Corporate Personhood and Citizens United

This is the third of 3 blog entries on the U.S. Supreme Court’s Citizens United decision. Yesterday I argued that the Court’s decision was fundamentally the right one, because the decision struck down a law that sought to use clumsy and intrusive means to achieve dubious ends. (And I pointed out that it’s possible to think the decision is the right one even if you worry about the possible consequences of that decision.)

Today I want to talk about the role of corporate personhood in the Court’s decision and in the underlying issues. Much of the furor over the Citizens United decision seems to be rooted in a reaction against the notion of corporations being (or merely receiving protections normally reserved for) persons. I think much of that reaction is misguided: not because I’m in favour of an expansive understanding of corporate rights, but because I think many people are misunderstanding what “personhood” means in this context, and the history of that notion.

A few points about the notion of corporate personhood, and the Court’s view on it:

1. The U.S. Supreme Court did not, in the Citizens United decision, suddenly declare corporations to be persons, contrary to what you might have heard. All they did was declare that one of the limitations on corporate speech could not be justified in light of the U.S. Constitution (in particular, the First Amendment). The Court left in place the legal restrictions on corporate donations to political candidates, and it left in place requirements about the obligations of corporations to disclose their political expenditures. Corporations were, prior to this decision, and they remain, after this decision, a kind of person before the law, with a limited range of rights and responsibilities.

2. It’s worth noting that the Court’s decision (in PDF, here) does not focus on, or argue in favour of, corporate personhood. Indeed, it mentions the concept just once in 57 pages of argument. The view of the Dissenting judges was that the decision by the Majority of the Court must have assumed that corporations are in some strong sense “real persons.” How else could corporations be thought worthy of constitutional protections? As a matter of Constitutional law, though, the majority’s argument was simply that the First Amendment applies to speech per se, not to the speech of men or humans or persons or anything else. Just speech. Ethically, I think the key is really that you can’t limit the speech of corporations without thereby limiting the speech of the persons (executives, employees, and shareholders) who make it up. Corporations are instruments: legal “persons”, yes, but also instruments or mechanisms by means of which real, flesh-and-blood humans achieve their ends. The Court’s decision is worthy of support not because it helps make sure that corporations per se are able to express themselves, but rather because it helps make sure that human beings are not denied a mechanism through which they sometimes choose to express themselves.

3. Legal personhood for corporations is not new. It goes back at least hundreds of years. At heart, all it means is that the corporation exists as an entity separable (ethically and legally) from the human beings that work within it. GM exists today despite the fact that none of its founders or original employees is alive today. You can sign a contract with Apple, and Apple (as a legal person) is required to honour its warrantees, without you having to interact with every shareholder in the company. Governments and courts have, for centuries, seen the wisdom of allowing (and sometimes insisting) that corporations be treated as collective entities (in legal parlance, as “persons.”) As I’ve argued before, there are good reasons Why Corporations Must be Legal Persons. Assigning some form of personhood to corporations (and churches and universities and unions and so on) is how we assign both rights and responsibilities to them. If corporations were not in some sense persons, they could not sign contracts and own property or do any of the other things that makes them useful to us. If corporations were not in some sense persons, you could not sue them when they do wrong. The piece of legislation that the U.S. Supreme Court declared, in part, unconstitutional — the Bipartisan Campaign Reform Act of 2002 — itself treats corporations as persons, since it imposes criminal sanctions on certain kinds of corporate behaviour.

4. Personhood is not a monolithic concept. The fact that the Court rejected some restrictions on corporations does not imply that corporations are now full-fledged persons in the same sense that competent adult human beings are. We have always recognized many different “kinds” of persons, with different sets of rights and responsibilities. Note that the rights and responsibilities of a child, for example, differ from those of an adult (even though both are persons). And the rights and responsibilities of a foreign tourist, for example, differ from those of a citizen (even though both are persons). The fact that corporations are regarded as a type of person does not mean that they’re going to be accorded the right to vote next. And the fact that they don’t have certain rights (e.g., the right to vote, or to adopt children, or to marry) does not mean they aren’t (in some sense) persons.

In summary, I think the corporate-personhood issue is a huge red herring, here. It’s a distraction. If you think (as I do) that there are specific rights that corporations shouldn’t have, argue against those. Treating corporations as in some sense persons should be the beginning of a conversation about which rights and responsibilities we think they should have.

19 comments so far

  1. John M on

    Thanks for your interesting three part series. I intend to work through, in the near future, your recommended text “The Company: a Short History of a Revolutionary Idea” (2005), by John Micklethwait and Adrian Wooldridge. Red herring or not, perhaps that will assist in understanding this issue.

  2. Franklin on

    Chris, i agree that the concept of the personhood of corporations is well documented in law. However, it seems to me that if I am an employee or a shareholder, the corporation should not have the right to speak on my behalf. It does not seem that the corporation/union should have the right to lobby, speak for, etc. for/against candidates or issues that I do not think are in my best interest. As a shareholder, I generally can sell my stock if the stock has a market. As an employee, I can quit. But why should one have to do either. As an individual person supporting an issue myself, I am speaking only for myself. To me that is the difference. Corporations/unions are speaking for many other constituents that may not have a say in the decision.
    Franklin O

  3. Chris MacDonald on

    Franklin:

    Basically, that’s consistent with everything I wrote above (though perhaps inconsistent with my general conclusion about the Citizens United decision.)
    Whether the corporate “person” ought to be allowed to speak on behalf of its human employees & shareholders is a good question. (The Court did consider it, but felt that there were sufficient safeguards in place.)

    My only point would be that the corporation gets to speak on your behalf on a whole range of social & political issues already — via “green” initiatives, statements on social policies, etc. The Supreme Court here argued that speech aimed at electoral politics shouldn’t be treated entirely differently.

    Chris.

  4. Nate Oman on

    I think that you are correct that the personhood issue is a red herring. It is worth noting that the First Amendment’s text doesn’t actually confer rights on persons. Rather it prohibits Congress from legislating on particular matters. As a textual matter the metaphysical status of the speaker is not an issue. I also think that it is important to note that speech contributes to debates (even if it only contributes bad ideas) regardless of its source. The pragmatic justification for free speech found in Holmes and Brandies is about the value of speech as a social enterprise rather than the value of speech as a reflection of individual personhood.

  5. John M on

    If nothing else, this issue is certainly causing a division not along traditional fault lines: “The idea that corporations are the equivalent of people leads directly to the next step: direct contributions to candidates from corporate coffers, not just unlimited independent expenditures to influence campaigns.”

    “Congress Must Act in Wake of Court Ruling on Campaign Finance”, by Norman J. Ornstein, Roll Call / AEI, February 3, 2010.

  6. Chris MacDonald on

    John:

    I’d like to know who on earth thinks “corporations are the equivalent of people.” I know those are Ornstein’s words, but whose view does he think that is? It’s certainly not the Supreme Court’s view. “Equivalent” is a very strong word.

    Chris.

  7. James Gaa on

    Chris

    I agree that the question of corporate personhood is a bit of red herring, if it causes confusion. The fundamental issue here is which of the rights (and duties) of natural persons should be extended to corporate entities.

    I don’t accept your argument that restricting corporate speech would restrict the speech of individuals who happen to run a corporation. Surely, they have freedom of expression as natural persons, regardless of their corporate affiliation. For example, when they give speeches, it is standard (required) practice for staff and commissioners of the Securities and Exchange Commission to begin with a statement that the views they express are their own and do not necessarily represent the views of the SEC.

    Thus, a CEO could surely write letters to the editor or make speeches or make donations to candidates as a natural person without restriction. I simply don’t see how affiliation with a corporate entity would restrict this. I think it goes without saying, though, that they could not use corporate funds for any such expression.

    This distinction between natural persons and organizations is often recognized. For example, the Canadian Federal privacy act, PIPEDA, makes the distinction implicitly but clearly: it concerns the collection, use and disclosure, by organizations, of the personal information of individuals. So, on the one hand, the fact that an individual may be an employee of an organization does not change his or her rights under the act, with respect to the collection of his or her personal information. (In fact, the act has special provisions for employee personal information to deal with the employer/employee relationship.)

    The New Zealand privacy act (I don’t have its name handy) makes the distinction explicit, by stating that the act applies only to the information of natural persons, thus making it clear that the act does not confer any privacy rights on “non-natural” persons. (This is worth a mention, since it could be argued that organizations (“corporate persons”) do have some rights of privacy; but to the extent that they do have them, they are created or recognized in that act.)

    I have to say also that it’s all well and good to say that it’s now up to corporations to act in an ethically responsible manner. We’ll see. I would just point out that the legislation of something like a century of lawmaking were wiped out here (in apparent contradiction of some Justices’ pious claims about the importance of stare decisis and the alleged importance of originalist interpretations of the Constitution — not that I ever believed Justice Scalia), and that these laws were presumably enacted because of a concern that organizations would not act in an ethically responsible manner. (The coming experiment in corporate self-control does not hold me in suspense.)

    At the risk of oversimplification, one of the primary reasons we have laws is to make enforceable rules that capture our value judgments about what constitutes ethically appropriate behavior. One way of looking at ethics is that it concerns limitations on self-interested behavior. Likewise, we can look at laws of this sort (i.e., re. campaign financing), as concerning legally enforceable limitations on self-interested behavior. In this context, it is appropriate for governments to use their power to enact laws that make our value judgments (and expectations regarding expected behavior) legally binding.

    Jim Gaa

  8. Chris MacDonald on

    Jim:

    Thanks for your thoughtful comment.

    I’m glad you picked on my argument about corporations as instruments. The details of that argument have been bugging me. (Though, just to be clear, I didn’t say that limiting the speech of corporations limited the speech of “individuals who happen to run a corporation” — I said if you limit corporate speech you are thereby limiting the speech of “executives, employees, and shareholders.”)

    I think what I’m getting at is this:
    Imagine 100 like-minded people (each with an obvious right to free speech) band together to speak on electoral politics. Now further imagine that they decide to incorporate (because, for example, that lets them aggregate their money to hire a secretary, rent an office, buy radio airtime with just one signature, etc etc). Under McCain-Finegold, that corporation is not allowed to print or broadcast any statements about electoral politics (within the relevant time periods prior to an election). If those 100 people held a rally — a form of social organization designed to amplify individual voices — and at that rally chanted slogans for or against a particular candidate, that would be perfectly legal. But having formed a corporation they are now banned from speaking (except separately, as individuals). That seems arbitrary.

    (Of course, they could form a corporation and still make political statements as long as they used the corporation to print a newspaper or buy a TV station, in which case freedom of the press kicks in, and they can spend as much as they want in order to say whatever they want.)

    I’m sympathetic to the idea that some voices can be too “loud.” And corporations might be a mechanism by means of which some very loud voices get created. But banning corporate political speech seems a clumsy way to solve the problem — as I suggested yesterday (and as the Court suggested), it’s both overinclusive and underinclusive in what it restricts.

    Chris.

  9. John M on

    Jim, I think your assertion in your third paragraph is not entirely right. As a counter-example I present St Louis Fed President’s very important 2004 speech “Maintaining Financial Stability: A Central Banker’s Perspective” (PDF). This was indeed very much his personal viewpoint, but as a Fed official he was not exactly his own person, notwithstanding the boilerplate about the speech being his views. On the other hand, Greenspan was hardly going to make him hitchhike to Europe just so he could say something in his own person!

  10. James Gaa on

    Hi Chris

    This is certainly an interesting issue, at least to a few of us on your blog. Your comments have the air of political theory, while mine have more the air of political power. I really don’t think the Court was interested in settling a theoretical issue — it’s about who (or more precisely, what) wields political power. (I’ll just mention Bush v. Gore, to get our hearts racing (:-).)

    The comments in your reply to me are similar to those of Justice Thomas that were reported just now in the NY Times.

    http://www.nytimes.com/2010/02/04/us/politics/04scotus.html?hp

    So, I guess your reasoning is pretty much in line with the majority decision. (I confess that I haven’t read the decision, even though you provided a link.) Still, if the 100 of you wanted to make these political expenditures, it would be pretty easy to designate one of you to sign cheques, and to do all the other actions you mention, without incorporating. So, if your group really wanted to spend money on an election, it could easily find a way of doing so (and without the cost of time and money of incorporating). And you wouldn’t have to go to the Supreme Court in order to be able to spend your money.

    As I understand it, the Supreme Court had heard arguments about a specific issue (buying TV time, similar to your example of buying radio time) and then decided, very unusually, that it would hear additional arguments about the whole issue. It then wiped out not just the one narrow case about the TV broadcast they had already heard (and which could have been decided narrowly, as courts traditionally do) but also a century of legislation. (Bye bye, stare decisis; hello originalist dumping of precedent). Not to mention that the decision required overturning recent Supreme Court decisions, which has traditionally been a no-no, because (as I understand it) this requires saying that only a few years ago the Court had been demonstrably erroneous.)

    I’m sure the underlying issue of this long line of legislation, in spite of Justice Thomas’s ad hominem (see above), is the power of large corporations to influence elections in a material way. Certainly, that’s the way I read the protests against this decision. Nobody’s worried about your example of 100 people banding together for some political purpose and, for some unnecessary reason (except, maybe, to create a test case?), deciding to incorporate.

    To the extent that this is the case, then the limitation on corporations was an attempt to prevent such entities from using their large economic muscles to influence elections in their favour. (Expect this to happen until and unless the Congress can pass legislation that somehow addresses this issue directly — and undoubtedly with 60 votes required in the Senate. No one should hold their breath.)

    Whether the US Congress can find a way of addressing this is unknown (unlikely, in my opinion, any time soon), but thinking that corporations will do anything but use their new freedom to influence the electorate is mistaken. The banking industry, for example, is not shy about using its resources to influence legislation and regulation.

    So, long story short, one could claim that the Supreme Court has thrown the baby out with the bath water, and needlessly so. E.g., it could have decided the narrow case it originally heard, and sent a strong signal to Congress that it needed to change its legislation before anothe case reached the Court. This has happened before, as I understand it. But, clearly the Court was eager to wipe the slate clean. Many people have concluded that the Court was not interested in the theoretical vagaries of corporate personhood (and the kind of puzzle you present (i.e., the group that just happens to incorporate, and is thus barred from making campaign expenditures)) so much as it was interested in an ideologically motivated shift in the balance of political and economic power.

    Jim

  11. Chris MacDonald on

    Jim:

    I’m trying to steer (myself) clear of U.S. politics, which I don’t understand well enough to speculate about much. That’s why I’m trying to stick to the theoretical issues (though I’m more than happy to have your comments on the other stuff, too!)

    You say that “Nobody’s worried about your example of 100 people banding together.” Probably right. But then, their behaviour would still be illegal, right (under McCain-Finegold)? And I’d be very surprised, actually, if there are many 100-person organizations (and I chose that number more-or-less arbitrarily, in my original example) that could get much done minus incorporation. Yeah, you can all pay dues directly to some volunteer among you, and have her pay the bills, but incorporation (as a nonprofit) is going to get very attractive very quickly, I suspect. And, it seems to me, this is a legitimate kind of endeavour.

    If ‘the influence that comes with money’ is the target for regulation, here, incorporation seems a poor proxy.

    Chris.

  12. Megan Schmit on

    I am going to try very hard to not discuss IF corporate personhood should or should not be upheld under the Constitution. It is a red herring, absolutely, because the Supreme Court had no place in making any determination of its validity. It is an appeals court, and the appeal came from Citizen United because they felt that the Bipartisan Campaign Reform Act (BCRA) of 2002 denied them of their FIRST AMENDMENT RIGHT.

    Specifically, the BCRA says that if you say “Vote for ___” or “Don’t vote for ___” then you are unable to run your campaign within 30 days of a primary. Citizen United didn’t ever say “Don’t vote for Hilary Clinton.” It was a documentary-style video with personal interviews and testimonies that were, yes all negative, and cast somewhat of a shadow over Clinton. However, they did not appeal to vote and the US District Court saying that they were violating BCRA restrictions IS SCARY. If a book that was 100% factual stated in the “Author’s Note” that you shouldn’t vote for ___, then technically that book would be BANNED in the time frame too.

    The Supreme Court ruled that it is not the place of the government to take away any person’s 1st Amendment Right of Free Expression and Speech. I applaud the decision’s objectivity because whether they agree or disagree with corporate personhood, power of corporations, whatever…their duty is to test the verdict in question against the Constitution and give an interpretive ruling. Bravo.

    I’m on an executive team for a nonprofit group at my university. I was elected to the position, and make decisions everyday on behalf of the organization. We also support other organization’s philanthropies as well as purchase space for career fairs, etc… when you pay for membership, you are investing (if you will) in the organization today as well as the sustainability of the organization for years to come. If there was a candidate running for President of X University that was against allowing any organization to use the facilities without paying to rent the space, that could potentially break us down. For good. So, naturally we voice our opinion…we campaign, we get the word out that this is the candidate’s position…and we NEVER say DONT vote for him. You mean to tell me, we can’t let people know this is his/her stance? You mean to tell me that we don’t have the right to use membership money for anything other food at free events (that would be outside in the grass somewhere I suppose)?

    The law applies to both Corporations and Unions. UNIONS. And, to wrap this up, a little tidbit of information I found incredibly relevant is that LOBBYING, a completely legal and unregulated act, outweighs corporate “giving” about 4:1!! http://bit.ly/3wwDNc

    You say you want fair, so think of how fair it would be if newspapers (it’s hard to believe, but yes they are corporations)had to follow “the rules” and no articles that portray a candidate in a good, or in a bad light can be run the entire month before the election. Yeah, that’s what I was thinking too =)

  13. Chris MacDonald on

    Megan:

    Thanks for your comment.

    Yes, I alluded to the newspaper exemption in a comment above.

    For what it’s worth, the Court did consider the issue explicitly, and determined that the message of the film ‘Hillary’ was “don’t vote for her”, even though it didn’t use those words. You can disagree with the Court, but that conclusion is what brought ‘Hillary’ under the auspices of ss441b.

    Your example from your work at the university is great. I think most people don’t consider (or realize) how broad the term “corporation” is, in this context, and how many cherished organizations it applies to — not just Walmart and the big banks!

    (As for personhood: the Court didn’t touch the topic, at least not explicitly.)

    Chris.

  14. Megan Schmit on

    Thanks Chris.

    You just helped me express my point that Hillary: The Movie never said “don’t vote for her” and the District Court said it was implied…and if the government can determine what I imply or don’t imply as opposed to what I actually say, well… we can all fill in the blank!

    I’m enjoying going back over this conversation. It’s a great topic, and hopefully we can discuss this with some degree of objectivity, if we hope to continue the “conversation about rights and responsibilities” that you said. Great series =)

    Thank you!

  15. Chris MacDonald on

    Megan:

    Yes, I see your point about interpretation. The Court actually made a similar point. They (the court) basically had no choice but to do some interpreting (it’s their job), but they argued that any law the application of which involves LOTS of interpreting (and probably requires companies to hire free-speech lawyers in advance to figure out whether they’re likely to be charged with a crime) is pretty problematic. And that’s how they described 441b of McCain-Finegold.

    Chris.

  16. Fibocycle on

    “Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws.” Plato (427-347 B.C.)
    The following advice from the Washington Based law firm K&L Gates LLP basically sums up the validity of Plato’s statement.

    From: http://www.klgates.com/newsstand/Detail.aspx?publication=6214

    10) How will corporations likely take advantage of their opportunity to make independent political expenditures?

    Just because a corporation may make an independent direct advocacy expenditure doesn’t mean that it should. Since the entity or entities financing independent expenditures must be disclosed, a corporation leading the way against a particular candidate risks alienating a significant block of its potential customer or shareholder base. Moreover, upon the first major corporate-funded public communications airing, media coverage is likely to focus on the corporation’s involvement in the campaign rather than the content of any advocacy.

    Therefore, most corporations will probably proceed cautiously. If such independent expenditures are made, groups of corporations within an industry may form coalitions or use existing trade associations to support candidates favorable to policy positions that affect the group as a whole. While corporations that contribute to these expenditures might still be disclosed, this indirect approach can provide sufficient cover such that no single contributing entity receives the bulk of public scrutiny.

    Corporations could further lower their profile in such cases by not making contributions specific to a particular expenditure by that third-party corporation. Such independent expenditures can also take the form of advertisements in “under-the radar” sources, such as ideologically-based talk radio, web-based ads or phone banks. Since state and local laws preventing corporate political expenditures will also likely be repealed as a result of Citizens United, small corporations may also become involved in state and local races through regional media.

  17. […] in the wake of Citizens United, I did a trio of blog entries on the topic. See my 1st, 2nd, and 3rd entries. A few months earlier, I had written about Why Corporations Must Be Legal Persons.) […]

  18. […] It’s an old topic, one revitalized by the US Supreme Court’s decision last year in the Citizens United case. Corporate involvement in the political sphere takes many forms (from lobbying to campaign […]

  19. […] their goals, then it becomes clear that the rights (or “rights”) of different kinds of corporate persons depend not on what kind of entity they are, but on the the demonstrable goals of the human beings […]


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