Derecognizing corporations as "people" -- what would change?

Factual Questions
1

Putting this in GQ rather than GD because I don’t know enough about the actual facts
to have an opinion of my own to defend or support. Also, I’d like to at least try to start off with a focus on the kinds of resultant changes that are verifiable facts, or as close to it as possible, rather than jumping straight to “it would revalorize the rights of individuals” versus “it would jeopardize economic prosperity and ruin innovation” or whatever ideological assertions might be attached.

Can those who have a decently solid understanding of the relevant law explain the immediate ramifications, all other things being (for the moment) equal, if the (I think it was?) 1886 ruling that corporations are in all respects persons in the same sense that individuals are persons were reversed? Are there any definite consequences or merely a range of possible consequences?

2

Not really an answer, but I’m going to note that the concept of “limited liability” might be somewhat difficult to manage - you need to be able to separate actions against “the company” from the shareholders. That sort of forces treating the company as a some sort of legal entity in lawsuits. Without limited liability, the concept of corporate ownership would be very, very different, and your average person would not hold shares in a public company.

3

Nor would there be non-profit corporations, which require a legal personality and limited liability to contract with employees and conduct their business separately from their donors.

Nor would there be municipal corporations, which require a legal personality and limited liability to hire workers, sue people for taxes they owe, accept contract bids, and pay the mayor separately from all the people who live there.

Nor would there be public authorities like bus companies and school districts for the same reason.

Or housing cooperatives, or mutual insurance companies, or credit unions, or food cooperatives, or political parties.

“Corporations” include a lot more than just businesses. Basically any non-human thing with a legal personality is a corporation of some kind.

4

Without using any fancy lingo, here it is in its most simple form:

If a corporation is not a “person”, then it would not be able to own anything. It would have neither rights, nor responsibilities. These are the most immediate effects, and everything else - such as the things mentioned by the previous posters - stems from there.

5

The concept of a “corporation” has existed in common-law jurisdictions for a very long time, because in the usual course of events it’s a very useful legal fiction.

If the people in a local community want to hire someone to build something for them, the existence of corporations allows the local council (one corporation) to sign a contract with a construction firm (another corporation). If there were no corporations, then who would sign the contract on either side? How could either party to the contract enforce it against the other party? Who would actually go sign the court papers, and go along to the courthouse?

If that same local community wanted to hire someone as an employee, who would the employee enforce their rights against? Without the existence of a corporation, the employee would have to sue each and every inhabitant in that community. Inevitably the employee would go after either the richest inhabitant (on the basis that that’s where the money is), or would go after the poorest inhabitants (on the basis that they wouldn’t be able to afford to defend themselves effectively). Either the law would have to allow this, or it would have to make (say) each of 20,000 inhabitants only liable for one-20,000th of any amount due. The problems with either possibility should be obvious.

The same principle applies if a group of people get together to form a business. If you have dealings with (say) Barnes & Noble, you only want to be dealing with one business at one address; but you can’t do that without the existence of corporations. What if you have a gripe with Barnes & Noble, and that gripe is that they do a particular thing they contracted to do; who would you make do that thing? What if it were something beyond the capacity of an individual human being (such as supplying 80,000 textbooks)?

Having corporations allows local government to function, charities to exist, businesses to operate. But their existence also allows private individuals to deal with a single entity when dealing with local government, charities, and businesses, rather than having to deal with a whole load of private individuals.

And then there’s national government. If I want to sue the US federal government, it makes life a hell of a lot easier for me to just fill in “The Attorney-General of the United States” in the relevant box on the court’s form, than to have to list out all 300,000,000 or so people living in the US! :slight_smile:

6

I’m no expert here but I think the answers are missing the point of the question.

The OP isn’t asking what would happen if corporations were suddenly legislated out of existence but rather what is the ruling granting them the status as ‘citizens’ were removed. That’s an entirely different question and one worth looking into.

Honestly, corporations existed prior to the ruling and would undoubtedly exist after such a ruling were, well, overruled. But what would the effect be?

7

They’re recognized as citizens?

They can certainly have sufficient interest in a legal dispute and in that legal dispute, they can invoke constitutional arguments. For example: Even if BigMart doesn’t have a religion, it can still prove in a court of law that a given law which is being applied to BigMart is unconstitutional because it infringes on religious freedom.

As for things like freedom of expression: The justification I’ve read from the Canadian supreme court is that freedom of expression is as much about expressing yourself as it is about informing others (like citizens who might want to know about your goods) so commercial speech is speech.

Let’s say we take away freedom of expression from corporations. The employees and shareholders can’t express themselves in the name of the corporation now? The head of the marketing department can express himself, just not express himself in the corporation’s name?

Let’s say we stop treating it as a citizen (to the extent it is), what can it no longer do?

8

Corporations are not ‘citizens’ and have never been recognized as such. Court rulings to the effect that corporations have a legal personality distinct from their ownership (or membership) were not some instantaneous revolution. They were a recognition of the de facto situation with regard to corporate entities through many centuries of common law.

You are under the misconception that court rulings regarding the legal personality of corporations somehow suddenly changed something. That is not the case. The rulings simply recognized what had occurred long before.

9

Read the distinction between partnerships (earlier version of same idea) and corporations. Partners are joint and severally liable (IANAL) which means that any single person in the aprtnership is fully liable for anytihng the partnership commits itself to, whether they personally agreed or not.

For very large organizations, this distinction is impotant. Why would I join a partnership, such as one sending a fleet of ships from England to India in the 1600’s to bring back tea, if there was a risk that I peronally would be on the hook for the whole cost if the venture had problems?

This is where the concept of the LIMITED company as a seaprate entity came from. A such, you cannot sue the shareholders imply because the company is broke. (Something Donald Trump understands). The corproraton then can enter into contracts, own property, keep bank accounts, and do most things a “person” can do.

Obviously, it does not qualify as a citizen and have a vote or many other things reserved for only real persons. Similarly, criminal acts by the corporation (i.e. bribery) are aslo the fault of personsacting on behalf of the corporation and those persons as well as the corporation can be charged for what the corporation does. You can’t send a corporation to jail, but you can fine the heck out of it.

10

There are, of course, LIMITED partnerships in which some partners liability is limited. Usually this limit is the amount invested just as it is with a corporation where the share price cannot go below zero. I believe, but am not sure, that the limited partners are also not liable for torts of the partnership.

11

Matrix Planet, Tom the Dancing Bug

All you see is illusion. Corporations are not real.

12

Don’t be silly. They’re real to the extent people choose to treat them as real. If humans respect the corporation’s money, and the company buys thigns, and society says iut owns them, in what way does it not have possessions? It is made up of people doing things in certain times and certain ways, nothing more - or less.

13

Most of the controversy about corporations as “persons” is exactly which rights of personhood do they have or should they have.

One of the side effects of the Supreme Court ruling was to make it much harder to make a law or regulation which treats a corporation in ways that would be illegal or unconstitutional if applied to a live human.

For example, it is clearly unconstitutional to regulate that “no human may speak unless his/her speech is pre-approved by the government”. But it is not too far-fetched to regulate that “no corporation may make an advertisement unless its truthfulness has been verified by the consumer protection agency.”

If a corporation is fully a “person” in the constitutional sense then the regulation above would clearly be unconstitutional. But if the corporation was merely a recognized type of legal entity with many, but not all, rights of a human, then it becomes possible to erect such regulations over the corporation’s behavior.

With that background …

To try to answer the OP’s question …

If corporations of all types (ref friedo above) were declared to be an entity with some rights, but less than those of a human citizen, then many areas of corporate behavior become subject to potential legislation or regulation. So the immediate impact would be small, but the potential long-term impact could be almost anything the legislators and regulators might do.

If it was decided that corporations were less-than-human in their rights, a key distinction would be whether the decision meant that they were assumed to have all possible human rights until removed explicilty by legislation, versus having no rights except the few explicitly granted by legislation. As an example, would corporations be prohibited from political advertising unless / until explicitly permitted versus being permitted to run political advertisements unless / until explicity prohibited? You can see a big difference in the practical outcome.
Naturally, whether one views corporations as the fount of most human progress or the source of most human misery determines how you’d view the prospect of them having fewer rights & therefore potentially greater regulation of their behavior.

14

So far, LSLGuy’s response is the one that I’m best able to follow and comprehend.

Those of you with a different perspective than LSLGuy, can you frame your dissent in terms of substantive disagreement with (or elaboration on) what he said?

That is a correct interpretation of my intention, yes. Or in light of LSLGuy’s explanation, perhaps I could clarify that as:

…Not asking what would happen if corporations were suddenly legislated out of existence but rather what if it were ruled that the rights of corporations can be restricted and ameliorated separately from those of other ‘citizens’ without that violating due process or equal protection etc?

Legislatively would I be correct in assuming “nothing would happen until and unless laws were passed that did indeed constrain (or for that matter empower) corporations differently from individuals”? How about court rulings subsequent to my hypothetical court ruling, would other conclusions likely be drawn directly from such a ruling (or is that impossible to answer without an actual ruling with an actual text to look at)? And ALSO w/regards to court rulings, would a whole slew of decisions based on “the intent of the law” be likely in cases where laws apparently written to apply to individuals are no longer (via equal protection) necessarily applicable in the same way to corporations?

I guess the political donations thingie would be up for reevaluation, for one obvious example, were some court open to reopening that one subsequent to the hypothetical ruling? That is, it could be argued that the intent of that law was to restrict corporations only/differently whereas the 1st amendment freedom of speech and subsequent interpretations including financial contribs as a form thereof were intended to apply to individuals, hence the former isn’t necessarily a violation of the latter?

15

As noted nothing would happen in the short term.

Almost certainly nothing would happen in the long term either.

Sure it would allow regulations on corporations in ways that could not be done to a human citizen but then that was the case prior to Citizens United. Corporations operated just fine. Under Citizens United corporations’ rights were broadened. There is no reason to believe without that ruling they’d be regulated out of existence.

16

It wouldn’t mean that such entities couldn’t exist. You would just have to apply liability and power to contract directly to actual people, such as a board of directors, rather than the fictional entity they act as agents for under the current system.

17

This. Corporations can have all the rights they need to function as limited-liability businesses, without having the right to “free speech.” IIRC, their free speech rights were limited until recent Supreme Court decision(s).

As it is, we have the absurd situation where even if all employees and stockholders of a corporation prefer candidate/position A for the sake of society, the corporate board may feel a fiduciary duty to speak and campaign for position B, if more profitable.

18

There’s nothing at all absurd about that. Corporate governance is set up so that the people in charge have defined powers.

You might as well say that it’s absurd that the President can order the military to do something even if the voters and the military both dislike it. Well, the rules specifically say that he can. The voters can vote the President out later, but they’ve already vested certain authority by voting him in previously.