Allan Powell: A close look at the corporation

December 16, 2011|By ALLAN POWELL

Many will be puzzled at the suggestion that corporations — the source of so many products and services — should be reined in seriously to regain control of an unruly critter. Indeed, there are those who think that some corporations, such as investment banks, should be treated as public utilities to ensure the public interest is protected. At minimum, citizens need to be well informed about the size, structure, involvements and legal fictions that give corporations advantages not available to any other businesses or citizens.

For those who are motivated to be informed about the evolution and conduct of the corporation as an agent of commerce, one up-to-date source is Thom Hartmann’s latest book, “Unequal Protection.” This history traces the corporation from its origin in 1580, during the reign of Queen Elizabeth, to the 2010 Supreme Court decision “Citizen’s United v. Federal Election Commission) which granted the right of free speech to corporations.

Americans should have a special interest in corporate conduct in view of the fact that our existence came about by a dramatic reaction to a decision made by a huge, multinational corporation (the British East India Company) to dump 17 million pounds of tea on the shores of the American colonies. This would benefit (actually save) an ailing business and, at the same time, enrich 218 businessmen and royalty who had invested in the company. Things haven’t changed; huge corporations, with interests scattered all over the globe, have been blessed with so many favors by politicians and judges that they are still “dumping” on citizens. No matter how gross their misconduct, they continue to get special treatment because they “are too big to let fail.”

By far, however, the 1868 passage of the Fourteenth Amendment was an unexpected gift of major proportions. It provided the language that could be stretched from a context providing for the protection of former slaves (real persons) to artificial “persons,” with attributes not available to mere humans. Corporation lawyers, serving the fabulously wealthy railroads, created legal fictions that are the envy of real persons.

There has never been any doubt that the Fourteenth Amendment was meant to apply to living, breathing persons. But this personhood morphed into a verbal bonanza in the hands of corporate lawyers — and what started as a legal fiction (artificial person) evolved into an abstraction that dwarfed a mere “natural person.” Eternal life (fervently hoped for by humans) was just a starter. Then came limited liability that gave corporations a form of protection unknown to real persons. Together, these capabilities made it possible for corporations to accumulate sums of money experienced by only a few real persons.

Railroads then used the power of eminent domain to seize land from farmers and settlers. Within seven years after 1850, more than 25 million acres of land were taken — with much alleged taints of bribery. Expansion in land, power and wealth was matched by the expansion of the use of constitutional amendments to confer rights originally intended for real persons to corporations. This began with the use of the Fourteenth Amendment to confer personhood to corporations. Then, other rights expected by real persons could be claimed to be inherent rights of artificial persons (corporations).

For example, the First Amendment’s protection of free speech for persons has been used to strike down a law that regulated money given to politicians and political candidates because the money given was declared to be the way a corporation freely expressed itself. The forced marriage of free money to free speech was a huge verbal and conceptual stretch. This was the legal result in the Citizens United case made in 2010.

The minority opinion, written by Justice John Paul Stevens, gave a stinging rebuke to the majority justices: “Unlike natural persons, corporations have limited liability for their owners and managers, perpetual life, separation of ownership and control, and favorable treatment of the accumulation of assets…that enhance their ability to attract capital and deploy their resources in ways that maximize the return of their shareholder’s investments. Unlike voters in the U.S. elections, corporations may be foreign controlled.”

We have pampered corporations until they are political leviathans and might well be out of control. It might be impossible to stuff the genie back into the bottle. It will take time to know if the Dodd-Frank law, intended to adequately regulate Wall Street, can accomplish this formidable task. Hartmann suggests that only a constitutional amendment that takes away the attributes of personhood from corporations can restore adequate management of corporations. Realistically, this is not going to happen because corporations have the power (and money) to block this attempt on both federal and state levels. Perhaps the protestors on Wall Street will stimulate interest in this vital concern.  

Allan Powell is a professor emeritus of philosophy at Hagerstown Community College.

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