For generations, big corporations were almost synonymous with the Republican Party. As recently as 2019, 54% of Republicans said large corporations have a net positive effect on the corporation. Today, just 26% of Republicans think big corporations are good for the country, not much higher than Democrats at 25%.
Rethinking the conservative movement’s relationship with big business has always been a foundational theme to the Edmund Burke Foundation’s National Conservatism Conference, and one of the first breakout sessions at this year’s conference in Washington, D.C., tackled the subject of “Corporations Against Conservatives.”
Sen. Josh Hawley’s (R-MO) chief counsel, John Ehrett, spoke first, identifying what he called “the myth of Citizens United.” That myth is that “the business corporation is autonomous, natural, and organic, something set against the oppressive power of the state.”
“We don’t discover the business corporation in the world,” Ehrett explained, “It is not a natural thing. Its very existence descends from a lawgiver who precedes it.”
“Of course, the government can regulate the activities of created corporations,” Ehrett continued, “because the corporations simply couldn’t exist without it.”
Ehrett’s boss, Hawley, has previously introduced legislation that would narrow the First Amendment protections recognized by Citizens United to small, nonpublicly traded corporations. Under Hawley’s legislation, small businesses and nonprofit groups would still be treated as persons with individual rights but large corporations would not. It is a position that is definitely not fully embraced by a majority of the party, but the party is clearly trending in that direction.
Boyden Gray partner Jonathan Berry followed Ehrett up with a short history of the American corporation from the founding of the nation to today. Like Ehrett, Berry stressed that corporations used to be chartered by states for a limited time and a limited purpose.
“Fundamentally, legally, and historically, corporations are themselves a kind of sovereign,” Berry explained. “They are created by the sovereign, by the state, by the grant of a corporate charter which confers statelike qualities.” These statelike qualities include unlimited life and limited liability, qualities no individual has.
“By definition, a corporation acts with the concession of a state’s sovereignty,” Berry continued. “And for most of American history, we recognized that this delegation of state sovereignty should be guarded jealously.”
Berry then rattled through some common and not-so-common limitations states once imposed on corporations including limiting corporate powers to the purposes stated in its charter, retaining the power to amend a corporate charter after it was issued, and requiring a majority of a corporation’s board to be residents of the state it was chartered in. Massachusetts went so far as to even allow unpaid corporate employees to hold shareholders personally liable and Texas once limited the amount of land each corporation could own.
Through the second half of the 19th century and into the 20th century, states and the federal government have moved away from granting corporate charters for a limited purpose and toward granting general charters where no stated purpose is needed at all.
This has likely led to faster economic growth but there also has been a cost. Berry quoted Irving Kristol from 1976:
“One must concede that both the Founding Fathers and Adam Smith would have been perplexed by the kind of capitalism we have today. They could not have interpreted the domination of economic activity by large corporate bureaucracies as representing, in any sense, the working of a system of natural liberty. Entrepreneurial capitalism, as they understood it, was mainly an individual, or at most a family, affair. … The large, publicly owned corporation of today which strives for immortality, which is committed to no line of business but rather seeks the best return on investment, which is governed by an anonymous oligarchy, would have troubled them, just as it troubles and puzzled us.”
Rather than limit corporate power through external mechanisms like antitrust enforcement or campaign finance regulations, Berry called for a return to internal controls on management.
“What we need is better corporate governance,” Berry said before outlining possible reforms like states giving more voting power to flesh and blood retail shareholders over institutional investors and asset managers. States could also expressly prohibit the use of environmental, social, and governance and diversity, equity, and inclusion in business management, Berry suggested.
For decades, evidence has been mounting that big corporations are far more responsive to an unaccountable global managerial class that feels just as at home in New York City and San Francisco as in Paris or Tokyo. And this same globalist class has nothing but contempt for people who live in flyover states, especially those who did not graduate college.
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As Antonin Scalia Law School professor Todd Zywicki noted during the panel, for many years, the Cold War kept the Republican Party united in the fight against socialism and government power. But with the Cold War over, a new generation of corporate management has taken over that is far more committed to identity politics than free market principles.
Conservatives have finally begun to notice, and the Republican Party’s policies are following suit.