Business as Usual: The Long History of Corporate Personhood
Aug 23, 2017
11 Min read time
Contrary to most narratives, corporations have always been one of the most powerful forces in American political life.
The mass defection of CEOs of some of the nation’s most powerful corporations from President Trump’s now-defunct Manufacturing Jobs Initiative and his Strategy and Policy Forum has led to a spate of commentary about the turn of business leaders to politics, much of it suggesting that this is a new phenomenon. “This is a remarkable moment in history,” observes Lou Dobbs, the business journalist turned right-wing political commentator. Dobbs is quoted in a recent celebratory New York Times article by David Gelles on corporate executives. Also quoted in the article is Darren Walker, president of the Ford Foundation, who states, “In this maelstrom, the most clarifying voice has been the voice of business.”
Business got political a long time ago; indeed, it has consistently been one of the most powerful forces in American political life. So how did this come to be obscured?
There is an emerging mythology around the involvement of business elites in politics—recent commentary marks it as a new phase of corporate activism, a radical break from the past. “Companies got political only under duress,” Gelles claims. These commentaries suggest that businesses have been forced against their will into the political fray. “Companies are naturally designed to be moneymaking enterprises,” writes Gelles. The assumption here is not only that businesses have been brought unwillingly into the political arena but that the innate purpose of business—moneymaking—is outside of the realm of politics. The reality is that business “got political” a long time ago; indeed, it has consistently been one of the most powerful forces in American political life. How did this story come to be obscured?
One answer is that both business leaders and pundits have emphasized business’s role in the culture wars while minimizing its role in the class war. Politics is about “taking a stand or adopting a cause,” as Marc Benioff, the CEO of Salesforce, told Gelles, “cause” being understood here not as capital gains tax rates, but as engaging in social issues. This perspective limits the boundaries of politics to “speaking out” on controversial social issues. And it ignores the “stands” that corporate leaders take on economic issues—regulation and anti-trust, for example. In this telling, their positions are less acts of politics than of doing what comes naturally and spontaneously for people oriented toward profit-making as their raison d’être.
There are at least two other reasons for the obfuscation of corporate politics. One is that business advocates since the New Deal have claimed that their political forays are purely defensive. Another is that commentators have fenced economics off from politics, so that pursuing profit is viewed as the natural condition of business, a healthy state that can be dangerously distorted by the introduction of the “political” concerns of government officials. This view goes back at least as far as the presidency of Calvin Coolidge, who famously declared that “the chief business of the American people is business.” But his subsequent (and often ignored) statement is perhaps more significant: “They are profoundly concerned with producing, buying, selling, investing and prospering in the world. I am strongly of opinion that the great majority of people will always find these are moving impulses of our life.” For Coolidge, business was a substitute for politics, not merely for businesspeople, but for all Americans.
If ordinary people are incipient business owners, then the reverse is also true: businesses are treated as people. This view, which dates back to nineteenth-century jurisprudence and the doctrine of “corporate personhood,” has only accelerated in recent years. It is not uncommon for Hobby Lobby to be described as a “Christian” or “faith-based” company, or for the Berkeley-based fast-food restaurant, Top Dog, to be called a “libertarian business.” These designations are a new phenomenon. Although there have always been companies that sold religious products and business titans, such as John D. Rockefeller, who were characterized as Christians, nobody would have described Standard Oil as a “Christian enterprise.” While the new nomenclature can be seen as a recognition of the political nature of business, it has been used very differently—as an assertion of identity politics.
‘The chief business of the American people is business.’
It is a measure of the influence of this discourse—and part of a long-term concerted campaign by advocates of “free enterprise”—that Gelles accepts the view that profits are the “natural design” of business and that it is only the recent “duress” that has led businesses to engage in politics. Business leaders have long couched their combativeness as a response to unfair attacks by savvy and effective bureaucrats and politicians armed with highly cultivated political instincts, which businessmen and women supposedly lack. In accepting this conception of apolitical businesspeople forced into politics, recent commentators are recapitulating an old story, one that has been narrated since at least the early days of the New Deal. This narrative was repeated throughout the period from the 1930s through the 1970s, the era that historians refer to as the “New Deal Order.” The culmination of this style of argument came in 1971, with a document that has come to be known to history as the “Powell Memo.”
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Forty-six years ago, the corporate lawyer, Lewis F. Powell, Jr., just months away from being nominated by Richard Nixon for a place on the Supreme Court, wrote a confidential memorandum to the US Chamber of Commerce in which he encouraged current business leaders and trade groups to inject themselves more firmly in politics. In his memo, Powell claimed that what he called “the apathy of business”—its normal state of disengagement from politics—was increasingly untenable. “No thoughtful person can question that the American economic system is under broad attack,” Powell wrote. Business needed to respond forcefully, for the “survival of what we call the free enterprise system” was at stake. The old formula, in which business interests “tried to maintain low profiles, especially with respect to political action” was no longer feasible in a new era that called for “hard-nose contest with their critics.” If what Powell called “the business system” was to flourish, it would have to get over “a disposition to appease” and stop shunning “confrontation politics,” which had, regrettably, become a necessary tool in the battle to save itself and the country.
The Powell Memo is the culmination of a long-term strategy of fighting—rather than accommodating—the New Deal order.
What was significant about the Powell Memo was not just that it encouraged business leaders and organizations to engage in anti-governmental politics, but that it also counseled them to enter into the culture wars. Powell emphasized that his colleagues should fight in the arena of popular culture. He demanded ideological “balance” on college campuses and in the media (which, he noted, were fundamentally businesses dependent “upon profits, and the enterprise system to survive”). Claiming that the media had puffed up Ralph Nader into a “legend,” he called for equal veneration for business leaders. He highlighted the importance of “television, which now plays such a predominant role in shaping the thinking, attitudes and emotions of our people” and devoted a whole section to this topic in a portion of the memo titled “What Can Be Done About the Public?”
In September 1972, after Powell joined the Supreme Court, his confidential memo was made public. The investigative reporter Jack Anderson broke the story of Powell’s memo in three of his “Washington Merry-Go-Round” columns, calling it “a blueprint for an assault by big business on its critics,” which reflected a “militant political action program.” (Anderson lifted the phrase “political action” directly from Powell.) Ever since, commentators have pointed to it as an important turning point in the conservative counterrevolution. The Powell Memo changed America and ignited a right-wing political movement, according to Jerry Landay, in a hyperbolic assessment that is not out of line with the views of many commentators.
But even then, Powell’s message that business needed to enter politics was not new. In 1933, soon after Franklin D. Roosevelt became president, one of his leading opponents, Col. Robert R. McCormick, the editor and publisher of the Chicago Tribune, argued that “business must enter politics or be destroyed by radical notions.” As McCormick described it, this was an unwanted and purely defensive war. Politics, in the form of the New Deal, imperiled business and therefore business must, against its normal instincts, turn to politics so as to be able to carry out its normal, apolitical functions. Such calls for business leaders to enter politics were echoed throughout the twentieth century.
The Powell Memo is thus best thought of as the culmination of a long-term strategy of fighting—rather than accommodating—the New Deal order, of becoming political only to defeat politicians who were straying outside of their lanes in their attack on business. It was also an extension of the recognition that public relations was a crucial front in the war for free enterprise, a position that advocates of “selling free enterprise” had stressed since the 1930s. With the benefit of historical hindsight, we can observe that Powell wrote his memorandum at a time when the New Deal coalition was under threat. One of the most astute readers of the change in mood was Richard Nixon. In a nationwide radio address in 1968, he announced that a totally different grouping had emerged, one which would take down the last vestiges of the New Deal order. “Without most of us realizing it, a new alignment has been formed,” Nixon declared. He called this alignment the “silent center.” Nixon’s message was not at all new: “The more centralized and domineering a government gets, the less personal freedom there is for the individual.” But he argued that this message had a more receptive audience that made up the nation’s majority. Nixon was prescient. A decade later, a Gallup poll confirmed increasing agreement with the claim that “the government has gone too far in regulating business and interfering with the free enterprise system.”
Business interests won this political battle in large measure by claiming that to reject “politics” as it has become understood at the height of American liberalism. In his memo, Powell highlighted the danger of “stampedes by politicians to support almost any legislation related to ‘consumerism’ or to the ‘environment.’” Powell called for a revival of faith in what he said was “variously called: the ‘free enterprise system,’ ‘capitalism,’ and the ‘profit system.’” This was the natural business environment, rather than the bureaucratically imposed and therefore political system that threatened to turn the nation in a socialist direction.
In hiving off economics from ethical and moral consideration, business elites and those writing about them have dangerously narrowed the meaning of politics.
Powell imagined a topsy-turvy world in which business had “little influence” in the political arena. On top of its own ineffectuality, business had become, Powell claimed, the “favorite whipping-boy of many politicians for many years.” It had, incredibly, sunk to the level of a subaltern group, a hated and despised “other,” whose interests were not represented in society’s corridors of power. Indeed, Powell claimed that “few elements of American society today have as little influence in government.” As evidence, Powell highlighted the widespread condemnation of corporations by that year’s presidential candidates. Moreover, Powell observed a growing class war that served to “undermine confidence and confuse the public.” He detected in the attacks on free enterprise a new form of “political demagoguery”—which consisted of “setting of the ‘rich’ against the ‘poor,’ of business against the people”—as “the cheapest and most dangerous kind of politics.” Given business’s status as a “whipping-boy,” Powell understood these juxtapositions as perverse because it they justified class warfare directed against a group lacking prestige or power.
It is in this context that Milton Friedman’s 1970 defense of business’s responsibility to produce “profits” is significant. What Gelles takes to be an argument for political neutrality, was, in reality, a manifesto for a counterrevolution against the social control of business through governmental instruments. It was a call for business to reclaim its rightful place as director of its destiny rather than being “unwitting puppets,” as he put it, to “the intellectual forces that have been undermining the basis of a free society.” Friedman, like Powell, wrote in a highly charged political moment, a time when the consumer advocate, Nader, routinely made Gallup’s annual list of most admired Americans and young people were, according to Stewart Alsop (in a passage quoted by Powell) disposed to “despise the American political and economic system” and support the “socialization of basic U.S. industries.” In supporting the idea that business should operate according to natural “market mechanisms” rather than “political mechanisms” as “the appropriate way to determine the allocation of scarce resources,” Friedman was himself making a political argument masked as an observation about how business worked.
Readers of the Friedman article took him to be making a political argument. They responded that there was nothing natural about profits—that they should be thought of as the product of political debate and discussion. “When we demand that automobiles be designed so as not to foul the air, we are weighing a 1 per cent reduction in corporate profits against a 10 per cent increase in the cost of remaining healthy,” argued one of the letters to the Times in response to the article. Another reader noted that profit maximization by business forced “society at large to absorb the costs of environmental pollution, rather than internalizing such costs and thereby reducing net profits.” In the 1970s, as the New Deal Order waned, business’s assertions that profits were neutral and outside of politics were frequently challenged. The recent commentary on businesspeople in politics suggests the need for a revival of such provocations.
Howard Schultz, the chairman of Starbucks, is quoted in Gelles’ article praising the recent political awakening of CEOs: “Not every business decision is an economic one.” This is undoubtedly true. But what has been obscured in the recent celebrations of the newfound moral voice of business leaders is that economic decisions are also political. In emphasizing a certain type of corporate ethics and hiving off economics from ethical and moral consideration, both business leaders and those writing about them have dangerously narrowed the meaning of politics. In so doing, they have reinforced business leaders’ preferred narrative about the nature of business—a story which insulates them from criticism of their actual role as important political actors in all senses of the term.
August 23, 2017
11 Min read time