Corporations had been viewed as artificial persons for millennia, the debate over whether they should be afforded the same rights as humans had been raging long before the United States created, or the14th Amendment was adopted. The degree of permissible government interference in corporate affairs was controversial from the earliest days of the nation.
With the Industrial Revolution, the favored form for large businesses became the corporation as a mechanism to raise the large amounts of investment capital. The Civil War accelerated the growth of manufacturing and the power of the men who owned the large corporations. Businessmen such as Mark Hanna, sugar trust magnate Henry O. Havemeyer, banker J. P. Morgan, steel makers Charles M. Schwab and Andrew Carnegie, and railroad owners Cornelius Vanderbilt and Jay Gould created corporations which influenced legislation at the local, state, and federal levels as they built businesses that spanned multiple states and communities. After the adoption of the 14th Amendment in 1868, there was some question as to whether the Amendment applied to other than freed slaves, and whether its protections could be invoked by corporations and other organizations of persons.
Corporations as legal entities have always been able to perform commercial activities, similar to a person acting as a sole proprietor, such as entering into a contract or owning property. Therefore corporations have always had a ‘legal personality’ for the purposes of conducting business while shielding individual shareholders from personal liability (i.e., protecting personal assets which were not invested in the corporation).
Corporate personhood is the legal concept that a corporation may be recognized as an individual in the eyes of the law. This doctrine forms the basis for legal recognition that corporations, as groups of people, may hold and exercise certain rights under the common law and the U.S. Constitution. The doctrine does not grant to corporations all of the rights of citizens. In Pembina Consolidated Silver Mining Co. v. Pennsylvania – 125 U.S. 181 (1888), the Court clearly affirmed the doctrine, holding, “Under the designation of ‘person’ there is no doubt that a private corporation is included [in the Fourteenth Amendment]. Such corporations are merely associations of individuals united for a special purpose and permitted to do business under a particular name and have a succession of members without dissolution.” This doctrine has been reaffirmed by the Court many times since.
As a matter of interpretation of the word “person” in the Fourteenth Amendment, U.S. courts have extended certain constitutional protections to corporations. Opponents of corporate personhood seek to amend the U.S. Constitution to limit these rights to those provided by state law and state constitutions.
The basis for allowing corporations to assert protection under the U.S. Constitution is that they are organizations of people, and the people should not be deprived of their constitutional rights when they act collectively. In this view, treating corporations as “persons” is a convenient legal fiction which allows corporations to sue and to be sued, provides a single entity for easier taxation and regulation, simplifies complex transactions which would otherwise involve, in the case of large corporations, thousands of people, and protects the individual rights of the shareholders as well as the right of association.
Generally, corporations are not able to claim constitutional protections which would not otherwise be available to persons acting as a group. For example, the Supreme Court has not recognized a Fifth Amendment right against self-incrimination for a corporation, since the right can be exercised only on an individual basis.
Since the Supreme Court’s ruling in Citizens United v. Federal Election Commission in 2010, upholding the rights of corporations to make political expenditures under the First Amendment, there have been several calls for a U.S. Constitutional amendment to abolish Corporate Personhood, Ralph Nader, Phil Radford and others have argued that a strict originalist philosophy should reject the doctrine of corporate personhood under the Fourteenth Amendment.
A central point of debate has been what role corporate money plays and should play in democratic politics. This is part of the larger debate on campaign finance reform and the role which money may play in politics.
The corporate personhood aspect of the campaign finance debate turns on Buckley v. Valeo (1976) and Citizens United v. Federal Election Commission (2010): Buckley ruled that political spending is protected by the First Amendment right to free speech, while Citizens United ruled that corporate political spending is protected, holding that corporations have a First Amendment right to free speech. Opponents of these decisions have argued that if all corporate rights under the Constitution were abolished, it would clear the way for greater regulation of campaign spending and contributions. It should be noted, however, that neither decision relied on the concept of corporate personhood, and the Buckley decision in particular deals with the rights of individuals and political committees, not corporations.
Citizens United v. Federal Election Commission, 558 U.S. ___ (2010), (Docket No. 08-205), is a US constitutional law case, in which the United States Supreme Court held that the First Amendment prohibits the government from restricting political independent expenditures by corporations,associations, or labor unions. The conservative lobbying group Citizens United wanted to air a film critical of Hillary Clinton and to advertise the film during television broadcasts in apparent violation of the 2002 Bipartisan Campaign Reform Act (commonly known as the McCain–Feingold Act or “BCRA”). In a 5–4 decision, the Court held that portions of BCRA §203 violated the First Amendment.
The decision reached the Supreme Court on appeal from a July 2008 decision by the United States District Court for the District of Columbia. Section 203 of BCRA defined an “electioneering communication” as a broadcast, cable, or satellite communication that mentioned a candidate within 60 days of a general election or 30 days of a primary, and prohibited such expenditures by corporations and unions. The lower court held that §203 of BCRA applied and prohibited Citizens United from advertising the film Hillary: The Movie in broadcasts or paying to have it shown on television within 30 days of the 2008 Democratic primaries. The Supreme Court reversed, striking down those provisions of BCRA that prohibited corporations (including nonprofit corporations) and unions from making independent expenditures and “electioneering communications”.
In Citizens United the Court confidently declared, “We now conclude that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.” And for skeptics who thought otherwise, the Court provided this additional assurance: “The appearance of influence or access, furthermore, will not cause the electorate to lose faith in our democracy.”
On march 2014 the Supreme Court heard oral arguments in Sebelius v Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corp. v Sebelius. These two consolidated cases concern Obamacare’s “contraceptive mandate”—the requirement that businesses offering their employees health insurance must provide plans that cover all federally-approved contraception methods at no extra cost to their employees.
Hobby Lobby Stores and Conestoga Wood Specialties are both owned by Christians who believe that some of those contraceptive methods are tantamount to abortion, because they can prevent a fertilized egg from implanting in the uterus. The owners seek an exemption to the contraceptive mandate under the Religious Freedom Restoration Act (RFRA), a statute that Congress passed almost unanimously in 1993. This says that “government shall not substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability”, unless the law is the least restrictive way to further a compelling state interest.
To summarize, the US judiciary thinks that corporations should have speech rights because they are basically associations of people. This view overlooks the fact that corporations are instruments with a very specific purpose, to make money. In fact, many social ills created by corporations stem directly from corporate law. The law actually inhibits executives and corporations from being socially responsible. A provision in corporate law says the purpose of the corporation is simply to make money for shareholders. Every jurisdiction where corporations operate has its own law of corporate governance. But remarkably, the corporate design contained in hundreds of corporate laws throughout the world is nearly identical. That design creates a governing body to manage the corporation, usually a board of directors, and dictates the duties of those directors. In short, the law creates corporate purpose. That purpose is to operate in the interests of shareholders.
Of course there are people behind corporations, however, one of the main purposes of corporations is to shield people from responsibility of what the corporation do. While it is true that what guide corporations is the human activity of their executives, boards of directors, managers and employees, all the human emotional factors of the people in the corporation pass through a “filter” created by the basic rule of maximizing profit. A corporation is a complex machine, and as it grows, its actions get more detached from the values of the founders. Wal-Mart a clear example of this. When Sam Walton was alive there probably was some truth on the saying that the Wal-Mart Way was the American Way; Nowadays is the cheap slave labor Chinese way.
Corporations are big machines that should not go amok, the same way a train engine needs tracks. Free market is not restrain enough, specially when there is such an concentration of wealth and power and a few oligopolies control everything. In practice, corporations are powerful enough that they control government, not the other way, and is a moot point to discuss government regulations. Nonetheless one should be at least aware of the manipulations of public opinion and values.
Small family business might show some correlation between their behavior and the values of the shareholders. But the modern large corporation, the one that we, the people, the flesh and blood people, should consider, is an amoral entity, i.e., not governed by human moral values. It lacks guilt for what it does, or empathy for those it harms. A corporation can function beyond the natural limits that govern humans. A corporation doesn’t die with its originator. Corporations can’t feel pain. A corporation cannot be imprisoned. One might give corporations the rights of a human being, but not similar responsibilities.
Like Frankenstein´s monster, corporations do have a life of their own, beyond the wishes, expectations or actions of their founders. Corporations are at their most nefarious as a living entity, bound on survive and thrive at all cost. The modern corporation is particularly dangerous because of its great concentration of money, power, and political influence–which it uses freely to reach its goals.
Even more, if it is granted that corporations reflect the interest and values of their owners, and there are a few extremely wealthy and powerful, that gives this few undue advantage to impose their interests on the majority.
It is a fact of life that the winner of elections for public office, specially the presidency, can be predicted on the bases of the amount spends on the campaigns. The news media coverage in the United States is of very low quality, heavily biased towards the interests of the plutocracy. Extending the rights and prerogatives of big corporations is in practice the end of democracy.
In 2010, after the Supreme Court declared that corporations have the same rights as individuals when it comes to funding political campaigns, Murray Hill took what it considers the next logical step: declaring for office.
“Until now, corporate interests had to rely on campaign contributions and influence-peddling to achieve their goals in Washington,” the candidate, who was unavailable for an interview, said in a statement. “But thanks to an enlightened Supreme Court, now we can eliminate the middle-man and run for office ourselves.”
William Klein, a “hired gun” who has been enlisted as Murray Hill’s campaign manager, said the firm appears to be the first “corporate person” to run for office and is promising a spirited campaign that “puts people second, or even third.”
A stunt, but how far should the corporate personhood metaphor go?