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Should corporations be viewed as living people?

People tend to think of corporations as part of the natural order of things: we've always had them; they're efficient and effective.

When critics complain that corporations are too powerful, corporate defenders reply that regulation interferes with basic constitutional rights of free speech and with the all-important free play of the free market.

But with corporations being the dominant form of social organization in our country, questions about the whys and hows of corporations need to be asked. To begin with, what are the main features of a corporation?

Four things seem truly basic. Somewhat oversimplified, they are:

1. A corporation, through a state charter, has the legal status and most of the rights of a natural person.

2. This "person" has an indefinitely extended life span. Theoretically, it could live forever.

3. If it's a business corporation, it's over-riding purpose is to make money for its owners, the stockholders. They can sue it for dereliction of this duty.

4. In return, it shields its owners from being personally sued or criminally charged for any bad acts it might commit.

Now consider how this works. In the competition between humans and these somewhat immortal artificial persons, wealth and power are bound to accrue over time to the immortals. No death means no splitting of assets among heirs, as well as no estate taxes. Wealth remains intact and concentrated, which aids its continued growth. Concentrated wealth translates into power and dominion.

This accumulation of capital is "the" purpose of the business corporation. Humans, however, have many values and interests: family, community, religion, hobbies, charities. Maximizing profit isn't usually their only goal. The corporate person has none of these distractions from profit-making.

To top it off, freedom from personal liability insulates stockholders from any personal concern about their corporation's possible misconduct. This feature of the corporation, while indispensible for attracting investors, institutionalizes human irresponsibility, although, of course, the corporation itself can be sued.

When you combine relative immortality, profit as the defining motive, and freedom from personal responsibility and then add science and advanced technology, you get history's most effective institutional mechanism for the creation not just of goods but of wealth and power.

The problem is that it's profoundly undemocratic, bureaucratic, hierarchical, and impersonal--an example of "things riding people" where values take a back seat to institutional imperatives.

The "personhood" of the corporation is essential to its triumph. Without "personal" rights, corporations would be more controlled by society rather than in control.

Oddly, the "personhood" doctrine is only 120 years old and has never been established by legislation or by judicial decision. It was part of the preface to a Supreme Court ruling in the case of Santa Clara County v. Southern Pacific Railroad in 1886. The preface wasn't part of the decision itself and doesn't have the status of "decided law". Still, it's been treated as a legal precedent ever since.

If corporations were no longer "natural persons", then corporate charters could be made more specific as to purposes, responsibilities, and accountability. They could be revoked for bad conduct or for going beyond the original purposes. (Though charters theoretically can be revoked in some states, that power isn't being used.) Since many name companies are recidivist law-breakers, they could be in jeopardy if charter revocation--or being put in trusteeship until reforms are made--became a real option.

There's more to be said about the history and changing nature of the corporation. Another time.
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Title Annotation:Opinions and Letters to the Editor!
Author:Peltz, Bill
Publication:The Informed Constituent (Albany, NY)
Article Type:Letter to the editor
Date:Mar 1, 2006
Words:572
Previous Article:Where are the wounded?
Next Article:The illusion of separation--wake up!
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