The Right to Bear Corporations? Reframing the Corporation as a Technology for Lobbying

This is a pre-publication draft of a paper published in the GeorgetownJournal of Law & Public Policy. 2014

The Right to Bear Corporations? Reframing the Corporation asa Technology for Lobbying

Chris MacDonaldTed Rogers School of Management, Ryerson [email protected]

Abstract:

Recent debates about corporate political speech have focusedon the question of corporate personhood and the rights and obligations it implies. But even for those of us for whom the notion of corporate personhood is a crucial concept, it may make sense to think of corporations, in their lobbying activities, as tools of humans with interests, rather than as the holders of interests themselves. This paper examines the corporation not as a lobbying agent, but as a lobbying instrument, and asks whether framing lobbying in terms of the appropriate use of technology can enlighten on a vexed topic.

Essentialism is almost always a mistake. This holds

true for essentialism about the nature of the corporation.

There are situations in which it makes sense to characterize

the corporation as a person. There are also times when it

makes sense to characterize it as a collective1. There are

other times when it is apt to describe the corporation as a

nexus, or a hub. And there are times – I will argue – when

1 See e.g., Isaacs, Tracy. (2011) Moral Responsibility in Collective Contexts. Oxford: Oxford University Press.

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it makes sense to describe the corporation as a social

technology. Corporate involvement in the world of politics –

and, in particular, in lobbying –might be one of the issues

for which framing the corporation as a social technology

makes sense, or at least makes a difference.

Let us look briefly at the much-debated United States

Supreme Court decision, Citizens United, as a way of exploring

this point. The Citizens United case raises two issues of

central significance to scholars and commentators in the

world of business ethics. Both have to do, in one way or

another, with personhood. One issue is about whether (or

rather, in what sense) corporations are or ought to be

regarded as persons. The other issue is about the extent to

which the question of corporate personhood is relevant, or

whether it is in fact a red herring, in discussions of the

Citizens United decision and in discussions of corporate rights

more generally. I examine each of those issues here in turn.

My interest, however, is not in the Citizens United decision

itself; rather, that case is used here as a convenient point

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of departure for examining philosophical questions related

to corporate political influence.

Personhood

Some commentators have taken the Court’s expansion of

the free-speech rights of corporations in the Citizens United

decision to imply a new (or significantly augmented)

attribution of personhood to corporations, and have seen

this as a problematic development. More generally, the

debate over corporate personhood vis-à-vis the Citizens United

case has sometimes been cast as a debate between those who

favour corporate personhood (and who hence favour according

to corporations most or all rights and privileges normally

attributed to natural persons) and those who oppose

corporate personhood (and who hence favour few or no rights

for corporations). I argue that this assessment of the

Court’s decision is both factually incorrect and ethically

misguided.

First, the idea that corporate personhood is a new

development is factually incorrect. Of course, only very

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poorly-informed commentators have literally suggested that

corporate personhood is entirely novel. More commonly,

commentators have seen the Citizens United decision as part of a

trend, a continuation of an expansion of corporate

personhood they trace back to what they take to be its

origins in certain U.S. legal decisions of the late 19th

century.2 But as Micklethwait and Wooldridge point out, the

idea of treating corporations (or companies more generally)

as persons – legal entities in their own right – is very old

indeed. Business corporations (as well as associations of

various kinds) have long been treated as de facto ‘persons’

under the law.3 Though the particular rights, privileges, and

obligations of these non-human persons has of course changed

since the day in 1670, for example, when the Hudson’s Bay

Company received its royal charter from King Charles II of

England, the point remains that the idea that corporations

are legal entities separable from the human persons involved

2 The case most commonly mentioned in this regard is the 1886 caseof Santa Clara County v. Southern Pacific Railroad Company.3 John Micklethwait and Adrian Wooldridge, The Company: A Short History of a Revolutionary Idea, Modern Library, 2005.

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with them (whether shareholders or employees) is far from

new.

And it is important that corporations continue to be

thought of as persons. Indeed, it is entirely essential, for

several reasons.

First, corporate personhood is an essential mechanism

of modern capitalist economies. It is no exaggeration to say

that without personhood, there literally would be no such

thing as corporations in any meaningful sense. Hansmann and

Kraakman list “legal personality” as one of “the five core

structural characteristics of the business corporation”

(along with limited liability, transferable shares,

centralized management under a board structure, and shared

ownership by contributors of capital).4 But in fact,

personhood is arguably the core characteristic of

corporations. An organization could still be function

effectively as a business corporation even in the absence of

transferrable shares, for example. Shares could in principle

4 Henry Hansmann and Reinier Kraakman, “What is Corporate Law?” inThe Anatomy of Corporate Law, Reinier R Kraaman et al, eds. (Oxford: OUP, 2004).

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be held in perpetuity; that would have important

implications for corporate governance, among other things,

but the organization would not cease to exist or indeed be

fundamentally changed. But without personhood, there

literally would be no there there. The fact that courts

recognize corporations as persons is what allows them to own

property, to hire workers, and to sign contracts, activities

without which corporations would just be loose and

presumably transient collectives of individuals.

And if it is granted, as surely it must be, that

corporate personhood – including the possession by

corporations of certain rights – is essential from an

economic point of view, then it immediately becomes obvious

that corporate personhood, including a certain range of

obligations, is morally essential as well. After all, without the

notion of corporate personhood, consumers and other

stakeholders would be at an enormous disadvantage in dealing

with corporations. A consumer today can buy an Apple

computer, and Apple (the corporate person) is obligated to

honour the warranty on that computer. That is part of what

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it means to say that a corporation is a legal person – it is

an entity that a court can hold responsible for honouring

its promises. Without corporate personhood, having a

warrantee honoured is nearly unimaginable, especially in the

not-uncommon case in which the particular salesperson from

whom the customer bought the computer has left the company

by the time the customer needs to invoke the warranty. And

if tobacco companies were not persons for legal purposes,

then governments and consumers would not be able to sue them

for the health impacts of thier products. Similarly, if BP

were not a corporate person, there would have been no one to

hold accountable, legally and financially, for the

devastation of the Gulf of Mexico by the Deepwater Horizon oil

spill. The person or persons directly morally responsible

for that disaster – if their identity could even have been

determined – would not have had the financial resources to

mount a cleanup effort, and practical barriers would have

made it impossible to seek financial redress directly from

BP’s millions of individual shareholders.

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In sum, personhood in the sense that is at stake here

just is the possession of some set of rights (e.g., the

right to own property) and obligations (e.g., the obligation

to make restitution for harms). It would be economic folly

not to allow corporations a certain set of rights; and given

that allowance, it would be equally foolish not to attribute

to corporations a certain set of obligations. In short,

corporations must be persons.

The erroneous belief that corporate personhood is

something we could do without is likely rooted in the belief

that personhood is either a) an inherently human quality, or

b) equivalent with some specific, predetermined set of

rights. But personhood is not best (or even plausibly)

understood as a monolithic concept, let alone a

monolithically human one. The fact that the US Supreme Court

rejected some restrictions on corporations does not imply

that corporations are now full-fledged persons in the same

sense that competent adult human beings are. We have always

recognized many different "kinds" of persons, with different

sets of rights and responsibilities. Note that the rights

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and responsibilities of a child, for example, differ from

those of an adult (even though both are persons). And the

rights and responsibilities of a foreign tourist, for

example, differ from those of a citizen (even though both

are persons). The fact that corporations are regarded as a

type of person does not mean that they are next going to be

accorded, for example, the right to vote. And the fact that

they don't have certain rights (e.g., the right to vote, or

to adopt children, or to marry) does not mean they aren't

(in some sense) persons.

It is worth noting that the term “legal fiction,” often

used (by both opponents and proponents) in reference to

corporate personhood, also seems to make the error of

implicitly assuming that personhood is a monolithic concept.

Only if personhood is identified as involving some “true”

list of qualities does it become necessary to regard corporate

personhood as a fictional, second-best kind of personhood.

We ought instead to recognize that personhood comes in

different flavours.

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The point, here, is simply to call attention to the

fact that personhood is a quality we attribute to certain

entities because it makes sense to do so for particular

purposes. In attributing personhood to corporations, we are

merely recognizing that, in order for corporations to

achieve the human purposes we want them to achieve (whether

those be conceived of in terms of the needs of owners or the

needs of society), they need to be treated as having certain

rights and responsibilities.

Personhood as Red Herring

Personhood, even rightly understood, is not the only

way to understand corporations. And avoiding the personhood

debate has the virtue of avoiding fruitless metaphysical

debates. If instead we were to regard the corporation as a

mechanism through which ‘real’ or natural persons (humans)

achieve their ends, then the question before the Court in

Citizens United was really not about the free speech rights that

ought to be attributed to corporations (a part of their

special brand of personhood), but about whether there ought

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to be limits on the ways in which human beings may use the

corporate mechanism to express their political views.

Understood this way, protections offered to corporations are

in fact a mechanism for protecting the rights of

individuals. Compare the notion of the sanctity of one’s

home: no one believes that houses have rights, but most

people agree that protection of the privacy rights of

individuals requires that we treat people’s homes as if they

held special significance – almost as if they had rights

(e.g., the right not to be searched) themselves.

Legal scholar Larry Ribstein argued along similar lines

in a 1992 paper on corporate political speech. Ribstein

argues that the idea that corporations are legal persons

serves to obscure the important interests of individuals.5

Ribstein’s interest, however, is specifically in (American)

constitutional law, and his worry is that focusing on the

corporation as a separate entity the existence of which

depends on the consent of government stands to weaken

constitutional protections for the interests of the parties

5 Larry E. Ribstein, “Corporate Political Speech,” Washington and LeeLaw Review, Wntr 1992, v49, n1, p109-159.

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to the various contracts that (under the ‘nexus of

contracts’ view) make up the firm. If, for example, we

contemplate the property rights of corporations-as-persons,

we may end up ignoring or diminishing the rights of human

citizens over their own property, some of which may be bound

up with various corporations. A practical legal fiction,

then, may obscure or diminish an important set of

constitutional protections. In contrast, I argue that the

need for, and limitations on, corporate personhood are

relevant to a wide range of ethical issues far beyond

questions of American constitutional law.

Corporations are, in effect, a social technology, a

form of organization that has evolved (most especially over

the last century) to serve human interests. Those interests

are many and varied. For the most part, corporations serve

the interests of those who create them, although of course

those that are successful at earning profits in the long run

are successful at doing so precisely because they are able

to serve a range of other parties’ interests, too. A

corporation with a viable service or product to sell has a

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kind of ‘gravitational attraction,’ pulling investors,

employees, suppliers and customers into its orbit. More

generally, organizations (whether they be for-profit

business corporations, unions, or non-profits) exist to

serve human needs – typically, at least at the moment of the

organization’s conception, the needs of their founders. It

is sometimes argued that corporations are ‘creatures of the

state,’ brought into being for the good of the community. It

would be closer to the truth to say that states provide the

legal preconditions for the establishment of corporations

(and other organizations) because they see it as socially

beneficial for individuals to be able to use corporate (and

other institutional) forms to pursue their own ends,

whatever those ends may be (within certain more-or-less

obvious limits).

Seen from this perspective, the question of corporate

free speech is not a question of what rights corporations-

as-persons should have, but what limits there ought to be on

individuals’ use of the corporate mechanism in achieving

their own ends. If an individual’s aims are legitimate ones

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(such as expressing a political opinion) then the state

generally ought not interfere in the achievement of that

aim, provided that the means utilized are not themselves

antisocial ones. The relevant question then becomes whether

use of a corporation as a vehicle for expressing one’s

political opinions is permissible or not.

Two examples are instructive, here, in understanding

the significance of this instrumental view of corporations.

First, consider the use of a technology such as the printing

press or the megaphone in self-expression. In explaining why

the state does not generally interfere with people’s use of

the printing press, no one thinks to attribute rights to

printing presses themselves. It is individuals that have the

relevant rights; the printing press is merely a tool.

Similarly, when contemplating legitimate uses of a

megaphone, the point is not whether a megaphone has rights,

or what rights a megaphone ought to have, but rather the

conditions under which use of a megaphone is consistent with

respect for other people’s right to speak. Does the use of a

corporation as a mechanism of expressing political opinion

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make some voices too loud, effectively interfering with the

rights of others to be heard?

One obvious difference between a printing press or

megaphone and a corporation is that the latter is a social

technology, a way of organizing human efforts. It is a way

of organizing people and other resources, rather than a mere

composition of matter like a bullhorn. We might more

usefully, then, compare corporations to other social

organizations that individuals use to achieve their ends.

With regard to political speech, for example, we might

compare the corporation to a protest or a sit-in. It is

worth noting that under the Bipartisan Campaign Reform Act

of 2002, it would be perfectly legal for 100 citizens to

assemble in a public place, chant political slogans, attract

press coverage, and thereby broadcast their message to what

could in fact be a very large, even national, audience. But

were those same 100 citizens to file papers of incorporation

in order to pool their funds in order to photocopy flyers or

to buy airtime on a local television station, they could be

charged with criminal behaviour under the pre-Citizens United

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BCRA. Why would the one means of collective action – one

kind of social organization – be considered a legitimate

mechanism, and the other criminal? This is not a rhetorical

question; I do not intend to imply that there is no

difference. But surely asking the question this way is very

different from asking whether the corporate person formed by

the joint action of those 100 citizens has or does not have

particular free-speech rights.

Seen this way, the question of the ethics of corporate

lobbying becomes a question of whether it is appropriate to

use corporations as a mechanism through which to influence

government. This is part of a broader question about the

mechanisms by means of which we pursue broadly political

objectives, including not just the mechanisms by which we

influence elected and appointed officials but also the

mechanisms by which we influence our fellow citizens.

The worry about excessive political influence of

corporations is essentially a worry about whether the tool

being used is too potent. It is comparable, perhaps, to a

worry about nuclear arms. No one denies a country’s right to

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defend itself. But using (or even possessing) nuclear arms

is a highly problematic mechanism for doing so. Of course,

the specific analogy here might not be apt. No matter what

supporters of Hilary Clinton might say, the use of corporate

mechanisms to spread an anti-Hilary message is far from the

‘end of the world.’ But framing the issue this way – in

terms of the appropriate use of a mechanism or technology –

is a usefully different way of framing the debate than

framing it as a debate over the rights of corporate persons.

But let us return specifically to the question of

lobbying. Seeing the corporation as a mechanism leads us to

frame the ethics of lobbying in terms of the ethical limits

on using the corporate mechanism. Owning a gun is

permissible. Using a gun to defend your family is

permissible. But using a gun to rob a bank is not. Likewise,

forming a corporation is permissible. Using a corporation to

lobby for more clear and efficient regulation is

permissible. But using a corporation to lobby in a rent-

seeking way is arguably morally impermissible. This is

obviously not a fully-fleshed out argument, and nor is it

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clear that the specific analogy is the right one. But it

should be clear that framing the issue this way makes a

difference. And it has the added virtue of avoiding

unproductive debates over corporate personhood. Seen from

this perspective, personhood is simply irrelevant to the

question of the ethics of (and limits on) lobbying.

How might we go about assessing the corporation as a

technology for lobbying? A full treatment of that topic is

beyond the scope of this paper. But the range of questions

that would need to be dealt with can be sketched briefly. Is

the worry about this (or any) technology a worry about its

existence or its possession or its use? Is it sufficient to

put limits on who can (or can’t) use this technology

(compare: age limits for driving a car), or is any use of it

immediately problematic? Under what circumstances, and at

what times, is the use of this technology morally

appropriate?

At a higher level of analysis, we might ask questions

about whether the objections to this technology (or to

particular uses of this technology) are based on empirical

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results regarding its impact, or whether they are instead a

priori objections. Is the concern about individual use or

aggregate impact? Is possession and use of this technology

condoned as a matter of right, or because the consequences

are good?

Of course, applying such a framework faces challenges.

To ask about permissible uses of a technology implies that

we can identify those who wish to use it. In many cases, it

is not clear who is “using” the corporation. Is it

shareholders? Managers? Is it stakeholders more broadly? In

the case of a nonprofit, is it the donors? Or the members,

if the organization has members? Each of these alternatives

faces well-known problems. But that ought not preclude us

from at least exploring this line of thinking.

Lobbying is just one among many issues that might be

dealt with more constructively by thinking of the

corporation as a technology or as a mechanism, instead of

thinking of it as a legal person. Consider, for example, the

question of religious freedom. It makes no sense to

contemplate the religious freedoms of corporations

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themselves; corporations themselves cannot easily be thought

of as having religious commitments, and I know of no

religious congregation that admits corporations as members.

But limits on the use to which corporations are put might

well imply dubious limits on individuals’ freedom of

religion. Where an individual or group makes use of the

corporate form to pursue religious ends, such activities

ought to be thought of in terms of appropriate use of

technology, rather than in terms of the rights of

corporations. For other issues, on the other hand,

personhood is essential: we can make little sense of the

notion of accountability for the quality of goods sold if we

do not think in terms of corporate personhood.

Conclusion

This paper represents an attempt to sketch an agenda

for reframing the ethics of corporate lobbying as a question

of the ethical limits on the use of a particular social

technology, namely the corporation. Thinking of the

corporation as a technology aligns well with our

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understanding of the economic role of corporations as

mechanisms for building wealth. This framing also offers

instructive analogies with proper and improper use of other

technologies, including information technologies and

weapons. And it reminds us that corporations are many things

to many people, and that essentialism about what

corporations “really are” ought to be regarded as a grave

error.

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The Right to Bear Corporations? Reframing the Corporation as a Technology for Lobbying

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