Corporations as Persons

Friday, June 18, 2010 -- 5:00 PM

According to American law, and the law in a lot of the rest of the world, corporations are persons–fictional persons, or corporate persons, or something like that. There must be two sides to this issue. But I can only see one. This is a really stupid idea. Corporations are not persons. Groups of persons in general are not persons. It's almost always a bad idea to call something by a name that doesn't deserve. By calling corporations persons, we seem to let a lot lame brains, including a majority of the Supreme Court, to think that they are persons. Corporations as persons is a dumb idea, that should be flushed down the toilet of history.

Well, I suppose that doesn’t sound very philosophical.  It sounds extreme. Groups of people, and corporations too, can do a number of things that people do. They can make promises, tell lies, incur debt, and the like.  Perhaps the  concept of corporations and other collections of human beings as fictional persons simply recognizes that fact. Groups of people were issuing statements, true and untrue, buying and renting buildings, going into debt, and stuff like that long before the law or Supreme Court came into it. At some point it seemed like a good idea, one that would encourage innovation and risk-taking, pooling of capital, and other things that increase economic activity, to create a special kind of association, a corporation, that shielded the participants from some of the liabilities and risks. With the rise of corporations in the 19th and 20th centuries, it seemed like a good idea to get clear about the extent to which corporations should and should not be treated like persons.  Hence the concept of a fictional person, as an unfortunate way of posing the question..

I’m willing to admit that corporations may be a good idea.  Some corporations have been very very good to me.  Stanford for example.  And KALW, and Ben Manilla Productions.  Perhaps none of these institutions would exist if it were not for the protection offered by corporations. 

But is there any reason to abuse language and confuse concepts in order to keep track of these facts?  To keep track of a few similarities between groups and corprorations, and real, live, breathing, humans --- the sorts of things that are real persons? We just need to say that groups of people and corporations can make statements, incur debts, sue and get sued and whatever other things we think it is a good idea for them to be able to do. As soon as we call them persons, we create the default assumption that they should be treated exactly like persons.  The language already in the law, and in the Constitution–a document written long before corporations were of much importance–that uses the word “person” is assumed to be applicable to these nonpersons. That puts the burden of argument in the wrong place, and, to my mind, somewhat demeans real persons.

Given that corporations exist and can do many of the things that persons can do, and that their existence seems to provide is a practical advantage that our country and most countries have wanted to incorporate into the legal structure, then we need to make certain decisions.   Then the question arises, in what ways should they be treated like persons and in what ways should they not be treated like persons? For example, should we put special restrictions on the speech of corporations? But we don’t need to pretend that corporations are persons of one sort or another to ask and deliberate about these questions.

What has happened here in America, as I understand it, is basically this. Various states have tried to make laws to the effect, say, that corporations are legally not allowed to tell lies in the same way that ordinary people are, and may be sued for doing so in ways that ordinary people couldn’t be.  Then the Supreme Court  says, “oh no , you can’t do that, the 14th amendment says all persons within each state must have the same rights.”  So an amendment, created as part of ending slavery, is abused to prevent the individual states from making reasonable differentiations between the rights of people–real people–and the ways we wish to allow corporations to behave –it seems misleading to me even call them rights.

There must be a better way.

 

Comments (18)


Guest's picture

Guest

Friday, June 18, 2010 -- 5:00 PM

In a lot of ways our ideas of corporations are fuc

In a lot of ways our ideas of corporations are fucked up, but I don't think this Supreme Court decision depends on bad wording; I think it depends on the problem that we have an unspeakably awful bunch of Supreme Court justices, who are willing to use the flimsiest justifications imaginable to issue decisions favorable to corporate interests. I'm sure even they realize that corporations can't vote, and cannot be either the victims or perpetrators of a wide variety of criminal acts. Their decision to arbitrarily add speech rights to the list of ways in which corporations are treated as people is completely arbitrary.
Still, people do have a fucked up idea of corporations. Limited liability is a privilege, not a right! If corporations aren't giving us enough benefit in return for that privilege, it's perfectly reasonable for us to add conditions, demand additional fees and taxes, or even withdraw the privilege if they're failing especially badly to deliver the promised benefits.

Guest's picture

Guest

Friday, June 18, 2010 -- 5:00 PM

I don't believe the idea of corporations (for prof

I don't believe the idea of corporations (for profit, not for profit, public, private) are necessarily a bad idea. What seems to me to be a problem is that our elected officials have little back-bone when it comes to "pulling" a corporation's articles or charter.
Instead of listing what a corporation CAN do, I ascribe to the position that we should only put limits (what you CAN NOT DO) on the corporation as we find the need to do so. Generally, that is how we should govern corporations (as leaders/managers) and make our laws. You are free to pursue your own ends as long as you do not damage or abridge someone else's rights.
What we are complaining about here is that we have a discovered that those who we have elected to lead and protect us in this representative democracy are not doing so. The government agencies have failed us because they are as or more intoxicated with greed than the businesses they are supposed to be regulating. Of course, it would be nice if regulation weren't necessary, and yet companies comprise human beings with all their strengths and weaknesses.
Whenever business leaders confuse the measurement (the financials) to be the reason for the corporate existence (serving stakeholders not just stockholders) they lose their way. The state/federal regulators who bestow the privilege of articles of incorporation and charters to conduct business must also hold us accountable and be willing to rescind those privileges. That will not happen until such time as we make sure the companies being regulated are not funding the regulators and that elected officials cannot legally receive ANY funds from business beyond that which individuals are allowed to contribute.

Guest's picture

Guest

Friday, June 18, 2010 -- 5:00 PM

First, as a laws/philo major graduate I'd like to

First, as a laws/philo major graduate I'd like to point out that one of the primary reasons for conceiving of corporations as having legal personalities (as distinguishable, say, from human personalities) is precisely so that we can hold them accountable for things.
The law might not be up to speed on the details with this one (for example, corporations do to not to take into consideration anything other than the bottom line when acting in shareholder's 'best interests'). However, in talking about corporations as legal entities, the courts have, in effect, opened up a dialogue about, not just rights, but accountabilities for corporations. There is potentially (and some would argue, probably) a great deal of good that can be made of this rhetoric into the future when perhaps corporations, as legal personalities, will be directly accountable for things like the environmental impact of their director's decision making, and so on.
Perhaps the way in which this area of law interacts with the American Constitution (and a hard bill of rights model) is particularly unfortunate. I should like to see the judgement in the Supreme Court that you're referring to.
But, if this is true, it's an issue of statutory interpretation - economically conservative judicial (anti?)activism - that is the root problem and not the concept of the corporation as a legal entity itself.

Guest's picture

Guest

Saturday, June 19, 2010 -- 5:00 PM

While I tend to agree with the general tenor of th

While I tend to agree with the general tenor of the show [i.e. the decision was a poor one prompted mainly by political concerns] it seems to me a much more interesting show would have ensued from having a guest who was a strong advocate of the decision. The range of opinions didn't cover much ground. Listeners were left, I think, with the notion that there was little in the way of a rational reason for it. I think the discussion would have left the Chief Justice shaking his head and muttering under his breath.

Guest's picture

Guest

Saturday, June 19, 2010 -- 5:00 PM

Thanks for writing such a thoughtful piece on this

Thanks for writing such a thoughtful piece on this topic.
Corporations were created as a certain type of legal entity, and should in no way be given the rights of persons. This is crazy, and I wish more people were speaking out about it. When humans come to their sense eventually, and realize corporations should not have too much power, history will look at "corporate personhood" as emblematic of how business became a new form of religion in this country, and far was too powerful.

Guest's picture

Guest

Sunday, June 20, 2010 -- 5:00 PM

I have to admit that the discussion was a little m

I have to admit that the discussion was a little more one-sided than most discussions on our show tend to be. But I think that's partly because as John says in the main entry, there really is only one side to this issue. But it's also partly because the court, in applying the concept of a corporate personality, has done very little hard reflection about what exactly corporate personality amounts to -- especially in recent years. You could have two different views, I suppose, of the corporation as person -- both with historical antecedents. On one view, the corporation as person is an "artificial person" and is therefore only a person in a restricted, special sense. Once you distinguished between natural and artificial persons, you would have to do decide to what extent and on what grounds the constitution requires you to extend the rights clearly afforded to natural persons to artificial persons. For example, the 14th amendment refers to persons "born or naturalized" within the United States and declares that they are citizens. It seems pretty absurd on it's face to think that corporations count as either born or naturalized citizens. Doesn't it? If so, then they can't possibly enjoy the "privileges and immunities" of citizens. And it's not clear at all what, if any, privileges and immunities the constitution requires be extend to these non citizen, non natural, artificial persons ( a category of "persons" not at all explicitly mentioned in the constitution anywhere.)
On the other hand, you could, I suppose, that corporations are, in some sense, "natural" persons. And if you thought that, you could think that corporations automatically get the full panoply of personal rights. It would be a little hard to argue for this, to say the least.
Here's sort of a stab at an argument. It might go from the fact that what an individual can do, collectivities of individuals can (often) also do -- things like asserting, promising, contracting, associating, etc. And you might argue that if individuals have certain rights in the doing of these things then they don't lose those rights when acting collectively. Perhaps collectivities of persons just inherit the rights and responsibilities of the individuals that constitute them.
The problem with this approach is that it misunderstands entirely the nature of the limited liability corporation. Corporation are not just collectivities of agents which inherit privileges and immunities from the individuals that collectively "constitute" the corporation. Individuals don't as such "constitute" corporations. I mean by this that the acts of a corporation are not, by law, attributable to the individuals that own the corporation as a collectivity at all. Corporations are, rather, free-standing entities, in a weird sense. This is shown by the fact that shareholders are legally liable for the acts of the corporation only to the extent that they are invested in the corporation. So if a corporation dumps millions of barrels of oil into the Gulf, causing widespread economic loss and environmental damage, the shareholders of the corporation who are its "owners" risk the loss of their stake in the corporation, but that's it. None of their other assets are to any degree at risk. They, as individuals, are not held fully accountable for the acts of the corporation because the acts of the corporation are not held to be either severally or collectively THEIR acts. The corporation's actions are not, in other words, their actions.
This construal of the corporation as a free-standing actor, spares and shields shareholders from full liability for acts of an entity that they own and that has a fiduciary obligation to act on their behalf. That my make economic sense, since it encourages a kind of risk-taking. But it makes almost no moral sense. But more particularly, it helps to show that the corporation can't really be viewed as natural persons, straightforwardly constituted by the cooperative activities of those who own the corporation. And once you see that, it seems pretty obvious on its face that you can't straight-forwardly argue from the rights of the individuals that "own" the corporation to the rights of the corporate entity that individuals constitute through cooperative activity.
There's a third way, I guess, you could think about corporations and rights. You could think something like this. Well, the right of free speech serves a certain purpose -- making for free, unfettered debate and competition in the market place of ideas. Then you could think that the purpose of the free speech clause of the constitution would be advanced by giving such rights to corporations and thwarted by denying such rights to corporations. Hence, we should give such rights to corporations.
Notice this way of thinking doesn't go through the bizarre idea that corporations are natural persons. It's a purely pragmatic approach that doesn't take a stand on the personhood of corporations. But once one thinks about it this way, it seems that all sorts of considerations should come into play -- considerations like the potentially corrupting influence of corporate wealth on the political process. And one would think that weighing the relative importance of these competing factors should be the business of legislatures, not courts.

Guest's picture

Guest

Tuesday, June 22, 2010 -- 5:00 PM

Great article. This is an issue that must be addre

Great article. This is an issue that must be addressed, good work on taking the initiative. That government was even willing to consider this syntactical fallacy, is erroneous by the first degree, even though it is an attempt with maybe some good intentions behind it. Great argument.
End Corporate Globalism's influence over Washington D.C.!

Guest's picture

Guest

Wednesday, June 23, 2010 -- 5:00 PM

I had asked Larry Ripstein, a legal scholar, who i

I had asked Larry Ripstein, a legal scholar, who is reasonably bright to comment on this post.
He didn't and here is his blog on BP.
http://www.forbes.com/2010/06/24/bp-oil-spill-anadarko-opinions-columnis...
Ripstein is not stupid, but as an attorney and PhD in Philosophy, I find his remarks intolerably stupid.
So, before I go off on rant on his blog, could Ken and John please salvage -if they can- something of Ripstein's argument.
(My wife and our twins thank you in advance. Anything to keep Dad from stopping around the house muttering about imbeciles.)

David's picture

David

Wednesday, June 23, 2010 -- 5:00 PM

Two suggestions: 1. Since it only exists as a mat

Two suggestions:
1. Since it only exists as a matter of law, removing the limited liability status of stockholders would reform the dynamics of investment strategy. Violent, criminal or damaging behavior suddenly becomes the institutional investor's nightmare, instead of a mild concern.
2. If the Supreme Court believes that the 14th Amendment gives corporations access to the rights enumerated in the Constitution, imagine the consequences of enforcing the 13th Amendment on corporations. Persons can not be bought or sold.

David's picture

David

Wednesday, June 23, 2010 -- 5:00 PM

John Perry makes a large misstatement when he spea

John Perry makes a large misstatement when he speaks of corporations doing what people do, lie; make promises, incur debt, etc. Never in the history of the world has any corporation done any of the actions ascribed to them. In all cases individual humans have acted in the corporation's name. It might be better reflect reality if we said "The president of BP, acting in favor of the economic interests of the Board of Directors, placed standards in place that caused local managers to risk massive oil spills to improve their opportunity for career advancement." We don't, instead we say, "BP cut safety corners to improve profitability", which is patently false.
We may recognize that the two should mean the same thing. But five members of the Supreme Court are not that wise.

Guest's picture

Guest

Thursday, June 24, 2010 -- 5:00 PM

I was a bit disappointed in the dialog about corpo

I was a bit disappointed in the dialog about corporations as persons for the sole reason that it avoided defining personhood. It seems to me that personhood necessitates that one is a moral agent, and the problem with defining corporations as persons is that they are not capable of acting as moral agents. I believe that there is a line of philosophy that particularly addresses groups as having "rights" or acting as moral agents, but I'm not up on it.
Thanks for a wonderful program.
Olivia

Guest's picture

Guest

Friday, July 2, 2010 -- 5:00 PM

Edward Thurlow (1731?1806), Lord Chancellor of G

Edward Thurlow (1731?1806), Lord Chancellor of Great Britain, is said to have asked rhetorically,
"did you ever expect a corporation to have a conscience, when it has no soul to be damned and no body to be kicked?",
It seems his exact phrase (John Poynder Literary Extracts (1844) vol. 1, p. 2 or 268.) was even more to the point:
"Corporations have neither bodies to be punished, nor souls to be condemned; they therefore do as they like."

Guest's picture

Guest

Saturday, July 3, 2010 -- 5:00 PM

There was a 19th century Supreme Court decision th

There was a 19th century Supreme Court decision that made corporations "artificial persons." Does anyone know the name and year of that SCOTUS decision?
E-mail me with the answer: politicalwiz55@aol.com
Thanks

Michael's picture

Michael

Saturday, July 3, 2010 -- 5:00 PM

Olivia writes: "...the problem with defining corpo

Olivia writes: "...the problem with defining corporations as persons is that they are not capable of acting as moral agents."
Yes, except one could argue that a corporation has a moral duty to deliver value -- profits -- to its shareholders. In fact, that's the only legal and moral duty of a corporation, as laws are now written. It would be interesting, as PT's guest argued, to change statutes to add a requirement that corporations "act in furtherance of the public interest" or at least "not act in ways that are detrimental to the public interest." A corporation that defied this moral imperative would lose its charter or face penalties. Corporations are entirely creatures of statute, and statutes can be changed, though the current Supreme Court seems to have taken them under its (far right) wing.

Guest's picture

Guest

Sunday, July 18, 2010 -- 5:00 PM

That was quite a *different* topic. Yes, it's wort

That was quite a *different* topic. Yes, it's worth thinking what sense does it make calling corporations as persons! Were the law makers so poor at vocabulary and dumb at logic that they could not find another suitable word, another definition for corporations? Ha! Nice read it was!

Guest's picture

Guest

Thursday, August 19, 2010 -- 5:00 PM

I was shocked and appalled by this Supreme Court D

I was shocked and appalled by this Supreme Court Decision because of the fact that it basically lets corporations "buy" elections. Once you define a corporation as a person they are free to donate as much as they want to a candidate with little consequence. This totally undermines the concept of our democracy where the government is shaped by the PEOPLE. Corporations have different interests as people and a hell of a lot more money. Very recently the company Target donated 150,000 dollars to a far right wing candidate. It suffices to say I won't shop there anymore after they have lost my trust by abusing their power as a corporation and abusing this democracy.

Fred Griswold's picture

Fred Griswold

Wednesday, March 28, 2012 -- 5:00 PM

Consider the Citizens United

Consider the Citizens United case, which Russ Feingold was talking about when he was at Stanford lately. The argument was that since the Fourteenth Amendment keeps the states from passing laws that violate protections people have under the U. S. Constitution, and since corporations are (legally) people, then anything that restricts a corporation's freedom of speech is prohibited. It's interesting to look at the implications for corporations of the other rights the Constitution guarantees. The free exercise of religion? I can't remember the last time I saw a corporation in church. Freedom of assembly? I'm not sure I could pick a corporation out of a crowd. What do they look like? Freedom from excessive bail? How much bail should we charge if a corporation gets rousted for drunk driving? And can you imagine what life would be like if your friendly neighborhood oil company could carry a gun?

Guest's picture

Guest

Saturday, March 31, 2012 -- 5:00 PM

I think our Constitution is

I think our Constitution is written in a way that refers to 'person', 'people', or 'individual' as property owners. By writing that slaves are to be considered three-fifths of a man, the document leaves the concept of person open to interpretation. The same can be said about how it only talks of men and not women. By giving value to people based on their wealth and means, it is not a far stretch to say a corporation counts as a person. In fact the Constitution defines 'person' in way that makes the corporation seem more like a 'person' than the biological entity that we usually think of as a 'person.' Any number of caste systems throughout history have given rights to people based on wealth. If how much of a person you are is based on how much you are worth, then a corporation is more of a person then I am. This does not really get at the core of the issue of why we need to even use the term 'person' to refer to a corporation. It is more about the intentions of the Constitution. It can be interpreted as a document that protects the wealthy minority from the majority written with deliberately broad language that guarantees rights to the many but still protects the property of the wealthiest class. This includes slave owners whose fortunes would be greatly diminished without slave labor. Even 'people' could be considered property. So newer concepts like ' the corporation' or "1%ers" are just different ways to talk about rights and power in America. The question of what a 'person' 'is' is an ongoing dialogue.

 
 

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