The Corporate Baby in the Bathwater: Why Proposals to Abolish Corporate Personhood Are Misguided

Author(s)

David Gindis
Senior Lecturer in Economics, Hertfordshire Business School, University of Hertfordshire
Abraham A. Singer
Assistant Professor of Management, Quinlan School of Business, Loyola University Chicago

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Time to read

5 Minutes

Considerable controversy has surrounded the US Supreme Court’s sharply divided decisions in Citizens United and Hobby Lobby. Critics argue that giving business corporations unwarranted constitutional protections entrenches corporate power at the expense of democracy by putting legal fictions on the same political plane as human beings. The powerful intuitions and normative concerns underpinning these objections are captured in familiar slogans, such as ‘End Corporate Rule,’ ‘Corporations Are Not People,’ and ‘We the People, Not We the Corporations.’

Rallying around such catchphrases is a broad social movement demanding that rights be restricted to human beings and corporate personhood be abolished. Support for these proposals—that Susanna Ripken appositely labels ‘corporate abolitionism,’ because, like the abolitionists of the 19th century, the movement frames its cause as an issue of human rights—has spread among local governments, state legislatures, and federal lawmakers.

While we agree that excessive corporate power poses a danger to the functioning of modern democracies, like Kent Greenfield and others, we doubt that the proposed remedies are appropriate. To explain why, our new paper identifies and reconstructs three partially overlapping but analytically distinct justifications for corporate abolitionism, which we express in general terms, independently of specific Supreme Court decisions or policy debates.

By showcasing the implicit philosophical logic underlying the three arguments against corporate personhood, we give them their strongest articulation and render them more scrutable to normative critique. We conclude that, despite their intuitive appeal, their various limitations show why the abolitionist cause is misguided. We offer a different way of thinking about the problem of corporate power, one that does not rely on abolishing the corporate person.

Three Arguments Against Corporate Personhood

We call the three basic arguments against corporate personhood the Plutocracy Rationale, the Absurdity Rationale, and the Distinctiveness Rationale. The Plutocracy Rationale stems from the fear that conceiving of corporations as bearers of constitutional rights reinforces the immense economic advantages they already derive from their legal personhood, thereby facilitating intolerable and ever-growing inequality in social and political power. The normative underpinning here is broadly speaking egalitarian in orientation. Corporate personhood ought to be abolished because the consequences are offensive to the egalitarian commitments inherent to a democratic society.

The Absurdity Rationale expresses the view that, because corporations are not conscious, living agents, corporate personhood must involve a category mistake. Since even lawyers and judges acknowledge that it is a legal fiction, to base our political understandings of rights on such sophistry is to invite inanity into society. The underlying objection here is that law ought to be scrutable and understandable to those subject to it. Because corporate personhood is nonsensical, it is illegitimate and therefore must be eliminated.

The Distinctiveness Rationale derives from the concern that if corporate personhood remains, we will be forced to put corporations on the same constitutional footing as us. By treating corporations the same as we do humans, we dilute the political and moral value of our own humanity. The objection here has a Kantian flavor. Since corporations are merely means to human ends, not ends in themselves, they are not, and should not, be considered as equal in normative standing.

In sum, corporate abolitionism is motivated by three concerns: a concern for democratic equality; a concern for social/legal coherence; and a concern for the priority of humans in our schemes of normative justification. Abolitionists argue that corporate personhood offends one or more of these values and, consequently, that some aspect of social justice or morality requires that we abandon this legal institution. We critically evaluate and respond to each objection in turn.

Why These Arguments Are Misguided

The Plutocracy Rationale conjures up images of big business abusing the rights intended for individuals. The focus on large business corporations downplays the fact that corporate personhood is a feature of a large array of business and nonbusiness organizations (including small private companies, cooperatives, nonprofits, political parties, universities, places of worship, municipalities, and states) that enable a modern society to function, all of which would find it difficult to accumulate assets, contract with one another, or access the courts if corporate personhood were abolished. It also ignores the societal and political benefits of corporate personhood, which we argue is a vital tool for collective action, providing an indispensable vector for democratic empowerment of the marginalized.

In assuming that person and human being are synonymous, the Absurdity Rationale misunderstands the legal notion of personhood. We demonstrate that law’s ‘person’ is abstract and disconnected from biological, metaphysical, or moral considerations. The distinction between the legal personhood of human beings and that of corporations cannot be that the former is natural and therefore legitimate, while the latter is artificial and hence illegitimate. Both are artificial in the same sense that other legal institutions are. To refer to ‘corporate persons’ may seem counterintuitive, but it is not incoherent or absurd.

The problem with the Distinctiveness Rationale is that it lumps all kinds of constitutional rights together and fails to acknowledge that the assignment of some rights (for example, those meant to limit government overreach) does not need to rest on the presence or absence of human qualities. As we show, corporate persons can be legitimate holders of constitutional rights and, importantly, nothing in the doctrine of corporate personhood requires that corporations be granted the same complement of rights as humans.

Overall, the strategy of seeking to abolish corporate personhood or eliminating all corporate rights is ill-conceived. The debate should instead focus on which rights corporations should or should not be granted. The problem is not that corporations are seen as rights-bearing persons. The problem is that the extension of rights to corporations is easily taken too far.

How to Think About the Real Challenge

We agree with abolitionists that we should not treat corporations the same as we do human beings. The challenge is that we need a principled way of (a) ensuring the priority of human persons while (b) maintaining the benefits that flow from having corporate institutions, both of which are important for a flourishing democratic society. The correct balance, we submit, cannot be decided categorically. The answer may lie in philosophical pragmatism.

Pragmatism is uniquely suited to the task of addressing the question of corporate personhood. Its core tenet of fallibilism, its commitment to generating knowledge through institutional experimentation, its focus on the consequences of different sorts of social action, and its emphasis on democratic equality as a basis for criticizing social and economic institutions, allow us to engage with the worries underlying the Plutocracy and Distinctiveness rationales.

The question of which rights ought to be assigned to corporations is something to be experimentally determined. Nothing should be inherently off the table, as long as we do not short-circuit our ability to reflect upon and revise our considered judgments. This presupposes that we have a system of collective inquiry capable of identifying the individual and collective interests that merit protection and assessing the consequences of the legal and political decisions underlying alternative assignments of rights.

A crucial part of this system is the protection of political rights associated with democracy, which we grant to human persons to guarantee their inclusive and equal participation in the social processes of experimentation, learning, assessment, and reflection. The priority of human persons can thus be asserted and defended by reference to the conditions necessary for legitimate, competent, and effective inquiry.

When deciding, for instance, whether corporations should have the same rights as us to support favored political candidates, we should ask whether this would corrupt or stunt the democratic background necessary for collective inquiry. Whenever it contributes to an unequal ability of human persons to participate in democratic procedures and deliberation, we undermine democracy’s attractive qualities. Restricting the political freedoms of corporate persons may therefore be warranted, despite the fact that they are generally capable of bearing rights.

David Gindis is a Senior Lecturer in Economics at Hertfordshire Business School, University of Hertfordshire, UK.

Abraham A. Singer is an Assistant Professor of Management at Quinlan School of Business, Loyola University Chicago, USA.

This post was originally published on the Columbia Law School Blue Sky Blog.

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