What are the arguments for and against corporate personhood?
November 3, 2011 4:11 PM   Subscribe

What are the arguments for and against corporate personhood?

Some related posts here, here, here, here, and here, but not quite what I was looking for, especially on the pro side.
Some of the discussion under this post comes the closest, but I'm also wondering if there are, for instance, non-trivial economic arguments, etc.
posted by spbmp to Law & Government (8 answers total) 16 users marked this as a favorite
You might find it helpful to read Reconceiving Corporate Personhood, by Elizabeth Pollman; it cites a lot of the literature on this.
posted by willbaude at 4:28 PM on November 3, 2011 [1 favorite]

Mod note: Couple comments removed. If you think a question is chatfilter, flag it; do not leave a comment saying as much in the thread. Thank you.
posted by cortex (staff) at 4:31 PM on November 3, 2011

Broadly speaking on the pro side, the ability to make contracts between companies (rather than the personal guarantors of CEOs or boards of directors) is thought to be diminished (or impossible) without corporate personhood.

There's been plenty said on the negative side - probably the best quick resource is The Corporation, which is a very good film (original film site). In essence, we legally treat corporations like persons, but they don't have the responsibilities of people: a corporation can't be jailed, for instance, and there are few repercussions for a corporation lying. "If a person behaved like a corporation, we'd call them sociopathic, and attempt to treat them" is the running line.
posted by Bora Horza Gobuchul at 4:58 PM on November 3, 2011

Here is Pascal-Emmanuel Gobry's spirited (or scornful, take your pick) defense: Corporations are persons, not people,
Corporations are persons.

What this means is that they’re recognized by the law as entities that can have a name, sue in court, be a party to contracts and have property.

Different types of persons have different types of rights, but these types of persons have only the rights that allow them to exist. Not the kind of “human rights” that fleshlings enjoy. (These non-people persons are referred to as “moral persons,” an even more misleading term, as opposed to “physical persons.”)


But there’s an even more profound reason why this non-controversy is stupid.

It’s not just that it’s an obvious fact that corporations are persons, not people, and that this, in itself, is utterly uncontroversial and of no notable policy consequence.

It’s that the doctrine of legal personality is one of the basic building blocks of civilization. It’s right up there with writing and indoor plumbing.

This is because without legal personality, it is not possible to have an institution that is distinct from the humans who make it up.

A state is a legal person. Without the concept of legal personality, any land and its inhabitants are the personal property of its ruler, as it was for much of human history. Even Robert Mugabe would not dare assert personal legal property over all of Zimbabwe.

It is quite simply one of the greatest achievements of civilization that we reached a level of sophistication high enough that we could not only conceive, but theorize and enforce the concept of an institution that is, actually, nothing but an abstract concept (there is no such thing as “Wal-Mart.” There are buildings and people and bank accounts, but “Wal-Mart” doesn’t exist. Except as a fiction. As a law professor of mine used to say “I’ve never had lunch with a corporation.”).

Going back a bit, here is an account of the case which created corporate personhood, by conservative historian/journalist Paul Johnson, which begins by quoting from Justice John Marshall's opinion,
A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence. These are such as are supposed best calculated to effect the object for which it was created. Among the most important are immortality, and, if the expression may be allowed, individuality; properties, by which a perpetual succession of many persons are considered as the same, and may act as a single individual. They enable a corporation to manage its own affairs, and to hold property, without the perplexing intricacies, the hazardous and endless necessity, of perpetual conveyances for the purpose of transmitting it from hand to hand. It is chiefly for the purpose of clothing bodies of men, in succession, with these qualities and capacities, that corporations were invented, and are in use. By these means, a perpetual succession of individuals are capable of acting for the promotion of the particular object, like one immortal being. But this being does not share in the civil government of the country, unless that be the purpose for which it was created. Its immortality no more confers on it political power, or a political character, than immortality would confer such power or character on a natural person. It is no more a state instrument, than a natural person exercising the same powers would be.
posted by villanelles at dawn at 5:47 PM on November 3, 2011 [6 favorites]

In legal disputes, the corporate legal person can sometimes function to deny a remedy if there are insufficient assets/insurance, and/or boilerplate adhesion contracts (e.g. waivers). But those are not necessary attributes of the corporate legal person -- I mean, you can have a legal system with corporate persons and also regulate risk, assets, the scope of waivers of liability, etc. Not inconsistent.

And/but -- in the political system, the corporate legal person is associated with Citizens United and the concept/problem that corporations enjoy rights permitting them to package and concentrate political donations without regulation as to amount or even publication.

And the one is enhancing the other, and vicey versey. And these attributes are related to the lack of regulation, unclear whether inherent in corporate personhood.
posted by ClaudiaCenter at 10:14 PM on November 3, 2011

I'll go a step further, if I may, than Gobry or Marshall. To me, the idea that corporate personhood was "invented" or "created" is a bit askew. "Recognized" would be a more appropriate wording. Marshall's opinion may have formed the basis for it in law, but it was clearly dealing with an extant situation of long standing. Legal personality, as noted, is very much the basis of modern mercantile life, and a key component of the rule of law that allows us to operate with set expectations and not have to worry about the king getting ticked off at us or the king's brother having designs on our properties. (If you look back a couple of centuries, the political elites of Europe were universally concerned not so much with titles but with incomes, of which sometimes a title was a side benefit or conversely, responsibility. This hasn't gone away entirely, but it got swept aside mainly during the 19th century as economic activity transferred to the middle class.

Legal personality was a necessity in this grand restructuring of society, and by itself has not been an ill: the trusts, for instance, came to dominance but then faced trust-busting; the Roaring 20s led to the Great Depression, to be sure, but also to Glass-Steagall. We enjoyed some of the most prosperous and economically equitable decades of this country's history, all under the aegis of corporate personhood.

What has happened in the last 30 years to make us less prosperous (to an extent) and less equal (in spades) has less to do with corporate personhood itself than with a political and socio-cultural trend that has built up and armor-clad a taboo against punishing elites, who simply aren't expected to bear the burdens everyone else is. In some ways corporate personhood has provided the insulation, to be sure, but it isn't by itself to blame. We can (in theory) change the laws back, we can even abolish corporate personhood, but we won't abolish the corporations themselves -- surely you know this to be true -- and we won't eliminate the functional needs that they serve. Besides, what would you replace it with? This is the great unanswered question. If you were injured by a General Motors car that malfunctioned, would you sue all the shareholders of GM (say, at the moment of the accident)? Would you even have the practical capability of determining who they all are (considering the related example mortgage servicers sometimes have trouble coming up with the simple base document)? Would this not create barriers itself to legal remedies against large companies?

To be sure, and clear, I share the grave concern that corporate personhood creates an essentially sociopathic entity, beholden only to its shareholders, even to the point of considering the law an impediment to this holy writ. We can, and should, find some means to reform this.

I have even pondered the corporate form known as the co-op. We have them in small scale situations (say, a farmers' dairy co-op), but there are few very large examples anymore, and many business structures that once resembled co-ops, like mutual banks and insurance companies, have lately been seen as antiquated and converted to shareholder form en masse. We should investigate whether we can reverse this trend and make the co-op attractive again. There has been renewed interest in credit unions; we should look anew at the quaint forgotten institutions known as the community bank or the building & loan (George Bailey style). They operate(d) under charters that did require social responsibility, e.g. for investing within their communities.

All this can be done without eliminating the key building block of our legal framework known as legal personality. What we can do can be in the service of reforming that framework, not punching a great big hole in it.
posted by dhartung at 12:26 AM on November 4, 2011

The argument against is a purely emotional one--by giving a corporation the status as an artificial person, we make it more important or as important as people. There is no real legal argument against it.

The basis for corporate personhood are the doctrines of standing and the concept of party. Along with the doctrine of cases and controversies, these are the absolute key doctrines in our legal system. Standing decides whether or not one has a right to be before the tribunal. A party is someone who is before the court. Before the development of trusts and corporations, who a party was was a simple proposition, it was a person. Even the government was a person, the King.

But as the economic system developed, groups of people got together and also trusts arose, situations where one person held property on behalf of another for another's benefit. This created problems in the law. When lords went off to the Crusades, they would convey their land to another to run their lands and receive feudal dues on their behalf. When they came back, sometimes the person who was watching over the land would not return it. When they sued, the English common law courts would not recognize the claim of the original lord and somebody would get the land for free. Lords learned to petition the King's chancellor (in a second type of law called Chancery) who would return the land on the basis of the principle of equity, a new theory in the law.

Corporations were entities made up of persons who put their money together to go into business. Problems arose when people tried to sue a corporation. Who was the party? Were all the persons in the corporation the party? Originally, a person defrauded by a corporation had no remedy, unless they were to sue the individual shareholders all at once, tracking them down and serving the complaint upon them. Sometimes courts ruled that a corporation was not a person and could therefore not even be sued for breach of any contract they entered into.

Hence was born the doctrine of the artificial person. This allowed the corporation to sue and be sued, to enter into contracts, and to be held liable for its debts as a collective. It could also be criminally charged for acts it took and pay out damages. All of these protect consumers.

The disadvantages of the system are few. Although many find it bad that corporations have rights such as free speech, such rights are critical to the functioning of our system. Imagine if AT&T used its influence to get Congress to pass a law in 1985 prohibiting the advertising of cell phones or long-distance services. Without corporations having free speech, such a law would be legal.

The Corporation is a bad movie, not a good one. It distorts the facts. Without artificial personhood, no one would be even able to sue a corporation.

The problem with unlimited contributions is the decision in Buckley v. Vallejo that money=speech. That is wrong. The rest is not. If a corporation's use of funds could be limited by law, there would be no problems at all.

The rest is just an indictment of capitalism itself. That is not the same as the doctrine of artificial persons.

For those who wish to eliminate the corporation, how could one legally deprive the owners of 98% of our wealth their ownership without destroying the entire society?
posted by Ironmouth at 11:56 AM on November 4, 2011 [3 favorites]

Two ways to think about the punishment of corporations is a masterful examination of corporate personhood and the ups and downs thereof. I find it helpful to bear in mind in these discussions that unions are a particular kind of corporation.
posted by anigbrowl at 3:31 PM on November 9, 2011

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