A Line of Separation between Corporation and State

A Line of Separation between Corporation and State January 11, 2014

Thomas Jefferson famously spoke of erecting a “wall of separation between church and state” in order to prevent an alliance of religious and political interests that would undermine democracy and lead to religious tyranny.[1] “History, I believe, furnishes no example of a priest-ridden people maintaining a free civil government,” he wrote.[2] “In every country and in every age, the priest has been hostile to liberty. He is always in alliance with the despot, abetting his abuses in return for protection to his own.”[3] A bit libelous, maybe, but the principle was sound. Corrupt priests and corrupt officials, each plenty powerful on their own, made an unstoppable combination when they got together—a threat to democracy itself. To prevent such an alliance, the Founding Fathers included in the Bill of Rights what are today known as the Establishment and Free Exercise Clauses. “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.”[4]

Less well-known is that Jefferson felt the same about commercial power that he did about religious power. When Jefferson listed the things he wanted in the Bill of Rights, he usually included not only freedom from a religious establishment but also “freedom from monopolies.”[5] An alliance between corrupt firms and corrupt officials, he believed, inevitably leads to the formation of monopolies and tyrannical aristocracies. It abridges democratic freedom and damages both government and commerce. On this point, however, Jefferson’s views did not prevail. No such clause was included in the Bill of Rights.

Although it took a long time for the courts to work out all the wrinkles of the First Amendment’s interpretation, the religion clauses have ultimately been quite successful in limiting religious interference in government and guaranteeing a competitive religious marketplace. We now have a fairly nuanced set of legal precedents that allow the state to regulate and interface with the religious marketplace in a general, rational way while preventing specific religious groups from receiving preferential treatment or co-opting the regulatory machinery. (As legal scholars would be quick to point out, it’s more of a “line” than a “wall” between church and state.)[6][7]

By contrast, we have paid a steep price for the omission of an anti-monopoly clause in the Bill of Rights. Despite occasional passage and enforcement of anti-monopoly legislation, the sordid history of collusion between corrupt corporate and government interests in America shows no sign of coming to a close. Indeed, with the rise of lobbying, SuperPACs, private government contractors, and Citizens United, the alliance of corrupt corporate and government interests is stronger than ever before—indeed, threatens the very fabric of our democracy. But in the absence of Constitutional guidance on this issue, Americans have found it difficult to agree on a solution. The Left has sought to use the regulatory machinery of the state to restrict corporate corruption and power, while the Right has sought to abolish the regulatory machinery of the state to prevent it from being co-opted by monopolistic firms. Obviously, these two solutions run in exactly opposite directions.

The problem with the Left’s approach is that the regulatory machine has been so thoroughly co-opted that it’s unlikely the lower classes could successfully “take it back.” It’s been tried before, in the form of initiatives like anti-trust laws and campaign finance reform, but the problems have only gotten worse. Proposed reforms typically get defeated by corporations with lots of money to spend on lobbying and advertising, and the pork-barrel spending and corporate handouts march on. Even when workers band together in unions and amass their own political war-chests, the results are little better. Democrat-controlled union towns like Detroit and Chicago are notoriously corrupt, and Democratic politicians dole out the pork just as fast as Republicans. The truth is, we just haven’t found an effective method of imposing accountability on regulators where large amounts of money are concerned. Regulators are supposed to answer to the people who elect them, but the public just isn’t well-enough informed to vote them out. Instead the regulators answer to the corporate types who pay for their campaigns. More regulation, then, doesn’t seem to be the answer.

The Right’s solution isn’t the answer either. The problem with the deregulation path is twofold.

First, all reasonable economists recognize that we can’t have a proper competitive market without a government role. Without a certain amount of security and rule-enforcement, markets devolve into piracy, mafias, cheating, and abuse. Government is the difference between a competitive market and Darwinian evolution. Government also plays a critical role in keeping opportunity open to all by providing education, public health, and infrastructure. Plus it helps prevent the damage of shocks and panics. So abolishing all regulation is simply not an option.

Second, the Right’s small government agenda has been just as thoroughly co-opted as the Left’s regulatory one. Far from fiscal conservatives, GOP leaders haven’t so much cut spending as shifted spending from civil initiatives into the military budget. Ronald Reagan’s military expenditures were so large that they turned the US from the world’s greatest creditor nation into the world’s greatest debtor nation.[8] Recent presidential candidate Mitt Romney proposed adding hundreds of billions of dollars to the annual military budget, and this in the middle of a recession.[9] Similarly, cuts to government hiring have simply resulted in greater reliance on private contractors, with about ten million contractors now on the federal payroll. Every contractor costs about twice as much as a full-time federal employee, and contractors are notorious for gaming the system and doing shoddy work.[10] Most of these contractors have lobbyists and cronies working to influence policy, which is especially disturbing in the case of military contractors who profit from war and death. The Right has also presided over troubling expansions of executive power and domestic surveillance, and its efforts at tax reform and deregulation have preferentially helped large corporations and the already-rich rather than made the market more competitive. In short, the “small government” slogan has often served as a cover for the removal of legitimate structures of accountability rather than for cutting away the abusive parts of government.

In the absence of viable solutions, perhaps it’s time to revisit Jefferson’s Bill of Rights proposal. Perhaps it’s time to draw a Constitutional line of separation between corporation and state—between government and commercial privilege. In fact, I propose that the First Amendment’s clauses about religion be used a model for an amendment on monopolies and commerce. “Congress shall make no law respecting an establishment of commercial privilege, or prohibiting the free exercise of competition.”

One nice thing about this proposal is that it takes advantage of a relatively large and nuanced body of existing legal precedent for interpreting the First Amendment. Under current precedent, the government can regulate the religious marketplace, but not in ways intended to privilege specific sectarian interests or to abridge minority religious rights. When such regulation is challenged in the courts, the government must show it to be non-preferential and motivated by a sufficiently compelling public interest to justify any abridgment of rights. A commercial amendment would presumably have similar implications. Regulation of the market could continue as long as it was motivated by compelling interests for the common good. However, things like pork-barrel spending, corporate subsidies, monopolies, no-bid contracts, Congressional profiteering, and lobbyist influence on policy would all come under strict judicial scrutiny. Corporate lobbying and campaign donations wouldn’t go away, but any initiatives they supported would automatically become suspect and vulnerable to legal challenge. This proposal thus has the advantage of being broad, flexible, and on point. It also—unlike campaign finance reform—avoids the Constitutional pitfall of abridging corporations’ right to political speech. It just might be something Americans from both parties could agree on.


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