“Corporate Personhood” Doesn’t Mean What Many Think It Means

Political Myth: “Corporate Personhood” is responsible for giving large corporations an excessive amount of influence over the political process in the United States.

Reality: “Personhood” has nothing to do with the amount of influence corporations exercise over the political process.

Explanation

Citizens United v. Federal Election Commission, 558 U.S. 50 (2010) was one of the most controversial decisions of the U.S. Supreme Court under Chief Justice John Roberts because it ruled unconstitutional any restriction on political expenditures by corporations, whether they be for-profit corporations or non-profits.  The full extent of the effect this decision will have on elections in the Untied States remains to be seen, but for the most part, both the supporters of the decision and its detractors agree that the decision will have an effect of some sort.

Some of the opposition to the decision stems from a general sense among many that for-profit corporations in the United States have become too big and too powerful as a result of our society embracing the legal fiction that a corporation is to be treated as a “person.”   That several business corporations have become very large and powerful will not be disputed here, and the question of whether their size and power is a problem is a matter of personal opinion.  But if the Citizens United decision added to corporate power, it isn’t because of “corporate personhood.”

Suppose you want to start a business.  For purposes of this hypothetical, we’ll say it’s a delivery business.  You hire a few delivery drivers, and one of them gets into an accident while on the job.  The person who your driver ran into will, of course, sue the driver, but he will also sue you because an employer is generally responsible for his  employee’s on-the-job negligence.  Since people who own delivery companies generally have more money in the bank than delivery drivers, the plaintiff will probably be looking primarily to you to get paid.  That makes hiring employees a risky proposition for a business owner — so much the more so if it’s a particularly large business with tens of thousands of investors, who jointly “own” the company even though they don’t personally participate in running it.

The purpose of the corporation is to address this problem by creating the business as a  fictitious “person,” separate from the individual owner.  The purpose of creating this ficticous “person” is to limit the owners’ liability.  Thus, if the delivery driver your business hired runs somebody over, you wouldn’t get sued because the delivery driver isn’t  your employee; he’s your corporation’s employee.  You personally can’t lose any more than what you invested.

To say that you are opposed to the idea of “corporate personhood” is, in effect, to say that you are opposed to the idea of a business owner being able to limit his liability in this manner.  While that is a perfectly valid point of view with which people may agree or disagree, it has nothing to do with campaign finance.

It has always been well accepted that corporations, like individuals, have a right to freedom of speech under the First Amendment.  Were it otherwise, the concept of “freedom of the press” would be largely meaningless as a practical matter, since most newspapers, television stations, radio stations, movie producers, and book publishers are businesses set up as for-profit corporations.  Freedom of speech gives corporations the right to say whatever they want to say.  The controversy in Citizens United involved the question of whether the First Amendment also gives corproations the right to spend money from whatever source it pleases in pursuit of its political objectives.

Before Citizens United, if a corporation wanted to, for example, “speak” in support of a particular candidate or ballot initiative, it had to set up a Political Action Committee with funds solicited from corporate executives, shareholders, and their families, and segregated from the corporation’s general treasury.  There was a wide variety of reasons for this, chief among them being that the funds in the corporation’s general treasury were “accumulated with the help of the corporate form and that have little or no correlation to the public’s support for the corporation’s political ideas.”  Austin v. Michigan Chamber of Commerce, 494 U.S. 652, 660 (1990).  In other words, the people who bought stock in Proctor and Gamble thought they were investing in a household chemical company, not that their money would be used to support a particular political candidate.  If Proctor and Gamble can  say what it wants, but if it wants to use its shareholders’ money to support a particular political candidate, it has to first solicit its shareholders to voluntarily pool their money for that purpose.

In Citizens United, the Supreme Court essentially ruled that the First Amendment forbids the government not only from imposing restrictions a corporation’s speech, but also on which “pot” a corporation may draw from to finance its political activities.  Corporate personhood (i.e. the legal doctrine that protects shareholders from being held personally liable for the actions of a corporation’s employees) is an issue entirely separate from that.

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