Wal-Mart Loses a Battle, But Why Was It Allowed to Fight?

By Jeff Milchen
April, 2004

Wal-Mart Inc. executives aren’t used to losing, but the world’s largest corporation took a beating from citizens in the Los Angeles suburb of Inglewood. The company’s ballot initiative, which would have negated Inglewood City Council’s rejection of Wal-Mart’s proposed “Supercenter,” was crushed by voters on April 6 despite Wal-Mart spending a mind-boggling $220 for each “yes” vote it received. Unknown additional funds were spent on a barrage of image ads in the region featuring black and Latino actors, reflecting Inglewood’s population.

Regardless of one’s opinion of Wal-Mart, all of us who value democracy should be pleased that citizens rejected the company’s blatant attempt to simply buy its way out of an unfavorable decision by local officials. The Inglewood result was the exception to the rule, however. So we might question why we allow any corporation to employ ballot initiatives — theoretically democracy in its purest form — as weapons to overturn decisions of our democratically elected representatives.

Corporations were forbidden from spending any money to influence government or elections in the early days of our nation, for good reason. When American colonists declared independence from England in 1776, they also freed themselves from control by English corporations that extracted their wealth and dominated trade. After fighting a revolution to end this exploitation, our country’s founders retained a healthy fear of corporate power and wisely limited corporations exclusively to a business role while setting up barriers to prevent them from corrupting politics. In most states, corporations could not make any political or charitable contributions nor spend money to influence law-making.

In the 1800s, corporations gradually dismantled those barriers. By the end of the century, their lawyers were arguing to the U.S. Supreme Court that corporations were legally persons entitled to constitutional rights. In 1886, a Supreme Court bench heavy on railroad industry lawyers ignored the fact that corporations never are mentioned in our Constitution and, without ever explicitly ruling on the matter, created “corporate personhood.” Soon, corporations had perverted the Bill of Rights itself to gain its protections — even before women and minorities had full personhood rights — and have since used this power to deny political rights to real human beings.

Yet, as recently as the 1970s, corporations faced meaningful limits to their political power — limits that a corporate lawyer named Lewis Powell wanted to remove. Powell wrote a memo to the U.S. Chamber of Commerce in 1971, arguing that big business should seek greater power “aggressively and with determination, without embarrassment.” Powell specified, “The judiciary may be the most important instrument for social, economic and political change.”

A month later Richard Nixon appointed Powell to the Supreme Court, where he went on to write the majority opinion in First National Bank of Boston v. Bellotti, a 1978 decision that created a First Amendment “right” for corporations to influence ballot initiatives and other political campaigns. The Bellotti decision is one major reason why corporations now dominate national politics and why companies like Wal-Mart frequently impose the will of corporate executives on communities around the country.

Until recently, Wal-Mart stuck to exerting its political power at the local and state levels, but this year the world’s largest corporation is predicted to become the nation’s largest corporate investor in candidates for federal offices as well. With the additional power to pressure any number of its one million non-unionized employees to “voluntarily” support campaigns, Wal-Mart’s power soon could rival even the clout of railroad corporations in the “robber baron” era of the late 1800s.

While Wal-Mart has used ballot initiatives elsewhere to trump decisions by local governments (including one in California last month), the Inglewood initiative went far beyond any previous attempt. The corporation literally attempted to exempt itself from all local zoning, planning and environmental regulations. The power grab was too extreme to pass this time, but as corporations continue to mold the culture and law to fit corporate agendas rather than citizens’ interests, what was an outrage one year becomes the law soon after.

Citizens still win a few skirmishes, but the larger struggle — one to determine whether citizens or corporations will control the future of our communities and country — will depend on changing the rules of engagement. The reasons that drove our country’s founders to keep business creations subordinate to democracy are even more compelling today. Until we return corporations to exclusively business activities and revoke their ill-gotten political “rights,” democracy will be an unfulfilled, fading ideal.

Jeff Milchen directs ReclaimDemocracy.org, a grassroots organization devoted to restoring citizen authority over corporations. Jeffrey Kaplan of our San Francisco area chapter contributed to this article.

This article was first published via Pacific News Service.

See our proposed Constitutional Amendment to revoke corporate political “rights.”