The Divine Right of Capital: Chapter 11

Chapter 11: Corporations Are Not Persons

The Principle of Justice:
In keeping with equal treatment of persons before the law, the wealthy may not claim greater rights than others, and corporations may not claim the rights of persons.

Implementing economic democracy will require working through the political and judicial process in order to free our legal machinery from the grip of corporations and wealth. When corporations assert aristocratic privilege, they do so by co-opting our democratic institutions in claiming that corporations have the same constitutional rights as real people.

In 1976, the Supreme Court decided in Buckley v. Valeo that money is equivalent to political speech, thereby harnessing our constitutional rights to free speech as a way of guaranteeing corporations’ the right to contribute to political campaigns.

The issue of corporate personhood has deep roots. When Thomas Jefferson ran for president in 1800, his Federalist opponents spoke freely about the need for the “steadying hand of the ‘rich, the able, and the well-born'” in running the country. Jefferson developed populist sentiment to the point where these assumptions could no longer be stated explicitly in politics at the national or state level. Wealth privilege was thereafter forced to take on a more subtle disguise.

It took decades before this new guise finally appeared in the ingenious shape of corporate personhood. Wealth was then shifting from land to corporations, which were still chartered by individual states. But the Supreme Court changed all this in 1886 through its Santa Clara County v. Southern Pacific Railroad decision, which found that corporations are natural persons, and therefore protected by the Constitution. Supreme Court Justice William O. Douglas commented years later that there was “no history, logic, or reason given to support that view.” The Fourteenth Amendment, which is the cornerstone of this finding was originally intended to protect the rights of recently freed slaves, but as Justice Hugo Black later noted in 1938, “less than one-half of 1 percent [of cases] invoked it in protection of the Negro race, and more than 50 percent asked that its benefits be extended to corporations.”

Our legal system has no coherent theory of the corporation. At the beginning of our country, we did; corporations were established for the public good. Over the intervening decades, we have cobbled together a collection of piecemeal regulations that leave us with nothing but a conceptual haze.

One solution would be to initiate a national dialog to clarify our intentions with regard to the corporation. Amending the Constitution to codify this understanding would be very difficult and sure to face stiff opposition. One approach to such an amendment is simply to state that “a corporation is not a natural person under the U.S. Constitution.” Other approaches to define what corporations actually are would be more difficult. Kelly proposes a combination of public and private ends; that the corporation be required to serve the public interest and to make a profit. She suggests some possible language:

“In keeping with equal treatment of persons before the law, the wealthy may not claim greater rights than other persons, and corporations may not claim the rights of persons. The public corporation is a semipublic body, composed of both property and persons, and these persons include employees. The public corporation is to be chartered by states to serve both public and private interests and is to be governed internally by democratic processes.”

In the end, we may not even need a constitutional amendment because the Fourteenth Amendment says that states may not “abridge the privileges or immunities” of any citizen, nor deny to any person “the equal protection of the laws.” This phrase itself might well cover race, sex and wealth discrimination already. This point of attack may not convince the Supreme Court, but it could be a good way to frame overall efforts for reform. Kelly notes that Article I, Section 9 of the Constitution also specifically states “No title of Nobility shall be granted by the United States” and makes the argument that this too could be used as part of the conceptual frame, especially in fighting for more aggressive estate taxes.