Economic Justice Primer 3): Corporations are NOT Persons

Corporations developed in the industrial revolution as a way to limit the liability (risk) of entrepeneurs in starting a new business.  They can be useful. In fact, these days most churches and other non-profits have formed “limited liability corporations,” (LLCs) so that, for instance, if someone falls and is hurt on said church’s property, they can only sue the corporation for damages–not every churchmember for every asset they own.  But corporations used to have far more limited rights than they currently do in the U.S.–and were only granted their charters if they could show that the corporation, whether for-profit or not, served the common good of society.  They certainly had far fewer rights than human persons under U.S. law–but now they have more rights than human persons.  What changed and what are the consequences?

As Thomas Hartmann documents in his book, Unequal Protection:  The Rise of Corporate Dominance and the Theft of Human Rights (New York: Rodale Press, 2002), the trouble started in 1886 with a U.S. Supreme Court decision, Santa Clara County v. Southern Pacific Railroad Company.  It was a simple tax case (Santa Clara, CA claimed that Southern Pacific Railroad owed back taxes) that should have had nothing to do with corporate personhood, due process, or human rights.  But the lawyers for Southern Pacific Railroad used much of their time claiming that the corporation was a legal person who should be granted all the protections of the 14th Amendment.  The Supreme Court seemed to agree. (Seemed because the claim that corporations are persons was not made in the judgment of the case, but in the headnotes which are not legally binding. Nevertheless, most subsequent court decisions have acted as if this case determined corporate personhood.)

Now, the 14th Amendment was passed in 1868 to defend the rights of freed slaves and other African-Americans.  But this Supreme Court, a VERY conservative court, the SAME Supreme Court which, in Plessy v. Ferguson, upheld segregation laws as treating the races as “separate but equal,” used the 14th Amendment to apply all the protections the U.S. Constitution gives to human persons to corporations. (In fact, as Justice Hugo Black would later point out, during its first 50 years, less than 1% of the cases involving the 14th Amendment that appeared before the Supreme Court had to do with the rights of African Americans–and a full 50% had to do with the rights of corporations.)   Plessy v. Ferguson was overturned in 1954 by Brown v. Board of Education of Topeka, KS, but, so far, no case has ever overturned (or, amounting to the same thing, decided that the Headnotes are not law) Santa Clara County v. Southern Pacific Railroad.

What are the consequences of the legal fiction that corporations are persons?  Many.  If corporations want to elect politicians that favor them over the common good, they can donate to campaigns–just like human persons–and usually with far more money to donate.  They can use the First Amendment’s guarantee of “the right to petition government for a redress of grievances” to lobby for their interests in the halls of Congress.  They can use the 4th Amendment’s protection against search and seizure to keep authorities from surprise inspections–allowing it time to cover up health and safety violations or violations of pollution laws.  They can use the 8th Amendment’s ban on excessive fines, bail and “cruel and unusual punishment” to limit the damages in lawsuits–as when Exxon-Mobile was able to get the fines from the Alaskan oil spill by the Exxon-Valdez  greatly reduced.  How meaningful are safety and environmental laws without surprise inspections?

The fiction of corporate personhood ends up giving corporations more rights than actual persons.  A human person cannot be two places at the same time–but a corporation can.  Thus, they can open an office in the Cayman Islands and avoid paying any U.S. taxes–while benefitting from U.S. laws.  Corporations are potentially immortal, whereas human persons die–so corporations pay no inheritance tax.  Corporations can have billions of dollars available which few human persons do.  Lacking a soul or conscience, corporate persons need not heed its guidance.

I believe we need a Constitutional Amendment declaring that corporations are NOT persons and not entitled to any of the protections afforded persons under the Constitution.  This would allow surprise inspections by regulating institutions such as the Environmental Protection Agency, the Occupational Safety and Health Agency (OSHA), the Wage and Labor Board, the Department of Labor (inspecting to see if corporations are illegally suppressing workers’ rights to form unions and engage in collective bargaining), Immigration and Naturalization Service (inspecting for undocumented workers), etc.  We also need a Constitutional Amendment declaring that money does NOT equal speech (or there could be no free speech, since the one with more money can buy more speech), so that campaign finance laws which restrict donor amounts by persons or corporations are not, thereby, restricting free speech.  We need to require that all corporations have their charters renewed every 10 years–and that they must justify their continued existence as corporations based on whether or not they continue to show that they benefit the common good.