Origins of the Corporate State
As I mention below, Ralph Nader is not altogether wrong about what the doctrine of corporate personhood has led to. As Felix Morley explains, abuse of the Fourteenth Amendment to nationalize rights, for corporations as well as individuals, enabled the federal government to extend its powers tremendously, first in the name of laissez faire and later in the name of labor. But regardless of which ideology or which interests tried to use centralized power for their own benefit, it was power itself that benefited most — which would ultimately give us big business and (for a time) big labor prospering in collusion with and subordination to big government. The loser in all of this was the idea of a constitutional federation:
The Fifth Amendment had stipulated that “no person” shall be deprived of property “without due process of law.” The Fourteenth Amendment repeated this, but with the provision directed specifically against “any State.” Now the ingeniously simple formula was to define a corporation as a “person,” whose property under the Fourteenth Amendment was then not subject to deprivation by any State without due process of law. In practice this meant that any regulatory action by the states could be appealed to the Supreme Court, which thus gradually replaced them as guarantors of property rights. As described by Charles A.Beard: “before the end of the nineteenth century the once almost sovereign powers of the States over property and business within their borders were reduced to mere shadows of their former greatness.”
By a logical extension of the corporate person argument the railroads, again for instance, soon found it expedient to apply to national instead of State courts, under the interstate commerce clause. That procedure brought the granting of injunctions against strike action, the violation of which in turn resulted in summary imprisonment of labor leaders, without jury trial, for contempt of court. Thus the national development of industry on the one hand, and of trade unionism on the other, led through the channel of the Fourteenth Amendment to the nationalization of governmental power and the resumed weakening of federal structure. Business leadership, too “practical” to theorize on politics, welcomed this centralization of power as long as it seemed to favor laissez-faire at the expense of labor organization. There was all too little anticipation that, in the name of democracy, this favoritism would eventually be reversed.”
That’s taken from Morley’s Freedom and Federalism. His chapter “The Fourteenth Amendment” elaborates the story. Morley is not, of course, arguing that he’d like to see businesses or individuals deprived of their property or rights in a lawless fashion at any level. But the structure of government matters as well as its content, and the combination of a liberal reading of the Fourteenth Amendment with the concept of corporate personhood wrought tremendous changes in the way governments works, in its scope and machinery. Power fled the people in the states and was absorbed and amplified by the institutions of the federal government — first by the Supreme Court, to a lesser extent by Congress, but ultimately and to the greatest extent by the executive branch, whose agencies, in the name of rights, can now seize property (the DEA), kill (the CIA), interfere in business (the FTC), censor communications (the FCC), and manipulate elections (the FEC) with nary a thought to “representation” or the legislative process. The corporate state turns out to be the executive state — which probably in the end becomes the military-security state. We’re not there yet, but we’re well on our way.
The last time we spoke, Dan, I remember remarking on moves away from libertarianism. Here in passing you mention crummy stuff done in the name of laissez faire, and that’s part of the problem. There’s no way to hermetically seal “good” libertarianism off from “bad,” except intellectually.
One can assign too many faults of a practice cloaked in an ideological or philosophical label to the ideology or philosophy itself, just as one can assign too few. The criticism of theoretical laissez faire that’s appropriate here is that, given that many, perhaps most businessmen will pursue their advantage by illicit as well as by legitimate means, are you ever likely to have a situation in which theoretical laissez faire can be realized? But the answer may not simply be no, because there are circumstances in which one gets much closer than in this example to a realization of the ideal. I think Anthony de Jasay is right that a bourgeois monarchy is more likely than a popular system to create an approximation of laissez faire, and the old, pre-14th Amendment federal republic allowed for a closer approximation than does the post-14th Amendment consolidated state.
Look at it this way: the practice of communists tells you something about the theoretical limits of communism, but that doesn’t mean everything communists did should be attributed to theoretical communism. Some things should be, and some things shouldn’t be. The question of which should be and which shouldn’t be is a difficult one, and to some extent a matter of judgment. In talking about laissez faire above, I’m implying that a truer approximation of the theory is possible than the one put into practice by the businessmen of the late 19th century.
I agree–there are better and worse ideas and better and worse real-world approximations of ideas. Arriving at the real-world thing ends up being a highly contingent question, though. Speaking for myself I get very little out of viewing matters through an anarcho-libertarian lense, even if that was a decent beginning point.
I find it curious that the comments are about laissez faire, when the article is about corporatism.
The Felix Morley quotation is about the corporate state assuming the mantle of laissez faire, like a wolf in sheeps clothing, and the willingness of practical business men to accept the new power of the state. The power that was eventually used against them.
The comments seem to say that laissez faire, the separation of business and state, is in fact corporatism, the symbiotic relationship of business and state, or as Adam Smith called it, mercantilism.
As Aristotle might have said, you cannot be A and B at the same time.
The comments indicate nothing more than an expression of the current George Soros mentality to call the post Reagan era “unbridled capitalism” despite the thousands of regulations and federal bureaucracies writing and enforcing them.
Laissez Faire never existed, but in the pre 14th Amendment Republic it was at least the dominant ideology.
To have laissez faire you have to have a minimal state, or better yet, no state, so that the practical businessmen will have NO central power to hitch their wagons to
Read Paul Koistinen’s detailed, and readable, four-volume history of the military industrial complex published by University Press of Kansas to understand how the corporate warfare state was born before the Cold War began.
Nader is wrong about parts of the past military industrial complex. Did you know GM Chairman and President Alfred P. Sloan Jr. did NOT want to cooperate with FDR’s Arsenal of Democracy in the early 1940s? Read David Farber’s bio of Sloan.
Good stuff — I’ll have to track those volumes down.
Nothing will change in America until Wall Street, K Street, and Constitution Avenue are knee-deep in the blood of those who work there.
Ballots no longer work. Only bullets. Viva La Revolucion!
[...] thereby circumscribe the powers of state and local authorities. Decentralists of all stripes, from the libertarian Felix Morley to the radical Ralph Nader to various Front Porch traditionalists, have seen this as a fatal [...]
The thing about corporate clothing is that most people think you always have to be suited up all the time, which you don’t. You can look just as great whilst still looking the part with whats known as the Australian look. Smart trousers, a smart shirt with no tie… pleae make a note of that those people who are tiephobic. One of the biggest impressions to to make sure you have a nice hair cut and please make sure your finger nails are clean and do not look like they have been chewed by a dog.
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