Democracy, Inc.

The Press and Law in the Corporate Rationalization of the Public Sphere

David S. Allen

• Publisher: University of Illinois Press
• Year: 2010
• Print ISBN: 9780252029752
• eBook ISBN: 9780252090400
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

In Democracy, Inc., David S. Allen exposes the vested interests behind the U.S. slide toward conflating corporate values with public and democratic values. He argues that rather than being institutional protectors of democratic principles, the press and law perversely contribute to the destruction of public discourse in the United States today.

Allen utilizes historical, philosophical, sociological, and legal sources to trace America's gradual embrace of corporate values. He argues that such values, including winning, efficiency, and profitability actually limit democratic involvement by devaluing discursive principles, creating an informed yet inactive public. Through an examination of professionalization in both the press and the law, corporate free speech rights, and free speech as property, Democracy, Inc.  demonstrates that today's democracy is more about trying to control and manage citizens than giving them the freedom to participate. Allen not only calls on institutions to reform the way they understand and promote citizenship but also asks citizens to adopt a new ethic of public discourse that values understanding rather than winning. 
 

PART 1

The Corporation and Democracy

1

The Rise of Corporate Rationalization

The examination of corporate influence on public life in the United States is not lacking in literature. From Alexis de Tocqueville through the Progressive movement to today’s corporate critics, the corporate form—or what Tocqueville called the “manufacturing aristocracy”¹—has attracted more than its share of attention. Much of that literature can be divided into two camps. On one side are those who see little good in the corporate form and what that form has wrought for today’s society. While most Progressives stopped short of calling for an end to corporations, preferring administrative rules, today’s critics tend to see little if any good in corporations. In the words of the media critic Robert W. McChesney, “The wealthier and more powerful the corporate media giants have become, the poorer the prospects for participatory democracy.”²

On the other side are those who argue in favor of expertise, efficiency, and the popular. The rise of corporate America, with its emphasis on scientific management styles, has created a business sector that is better able to serve the needs of democracy by providing “what people want” and by giving voice to citizens, helping us understand our world. In the area of the media, these advocates point to the tremendous amount of information that is available to today’s consumers through the Internet, cable television, and publishing outlets. Not only that, the argument goes, but those media outlets are staffed by the best trained, most professional workforce that has ever occupied those offices of culture.³ Through an emphasis on profitability, efficiency, expertise, and professionalism, the needs of democracy are more than being met.

The debate between these groups is interesting not only because of what it says about modern-day American democracy but because of what issues go unchallenged. The two sides seem to agree that the values of corporations have come to be the values of the public sphere; there is a disagreement about whether that is good or bad, but few seriously dispute the centrality of corporations in modern democracy. No one seemingly challenges the idea that corporations now dominate public life.

Take, for example, the comment by the publisher of the New York Times, Arthur Sulzberger Jr.: “‘New media are by definition transactional. We need to work more closely with advertisers and marketers to create content that meets their needs. We must develop new ground rules.’”⁴ Corporate critics would argue that such claims collapse the distinction between journalism and advertising; corporate advocates would acclaim Sulzberger’s forward-thinking mission for making the press more financially sound, thus allowing it to better serve the public by providing what people want.

The point of this chapter is not to rehash this debate. Instead, this book attempts to understand how corporate values have come to play that dominant role by investigating how those values have become ideological. Like most questions concerning public life, there are no easy answers. Still, if we believe that all human developments—including intellectual endeavors—have a history, then we ought to be able to uncover some parts of how this transformation took place. This chapter links the historical development of corporations with corporate liberalism and the Progressive movement in an attempt to provide a foundation for an understanding of that transformation.

Much has been written about the American development of a democracy based on corporate-liberal principles. Historians have tracked how a liberalism based on individualism eventually morphed into a liberalism that was primarily aimed at protecting and enhancing corporate rights. This study explores not the development of that political ideology but rather the hegemonic process that has allowed it to be transferred to the public sphere.

The Growth of Corporations

The threat that corporate power potentially might pose was identified long before the transformation actually began. As Tocqueville wrote in 1831, “I think that all in all, the manufacturing aristocracy that we see rising before our eyes is one of the hardest that has appeared on earth; but it is at the same time one of the most restrained and least dangerous. Still, the friends of democracy ought constantly to turn their regard with anxiety in this direction; for if ever permanent inequality of conditions and aristocracy are introduced anew into the world, one can predict that they will enter by this door.”⁵

Despite Tocqueville’s warning, the history of corporations in the United States is a long one. Prior to 1800, few corporations existed in the United States.⁶ Those that did exist, according to the law historian Lawrence M. Friedman, were churches, charities, or cities. Friedman reports that in the eighteenth century, only 335 businesses were chartered as corporations.⁷

The nineteenth century saw a tremendous growth in the formation of corporations. That growth was tied to the rising economic interests in the United States. As Friedman writes, “[A]s the economy developed, entrepreneurs made more and more use of the corporation, especially for transport ventures. The corporate form was a more efficient way to structure and finance their ventures.”⁸

Interestingly, in the early part of the nineteenth century people equated chartered corporations with monopolies, and because of that they were subject to a higher degree of regulation. Corporations were clearly viewed as entities created by the state that hold a special privilege. In Friedman’s terms, corporations “were in a sense parasitic, and yet unduly powerful.”⁹ During these early years of the corporations, legislatures had to routinely grant special charters to what they considered to be deserving corporations. By the 1840s and 1850s, most legislatures had ended that practice and instead granted a general law to oversee the formation of all corporations. As Friedman notes, the special charters were seen as being increasingly inefficient. But perhaps more importantly, it turned the “corporate form into a freely available right, rather than a privilege of the few.”¹⁰

Such changes made the formation of corporations far more accessible to the general public but also increased the potential for abuse. With no limits put on the length of the life or size of corporations, they soon would become powerful players in American law and politics.

The courts began granting rights and privileges to corporations in the early 1800s. In Dartmouth College v. Woodward¹¹ in 1819, the Court granted corporations their first protection under the U.S. Constitution, recognizing contract clause protection. In the case, the New Hampshire legislature attempted to alter a charter for the college—a charter that dated back to George III in 1769. In 1816, the state attempted to bring the college under public control by taking authority away from its trustees. The Court, led by Chief Justice Marshall, decided that the college’s original charter was in effect a contract under the meaning of the Constitution.

It is important to note, however, that Marshall’s intent, at least in the eyes of some observers, was less to carve out protections for corporations than to protect investors. As such, his purpose was to “assure capitalists the expectation of a reasonable return on their investment in return for providing public improvements and services useful to the community at large.”¹²

While Dartmouth College v. Woodward recognized corporations under contract law, they had not yet been granted broader protection under the Constitution. Most writers trace the development of the Supreme Court’s recognition of corporations as people to its 1886 decision in Santa Clara v. Southern Pacific Railroad.¹³ The question before the Court was whether the Fourteenth Amendment barred California from taxing the corporate property of a railroad differently from how it taxed the property of individuals. In siding with the railroad, the Court noted, “The court does not wish to hear argument on the question whether the provision of 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.”¹⁴

In the eyes of many, the Court’s Santa Clara decision was the foundation for future decisions expanding the rights of corporations. The law professor Morton Horwitz has argued that Santa Clara does not break with precedent that can be traced back to Dartmouth College, however. He sees the Court as not necessarily accepting corporations as people (often referred to as the theory of corporate personhood, examined in more detail in chapter 5) but rather as trying to protect the property rights of individual shareholders, much as it did in Dartmouth College. Horwitz argues that “corporate person-hood” theory had not even been developed at the time of the Santa Clara decision and that personhood theory has been gradually absorbed into the meaning of the Santa Clara decision “to establish dramatically new constitutional protections for corporations.”¹⁵

It is clear that as the corporate form developed in the latter part of the nineteenth century, the legal grounds had been established for an expansion of corporate rights in the United States. And while the intent of the Dartmouth College and Santa Clara decisions might have been to protect investors rather than corporate rights per se, those developments when coupled with other intellectual movements produced an important foundation for the expansion of corporate rights.

Competitive Capitalism to Corporate Liberalism

As with most thing things involving business after the Civil War, John D. Rockefeller seemed to understand it best. While we often associate the public cry for free and open competition in the marketplace with American business, the death of competitive capitalism was initiated by Rockefeller and other captains of industry.¹⁶ Rockefeller recognized far earlier than most that corporations could not withstand the economic booms and busts associated with growing markets. Following the Civil War he began the move away from competition and toward cooperation and control. As Rockefeller put it, “‘This movement was the origin of the whole system of economic administration. It has revolutionized the way of doing business all over the world. The time was ripe for it. It had to come, though all we saw at the moment was the need to save ourselves from wasteful conditions…. The day of combination is here to stay. Individualism has gone, never to return.’”¹⁷

Rockefeller’s idea in many ways eerily coincided with the views of many reformers as America neared the twentieth century. Those reformers, loosely organized around the Progressive movement, also recognized that unbridled competition was not the answer to economic problems. As the historian Ron Chernow writes, “Standard Oil has taught the American public an important but paradoxical lesson: Free markets, if left completely to their own devices, can wind up terribly unfree.”¹⁸ The vital question was, of course, how to regulate the economy to rein in the undemocratic nature of corporations while still preserving and allowing economic growth. For that, the Progressives turned to regulation and scientific management skills. The hope was that social science would enable the government to manage corporate growth and control its impact on democracy.

As the corporate form began to dominate American capitalism, the Progressives sought to control that power from within. This is evident in many areas of public life, especially in the law and journalism. As will be examined in subsequent chapters, the push to make the law and journalism more scientific has had a powerful impact on those professions. However, in more general terms, Progressive reform worked from the belief that corporations could be controlled and therefore need not be eliminated. As the historian Robert H. Wiebe has written, “In particular, national progressivism had been predicated upon the existence of the modern corporation and its myriad relationships with the rest of American society.”¹⁹ The corporations encompassed many of the values that the Progressives also coveted: efficiency, technology, and administrative expertise. As Wiebe writes, “In a way only a few of them fathomed, their alteration strengthened a scheme they disliked by weaving its basic elements into an ever-tighter and more sophisticated national system. A public bureaucracy sheltered as it regulated.”²⁰

One of the most important ways in which this was done was through alliances with government. Whereas before business had expressed distrust of government, now it turned to government for protection, using cooperation as a way of staving off destructive competitive forces. Wiebe writes of corporations during the Progressive Era, “They wanted a powerful government, but one whose authority stood at their disposal; a strong, responsive government through which they could manage their own affairs in their own way.”²¹

To accomplish this task, Progressives and corporations turned to scientific management techniques. Business had long become enamored with the scientific management ideas associated with Frederick Winslow Taylor. Taylor’s idea was that the adoption of scientific techniques within the workplace would make business more profitable while improving the lot of workers. The goal was to establish “absolute uniformity” for workers and place more of the burden of making choices in the hands of managers. As Taylor wrote, “The managers assume new burdens, new duties, and responsibilities never dreamed of in the past. The managers assume, for instance, the burden of gathering together all of the traditional knowledge which in the past has been possessed by the workmen and then of classifying, tabulating, and reducing this knowledge to rules, laws, and formulae which are immensely helpful to the workmen in doing their daily work.”²²

The development of these formulae allows management to “replace the judgment of the individual workers” with the expertise of managers.²³ As Taylor noted...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Contents
• Acknowledgments
• Introduction
• Part 1: The Corporation and Democracy
• Part 2: Corporate Rationalization and Democratic Institutions
• Part 3: The First Amendment and Public Life
• Notes
• Index