Corporate personhood is one of the most misunderstood concepts in discussions of corporate behaviour and responsibility. It is also one of the most essential tools for promoting human wellbeing and protecting individual human liberties.
People get angry—understandably and often justifiably angry—when they see instances in which corporations have too much power. But the response, the way such anger is directed, is not always constructive. Indeed, sometimes it’s downright counterproductive.
Witness, for example, the recent move in the U.S. by a citizen’s group and Congressman Jim McGovern of Massachusetts to propose a “People’s Rights Amendment.” This is a hail-Mary attempt to amend the U.S. Constitution, largely in response to the U.S. Supreme Court’s controversial Citizens United decision. That decision, rooted in constitutional arguments about free speech, removed certain limits on corporate political donations. Like many people, I worry about the effects of that decision; but I worry even more about the potentially disastrous effects of the proposed remedies.
Now, a lot of people believe that the U.S. Supreme Court, in the Citizens United decision, invented the notion of Corporate Personhood. That belief is both false and wildly U.S.-centric. But aside from getting history wrong, this belief has resulted in a backlash that has included some wrong-headed proposals for shifting the balance of power back to “The People.” The People’s Rights Amendment is one of those.
Here are the three sections of the proposed “People’s Rights Amendment”:
Section 1. We the people who ordain and establish this Constitution intend the rights protected by this Constitution to be the rights of natural persons.
Section 2. People, person, or persons as used in this Constitution does not include corporations, limited liability companies or other corporate entities established by the laws of any state, the United States, or any foreign state, and such corporate entities are subject to such regulation as the people, through their elected state and federal representatives, deem reasonable and are otherwise consistent with the powers of Congress and the States under this Constitution.
Section 3. Nothing contained herein shall be construed to limit the people’s rights of freedom of speech, freedom of the press, free exercise of religion, and such other rights of the people, which rights are inalienable.
There are two problems here, and they are rooted in Sections 2 and 3 respectively.
Note that Section 2 says that incorporated entities don’t get constitutional rights at all. So that means, for example, no Fourth Amendment limits on search and seizure of corporate property. So, under this proposed Amendment, no one’s investments—stock portfolio, IRA (or RRSP, in Canada’s case), pension plan— is immune from arbitrary seizure by the state. It also means that a corporation would have no right to due process when charged with a crime. The implications for shareholders and employees, here, are potentially disastrous. Under the People’s Rights Amendment, any corporation you’ve invested in, or where you work, could effectively be seized and shut down without cause, without trial, without explanation. This surely limits corporate power, but at enormous cost—namely an enormous increase in the power of the state. Not the people; the state.
I should also add that this Amendment seems also to apply to unions, nonprofits, and churches. None of them would, under the People’s Rights Amendment, retain these rights against the state, and all would be enormously vulnerable.
But all of that only matters if Section 3 doesn’t exist, because Section 3, if taken seriously, guts the whole thing. Section 3 reasserts that human beings do have rights, and that nothing in Section 2 can be construed as limiting those rights. So as the owner of a corporation, or as a shareholder in one, Section 3 assures you that your property—including presumably the property of the corporation you own, or the property of the corporation from which you derive dividends—cannot be subject to unreasonable search and seizure, and cannot be confiscated without due process. Whew!
The point here is that people, real flesh-and-blood people, rely on business corporations and other ‘corporate entities’ in a huge number of ways. They are how we make our living. They are the instruments of our collective success. Where the power of those instruments needs to be limited, as it surely sometimes does, it cannot be done by pulling the rug out from under individual, human liberties. And so if corporate power is to be reined in, it will have to be done through a mechanism considerably less clumsy than the People’s Rights Amendment.