Freedom from Monopolies

Nova Spivack has written a thought-provoking article, in which he advocates for a Constitutional amendment guaranteeing separation of corporation and state.

I agree wholeheartedly that an explicit separation between corporations and government should be part of our foundational documents. It might surprise Mr. Spivack, however, that Thomas Jefferson and James Madison, among other founders, also thought so.

In 1787, Jefferson wrote of the new Constitution:

I will now tell you what I do not like. First, the omission of a bill of rights, providing clearly, and without the aid of sophism, for freedom of religion, freedom of the press, protection against standing armies, restriction of monopolies, the eternal and unremitting force of the habeas corpus laws, and trials by jury in all matters of fact triable by the laws of the land, and not by the laws of nations. ¹

And again in 1788, the year leading up to the ratification of the Bill of Rights,

By a declaration of rights, I mean one which shall stipulate freedom of religion, freedom of the press, freedom of commerce against monopolies, trial by juries in all cases, no suspensions of the habeas corpus, no standing armies. These are fetters against doing evil, which no honest government should decline. ²

In the end, Jefferson won the inclusion of all but two of these fetters against doing evil in the Bill of Rights: the freedom from monopolies, and protection against a standing army. ³

So in fact, the founders were keenly aware of the dangers of corporations. While it is little taught in American history classes, the War of Independence was as much a revolution of independent merchants against the British East India Company and the London Company -- Jefferson's monopolies -- and the monarchy's laws favoring them, as it was of citizens revolting over royal taxation.

In some ways, the early colonial period was not so different from today. In fact, our nation was settled by chartered monopolies, the forebears of the modern corporation. Chartered monopolies arose as a power-sharing mechanism between the land-holding nobility of feudal Europe and the rising merchant class which threatened the nobility's power. They provided the nobles with a convenient and risk-free mechanism to share in the bounty of mercantilism, while providing merchants with monopoly power over designated markets. ⁴

Indeed, Jamestown was settled by the London Company, and the mythical Mayflower of Pilgrims' lore was a ship chartered from the British East India Company. And early American life was economically dominated by these early corporations, whose royal charters literally gave them complete control over the colonial markets.

Most Americans today, ironically including the Tea Party Patriots, seem to believe that the Boston Tea Party was just about "taxation without representation." But as Douglas Rushkoff ⁵, Thom Hartmann ⁶, and others explain, the Boston Tea Party was a direct response to the British Tea Act. The Tea Act exempted the British East India Company from paying export taxes on tea, flooding the American market and undercutting a profitable colonial tea trade. It was not the monarchy itself, but the collusion between the monarchy and the Company, which fueled the rebellion.

While Jefferson and Madison lost their fight to include freedom from monopolies in the Bill of Rights, the early days of our Republic were mostly free of corporations, which the founders inherently distrusted. Those corporations that did exist were granted by state legislatures, for specific purposes, for time-limited durations, and without the veil of limited liability corporations enjoy today.

It wasn't really until after the Civil War, when states found themselves facing bankruptcy, that the era of permissive incorporation (incorporation in return for paying a fee) began, and the first American ancestors of the modern corporation were born. Today, instead of paying kickbacks to the royalty, corporations pay kickbacks to politicians and bureaucrats. But the relationship and the return, the favorable treatment and economic concentration, the quid pro quo, are much the same as they were with the chartered monopolies of yore -- the enemies of Jefferson and Madison.

Not to be understated in the conception of the modern corporation, nor in our political quandary, is the peculiar headnote to the 1886 Supreme Court opinion in Santa Clara County v. Southern Pacific Railroad, which boldly declares:

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 the opinion that it does. ⁷

While this is but a headnote, written by a clerk and not binding precedent, it has come to be interpreted as granting corporations some notion of personhood, and therefore entitlement to constitutional protections like freedom of speech; and for the first decades of the early twentieth century, brought the Lochner ⁸ era and reign of economic due process.

Most vestiges of economic due process were eradicated with the New Deal, but the older concept of corporate personhood has persisted. It forms the basis of our horribly broken campaign finance system, from Buckley v. Valeo ⁹ through last year's Citizen's United ¹⁰, by allowing corporations the same First Amendment protections as natural citizens.

Jefferson and Madison would be both vindicated and horrified to see the state of our republic today. The very interests they fought against, the merged power of economic and legal coercion arising from the collusion of government and corporation in greed, have overtaken their nation.

I agree with Mr. Spivack. It is time that we realize the design that Jefferson intended, with explicit provisions in the Bill of Rights guaranteeing not only Freedom of Religion, but also Freedom from Corporations, and Freedom from a Standing Army (the prison-industrial complex, in my modern reckoning). These were the three threats Jefferson perceived to our republic, and it is time for us to fully implement his vision.

Freedom from Corporations would entail ending corporate personhood, explicitly overruling Buckley and Citizens United, increased liability for corporate actions, and some combination of stronger laws and tougher regulation of corporate entities.

Yet I worry about whether we can achieve Constitutional amendment. There are two ways to propose amending the Constitution. ¹¹ The first requires the federal legislature to act, and they have proven over the past decades that they are corruptible beyond contempt, fully captured by the corporate entities that fund their campaigns.

The alternative method requires two-thirds of the legislatures of the states to convene a Constitutional Convention. This mechanism has never been invoked in our nation's history, and it is unclear how such a convention would work.

Anecdotally, at least, local and state elections seem less dominated by special interests than their federal counterparts. In part, this is because it costs less to conduct local campaigns and to run at the state level.

Perhaps the best strategy for winning Constitutional amendment, then, is to run a coordinated, nationwide, multi-year campaign to elect state legislators who favor calling a Constitutional Convention. All the while, the same organization would be working in the background to define a convention process and quietly craft a national campaign.

This process, if begun now, will likely take at least five to ten years, perhaps longer, to see to fruition, given the rate of turnover in state legislatures, and the political will needed to unite common interests on both sides of the political aisle. If we're serious about amending the Constitution, we'd best get started.

Even at that, I am not confident, nor especially optimistic. The last time our nation faced such collusion between business and government, the Gilded Age and the Depression that followed, we only overcame it by a violent World War. The time before that, at our founding, by a violent Revolution.

To see whether We, the People of our nation, can rise above this history, to rescue ourselves peaceably from our self-imposed bondage of corporate slavery, via the political process, will be the greatest test yet of our Constitution and of the American Experiment.