Corporations as “People” vs Corporations as “Persons”

There are two ways to think about corporations. One is as a mechanism for letting a bunch of individual people interact. Seen this way, General Motors is just a mechanism for letting employees, customers, shareholders, suppliers, and managers interact in mutually-beneficial ways. The other way is to think of the corporation as an entity in its own right. Seen this way, GM is an entity that owns property, hires employees, is a party to contracts, and has obligations (e.g., via warrantees) to millions of customers. The people involved come and go, but the 103-year-old institution remains. These two views aren’t incompatible. Each illuminates one important characteristic while obscuring another. We need to be able to see corporations both ways, depending on the circumstance.

But it is important not to confuse the two. One is about people. The other is about legal personhood.

Here’s an important case of that confusion. As was widely reported at the time, US presidential hopeful Mitt Romney said, in a speaking engagement, that “corporations are people.” (You can see it for yourself on YouTube: Mitt Romney- Corporations Are People!) This happened over six weeks ago, but it is still causing confusion, and muddying the waters of the debate over the role of corporations in modern society.

What did Romney mean by what he said? I think the point Romney was clearly making is very different from the one he is often thought to have been making. In fact, he was making the exact opposite point. In clarifying what he meant, Romney said, in reference to corporate profits:

“Everything corporations earn ultimately goes to people. Where do you think it goes?”

In other words, he’s pointing to the first of the two viewpoints mentioned above, the one according to which what really matters is the people, the individual stakeholders, behind the corporation. And yet I keep seeing Romney’s “Corporations are people” claim bandied about sarcastically as if it’s yet another example of the much-hated (and much-understood) notion that corporations are legal persons.

(Greg Sargent at the Washington Post did try to explain this, but the point has generally been missed.)

If you don’t like Romney, fine. And if you don’t agree with the point he was making — that corporate profits end up in the pockets of human beings — that’s fine too. But please don’t confuse his point with the exact opposite point, namely the fact that corporations are (and need to be) legally regarded as persons.

10 comments so far

  1. martina on

    so you’re more for the “corporation as a legal person”. How about responsibilities? do you think that the corporation or the people inside of it should pay for the consequences of its actions?

  2. Chris MacDonald on

    Martina:

    No, look at the last sentence of the first paragraph above: both are essential views on the corporation, depending on the circumstances.

    And who should bear the consequences depends on the situation. People should always bear responsibility for their actions, where possible. When it’s not possible to identify who is responsible, then generally the organization as a whole should be held responsible. Sometimes both should happen.

  3. Pete Bresnahan on

    I am sure that most readers of this blog do not have major issues with the concept of the corporation as a legal person since the need of a legal identity is required for the administration of contracts, recognition of private property and the need for a distinct entity to be considered in litigation.

    However decisions such as ‘Citizens United v. Federal Election Commission’ calls into question the limits of corporate free speech. This issue is exasperated by the advent of the SUPER PAC which effectively allows candidates and parties to fundraise for their campaigns and party organs at the same time they solicit unlimited, anonymous contributions to the super PAC. Corporations now have a disproportional say in the workings of the democratic process.
    Accountability and transparency are two important principles that serve to ensure the political playing field is free of conflicts of interest and to promote an environment that has integrity and fairness. Allowing ‘legal persons’ to influence the political process in a clandestine manner only serves to add to the increasing mood of distrust and cynicism when it comes to politics and corporate behavior.
    .
    While recognizing corporations as legal persons has benefits with regard to the functioning of the corporate sector in society–it is when decisions such as Citizens United are made with careless disregard for the integrity of the democratic process that the concept of the corporation as a legal person becomes problematic.I am sure that the framers of the Constitution did not intend on allowing anonymous and clandestine ‘persons’ influencing America’s representative democracy. The recent changes in campaign financing by corporations makes a sham out of the concept ‘government of the people, by the people, for the people’.

    Super PACs and the undue influence of corporate lobbyists will be the undoing of a democracy that has personal liberty at its foundation. Perhaps Bob Dylan was correct when he said ‘money doesn’t talk–it swears’.

    • Chris MacDonald on

      Pete:

      Thanks for the comment. I think you’re right about where the real meat of the debate is.
      But as it happens, there are entire groups — quite active, online at least — organized around a misguided effort at “eliminating” corporate personhood.

      Chris.

      • Chris MacDonald on

        In fact, a demand that the US government “repeal” corporate personhood seems to be one of the demands of the “Occupy Wall Street” protestors.

  4. Christina on

    But anyway, let corporations be ‘people’ or ‘persons’. They will always have an influence in politics as their power and influence in society gets greater.
    While spending vast sums of money on their campaingn they will alway be able to subliminal influence public opinion and therefore, political decisions – let it be direct or indirect.

  5. Aurélia on

    Considering the increasing power and influence of corporations in areas such as politics and considering the fact that in a democratic society people should be able to have a say on the basic conditions of their lives, don’t you think that it can be a problem that corporations are able to influence our lives whereas they are not subject to democratic elections?

    • Chris MacDonald on

      Aurélia:
      Yes, we should have a say, and we do have a say. We’ve passed an enormous number of laws that govern how corporations operate.
      As for your 2nd question: yes, corporate influence can be a problem. But the second half of your question — the part where you say corporations are not “subject to democratic elections” confuses me. We don’t elect corporations, that’s for sure. But our elected leaders pass laws about corporations. (Note that we also don’t elect churches, another set of powerful institutions.)
      Chris.

  6. hannahanna on

    Hi Chris,

    I think that what Romney meant by “corporations are people” was both that what corporations earn goes ultimately to the people, but also that this is based on corporations taking social responsibility. Both the profits of the corporations, but also in what way they work and in what way they affect society makes them people. We are all affecting the society, both human beings and corporations, even though corporations are much bigger. So maybe one could say that corporations are many people forming one huge person, with more power than one “small” human being.
    This might also lead to the corporations being even more people than the people themselves.

  7. Anders on

    How do you consider the interaction between corporations and the government in an ethical perspective?
    I saw the movie “Inside Job” by Charles Fergusson and that movie present a view that greed, cowardliness and corruption is a part of the economic force that runs the country (but not only the US).

    What is your opinion on the matter? How can we get other companies to think ethical when apparently the biggest actors don’t? And does the political forces have a negative impact on morality?

    Corporations as “People” vs Corporations as “Persons”


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