One of the most fervent debates in American politics today is the notion of corporate personhood. Proponents believe that corporations should be afforded the constitutional rights individuals enjoy as corporations are an extension of people and people, who enjoy such rights, create corporations and make decisions as the corporation. Opponents, on the other hand, believe that corporate personhood is a preposterous idea and in some cases, not only hurts democratic values, but is antithetical to the democratic institution the founding fathers of the United States created. What are the arguments for and against corporate personhood? Should corporations be treated as individuals and thus enjoy the rights of the Constitution? How could a change in current US law and perception of corporate personhood change the American political climate?
Despite the common perception, corporate personhood has a long history in American society. Adam Winkler, constitutional law professor at UCLA, wrote, “When corporations were first invented, the very idea was to create a fictional ‘person’ that could be recognized by law and exist in perpetuity. Writing in the 1700s, the British jurist William Blackstone explained that ‘it has been found necessary, when it is for the advantage of the public’ to ‘constitute artificial persons, who may maintain a perpetual succession, and enjoy a kind of legal immortality. These artificial persons are called...corporations.’" According to Yale law professor John Witt, the 1886 Supreme Court decision of Santa Clara v. Southern Pacific, paved the way for modern corporate personhood. The decision by the Court affirmed that “corporations were persons for the purposes of the 14th Amendment,” Witt stated. Witt continued, “What the court started to do around the turn of the 20th century and into the 20th century was to begin to force legislatures at the state level and the federal Congress to treat metaphysical persons - that is to say, corporations - the same as natural persons for purposes of contracting and rights to property.”
In a recent blog post, George Mason University law professor Ilya Somin wrote in defense of corporation rights in the context of the Supreme Court’s most recent and controversial decision of Burwell v. Hobby Lobby. The Hobby Lobby case examined if corporations can exercise religious beliefs and be exempt from providing certain contraceptive drugs mandated by the Affordable Care Act under the Religious Freedom Restoration Act (RFRA) as the owners of the corporation religiously object to providing the drugs to their employers in the form of health insurance packages. “It is indeed true that corporations are not people. But those who own and operate them are. In modern society, people routinely use corporations for a wide range of activities,” wrote Somin. Continuing, Somin, who it is important to point out is an atheist and does not maintain sympathy for the particular religious beliefs of Hobby Lobby, argued, “If we consistently apply the principle that corporations are not entitled to constitutional rights because they are not real people, then the government would be free to censor newspapers and TV stations that use the corporate form, including the New York Times and CNN. Similarly, it would be free to take corporate property without paying the ‘just compensation’ required by the Fifth Amendment, or search it in ways that would otherwise be forbidden by the Fourth Amendment’s ban on unreasonable searches and seizures.”
Those who oppose the notion of corporate personhood believe, it is absurd for a corporation, or a metaphysical entity, to exercise religion or enjoy the freedom of speech. Again, using the Hobby Lobby case as a model, Winkler believes, “Hobby Lobby should only have the rights of legal personhood that are essential for its operations...The owners claim that their personal religious beliefs would be offended if they have to provide certain forms of birth control coverage to employees. Yet Hobby Lobby’s owners aren’t required by the law to do anything. The legal duty falls on Hobby Lobby, the company, not its owners. If Hobby Lobby fails to provide the required insurance, the company, not the owners, is responsible.” Witt also articulated some of the (limited) rights corporations enjoy in order for them to properly function in their business capacity: “[T]he law has treated corporations as what some lawyers call metaphysical persons. That is, they’re persons for some purposes, and they’re not persons for others...[F]or example, a corporation can be prosecuted for a crime, which usually only persons can be prosecuted. But on the other hand, corporations get rights. They get rights to contract. They can’t marry or run for office or vote, but they can speak - things like that.”
Many in the liberal camp were devastated at the Supreme Court’s decision in Citizens United v. FEC and last term’s extension of Citizens United, McCutcheon v. FEC, which both “eviscerate” campaign finance regulations, according to some liberals. Corporations (and wealthy individuals) are afforded First Amendment freedom of speech rights in the sense that money is speech and can dump large sums of cash into political campaigns. Many liberals believe this notion is detrimental to democracy because legislators who benefit from large sums of cash (from both corporations and wealthy individuals) are indebted to their interests for the generous donations to their campaigns, what is referred to as quid pro quo. Some Democratic members of Congress proposed a constitutional amendment to address the Court’s decisions and regulate campaign finance. However, many conservative members of Congress fear that such an amendment would limit the First Amendment’s freedom of speech, if money is in fact considered speech, which is arguably a bigger part of the debate.
According to US law, corporations are people. Under the Dictionary Act, “the words ‘person’ and ‘whoever’ include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.” That being said, corporations should be afforded certain rights such as the aforementioned contract and property rights in order to function properly and effectively for their existential purposes. The real quandary is how to strike a balance between the personal constitutional rights of the individuals behind the corporation and the actions taken by those people as a collective in the name of the corporation, because a corporation is not a free thinking entity.
What would happen if rather than amending the Constitution to curtail individual freedoms of speech or religion etc., legislators explicitly codified the rights of corporations, or amended the Dictionary Act? Surely, they would continue to receive harsh push-back from conservatives, but it would be a much more narrowly tailored and incremental response to alleged campaign finance evisceration rather than the more arduous and controversial constitutional amendment. Such action would also potentially alleviate qualms regarding corporate exercise of religion that the liberal community shared during the Hobby Lobby litigation.
A third situation that a more defined corporate rights definition could remedy pertains to the Wall Street collapse of 2008. In the subsequent years with crackdowns and record criminal settlements, it was corporations and banks who were fined for their unfair practices and price fixing - not necessarily the individuals who made those decisions. In fact, not a single individual was prosecuted for the Wall Street and housing market crash (though politics may be at play.) Several executives have since left their companies after the crash while the company (and its current executives) still pays for the decisions made by individual persons.
As previously stated above, corporations can be prosecuted for crimes, however, it appears as if shady and greedy individuals have, to some degree, found a way to hide behind the veil of corporations. Are these problems associated with corporations, rights and personhood remedial problems, or simply side effects to US law and constitutional rights that are required for essential existential corporate functions? It is clear that corporations should be afforded some rights, however the jury is still out among many in the legal community over personhood debate.
