Fleshing out the corporate person
This is my contribution to n+1’s OWS Gazette #2. You can download the PDF here. It’s full of terrific stuff.
There was a witticism circulating—it embarrasses me a bit to say—on Facebook recently that went something like: “I’ll believe that coporations are people when Texas executes one.” Though I’m no fan of capital punishment, but that was the best argument in favor of corporate personhood I’ve ever heard. Because while corporations have the rights of actual living people—more, maybe—they have none of the responsibilities. Corporations routinely get away with murder. Is the problem that they’re legally persons, or that they’re not consistently treated as such?
I first came across the critique of corporate personhood almost 20 years ago, when Richard Grossman and Frank Adams published their snazzy little pamphlet, Taking Care of Business: Citizenship and the Charter of Incorporation. (Snazzy as in nicely designed. The web version isn’t, alas.) At the time, I was struck by the legalism of the approach. Grossman and Adams showed little or no interest in the economic reasons for the corporate form—why, for example, industrial development made the sole proprietorships and small partnerships that dominated the pre-Civil War landscape so unwieldy and unstable.
Making complicated stuff requires organizational stability across time and space; a single capitalist, or even a small gaggle of capitalists, all very mortal, couldn’t run a transcontinental railroad that was expected to last decades. The late 19th century was a time of tremendous economic volatility, with wild booms and busts. Almost half of its last three decades were spent in depression. One reason was that small firms didn’t have the resilience to stand up to shocks. (Another was the absence of a central bank, about which see my contribution to the previous Gazette.) I recall meeting Grossman shortly after the pamphlet was published and bringing these issues up with him. He didn’t seem very interested in the economic arguments.
I’m getting similar feelings now that corporate personhood has exploded onto the scene—first in the wake of the Citizens United decision, and more recently with OWS. There’s a fixation on the legal status of the corporation at the expense of some other, more important things.
Back in a moment to the economic angle, but Citizens United deserves a few words on its own. Basically, the reasoning is this: corporations are people. Money is a form of speech. So restrictions on corporate political spending are unconsittutional restrictions on political speech.
Which is the more serious problem with that chain of reasoning? That corporations are people, or that money is a form of speech? I’m uncomfortable with the urge to treat the Koch brothers as the focus of evil in the modern world, to steal a phrase from Ronald Reagan, but they could spend tons of their personal money spreading their poison and the issue of corporate personhood wouldn’t figure at all. Rich people have a long history in this country of buying elections and politicians. They didn’t, and still don’t, need the dodge of corporate personhood to do that nasty work.
Back to the economic argument. Critiques of corporate personhood tend to blur into critiques of bigness as an evil in itself. There is a great nostalgia for some kind of soft-focus version of the old days when enterprises were small and local. But there’s no way that small, local enterprises could make computers or high-speed rail equipment. Those things require both size and durability, things that the corporate form allows. Who’d buy complex, long-lasting equipment from a small firm that could die with its proprietor the day after tomorrow? How could such a firm design and build a train that does 350 mph while consuming minimal energy?
Of course, there may be some opponents of corporate personhood who don’t want a society that builds computers and fast trains. If so, they should tell us that explicitly.
All this doesn’t mean that we have to make peace with the status quo, however. In one of his more optimistic moments, Marx declared the modern corporation, owned by outside shareholders and run by their hired hands, “the abolition of the capitalist mode of production within the capitalist mode of production itself, and hence a self-abolishing contradiction” (Capital, vol.3, chapter 27.) That is, there’s no reason why such an enterprise has to be run for the benefit of its shareholders, and not by and for its workers, neighbors, and customers. It is now, but it doesn’t have to be that way forever. Of course, getting there from here isn’t one of those self-evident truths, but it’s a very enticing prospect to think about.
As I understand the corporate personhood argument, the problem isn’t the very existence of corporations but the specific rights they received in a decision in 1886.
That is, there’s no reason why such an enterprise has to be run for the benefit of its shareholders, and not by and for its workers, neighbors, and customers.
You can’t even count on actually existing corporations being run on behalf of the shareholders, instead of management.
Is the problem that they’re legally persons, or that they’re not consistently treated as such?
One thing that corporations do that actual persons can’t do is shuffle off blame to a detachable individual employee or contractor and walk off scot free, as though I could blame my ank;e for a crime I committed. I don’t see a way to treat corporations consistently as persons, when they’re so unlike persons. And it strikes me that there are a number of rights that persons should have that corporations should not have.
The problem of the concentration of wealth and power represented by the Kochs would still exist if corporations were not privately owned and even if they nominally existed for the benefit of the whole society. Taking away corporate personhood wouldn’t solve that problem, but granting corporate personhood exacerbates it.
In _Imperialism_ , Lenin says monopoly capital is a precursor form of socialism. This is consonant with some of what you say in your last paragraph. Marx’s famous mention that “the expropriators are expropriated” is in a paragraph in which he describes the formation of “monopolies ” ( He uses that term ; Few capitalist kill many. ) as the historical tendency of capitalist accumulation. He doesn’t say bust up the monopolies. He says they are expropriated.
“But monopoly is the transition from capitalism to a more highly developed order. Without going into Lenin’s theory of imperialism, we may say that for him imperialism coincided with finance capital, and the latter was organizationally the precursor of socialism. The centralized administrative control over social capital exercised by monopoly finance had only to be taken over by the proletarian state and put to the service of society at large.”
On Oct 24 Morning Edition, NPR Yale Law Professor Witt explained the corporate personhood argument, stating that corporations could be prosecuted criminally. This was a bit of legerdemain, and the interviewer did not bother to mention that corporations cannot be executed or jailed. Even taking them apart, as the Nurenburg judgment did with IG Farben–took over 50 years to complete. About what you can expect from NPR, I suppose.
“WITT: Well, for example, a corporation can be prosecuted for a crime, which is something that usually only persons can be prosecuted for.”
Isn’t government just a giant corporation that has a little more accountability than usual? Ross Perot wanted to run it like a corporation. Romney says he has experience running corporations. In the past government was used exclusively to benefit the elite at the expense of the 99 percent but that was changed.
Looks like there might be a bank run on governments in the Eurozone. Does Doug believe that an European Central Bank-orchestrated devaluation would be the “lazy way out” as he said about more monetary policy in the U.S.
The government did “execute” or pulled the plug on Lehman, which started the panic of 2008. Other corporations that died or were eaten up by larger competitors; Bear Stearns, Wachovia, Merrill Lynch, Washington Mutual, Countrywide Financial, MF Global, etc.
I like the historical-structuralist explanation for the development of the corporation. However, in your argument here, you extend the structural explanation into the future, which creates a bit more determinism than I am comfortable with (I see you revoke it a bit in the last paragraph, but I’m still uneasy). I suppose that some people might fetishize smallness (I guess I’ve met a couple.), but my understanding is that a lot of people critical of the corporate institution have other alternatives in mind, ones that they think could be a promising link to economic socialization, for example cooperative networks funded by regional credit unions (and currencies).
I know you think this is not a promising economic alternative, but I’m not clear yet on why. I don’t think the “big corporation make big products” argument addresses the matter. Could you kindly clarify by explaining why cooperative networks (Emilian model, Mondragon) cannot provide the same if not better market stability as/than a corporation? And if possible could you clarify your constraining assumptions? Monopoly capital? Cheap fuel and communication, and global economic ties?
Thanks for considering this request.
I don’t think that Emilian/Mondragon enterprises couldn’t provide the same stability. I don’t know enough about them. But in theory, that’s pretty much what I’m talking about in the section taking off from the Marx quote. They’re not small partnerships or sole proprietorships – some are pretty big, too.
There are some quite big co-ops in the UK. They’re not perfect, and still run on similar lines to normal corporations. On the other hand they are far better than corporations, treat their workers better (who after all are technically the owners of some of them – others are owned in theory by shoppers) and tend to take social responsibility quite seriously. Executive pay, while still too high, is far lower than comparable private companies.
Along similar lines, Building Societies in the UK were owned by customers (so essentially non-profit) and for the most part were run fairly well. They offered a better service, better rates and were fairly conservatively run. They were famirly limited in the activities they were allowed to engage in. They were strictly a consumer financing deal (mostly houses). Most of them were force-privatised by the conservatives, but the remaining ones have mostly weathered the crisis fairly well. In comparison to their private breathren, none of whom now survive. The bank which endured the bank run in the UK, Northern Rock, was an ex building society.
W. L. Gore and Associates is perhaps an example of an interim culture existing in the US. Far far from perfect, but hints of what might be nonetheless
Thanks, Doug & Cian!
There’s a very interesting similarity between the modern idea of corporate personhood and late 19th/early 20th century pluralist arguments for the “personality of the association.” These originated in Germany with Gierke and were taken up by English thinkers like Maitland and Laski. Of course, the point there was largely to show that the State had no claim to sovereign authority over individuals since they were also members of various associations and corporate bodies on par with the state. Some of these thinkers even pushed the idea of the personality of the association in a more organic direction to claim that each association had a unique character beyond the sum of its individual parts. I don’t know how much historical influence this strand of thought had (if any) but it is curious.
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Protection of a corporation’s right to unlimited spending to influence elections as “freedom of speech” involves metaphor gone berserk. Corporations are legal constructs — they have no mouths and cannot speak. Perhaps it would be easier to allow corporations simply to register as voters. How many votes should WalMart get? Must they present a photo ID at the polling place? Can they wear a veil to cover the face? Actually corporations can be viewed as veils to cover the faces of managers and limit exposure of investers. Should these “persons” be allowed to “marry” other such persons we would lose any control over “mergers not in the public interest.” And finally, how do we tell if a corporation is male of female, and should that influence who, or what, they might marry? Legal fictions may facilitate some transactions, but the court seems to have forgotten what FICTION means.,