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The Rise of the Corporation, the Birth of Public Relations, and the Foundations of Modern Political Economy

50 Pages Posted: 9 Sep 2011  

Donald J. Smythe

California Western School of Law

Date Written: September 8, 2011


The rise of the modern corporation was an integral part the Second Industrial Revolution. This important economic and social transformation would not have occurred if business entrepreneurs had been unwilling to make the large investments necessary to implement the new technologies that drove the industrial growth and development, and entrepreneurs would have been reluctant to make the investments without the shield of limited liability and the opportunity to spread their risks across diversified portfolios of corporate stocks. Nonetheless, the rise of the modern corporation created problems. The most successful corporations grew to unprecedented proportions, and the public’s concerns about their growing economic and political power contributed to the Progressive Movement and pressures for social and political reform. There were no federal or state constitutional protections for corporate speech in the early twentieth century. Indeed, corporations were regarded as creatures of state law, whose powers were usually defined by their charters under state incorporation statutes. The federal and state governments could have enacted sweeping regulations on corporations’ speech and related behavior. But they did not. Corporations thus began to make sustained attempts to alter public attitudes and improve their public images through systematic public relations campaigns and corporate welfare programs. The public never came to think of the corporation as a person or anything other than a business entity, but the public relations campaigns succeeded in humanizing the corporation and integrating it into the American public’s sense of community. More importantly, perhaps, they succeeded in rationalizing the role of the corporation in the American economy and legitimizing its role in modern American life. This has had profound implications for the way that American business law and public policy have evolved during the twentieth century.

Keywords: Corporations, Political Economy, Public Relations, Advertising

JEL Classification: K20, L50, N00, O00

Suggested Citation

Smythe, Donald J., The Rise of the Corporation, the Birth of Public Relations, and the Foundations of Modern Political Economy (September 8, 2011). Washburn Law Journal, Vol. 50, No. 3, 2011. Available at SSRN:

Donald J. Smythe (Contact Author)

California Western School of Law ( email )

225 Cedar Street
San Diego, CA 92101
United States

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