In the January/February issue of the Washington Monthly we have a feature from Boston College law professor Kent Greenfield on the efforts to codify into law the idea that corporations are not people. What’s interesting about it is that Greenfield doesn’t think these efforts are a good idea.
Many of the leaders of this movement are friends and respected colleagues. I contributed to Elizabeth Warren’s senatorial campaign and voted for [former Labor Secretary Robert] Reich when he ran for governor of Massachusetts. Forty years ago, my coal miner grandfather sat me down and told me how a union had saved his life. As a law professor, I have spent my career as an oddity—a progressive who teaches corporate law, almost always the most liberal person in any room of business law academics. A decade ago, I came up with a novel legal theory that shareholder activists recently put to good use suing the Hershey Company over the use of child labor in West African chocolate cultivation.
A corporate lickspittle I’m not.
But the attack on corporate personhood is a mistake. And it may, ironically, be playing into the hands of the financial and managerial elite.
What’s the best way to control corporate power? More corporate personhood, not less.
If, as I suspect, you are viscerally opposed to the idea that we need more corporate personhood, you owe it to yourself to at least hear Professor Greenfield out.
Without spoiling his argument, one of his key points is that we need corporate structures to shelter investors from losses that go beyond a reduction in share value. Without this separateness, concerns about liability will undermine our entire system of corporate investment. Whether we consider these separate entities to be “persons” or not, they should be legally distinct from the directors and shareholders. This is one reason why the Hobby Lobby decision was so poorly decided.
He makes other points that must be reckoned with. For example, if corporations are not people and do not enjoy constitutional protections, then perhaps they don’t have the same vigorous free speech rights that individual citizens enjoy. How would that have played out for the publication of the Pentagon Papers, for example? Or, could Planned Parenthood, a corporation, have been denied standing in court to argue Casey back in 1992?
Greenfield also points out that most of the money flooding into our elections over the last few cycles has come not from corporations but from individuals like Sheldon Adelson and the Koch Brothers. Those people certainly operate and control many corporations but restrictions on corporate giving would not have dissuaded or prevented them from injecting themselves in a big way into our electoral politics.
Perhaps the efforts to do away with corporate personhood are well-intentioned but aimed at the wrong target. Could it be that there is a better approach that aims instead at the dogma that corporations’ sole prime directive is to maximize shareholder value?
And could the anti-corporate personhood folks be inadvertently fighting to strengthen that dogma?
To make up your mind about this, you’ll want to read the whole thing.
Give the Corporations full person hood. This way they should not be allowed to have any more rights then an individual. The Corporation and all of it’s assets should be treated the same as you or I.
Especially if the Corporation is found liable by a court of law for damages. The law should be allowed to attach all assets of said owners of the PersonCorp in any law suit. Remove all protections from liability for all involved with said PersonCorp.
“Give the Corporations full person hood. This way they should not be allowed to have any more rights then an individual. The Corporation and all of it’s assets should be treated the same as you or I. ”
This is not the solution. This is the problem. Corporatins, at least in certain contexts of US law, do have the same rights as individuals. But they are far more powerful and wealthy than individuals, and they can live forever.
I don’t get the argument at all. It seems to be that in order to shield investors from liability the corporation must have the same constitutional rights that humans have. Don’t buy it.
Hobby Lobby just wants more rights via their corporation and their argument fails.
Sorry, this has to be said. Kent Greenfield is a useful idiot. There is no way to miss the point that completely.
Corporations want the bits and pieces of personhood that reduce their accountability. They do not want the pieces parts that might increase their accountability.
“It’s the unaccountability, Stupid!”
All the more reason they should have acquire them, – of course they don’t want them
Exactly. Really the question of corporate personhood comes down to whether we want to have corporations at all. If they are useful, then we are talking about a kind of artificial personhood, because that’s really just what a corporation is. The problem lately isn’t so much that the idea of corporate personhood is novel, it’s that we’ve lost sight of the artificial part.
And it’s also important to keep in mind that not all corporations are for-profit entities. That’s why I think BooMan is on target when he talks about aiming at “the dogma that corporations’ sole prime directive is to maximize shareholder value.” Corporations can form for lots of different reasons, and profit making is just one of them. But it’s the government that grants the liability protection that makes for-profit corporations feasible, and the government has every right to expect something in return.
Bingo.
Given corporations personhood turns them into Hobbesian Leviathans. And makes the legally reponsible officer an autocrat relative to those who do not have that legal responsibility. At the same time the privilege of limited liability and corporate bankruptcy and reincorporation provides routine ways for those autocrats to dodge accountability.
Greenfield dodges saying specifically what it means for corporations to have full personhood and limited liability (for that is the primary privilege of corporations). How exactly do you arrest and detain a corporation? Apparently piercing the corporate veil doesn’t happen enough to be a deterrent for corporate officials. How do you imprison a corporation?
The fact that corporations are specifically not persons is what make accountability go from beyond problematic to impossible.
There needs to be some constitutional provision that does two things–ends the illusion that corporations are private and not grants of government-provided privileges and provides some means of accountability of the people involved in the corporation.
There may be valid reasons to regard corporations as persons but when, as in the Hobby Lobby case, people start arguing that corporations have religious beliefs then the concept of corporation personhood is fatally flawed.
Corporations need to be brought to heel.
One of the easiest ways to do that would be to require, by law, that corporations serve the public interest in their pursuit of profit.
Which is how it used to be, by the way.
When a corporation receives its charter, that IS the understanding, i.e. that they serve the public interest.
The state that grants the charter has the power to revoke it. However, charter revocations of for-profit corporations are extremely rare.
So corporations have no fear of revocation. All they have to worry about is court cases, and you see how that goes. Usually the worst that happens is a fine. Even huge fines e.g. for oil spills have little effect on the big boys. Usually the fines for fraud, etc. are much laughable and criminal penalties, if any, fall on a few individuals. As somebody just said, you can’t put a corporation in jail.
Corporations are no longer required to help the public good. They are required to distribute profits to shareholders.
Ultra Vires used to be a real corporate law thing. Now it’s just a concept you learn in law school.
In essence, corporations are legal entities that can pretty much do whatever they want to make a profit, and act as a shield, most of the time, for any personal liability for actions taken by the corporation.
I have no problem with corporations as they were understood in the 19th century, as they were much more limited. But anti-trust laws basically made them the new money shelter for oligarchs.
Require public good ultra vires and drastically limit limited liability, and they might go back to being relatively functional. Of course, capitalism is the disease eating the system, so we’re talking bandaids and neosporin, but unfortunately Capitalism is the official religion of the USA, so we have to tread very lightly.
I didn’t exactly mean that “corporations are required to help the public good”. I meant that the theory of the chartered business corporation is that they do help the public good, part of which is distributing profits to shareholders, but also by providing goods, services, and employment beneficial to society. To some extent this is true, but we know very well the damages that hide behind that platitude of “public good”.
The peculiar thing about American political theory is that it portrays private gain as an unvarnished public good. When a company decides to sell stock, it is said to “go public”.
Looking over the history of the twentieth century, I actually a think well-regulated capitalism protecting small entrepreneurs, workers and consumers, and with fair-share progressive taxes and distributive justice, is the best system. That’s far from what we have now, which is more like the socially destructive capitalism warned against in Karl Polanyi’s The Great Transformation.
I have said from the beginning of the recent debate about corporate personhood that it is miscast, and there is nothing our enemies love more than a miscast debate, because it means lots of sound and fury that will never reach the right solution.
Corporate personhood is an ancient concept that goes back to Roman law. The basic idea is that a collective entity can be recognized by law as having certain rights, in other words, it is granted existence as a legal entity. Corporate personhood has always been understood as a “legal fiction” for the benefit of society (common good).
The specific rights and responsibilities of this corporate person are defined by the law under which they are established. These rights are basically pragmatic. They are supposed to be for the purpose of pursuing a public good. As someone upthread mentioned, many corporations are nonprofit. Incorporated villages, towns and cities are also corporations of a type. So are universities, etc, etc. For-profit corporations too are granted charters because, in theory, they exist for the good of society.
Of course there can be and are all sorts of problems with corporations, but the core problem is not personhood (which is artificial).
The problem is rather that corporate persons, and most notably for-profit corporations, are enjoying rights that should belong only to natural persons, i.e, human beings. This is not inherent in the idea of “corporate person”.
Rights of human beings and the constitutional, statutory rights based on these, apply to humans precisely BECAUSE they are human. In our legal and philosophical tradition, humans are natural persons and enjoy natural rights precisely because of their humanity, not for merely pragmatic or arbitrary reasons.
Remember those famous words in the opening of the Declaration of Independence: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are life, liberty and the pursuit of happiness.” This is straight out of the Western tradition of natural law, based on natural theology.
The problem started with the hijacking of the 14th Amendment, specifically the case of Santa Clara County v. Southern Pacific Railroad Company, 118 US 394 (1886), which for the first time held that that the equal protection clause applies to corporations as well as to natural persons.
It was that case that opened Pandora’s Box. There is nothing wrong with the concept of corporate personhood. The problem is that corporate persons are enjoying rights under the constitution that should only belong to natural persons.
As long as Santa Clara vs Pacific and the innumerable decisions for which it stands as precedent are considered constitutional by virtue of a false interpretation of the 14th Amendment, this trait of US law will continue eroding our rights as humans and American citizens, and any attempted solutions that ignore this are sure to make matters worse.
I respectfully disagree with you, Booman.
There is no intrinsic connection between corporations as persons and corporations as safe investment vehicles.
A legal system/economic system can have one and not the other.
One can ALSO have safe investment vehicles without giving the stockholders voting shares. Eliminating this voting power for shareholders would create a different corporate structure, one in which non-involved shareholders are deprived of their power over management decisions. THIS is the most evil part of stock ownership, that people how have no vested interest in a company are cow-towed (sp?) to, at the expense of sound management decisions for the long term (or even short term) good of the corporation and its employees and its community.
THE single biggest evil of corporations is that they are not required to be responsible to the community in which they exist. Corporations rape communities all the time, playing hardball over taxes and other community responsibilities – including keeping people employed. Thus, corporations move from one prostituted community to another, stealing tax money in the form of “If our corporation has to pay taxes, we will just pull up stakes and move elsewhere” or “If you want us to come to your town, make us an offer.”
Thus corporations don’t pay taxes if they have the ability to play such games. This in effect steals money from the community, and then holds the community ransom for future taxes, with the ever-present threat of moving elsewhere.
Then add in this election donations issue, and corporations have stolen our electoral process, too, where one man is not one vote anymore, but one dollar is one vote. The voters are already disenfranchised enough, from the two parties’ de facto ability to monopolize ballot access and thus deny choice to voters. Now voters’ votes mean even less. One corporation can have as many votes as it pays for. Humans are limited to one vote.
You are wrong on this one, dude.