Saturday, January 23, 2010

Corporations are Imaginary People, Not Real People

Nowhere does the Constitution of the United States mention corporations.  Nowhere does the Declaration of Independence mention corporations.  Corporations are not real people.  They are legal fictions created by legislation to facilitate economic activity. The purposes for which a corporation may be created are defined by the statutes under which they are incorporated. 

The Bill of Rights limits the ways in which the government can interfere with the activities of people in the United States.  However, corporations have never been allowed to do anything that the legislature did not say they could do in the first place.  No one can tell an individual that he may not pursue a lawful profession, but legislatures have often limited the extent to which particular professionals can do business as corporations.  This is why law firms and accounting firms are typically organized as partnerships.    

For more than a century, Congress has limited the extent to which corporations may participate in the political process.  Many states legislatures have imposed similar restrictions.  Since a corporation's right to engage in any activity is defined by statute, there should be no reason why its political activities should not be subject to legislative limitations.

In a brazen usurpation of legislative prerogatives, the Supreme Court of the United States has decided that
Congress cannot make such distinctions between corporations and real flesh and blood human beings.  By such logic, corporations should be allowed to run for office and to vote.

Conservatives love to whine about activist judges who make laws rather than interpret laws.  I hope they will make their voices heard now.


  1. I guess I'm a bit confused by which team (Dem/Rep) is publicly behind this? It seems to me it benefits both sides, yet it's in their best interests to feign righteous indignation about it because the little guy is getting boned again.

    does that seem right?

  2. Actually, I don't think either party is happy. As it stands now, corporations spread money around pretty generally to members of both parties, but if a Congressman or Senator decides that he can get along without a particular source of funds, he may decide that there is more to gain by doing something good for his constituents. Now, however, the corporation can retaliate more directly by running attack ads when the guy is up for reelection. I think that threat is going to be a constraint on all legislators.

    I also think that legislators won't be able to whore themselves at as high a price as they have in the past. Now that the corporations have a bigger stick, they can offer smaller carrots.

  3. yo, I want to send a link to this entry around, but you should maybe proofread it first.

  4. >the United States has decided that
    Congress cannot make such distinctions between corporations and real flesh and blood human beings.

    Except that corporations consist of people. The question is if citizens' right to free speech is restricted when the rights of citizens to speak as a group are restricted. I say yes.

    It's true that corporations aren't literal people, but small towns, Africa, and the Democratic Party are literally people either. In none of these cases should the rights and interests of the group be dehumanized.

  5. Jeffrey,

    Thanks for stopping by.

    I am not sure whether it is helpful to say that "a corporation consists of people." To the extent that is true (about which I am not certain), a corporation consists of a lot of different people with different interests including directors, executives, employees, and shareholders. I think what we have seen in the current financial crisis is that our current regulatory structure does not adequately address the conflicts of interest between these groups.

    I think there is an important distinction between buying stock in a publicly held corporation and joining a membership organization like the Democratic Party, the PTA, or a union. In the latter case, the organizations exists in order that individuals may come together to pursue shared interests or address common concerns that exist independently of the membership organization. By joining the organization, I am indicating what I share in common with other members. I don't think that I do that when I buy a share in a corporation. I can think very differently from the executives of a corporation about many political issues while believing in its business prospects. I don't think we can conclude that a restriction on the political activities of a corporation is a restriction on the speech of its shareholders.