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Corporate personhood

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From the bottom of page 438 of the e-book version of Cryptonomicon -- Andrew Loeb defends his fractally wacky decision to be a lawyer ...

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Community entry:Corporate personhood

Original author most likely was expanding on Wikipedia's entry to be generous. I felt it really tied into Andrew Loeb for some reason. This is a summation of the problems of that entry from the talk pages:

There are several problems with this article: 1. First, it conflates a discussion of an argument against corporate personhood generally with a discussion of / argument against treating corporations as persons entitled to constitutional protections. 2. Second, it is at best misleading, and at worst wrong, about the effect of treating corporations as constitutional persons. 3. General anti-corporate bias.

  1. Okay, first its important to realize that “corporate personhood” is not a unitary concept. The law can, and does treat corporations (“artificial persons”) and natural persons the same in some respects (ability to hold property, ability to sue and be sued) but differently in other respects (income tax). This is not a new phenomenon, corporate personhood is as old as the Middle Ages, and exceptional treatment is as old as the English Statute of Mortmain (1279). Thus the article is just wrong when it says: Until 1886 corporations were not considered persons. It was clear what they were: artificial creations of their owners and the state legislatures. They were regulated and taxed. They could sue and be sued. They were subject to all of the laws of the land as well as any restrictions placed in their charters. Corporations were both (possessed of the rights of) “persons” and “artificial creations.” However, this sets paragraph sets up a major thesis, which is that Santa Clara County v. Southern Pacific Railroad Company (118 U.S. 394 (1886) somehow “converted artificial entities into the legal equivalent of natural persons.” This thesis is just a really bad example of reification. The Santa Clara Country case did not find that corporations are persons for all purposes under the law; instead it found that corporations are “persons” under the 14th Amendment, i.e. corporations would be treated the same as natural persons for the limited purposes of the 14th Amendment (actually not even the whole 14th Amendment, just the “due process” part). The point is that you can have a useful debate about whether corporations should be entitled to such rights as the ability to hold property, sue in court or the right to due process (which carried a lot of baggage in the 19th century, but as I note below, doesn’t anymore). But it is not illuminating to conduct that debate in terms of whether a corporation should be a “legal person.” This is just a clumsy bit of doctrine.
  2. The really bizarre thing about this is that, with only a few exceptions and contrary to the strident tone of the article, changing the law so that corporations don’t enjoy any constitutional rights would hardly make a difference because, generally speaking, corporations don’t derive much benefit from constitutional law (as it stands at the end of the 20th century).

Another thesis of the article is: Corporate constitutional rights effectively invert the relationship between the government and the corporations. Recognized as persons, corporations lose much of their status as subjects of the government. Although artificial creations of their owners and the governments, as legal persons they have a degree of immunity to government supervision. The problem with the thesis is that, with some exceptions I'll discuss below, the constitution provides corporations with very few protections that a (business) corporation could use; this is largely because courts have, more or less, retreated from treating economic and property rights as entitled to constitutional protection. In the latter half of the 20th century, the story of constitutional law has been the protection of minority (individual) rights and coordination among government bodies. It is telling that the 14th Amendment, which item was in dispute in Santa Clara County v. Southern Pacific is no longer used by courts to shelter economic activity from state intervention. During the 19th century the doctrine of “substantive due process,” in the “Slaughterhouse” cases struck down a variety of state regulations of economic activity. Corporations, entitled to the protection of the 14th Amendment, were major beneficiaries. In this context, the article has a justified point, in that corporations were receiving a major benefit that (perhaps) they shouldn’t have received.

But, “substantive due process” as a protection against economic regulation was abandoned during FDR’s term (the famous “switch in time that saved nine”). The foes of corporate beneficiaries of the 14th Amendment won, not by excluding corporations, but by gutting the (economic) protections of the 14th Amendment. Today, the 14th Amendment is used to protect against racial and sexual discrimination.

Now, the exceptions. In the economic and property sphere, corporations could take advantage of so-called "takings" jurisprudence which limits government's ability to take property without paying just compensation. This has some theoretical utility, but as a practical matter corporations can't make much use of it for reasons that are probably too involved to get into here (here's a teaser: taking 99% of the value of an enterprise is not a constitutional "taking").

The other major exception is corporate free speech, an issue which has resonance today due to campaign finance laws. Whether or not conglomerations of people should be entitled to free speech is an interesting issue (and I'll admit my bias by noting that both the Sierra Club and the New York Times enjoy their free speech rights), but, to return to the above discussion, it is more usefully analyzed as a question of whether corporations should have free speech rights rather than an argument about corporate personhood. In sum, I would say that the question of corporate personality really does not, and (given the current state of substantive constitutional doctrine) can not, have much bearing on actual rights enjoyed by corporations. If the author of the article disagrees with me, I challenge him to provide a list of such rights and analysis of how they would be effected if Santa Clara was overturned. 1. General anti-corporate bias.

There is a lot of slanted language, irrelevant facts and insinuations that paint a very biased picture. Here are some examples: the focus on slavery and racial animus is irrelevant to defining the scope of a corporation’s rights; phrases like “the moral and legal depravity of the Supreme Court during this period” and “wealthy, powerful men who owned corporations wanted more power for their corporations”; and the inclusion of other instances of corporate wrongdoing and mistaken corporate decisions (Dartmouth) that are, again, irrelevant.