This post is part of an ACSblog symposium marking the one-year anniversary of the landmark decision Citizens United v. FEC. The author, Daniel JH Greenwood, is a professor at Hofstra University School of Law, where he researches corporate governance and the role of corporations in our economy and democracy. He co-authored an amicus brief in Citizens United on behalf of the American Independent Business Alliance.
A year later, Citizens United still looks like the modern Lochner v. New York. This case may well come to symbolize the Court's contribution to our modern Gilded Age and its destruction of the foundations of prosperity and democracy.
Lochner symbolizes the Old Court's turning the Civil War Amendments on their heads. The Fourteenth Amendment promised African-Americans, and indeed all Americans, the rights of citizenship, equal protection and due process of law. The Court, instead, ruled that American citizens had fought the Civil War in order to forfeit our right to use democratic government to protect ourselves against the arbitrary power of "malefactors of great wealth."
The Gilded Age's concentration of power and wealth in the hands of a few, symbolized and furthered by Lochner's rejection of basic American values, led straight to the Great Depression. Neither democracy nor market capitalism can long survive if entrenched economic power is permitted to set the rules of competition so that it always wins. When ordinary Americans lacked the power to demand wages high enough to buy the products and services they produced, the resulting shortage of demand nearly destroyed the system.
Today, we are again in a crisis caused by a similarly radical upward shift of power and wealth. In sector after sector, economic incumbents have amassed enough power to be able to shift the rules in their own favor. We have raised CEO and banker pay, at the direct cost of ordinary employee wages, to the point where our major firms increasingly resemble the world's kleptocracies. The wonder is not that so many have collapsed, Enron-style, into complete corruption or, dot.com and housing-style, into utter incompetence and misallocation, but that so many manage to last so long, emulating the Soviet and Third World autocracies in their fantastically wealthy elites and long slow slides into collective failure.