The History of Corporate Activism in America
June 18, 2023
In recent American History, the line between politics and corporations has diminished. Recently Florida Governor Ron DeSantis has been in a months-long legal fight with Florida’s largest employer Disney over Florida’s Parental rights bill. Anheuser-Busch faced scrutiny after partnering with transgender activist Dylan Mulvaney, causing a nationwide boycott and a drop in stock price. However, is this a new phenomenon, or has corporate America always had a hand in governmental affairs?
Corporations in Early American Government
While there is no evidence that corporations had an explicit interest in the founding of the United States, there was business interest in the new land. In 1601, a group of businessmen in England started an expenditure to work out trade in the East India Company. Towards the end of the Decade, the corporation took an interest in colonizing North America (Osgood, 1896, p. 264). As more settlers made their way to North America, elected officials made efforts to find and appoint corporate entities to instill confidence in the new land. 1682 Governor Penn of Pennsylvania established The Free Society of Traders of Pennsylvania. In 1682 a formal agreement was drawn up establishing the coalition. Shortly after that, the state general assembly ratified the alliance allowing 20,000 acres of land to be granted to the society, and business was started with the approval of Governor Penn (Baldwin, 1903,453). The Society would ultimately be a failure in itself. That did stop other colonies from attempting similar expenditures.
Printing Press Influence
One of The United States' first successful businessmen, Ben Franklin, showed early America the power of the dollar in governmental affairs. With the Revolution raging Ben Franklin and his printing press were used to influence the public. In an editorial note in Pennsylvania, Franklin said,
“It will always prevail over Falsehood. Therefore, though they have an undoubted Property in their Press, they willingly allow that anyone is entitled to the Use of it who thinks it necessary to offer his Sentiments on disputable Points to the Public.” (Franklin, 5).
When the Stamp Act was proposed, skepticism arose in England that Americans would accept the Tax. Ben Franklin informed local politicians that he was doing everything he could to oppose The Stamp Act, but privately was puzzled by the opposition to the Act. (Frasca, 2009, 409). However, this did not stop other printing presses went forward from publishing harsh opinions and the potentially disastrous effects that the passage of the stamp act would have on the colonies. Rhode Island Merchant Nicholas Brown stated, “The press had much to do with whipping up public fever against the stamp act and its agents.” (Frasca, 2009, p. 407). The owners of printing presses were successful in their opposition as the public turned on the act, and the floodgates were open as wealthy individuals made efforts to sway public opinion on an issue.
Business and Slavery
The reconsecration era in the United States marked one of the lowest points in United States history, both politically and economically. The emancipation of enslaved people completely shut down the profitable economic system of the South. Historians widely agree that slave labor significantly contributed to the United States' economic growth. In the 1820s, a new breed of entrepreneurs was popping up in southern states specializing in purchasing enslaved individuals, and we're being rewarded handsomely for it. (Baptist, 2014,179). As enslaved people continued to be a lucrative industry, the value of cotton rose exponentially. In the 1820s, the American South supplied 70 percent of the world’s cotton (Srinivasan, 2017, p. 56). This financial success allowed southern plantation owners increased political power. After the 1800 Election of Thomas Jefferson led an expansion of representation in the House for southern states, this expansion allocated seventeen southern congressmen to represent three-fifths of the slave population. (Baptist, 2014, 153). As some northern politicians attempted to disband slavery, northern business leaders saw economic opportunity in southern states. Some high-class New Yorkers wanted the South to be accommodated politically (Wright, 2020, p. 25). However, this interest would start to wain over time. The South used the political authority they had garnered to oppose the expansion of the United States, opposing legislation such as the Homestead Act, Pacific Railroad Act, and Funding of agricultural education. (Wright, 2020, 26). This caused northern shareholders to turn back on their support of the South, viewing them as in competition with the expansion of the United States.
The Civil Rights Movement
While the Civil Rights Movement raged on, protesters often looked to corporate entities and organized boycotts if the company refused to hire or serve people of color. Black-owned businesses often pushed for civil rights by holding a quasi-civil rights movement within their communities. Local Governments started to crack down on black-owned businesses and attempt to disrupt the silent protest. After Rosa Parks protested public transportation forcing African Americans to sit in the back of the bus, local cab companies decided to lower their rates to match the price of a bus ticket so that African Americans who were participating in the bus boycott had the opportunity to still get to their destinations. Local police departments then began to enforce a minimum fair law that would crack down on cab companies from offering these fares and thus disrupt the protest. (Ferleger, Lavallee, 2018). Other black-owned businesses began taking economic losses as they attempted to protest the injustice that was taking place in the United States. Notably, Gus Quartz, who was a grocery store owner, registered several 100 black voters and had threats made against him. Gus Courts, A grocery store owner, began having multiple other businesses in the community refuse to work with him after speaking up, including not allowing him to purchase gasoline for his vehicle, other businesses refused to deliver to his store, and even an instance of him being shot in his store. (Fergler, Lavllee, 2018). While the central struggle in the South was at the feet of African American corporations all over America that were facing the consequences for supporting The Civil Rights Movement. Some corporations took the risk to push the movement forward despite the potential risk. Coca-Cola, based in Atlanta in the segregated state of Georgia, rallied white business leaders and politicians to celebrate Martin Luther King Jr. After the act's passing, serval corporations welcomed African American employees before it was socially acceptable. (Lin,2022,19). While progress moved forward in some corporations, others were slow to accept change.
Heart of Atlanta
The Passing of the Civil Rights Act was not the magical ending that some hoped for. In the landmark case of Heart of Atlanta Motel, Inc. v. United States, plaintiffs alleged that the Heart of Atlanta motel only accommodated white clientele in violation of the Civil Rights Act of 1964. At the heart of the case, The Heart of America Motel believed that out-of-state travelers were exempt from Civil Rights Acts protections. According to the case, 75% of its registered guests we’re from out of State. Prior to the passage of the Act, the motel had followed a practice of refusing to rent rooms to African Americans, according to court documents The Motel intended to continue to do so. In an effort to dispute that policy, a suit was filed.” Heart of America’s attorneys argued that the Civil Rights Act of 1964 violated the Constitution's fifth, thirteenth, and fourteenth amendments. Heart of America’s attempt to make this an interstate commerce issue was unsuccessful, as the court denied their claim unanimously. Justice Clark said in the court’s majority opinion that.
“It is clear that such a limitation renders the opinion devoid of authority for the proposition that the Commerce Clause gives no power to Congress to regulate discriminatory practices now found substantially to affect interstate commerce” (Clark, 1964).
Senators McCain and Feingold wrote and passed the Bipartisan Campaign Reform Act to limit money's role in politics. The act limited the amount of corporate influence in elections by restricting the amount of money an entity could give a candidate, putting a cap at one thousand dollars. This did not stop corporations from making attempts to sway elections. One of the many entities engaging in these activities was Citizens United. Citizens United was found violating the Bipartisan Campaign Reform Act when they made Hillary: The Movie, a documentary detailing the wrongdoings of Hillary Clinton during her 2008 presidential campaign. The Federal Elections Commission would not allow Citizens United to release the film accusing the company of electioneering. The FEC cited the Bipartisan Campaign Reform Act prohibition on independent expenditur airtime 30-60 days before the election (Winkler, 2018, p. 329). Citizens United sued the FEC and the case made it to the Supreme Court. In a narrow 5-4 ruling, the Supreme Court gutted the Bipartisan Campaign Reform Act and ushered in a new era of American politics. The ruling allowed for an era of Super Pacs which are allowed to give unlimited amounts of money to campaigns and produce advertising separate from the candidate allowing corporations to spend in elections and grant themselves access to politicians.
Corporate Activism Today
Corporate activism has taken a digital and forward-facing approach in today's hype-partisan world. Corporations can use their influence on social media to spread messages. Often these corporations use their economic power to pursue state governments. In 2015 Indiana’s State Legislator attempted to pass the Religious Freedom Restoration Act. This legislation faced backlash due to perceived anti-LGBTQ stances. Critics pointed to the bill allowing businesses to put up a sign that they would not serve certain members of the population if severing them would “substantially burden the individual's exercise of religion” (Religious Freedom Restoration Act, 2015). According to Aaron K. Chatterji and Michael W. Toffel at the Harvard Business Review, multiple CEOs came out against the bill. Angie’s List canceled a planned expansion to Indianapolis, Sales Force stopped employee travel to the state, and the National Collegiate Athletic Association (NCAA) announced that the state might lose tournaments and considered moving its headquarters. Governor Mike Pence revised the bill saying that businesses may not refuse service based on sexual orientation (Chatterii, Toffel, 2018). While these victories are celebrated, others are skeptical of the corporation's intentions. Biotech founder Vivek Ramaswamy has been on the front lines speaking out against what he calls “Corporate Wokeism,” an idea that corporations who speak out on these issues are ill-motivated and do not practice what they preach. In The New Yorker, Sheelah Kolhatkar points out Ramaswamy's critique:
"Amazon donates to organizations that aid Black communities while firing workers trying to unionize. While exploiting workers in Asia, Nike produces advertisements with the civil-rights activist and former N.F.L. quarterback Colin Kaepernick.” (Kolhatkar, The New Yorker, 2022).
Ramaswamy believes that these corporations’ main goal is to cozy up with the democratic elite, not face backlash, and make money for their shareholders above all else.
Businesses can only survive with the support of consumers. When company’s take a risk to make a statement on policy, that will inherently cause disagreement, and some citizens have decided to vote with their wallets and not support businesses they disagree with. In 2012 several states were preparing to vote on propositions to legalize same-sex marriage in their state. Religious groups started taking in millions of dollars to fight these propositions and had support. Chicken fast food giant Chick-fil-la CEO said on a radio show, “I pray God's mercy on our generation that has such a prideful, arrogant attitude to think that we would have the audacity to try to redefine what marriage is all about” (HU, 2012). These comments and donations to LGBT groups made by the company sparked conversation and boycotts. Despite this Chick-Fil-La remains at the top of the fast-food marketplace. Even with success, Cathy regrets the attention his comments brought to the company, saying, “And it is probably very wise from our standpoint to make sure that we present our brand in a compelling way that the consumer can relate to” (O’Connor, 2014). Some companies' risks had financial consequences they were not expecting. Beer giant Bud Light partnered with Dylan Mulvaney, a transgender activist, for a new campaign. Bud Light’s involvement stoked backlash, resulting in a twenty-nine percent drop in sales (Brooks, 2023). The backlash from right-wing pundits and politicians caused Bud Light to backtrack significantly but threw gas on the fire. Multiple LGBTQ+ Bars began to pull the product for attempting to erase the progress that Bud Light attempted to make. One bar owner said, “What we are saying is that you cannot erase our community - you cannot put part of our community, particularly the 'T,' in danger - and think we are going to continue to give you our money, so we removed the products" (De Mar 2023).
Money and influence have gone hand and hand since the dawn of cavillation, and individuals with capital will continue to influence politics. With a new wave of political backlash to certain stances and a new age of politicians who focus on small-dollar donations, corporate influence should be seeing a change in the near future.
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