Posts Tagged ‘Corporate Personhood’

How the power of money was unleashed

October 8, 2016


In a way, the enormous amounts of money that are spent in U.S. elections reflects the democratic nature of American institutions.

If the political process were controlled by a few party leaders, as during the Gilded Age of the late 19th century and other times in the past, it wouldn’t cost so much to control the process.

Many reforms were enacted in the 20th century to limit corporate power and make the government more democratic.  The Tillman Act of 1907 forbid corporations to contribute to political candidates or elections.  The Constitution was amended in 1913 so that Senators would be elected by the public instead of chosen by state legislators.

Over time limits were placed on campaign spending, and the Democratic and Republican parties began to nominate their candidates through primary elections rather than party conventions.

These reforms made possible the legislation of the Progressive era and the New Deal, which subjected corporations to unprecedentedly strict regulation and rich people to taxation at top rates reaching 90 percent, while providing Social Security, unemployment insurance and extensive public works.

Business leaders made a concerted and successful effort to turn things around.  They altered the climate of opinion, both among educated people and the public.   They supported candidates committed not only to the interests of particular businesses, but support of unrestricted capitalism in general.

And they worked through the courts, just as liberals had, to change the limits of what was legally permissible.

What follows is a (very incomplete) list of milestones in their progress, with an emphasis on the legal milestones.


The trouble with corporate personhood

October 3, 2016


Can a corporation have religious scruples?

March 23, 2014

Employers have brought a case before the U.S. Supreme Court claiming a religious conscientious objection to the provision of the Affordable Care Act requiring them to provide health insurance that covers contraception.  What they’re claiming, as I see it, that religious freedom includes the right to refuse to do business with sinners.

The general rule is that there is no right of religious exemption from laws for the benefit of the general public that apply to everyone equally.  Nevertheless, there is a tradition in the United States of bending over backwards to accommodate individuals with sincere religious beliefs, from allowing religious conscientious objection to military service to exempting Seventh Day Adventists from Sunday closing laws.

I think this is a good tradition, as it applies to individuals.  I don’t think, for example, that the right of gay people to marry includes the right to do business with a florist or wedding photographer who thinks homosexuality is sinful.

Corporations are a different matter.  Corporations are not human beings.  They are soulless artificial constructs whose supposed personhood is a legal formality.  How, then, can a corporation have religious scruples?   Why do the managers of a corporation have any more right to impose their private views on their employees than do the managers of a state Department of Motor Vehicles?

How corporations won their civil rights

November 8, 2013

When you stop and think about it, it is perfectly obvious that a corporation is not the same thing as an individual.  A corporation is an organizational structure within which individual human beings operate.

But in American law corporations have the same Constitutional rights as flesh-and-blood human beings.  The video shows the court decisions that brought this about.

One of the most significant ones was Ford Motor Co. vs. Dodge in 1919, in two minority investors appealed a decision by Henry Ford to cease paying dividends and instead invest the company’s surplus money in building new factories and expanding employment.  Ford claimed he was doing this for the public good, but the Michigan Supreme Court ordered him to pay the dividend because his obligation was to shareholders, not to employees or the community.

Another important decision was Pennsylvania Coal Co. vs. Mahon in 1922, which went to the U.S. Supreme Court.  In that decision, the court rules that a law or regulation that diminishes the value of land can be a “taking” of land without just compensation contrary to the Constitution.

This principle is embodied in international trade treaties, such as the proposed Trans Pacific Partnership and the Transatlantic Trade and Investment Partnership agreements. Under these treaties, corporations, but not labor or community organizations, are allowed to ask an international tribunal for compensation which national laws unjustly deprive them of expected profits.  The fictitious legal entity has more rights, not just the same rights, as individual humans.


Now, the corporate form of organization is useful.  It enables people to pool their resources and do collectively what they could not do individually.  The principle of limited liability enables people to invest in ventures without risking anything more than they put in.  If this possibility did not exist, American business people would be less enterprising.  Imagine being a General Motors stockholder when it went bankrupt, and being obligated to pay your share of GM’s debts!

The trouble with the corporate form of organization is that it enables individuals to avoid responsibility for their actions and hide behind the corporate structure.  When a corporation is fined for wrong-doing, management may punish low-level employees if they’re still around, but they won’t hold themselves responsible.

Corporate personhood as a metaphor gets in the way of clear thinking.  Corporate personhood as a legal doctrine gets in the way of democracy.  I am in favor of a Constitutional amendment that states that fictitious entities do not have human rights.

We can prosecute corporate managers who break laws, and jail them if convicted.  Fining fictitious legal entities is not a deterrent if individual lawbreakers go free.  But this may be negated if the TPP, TTIP and similar treaties are ratified.  These would give corporations rights that are beyond the reach of U.S. law.


Corporations behaving badly

October 24, 2012

Corporations Are Sociopaths

Corporations aren’t really people, of course.  They are organizational structures which people can use for good or ill. Corporate structures serve the necessary function of accumulating capital.  It is through capital investment that the total wealth of a society is increased.  Both experience and economic theory show that this works better when capital is in private hands than in the hands of central planners.  Even though corporations represent a dangerous concentration of wealth and power, it is a danger that has to be risked if we want to enjoy the blessings of a growing industrial economy.

Corporate investors have the privilege of limited financial liability.  That is, unlike individuals who own businesses, they only risk what they have invested.  If the corporation fails, any additional debts and liabilities have to be absorbed by someone else.  If it weren’t for this privilege, if the investors were individually responsible for the corporation’s actions, there would be few investors.  I would not buy corporate stock or invest in mutual funds if I were on the hook for everything a company might do.

Under current law, the executives of corporations have a fiduciary responsibility to maximize return to shareholders.  Period.  Whatever obligations they assume beyond this is a matter of law, regulation and of individual ethics.  But if there no laws and regulations concerning labor, health and safety, environmental, consumer protection, monopoly power or fraud, or the laws and regulations are not enforced, there is not necessarily any material reason for corporate executives to care about such things.

And if you believe in an economic theory that says that the corporation maximizing profit always results in what is best for society, and that the unfettered individual pursuing his or her self-interest always results in what is best for society, then there is no ethical reason to do so either.  The result is the behavior described in the chart.

Hat tip for this chart to The Big Picture.