'In Defense of Corporate Persons' by Kent Greenfield in (2015) 30
Constitutional Commentary 309
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This essay is a critique of this attack on corporate personhood. It explains that the corporate separateness - corporate “personhood” - is an important legal principle as a matter of corporate law. What’s more, as a matter of constitutional law, corporate “personhood” deserves a more nuanced analysis than has been typically offered in arguing in favor of an amendment to overturn Citizens United. Indeed, the concept of corporate “personhood” can in fact be marshaled in arguments against corporations being able to assert constitutional rights. In the nascent category of cases brought by corporations asserting rights of religious freedom, for example, corporations typically derivatively assert the religious claims of their shareholders. Attention to corporate “personhood” would lead courts to separate the claims of shareholders from those of the corporation itself, leading to a dismissal of corporate religious claims asserted on behalf of shareholders.
Finally, it proposes that the concerns motivating the movement against corporate personhood should be ameliorated with adjustments in corporate governance rather than constitutional law. In corporate law, what we need are changes in corporate governance to make corporations more like persons, not less. Unlike persons, corporations are expected to act if they have only one goal - the production of shareholder value. People must balance a range of obligations, both moral and legal. Requiring corporations to attend to a broader range of stakeholders would make corporations more like people, would make them better citizens, and would make their political participation less problematic.
Greenfield suggests that
corporations should be seen as having robust social and public obligations that cannot be encapsulated in share prices. Now, executives have legal obligations to take account of shareholder interests. Progressive corporate scholars argue these “fiduciary duties”should be extended to employees and other corporate stakeholders.
One way to make these obligations operational is to make the decisionmaking structure of the company itself more pluralistic. In a number of European countries, for example, companies have “codetermined” board structures that require representation of both shareholders and employees.Even with these management structures, corporations continue their focus on building wealth—that is the core purpose of the corporate form—but not only for a narrow sliver of equity investors. And it works. Germany, where co-determination is strongest, is the economic powerhouse of Europe. The CEO of the German company Siemens argues that codetermination is a “comparative advantage”for Germany; the senior managing director of the U.S. investment firm Blackstone Group had said that codetermination was one of the factors that allowed Germany to avoid the worst of the financial crisis.
Notice that these governance structures reforms make corporations more like persons, not less. Human beings routinely balance a multitude of interests—I am, for example, a parent, a spouse, a teacher, a writer. Only the rare oddball behaves as if accumulating money is the paramount and unitary good. Humans have consciences; corporations do not. Left to themselves, they will behave as if profit is the only thing that matters. The best way to constrain corporations is to require them to sign onto a more robust social contract and to govern themselves more pluralistically—mechanisms designed to mimic the traits of human personhood within the corporate form.
If corporations had these traits of personhood, I would worry less about corporate involvement in the political arena. American corporations have become a vehicle for the voices and interests of a small managerial and financial elite. The cure for this is more democracy within businesses—more participation in corporate governance by workers, communities, shareholders, and consumers. If corporations were more democratic, their participation in the nation’s political debate would be of little concern.
Unfortunately, corporate personhood opponents are making these corporate governance reforms less likely. Personhood skeptics often characterize corporations as having a narrow social role; because of that narrow role, the argument goes, they owe it to shareholders to stay out of politics. The opponents of Citizens Unitedare endorsing a narrow view of business as a way to explain why corporations should be exiled from the public square. To fight corporate personhood, they are bolstering shareholder primacy.
Take for instance Justice John Paul Stevens’s dissent in Citizens United itself. He argued, among other things, that corporate speech should be limited in order to protect shareholders’investments. Shareholders are seen as owners, as “those who pay for an electioneering communication” and are assumed to have “invested in the business corporation for purely economic reasons.” Stevens argued that corporate political speech did not merit protection because:
[T]he structure of a business corporation
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draws a line between the corporation’s economic interests and the political preferences of the individuals associated with the corporation; the corporation must engage the electoral process with the aim to enhance the profitability of the company, no matter how persuasive the arguments for a broader
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set of priorities.
Even more revealing, Stevens cites as support a set of corporate governance principles adopted by the prestigious American Law Institute. The Principles were the product of compromise, both asking corporations to look after shareholder interests and allowing them to act with an eye toward “ethical”and “humanitarian” purposes. But Stevens quoted only the language embodying shareholder primacy: “A corporation … a view to enhancing corporate profit and shareholder gain.”
Opponents of corporate personhood are following Stevens into the shareholder rights trap. Common Cause now has a “featured campaign” for “strengtheningshareholder rights.” The Brennan Center for Justice is supporting a “shareholder protection act”and calls shareholders “the actual owners”of corporations. Professor Jamie Raskin of American University, one of the smartest and most energetic academic opponents of Citizens United, says that corporations should not be spending in
elections because, “after all, it’s [shareholders’] money.” This is all shareholder primacy language brought to bear in fighting Citizens United.
Wall Street loves talk of shareholder rights. To be sure, many Americans are shareholders through our retirement accounts and the like. But “widows and orphans” are still the minority; most stock held in American businesses is owned by the very wealthy. (The richest 5% of Americans ownover 2/3 of all stock assets. The bottom 40%—125 million working class people —essentially own nothing in terms of stock.) So when opponents of Citizens United focus on shareholder rights, they are singing Wall Street’s tune.
I wish this shareholder-protective rhetoric was just that, but it is not. Corporate personhood opponents urge, as an intermediate measure short of a constitutional amendment, that corporations be required to seek shareholder approval before spending corporate money on political campaigns. There might be some benefit to such a rule, since it would help ensure executives do not spend corporate monies on issues and candidates opposing company interests. But that benefit is probably marginal, and would come at the risk of validating corporate involvement in the political process in furtherance of shareholder value and to the detriment of other stakeholders. Corporations could speak out in favor of Wall Street but not employees? That would be worse, not better.
The efforts of anti-personhood activists are not only in tension with stakeholder theory on the conceptual level. In the political arena, too, a tension exists because the energy for reform is a finite resource. I believe that, in this moment, there is an opening to question the very framework of how we view corporations and their social obligations. But we won’t get anywhere on that front if the progressive left wastes its energy fighting for a constitutional amendment that is unlikely to succeed and would either be toothless or affirmatively harmful if it did
