Saturday, October 4, 2014

“Corporate Personhood” Clarified

The Supreme Court ruling in the Hobby Lobby case raised the issue of corporate personhood. What is corporate personhood? What is its purpose? The actual Hobby Lobby ruling has gotten buried under an avalanche of often emotional rhetoric from both sides. Yet, the Supreme Court majority opinion clears the air on corporate personhood, if only people—particularly critics of the ruling—would actually read what the court said.

A good example of the confusion surrounding the doctrine of corporate personhood is a letter by Kenneth Rogers published in the Hunterdon County Democrat.

The July 31, 2014 letter to the editor "Common sense needed” by Kenneth Rogers objected that, in the Hobby Lobby decision, “the Supreme Court once again ruled that corporations are people.” Since “corporations exist only to make profits for their owners and shareholders,” Rogers called for a “law that clearly states that only humans are people and only a human can be a person.”
What Rogers is essentially saying is that the actions of a for-profit corporation are somehow distinct from the actions and purposes of the individual[s] who comprise it. This notion is absurd. A corporation can’t act on its own. Only individual human beings can act.
It’s true only humans are people, and of course corporations aren’t people. Corporations are voluntary associations of individuals, each of whom has rights, and Rogers’s characterization the Supreme Court’s ruling is grossly misleading. “A corporation,” the court observed in its Hobby Lobby ruling, “is simply a form of organization used by human beings to achieve desired ends.” The definition of corporations as “persons”, the Court noted, is “a familiar legal fiction” with “the purpose to provide protection for human beings” organized under the corporation. Thus, “When rights . . . are extended to corporations, the purpose is to protect the rights of these people.” (Burwell v. Hobby Lobby Stores, Inc., page 18-19)
In other words, the “rights” of corporations—such as the right to decide whether or not to provide contraception coverage to its employees—are nothing more than extensions of the rights of the corporation’s owners, who are people. The owners of corporations do not forfeit their individual rights simply by acting through their own corporations any more than individuals would forfeit their rights by organizing into other types of groups such as clubs, churches, families, political or intellectual movements, charitable institutions, or unions.

The particular "desired end" or common goal of the organization is irrelevant. Whether the association’s purpose is to socialize, worship, raise children, advocate for candidates or ideas, aid the hungry, bargain collectively for wages, or earn profits, the rights of the owners to run their organizations as they judge best is integral to their rights as individuals.

“Corporate personhood”, to be sure, is a sloppy term. It can and does open the door to all sorts of misunderstanding and misrepresentation, and unnecessarily muddles the principle of individual rights as it relates to group associations. 

Nevertheless, Rogers’s proposal would establish an artificial legal dichotomy between individuals and associations of individuals. This has dangerous implications for liberty.

As Ayn Rand has observed:

Any group or “collective,” large or small, is only a number of individuals. A group can have no rights other than the rights of its individual members. In a free society, the “rights” of any group are derived from the rights of its members through their voluntary, individual choice and contractual agreement, and are merely the application of these individual rights to a specific undertaking. Every legitimate group undertaking is based on the participants’ right of free association and free trade. (By “legitimate,” I mean: noncriminal and freely formed, that is, a group which no one was forced to join.)

A group, as such, has no rights. A man can neither acquire new rights by joining a group nor lose the rights which he does possess. The principle of individual rights is the only moral base of all groups or associations.

To deny the “rights” of corporations is to violate the rights of the very object of Rogers’s proposed law; actual human beings. If Rogers’s law is ever enacted for the purpose he suggests, it would be another spike in the coffin for individual rights in America—including the right to freedom of association, itself a fundamental First Amendment individual right.

[NOTE: The above is an expanded version of my reply to Rogers’s letter published as a letter to the editor on August 7, 2014 in the Hunterdon County Democrat. As of this writing, neither my letter, titled “Dangerous Implications for liberty”, nor Rogers’s letter has been published online.]

Related Reading:

"Corporatists" Are Individuals, Too

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