Discussions of the corrosive effect of corporate money in politics have been reignited by the recent U.S. Supreme Court “Citzens United” decision which, citing grounds that such laws violate first amendment freedom of speech protections, overruled previous bans on political spending by corporations in elections. Helpful background for thinking through the structure of the sticky situation we find ourselves in may be found in Robert B. Reich’s 2007 book Supercapitalism, which recently made its way to my hands from the local public library.

Reich offers an accessible, compelling, and remarkably balanced historical sketch of the economic, social, and political transformation of the developed world engendered by the rise of what he calls “supercapitalism”, the highly competitive globalized business landscape that has emerged in the past several decades. The economic engine of supercapitalism has done a fantastic job of generating material abundance at “everyday low prices” as well as providing ever-growing investment returns, exactly the outcomes the logic of market competition is intended to achieve. However, its inadequately regulated speed and power has thrown this economic engine off of its tracks, chewing up the natural environment and crashing through the institutions of democracy. In its spill-over into political lobbying and the insidious purchase of corporate influence via bundled campaign donations, supercapitalism threatens the foundations of our society by warping democratic decision making to favor moneyed interests over the common good of the people. We see the results in wasteful and often socially detrimental corporate subsidies; in eroded environmental, safety, and health regulations; in underfunded public education, physical infrastructure, and healthcare; and in growing income inequality, all while the government continues to grow.

While vividly pointing out supercapitalism’s damaging excesses in all of these spheres, Reich goes out of his way not to blame the capitalists, who, by and large, are doing everything they legally can to deliver value for their customers and shareholders in the highly competitive environment in which they must operate. Reich does not even blame the politicians, who, by and large, are doing everything they legally can to make incremental progress enacting their campaign platforms during their short terms while reluctantly taking on the full-time job of raising money to get re-elected in order to make some more incremental progress. Reich instead focuses squarely (and correctly, in my view) on the systemic, structural issues driving behavior in both spheres. The problem, as Reich sees it, is the lack of an effective firewall between corporations and government. Such a firewall would constrain capitalism to the playing field of the market and keeping it out of the rule-making chambers of government, which should deliberate the public good rather than privilege private profit.

Creating such a firewall without trampling on (or amending, as some are calling for) the Constitution is the trick. I have for some time supported voluntary public financing of campaigns, but the recent supreme court decision (which I see as problematic for the separation of money and politics but having merit in keeping congress from legislating who can say what) makes me increasingly cognizant that such a system could only be one part of a solution to this problem, since corporate contributions for political media buys during an election could occur in parallel to the spending of public money by the actual candidates, swaying the outcome of the election and buying influence by another path.

Given this, what should be done? Reich ends Supercapitalism with his prescription for reform, which, like his analysis of the problem, favors neither liberal nor conservative approaches, but a middle road that will probably make both sides unhappy. The reforms all rest on an application of the principle that corporations, despite their name, are legal fictions, bundles of contracts, not incarnate spirits or corporeal bodies. Corporations are not people, who should be the only entities with rights in a democracy. In particular, Reich calls for us to:

  • End the corporate income tax (passing taxation through to investors), removing incentives for corporations to change tax laws;
  • End corporate standing as defendants in criminal lawsuits, removing incentives for corporations to change liability laws, and instead holding people instead of corporations accountable for violations of law
  • Subsidize corporate research & development which upgrades the skills of (and only of) U.S. worker’s, regardless of whether the firm is a U.S. corporation, stopping the subsidization of R&D of U.S.-owned companies that actually goes to benefits workers in their operations in other countries and instead retaining that benefit to U.S. workers to increase our their global competitive advantage;
  • End corporations’ standing to bring lawsuits, reserving that right exclusively to people who have standing due to harm;
  • Extend pay-check protection laws from unions to corporations to require the explicit consent of shareholders for any political lobbying or advertising, so that it is truly associations of people (not just associations of capital) that are allowed to participate in democratic decision-making (and/or provide a tax credit of $1000 for citizen lobbying to put people on a more equal playing field with corporate-sponsored political speech)

While I have not thought deeply about the broader implications of these policy suggestions, I would only hesitate to endorse the last parenthetical idea Reich advances, as it seems political lobbying is an (economically) unproductive use of capital, so we should be looking for ways to remove, not add, incentives to invest money there. The other proposals appear to be reasonable and balanced approaches to build a much-needed firewall between corporations and government while still protecting our ability as individuals to exercise rights of speech and association and to enjoy the benefits of incorporation without its pathologies.

Reich has contributed much by providing a clear-headed way of understanding the political challenges we now face and of sketching a strategy to get out of our present quagmire. Unfortunately, he leaves plotting a path to actually enacting these politically challenging changes as an exercise for the reader. Given the realities of our current legislative apparatus, how do we get there from here?