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.