corporate personhood for liberals

"Corporations are people, my friend."


"Corporations are people, my friend."

The current issue of the Washington Monthly features an article from law professor Kent Greenfield about the doctrine of "corporate personhood." This bête noire of liberal activists holds that, in the eyes of the law, corporations should have many of the same Constitutional rights as actual flesh-and-blood human beings. Under this line of reasoning, the Supreme Court held in 2010 that restricting the ability of corporations to contribute to political campaigns would violate their First Amendment rights to freedom of speech. Greenfield believes that this decision, Citizens United v. FEC, was a bad one. But this is not because of the doctrine of corporate personhood on which it relied. Rejecting this longstanding doctrine because of some recent unpalatable decisions, he argued, is throwing the baby out with the bathwater. 

Corporate personhood did not emerge with Citizens United. Indeed, it is well over a century old. The doctrine was given a permanent place in our country's legal tradition by the Supreme Court's 1886 Santa Clara Country v. Southern Pacific Railroad decision (the subject of a chapter in my book), but was already somewhat established by that point. Indeed, Santa Clara did not implement the doctrine of corporate personhood so much as ratify it, registering the court's approval with an offhand comment and no recorded argument.

Whatever one might think of the court's answer, thought, the question it was addressing was an urgent one. During the Gilded Age, corporations were rapidly increasing in number, prominence and wealth. The question of their status, duties and responsibilities raised a pressing issue. In Santa Clara, the plaintiff, a railroad, argued that in taxing corporations differently than individuals, the state of California violated the company's Fourteenth Amendment guarantee that "no [s]tate shall...deprive any person of life, liberty, or property, without due process of law" or "deny to any person within its jurisdiction the equal protection of the laws." But if the amendment's protections did not apply to corporations, then states would be under no particular obligation to apply laws to them consistently or fairly. So the court had to decide whether the amendment would apply to corporations. Since the amendment used the inconvenient word "persons," ordinary usage would suggest that corporations were not under its aegis.

A cartoon depicting railroad magnate William Henry Vanderbilt. After two of his trains collided, killing two people and injuring hundreds, a reporter asked him whether he had an obligation to consider the public when running his company. His response: "The public be damned!" (Information and image from Kent Greenfield's "sidebar" in The Washington Monthly, "Corporate Law's Original Sin.")

A cartoon depicting railroad magnate William Henry Vanderbilt. After two of his trains collided, killing two people and injuring hundreds, a reporter asked him whether he had an obligation to consider the public when running his company. His response: "The public be damned!" (Information and image from Kent Greenfield's "sidebar" in The Washington Monthly, "Corporate Law's Original Sin.")

But the court differed, strongly, with this interpretation. In declaring corporations to be persons, what it was saying was that they are entitled to the protections of the Fourteenth Amendment. Whether a person is for or against corporate personhood, anyone who tries to think through the issues related to the role of corporations, will have to face the same question that the Santa Clara court did: what is the extent of the rights, and the limit of the obligations, of businesses organized as corporations?

Greenfield argues that the personhood understanding provides the tools for liberals to obtain the results that they want. In the Hobby Lobby decision, for example, the Supreme Court held that a family-owned corporation had the right to refuse to provide health insurance plans that contained provisions that violated the religious beliefs of its owners. Greenfield argues that the case was wrongly decided because the justices failed to acknowledge that the company has an identity (or, if you will, a "personhood") separate from that of its owners. The owners might have religious objections to contraception, but the company does not. The decision "is evidence of the [c]ourt's much-discussed pro-business tilt, to be sure. But it's also evidence that the majority doesn't understand the basics of corporate law. Its sin was not an embrace of corporate personhood but a rejection of it."

Stripped of all the baggage, the corporate form is a privilege bestowed by the state. In allowing the creation of a business entity that exists separately from the people who own it, it frees the investors of a business from the responsibilities commonly associated with such properties, particularly its day-to-day management and the potential for large financial losses. (The most that the owner of a corporation can lose is the money he/she invested in the stock. If a non-corporate business generates serious losses, creditors will take the owner's house.) Since corporations pool wealth, they typically have access to far more money than all but the richest individuals. The state grants this privilege because, in Greenfield's words, corporations have been "important to the development of national wealth." This provides for a kind of accountability, since corporations can afford to make restitution for things that individuals cannot, like the Deepwater Horizon oil spill. Additionally, Greenfield argues that corporations should have certain rights. Like citizens, they should be free from unreasonable search and seizure, possess the ability to engage in public speech freely, and enjoy privacy where appropriate.

These are all good reasons to support the claim that the state should closely monitor the rights and responsibilities of corporations. To my mind, though, it does not explain why the device through which these privileges and obligations should be adjudicated an awkwardly inherited divide like personhood. In pointing out that corporate personhood is not the primary intellectual culprit in the Hobby Lobby or Citizens United decisions, Greenfield correctly underscores the point that pro-business Supreme Court justices, whether in the Gilded Age or the twenty-first century, will always find a way to reach the decisions they favor. The implication--that "end corporate personhood" is a slogan rather than a serious intellectual project--is one that liberals should take seriously. Yet I disagree with Greenfield in thinking that an important rethinking of the rights and obligations of the corporation must begin with dismantling the treasure-trove of Fourteenth Amendment privileges that come with the grant of corporate personhood. Greenfield himself holds that corporations "cannot vote or serve on juries...[or] assert the Fifth Amendment right to be free of self-incrimination." As such, they "should not automatically receive all the constitutional rights that you and I can claim." But if corporations do not automatically receive all the protections of the Fourteenth Amendment, how do we decide which privileges they have and which ones they don't? And what standard do we use in doing so? Once we have to ask those questions, it seems like the initial interpretation of the corporation as a person costs more than it is worth.

More importantly, the question reveals the issue as political tussle rather than a legal investigation. Liberals typically expect more responsibilities and obligations from corporations, while conservatives emphasize rights. This is an honest difference of opinion that needs to come to the fore and the debate over this important question is not well-served by appeals to Constitutional principles. It is true that overturning corporate personhood will not create a liberal utopia. But it is also true that liberals cannot think about what rights and obligations corporations should have until this particular block is removed from the road.