The “one and only social responsibility of business,” economist Milton Friedman wrote back in 1970 in a New York Times Magazine essay that launched a thousand arguments, is “to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game …” Friedman contrasted this with the multiple responsibilities that an individual — such as a corporate executive — might have “to his family, his conscience, his feelings of charity, his church, his clubs, his city, his country.”
His point was that CEOs shouldn’t go around imposing their own notions of social responsibility on corporations that were owned by others. Since the only interest that could possibly unite the disparate shareholders of a large corporation was making money, that was what executives should focus on during their working hours.
Now think about this argument in the context of the Supreme Court’s decision (pdf) last week to strike down all restrictions on political spending by corporations. During the oral arguments, Solicitor General Elena Kagan hinted at the Friedmanite line that corporate executives who spent shareholders’ money on political causes might not really be looking out for shareholders’ interests. To which Chief Justice John Roberts retorted:
Isn’t it extraordinarily paternalistic for the government to take the position that shareholders are too stupid to keep track of what their corporations are doing and can’t sell their shares or object in the corporate context if they don’t like it?
Both James Fallows and Felix Salmon (in a blog post with the best headline ever) have made the case that Roberts doesn’t seem to understand how the relationship between corporations and their shareholders really works in these modern times, and that his obliviousness fatally undermines the Court majority’s reasoning. But let’s say Roberts is right, and America’s corporations are all faithfully abiding by Uncle Miltie’s exhortation to focus single-mindedly on looking out for their owners’ interests by making lots of money. Then the argument for imposing restrictions on corporate political activities grows even stronger.
The individuals who make up the electorate in the United States are, as Friedman described, beings of many facets — their actions and their views shaped by pecuniary self interest but also by values, beliefs, and loyalties that might conflict with that self interest. The ideal for-profit corporation, on the other hand, is out to do nothing but make as much money as it can “within the rules of the game.” It is supposed to behave in a fashion that for an individual would probably be described as psychopathic. And if corporations are allowed to play a decisive role in shaping the “rules of the game,” we have effectively put the inmates in control of the asylum.
This feels like a pretty compelling justification for treating corporations differently from individuals in the political process. And there is of course a long tradition of treating them differently. We don’t give corporations the vote, and for generations states and the federal government have tried to restrict campaign spending by corporations. Because corporations are made up of individuals, it can of course be awfully hard to draw the dividing line between corporate and individual activity. Justice Anthony Kennedy dwells on this in his majority opinion in Citizens United v. Federal Election Commission. He dwells even more on the inconsistency involved in banning some political speech (campaign spending) by corporations when we would never consider banning corporate-owned newspapers from endorsing candidates, Keith Olbermann from calling some Republican the “Worst Person in the World,” or Fox News talking head after Fox News talking head from referring incessantly to “the far-left policies of Barack Obama.”
Consistency is of course the hobgoblin of little minds (adored by little statesmen and philosophers and divines). We probably want our judges to be little statesman — not brilliantly imaginative rulebreakers. Legal opinions are supposed to be consistent with precedent and the law. In this case, though, the Supreme Court was dealing with three different and conflicting strands of law and precedent: (1) the many laws and past court rulings restricting corporate political involvement, (2) the precedent that political spending is equivalent to First-Amendment-protected speech, (3) laws and precedent that establish corporations as persons.
The Court majority chose to jettison (1) and stick with (2) and (3). I’m in no position to say the justices were wrong as matter of law. But as a matter of policy and common sense, it’s clearly (3) that’s most problematic. If corporations are persons, they are — if they behave as Milton Friedman wanted them to — persons with mental and emotional impairments so severe that any decent judge would feel entirely justified in declaring them incompetent.
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