Corporate Persons

and other horror stories

In my last article ‘The High Ground’, I suggested that one of the things that must be done on the road toward a mutually-regulating triangle of governmental, corporate and cultural (people-powered) institutions is to overcome “the abomination of corporate personhood”. And I also promised “more detail on that later”. So here it is:

Full understanding of this principle and its history is complex because laws are different in different places (as they should be) and because of precedent, and different interpretations of laws etc. However, some key events and milestones based on Britain and the USA will illustrate the situation:

In 17^th century Britain, corporations started to come into existence, not freely, but under cover of Royal charters of specific duration and for specific purpose - one such being the British East India Company. During the Industrial Revolution, the concept of ´legal person´ was instituted and covered, among other things, such corporations. There were some sound rationales in this such as limiting the (considerable) risk of those seeking to start a major economic enterprise, legally identifying a non-individual owner of assets, and making it possible to sue a corporation in the case of wrong-doing. However, it also gave corporations great freedom, and by the nineteenth century the East India Company had become more powerful than the British government. It was the richest company in the world, was governing India, and even had its own army, running to a quarter of a million men - bigger than the British army. And that company was just one example. The Hudson Bay Company had become the de-facto government of Canada, and there were many other similar organisations.

In America too, corporations started out under state charter. The original conception of such charters was that they be for activities developed in the public interest. However, during the 19^th and 20^th centuries, a series of Supreme Court judgements first prevented the state from revoking corporate charters, and then step by step gave corporations more and more of the constitutional rights which had originally been designed for the protection of private individuals, setting them free to far exceed their proper role. Some key milestones cited by campaigners against corporate personhood are:

1819, Dartmouth College vs Woodward, US Supreme Court: The court´s ruling prevented a government from revoking a charter by decreeing that this could only be done if a condition allowing it had been written into the original charter. This set a precedent for viewing government charters as contracts like any other and gave corporations standing within the Constitution.

1886, Santa Clare County vs South Pacific Railroad, US Supreme Court: This judgement actually supported the position of the State, and anyway was not a case directly concerned with corporate rights or ´personhood´. However, the judge made an incidental remark, separate from the judgement itself, that he believed companies to be subject to the rights of the 14^th amendment (Rights of citizens). Subsequently, this remark was widely and erroneously (or deceptively?) cited as a precedent that corporations are to be considered persons with regard to the 14^th Amendment.

1906, Hale vs Henkel, US Supreme Court: This case granted corporations 4^th Amendment ´search and seizure´ protection - again originally intended for individuals.

1919, Dodge vs Ford Motor Company, Michigan Supreme Court: The court ruled that the primary purpose of a corporation is to make profits for its shareholders - by now completely overturning the original conception of corporations as undertaking tasks in the public interest. (Note: This is a curious one: It may be that ‘profit before all else’ has become problematic not primarily because of the ‘greed of directors and shareholders’, but because of a law obliging companies to put profits first. On the other hand, as Hayek suggested, governments should legislate whatever human and environmental protections are needed, and then companies should simply get on with their tasks. They are not the moral guardians of society, and never should be. Yet vast and powerful corporations are now actually flouting that still-current law that says shareholder profits must come first, and setting themselves up as the ‘environmental, social and governance’ (ESG) caretakers of the population. Or at least pretending to. Frankenstein not only lives, but has mutated).

1922, Pennsylvania Coal Company vs Mahon, US Supreme Court: Corporations were here given the right, as ´persons´, to the 5^th Amendment ´takings clause´. This meant that regulations impacting a corporation´s ability to make profit might be subject to a claim for lost earnings, and resulted in a much greater caution in making laws in the public interest when they have implications for the activity of corporations.

1976, Buckley vs Valeo, US Supreme Court: Corporations as ´persons´ are granted First Amendment free-speech rights in respect of spending money to influence elections.

1996, International Dairy Foods vs Amnestoy, Federal Court of Appeals: Corporations were allowed, under the First Amendment ´right to remain silent´ and to avoid self-incrimination, not to disclose in labelling the use of a synthetic growth hormone produced by GM giant Monsanto.

2010, Citizens United vs The Federal Election Commission, US Supreme Court: In upholding the right of a corporation (political advocacy group Citizens United) to produce and air political movies in the days prior to a presidential election, the court overturned certain elements of 2002 legislation aimed at setting limits on corporate electioneering. This was again based on the First Amendment right to the free speech of the individual, and the identification of corporations as ´individuals´. The ruling was controversial, particularly as five judges supported it and four opposed it. It provoked both new corporate campaigning activities and fierce public debate.

This history has contributed to a situation in which corporations are more powerful than nations. At the beginning of the third millennium, the 200 biggest corporations in the world control more than a quarter of the economic activity on the planet. According to a report from the Institute of Policy Studies, sales of those 200 corporations exceed the GDP of all the countries in the world minus the top nine, they have twice the economic resources of the lower 80% of the world population, and they employ less than a quarter of one percent of the world´s population and falling. Further, those employees are receiving a shrinking percentage of the fruits of their employers. More than half of the biggest economies in the world, at the time of the report, were corporations and not countries - with General Motors bigger than Denmark, Ford bigger than South Africa, Phillip Morris bigger than New Zealand, DaimlerChrysler bigger than Poland, IBM is bigger than Singapore; and Sony bigger than Pakistan. This situation, suggests the report, is creating not a ´global village´, but a global apartheid´.

Having gone much further than the original intentions of limiting risk and making corporations legally identifiable and accountable, ´corporate personhood´ now empowers companies under the free speech provisions of the First Amendment to lavish their billions on influencing elections, greatly diminishing the influence of genuine ´people´ to do the same. They are empowered also under the First Amendment, to ´remain silent´ and not incriminate themselves, diminishing the right of real ´people´ to know, for instance, what they are putting in their bodies. They are protected in various degrees from being ´searched´, and from the passing of new regulations which negatively affect their profits.

As the folks at ‘Reclaim Democracy’ have it, corporations have become superhuman in that unlike other ´persons´, they can live forever, they can cut of parts of their body, including their head, and still live, and they can create not only new children but also new parents. And in becoming trans-national, they are now transcending nation-states, which at times seem more like their wholly owned subsidiaries.

Over the past decade or two, a great battle has raged on this issue. But like many other critically important issues it is kept out of the media for fear of the possibility that the electorate won’t like it. Huge and ongoing public campaigns and protest movements against it (driven by the more alert part of the population which was pro-active in finding out about it) have been kept invisible. So have the higher-level political battles and developments, as follows:

Between 2007 and 2017, another set of legislative developments were being negotiated, with the aim of extending the rights of ´corporate persons´ yet further., and dramatically so. TAFTA (Trans-Atlantic Free Trade Agreement), also known as TTIP (Trans-Atlantic Trade and Investment Partnership), and TPP (Trans-Pacific Partnership), driven by powerful industry groups around the world, were said to contain in their draft forms provisions for bypassing various emission rules, environmental and safety standards, consumer protection legislation, financial regulation, labelling of products and so on, and opening floodgates to controversial practices such as genetic engineering.

More significantly than all of these however, by means of ´Investor State Dispute Settlement´ clauses, TAFTA/TTIP allowed for corporations to sue nation states (i.e. all European and American nation states) for large sums of money for taking any actions which would inhibit their activities. It was also drafted in such a way that, once enacted, it would be impossible for any future government to repeal unless all signatory nations agreed.

Back at that time, I took the issue up in a conversation with the commercial director of a Spanish-based multi-national. He told me “but we can do that already – our company has already successfully sued the Spanish government for seven-figure sums for taking actions which damaged our business. So I explored further. And the difference is this: Under TAFTA / TTIP, companies would have been able to sue any signatory country, i.e. the twenty seven in the European Union and all of those who were party to NAFTA. More significantly, cases would not have gone through the courts of any country, but through an arbiter set up as part of the World Bank. Once again, unelected bankers in control.

In recent years, the Occupy Wall Street movement had the repeal of ´corporate personhood´ high on its agenda, and other campaigns with similar objective included ´Move to Amend´, and ´Reclaim Democracy’. Activist William P Meyers likened corporate personhood laws to early slavery laws saying that while slavery laws were a legal fiction allowing a person to be property, corporate personhood is a legal fiction allowing a property to be a person. The latter like the former, he said, results in gross loss of individual rights and like the former, must therefore be abolished.

Such abolition of the corporate personhood principle may be some way off, but in fact a small victory against excessive corporate rights was won in 2017 when TPP was killed off and replaced by a watered down CPTPP, signed by in 2018 by Australia, Brunei, Canada, Chile, Japan, Malaysia, New Zealand, Singapore and Vietnam. (And as of 2023 also by the U.K.). TAFTA/TTIP has since also been consigned to the dustbin of history without ever having been enacted. Corporations however still have rights that were designed and drafted for individual human beings, and individual human beings as a result still effectively lose theirs.

The campaign for reform on this must go on, and it starts with more people being aware that the issue exists.