Archive for the ‘personhood’ Category

Why Corporations Must be Legal Persons

OK, this topic is too important to let drop just yet.

A few days ago I asked what rights corporations should have. That posting generated some useful comments, but some of those comments, and other things I’ve been reading online, suggested an animosity to the very notion of rights for corporations and the legal personhood that goes along with it.

So, I’ll put this forward succinctly: legal personhood for corporations is not optional. It’s absolutely fundamental to modern commerce. To believe otherwise, you basically have to be an anarchic anti-capitalist; indeed, you have to be against the very notion of large-scale cooperation and division of labour. But you’re not, are you?

At heart, legal personhood just means that a corporation can be taken seriously by courts: it can be treated as a thing, separate from the human persons that make up the corporation at any particular time.

This point does not imply any particular list of rights: the items on that list, and the limits thereon, are still very much up for debate. But what cannot be denied is that corporations must be treated as legal persons. The recent deliberations of the U.S. Supreme Court is something of a red herring in this regard. As is the American legal trend, in the decades after the Civil War, to apply the Fourteenth Amendment to corporations. Those are particular good-or-bad decisions; they tell us little if anything about the wisdom of granting some form of personhood to corporations. That idea, by the way, is a very old one, stretching back far before the 19th century. Corporate personhood is not an American invention or a conspiracy. It’s a feature of every modern economy.
(For a lively and informative history of the corporation, and other sorts of companies, see The Company: A Short History of a Revolutionary Idea.)

Look, for starters, at a few other kinds of legal persons:
– universities
– churches
– nonprofits
– political parties
– governments
– estates
– etc.

None of those is a human person. But courts treat them as persons. And you can imagine the important activities that would simply be impossible if they weren’t regarded as persons (i.e., taken as objects of legal rights and obligations) by courts. The university I work for couldn’t own the land it sits on, and couldn’t issue me a salary. Greenpeace couldn’t have a bank account. Political parties would not be able to fundraise, and to hire accountants to keep the books. Governments couldn’t be taken to court. Churches couldn’t be sued for, e.g., sexual abuse by priests . And estates — well, what would an estate even be? Just the no-longer-owned stuff of a former person, now up for grabs.

So, back to corporations. If a corporation were not regarded in at least some ways as a legal person, at least 2 very bad consequences would follow.

1) If corporations were not (in some sense) persons, they could not own property or hold bank accounts. And without those 2 things, operations would literally be impossible. (And that goes not just for corporations, but for all other large organizations, including cooperatives and nonprofits.)

2) If corporations were not (in some sense) persons, they could not be sued or fined or charged with crimes. You could sue or charge particular people within the corporation, of course, but that’s at least sometimes not really effective. For all I know, no one who worked at Exxon back when the Exxon Valdez spilled millions of gallons of oil onto the Alaskan coastline 20 years ago still works there. Should that mean no further legal action can be taken with regard to those events? Or that you’ve got to chase down people who have retired or now work at other companies? In some cases, you might want to do just that. But most of us share the intuition, I think, that Exxon itself, as a company, is responsible (too). If Exxon were not a legal person, there would be no way for anyone to take legal action against it.

So, yes, the debate over which rights (and responsibilities) corporate “persons” should have is a good and important one. But please, let’s be rid of the silly notion that corporate personhood is itself, in some sense, just a mistake.
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p.s. I’m not a legal scholar. If I’m wrong on any legal points, and if any readers are qualified to help me out in that regard, I’d be much obliged.

Wal-Mart: The Transformative Power of a Transformed Company

Here’s an interesting story about Wal-Mart’s decision, back in 2005, to ‘go green.’
From the NY Times: Green-Light Specials, Now at Wal-Mart.

Two grand themes emerge in the story. Both are about massive transformations.

One is the story of Wal-Mart’s attempt to use its enormous size, and its enormous influence over its supply-chain, to do what very few companies can do: have a significant (positive) impact on the environment.

By virtue of its herculean size, Wal-Mart eventually dragged much of corporate America along with it, leading mighty suppliers like General Electric and Procter & Gamble to transform their own business practices.

Under Mr. [Lee] Scott, who is retiring this month at the age of 59, the company that democratized consumption in the United States — enabling working-class families to buy former luxuries like inexpensive flat-screen televisions, down comforters and porterhouse steaks — has begun to democratize environmental sustainability.
For decades, many consumers felt that going green was a luxury, too, reserved primarily for those with enough money — and time on their hands — to buy groceries at natural food stores and organic clothing from specialty retailers.

(For previous postings on Wal-Mart and the environment, see here and here.)

The second grand theme of the story is the transformation of Wal-Mart into the kind of company that, by all appearances, wants to have the kind of positive impact alluded to above.

“It wasn’t a matter of telling our story better,” said Mr. Scott said in recent interview. “We had to create a better story.”

WAL-MART, of course, didn’t change overnight. It was pushed — or, more accurately, shoved — into wrenching reforms.

When Mr. Scott became chief executive in 2000, the company was a Wall Street darling. With nearly 4,000 stores and more than a million employees, it had edged out Goliaths like Sears and Kmart. But its size and success invited scrutiny. In 2005, two union-backed groups, Wal-Mart Watch and Wake Up Wal-Mart, set up shop in Washington and started a public relations assault against the company.

Some of you may have noticed that I implied above that having a positive impact was something that Wal-Mart (rather than, say, Mr. Scott, or the Board) “wanted.” Some people are skeptical about corporations (or other composite entities) “wanting” or “believing” or having other such mental states. But if you don’t take it too literally, you see it makes sense. As of 2009, Wal-Mart, as a whole, wants to play a certain kind of role. Now the reasons for Wal-Mart wanting that are pretty complex. In fact, I think at the level of reasons, that’s where we should say “No, corporations don’t have those.” If you want the reasons why Wal-Mart wants what it wants, you have to look at the many and diverse reasons why the different people that make up Wal-Mart want the company to play that role.

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