of the laws applies to these corporations. We are all of opinion that it does.”
In later cases, this headnote would be treated as an official part of the verdict, and Waite’s conclusion reaffirmed in subsequent decisions by the Court, from an 1888 case involving a steel-mining company to the 1978 Bellotti decision, which granted corporations the right to spend unlimited funds on ballot initiatives as part of their First Amendment right to freedom of speech.
In the 2010 case Citizens United v. Federal Election Commission (FEC), the most sweeping expansion of corporate rights yet, the Supreme Court cited Bellotti in its highly controversial 5-4 ruling that political speech by corporations is a form of free speech that is also covered under the First Amendment. In 2014’s Burwell v. Hobby Lobby Stores, another 5-4 ruling by the Court granted the right of closely-held companies, which aren’t traded on the stock market, to file for exemptions to federal laws on religious grounds.
The legacy of the 14th amendment.
Not everyone agrees with this expanding interpretation of corporate personhood. In his dissent in Bellotti, Justice William H. Rehnquist wrote that corporations were “artificial” persons rather than “natural” persons, and that granting them the right to political expression could “pose special dangers in the political sphere.” Along similar lines, Justice John Paul Stevens argued in his dissent to Citizens United that “Corporations…are not themselves members of ‘We the People’ by whom and for whom our Constitution was established.” And soon after the ruling, then-President Barack Obama said in his State of the Union address that the decision would “open the floodgates for special interests—including foreign corporations—to spend without limit in our elections.”
While cases like Citizens United and Hobby Lobby have brought the debate over corporate personhood squarely to the forefront of American political life, they’re really just the most recent chapters in a long story. Corporations have been pushing for more and more constitutional rights since the first years of our nation’s government, and so far there’s no indication they’ll be stopping anytime soon.