Capital Commentary is the weekly current-affairs publication of CPJ, written to encourage the pursuit of public justice.
Corporations, Personhood and the Common Good
Jess O. Hale, Jr.
November 4, 2011
by Jess O. Hale, Jr.
The recent recession and the crises in the housing market and banking industry provide Americans an opportunity for a moral conversation with our fellow citizens about a critical social actor: the corporation. Occupy Wall Street harangues financial institutions while presidential candidate Mitt Romney quips that “corporations are people too.” Both represent popular sentiments about the role of corporations in our economic and social life. But what role should corporations play in our society?
Many people understand a corporation as an institution that powers the economic engine of capitalism—an entity, created by humans, that holds property collectively for individuals and organizations for the sole purpose of making monetary profits for its shareholders. Assigned human-like characteristics by our society, corporations exercise power and act not only to make wealth but also to “speak” and “advocate” like flesh-and-blood people. They elicit controversy when the U.S. Supreme Court invalidates attempts to curb their ability to dominate non-economic parts of our common life, like politics, through exercising speech.
It is only from the nineteenth century that American corporations were viewed as entities that should only act in the financial interests of shareholders. As Morton Horwitz has shown us, at one time corporations were expected to serve the common good—before the ascendancy of the contract and an instrumental view of law in service to a market economy. Enabling both evil and good, corporations can have a life and momentum of their own, and we find antecedents of corporate notions giving expression to a social reality in Greek, early Christian and medieval thought.
With this history in view, it becomes clear that corporations are not just engines of monomaniacal wealth creation. Many of a society’s common or social endeavors collectively take form through corporations. Churches and schools can act through them to accomplish worthy goals that have nothing to do with profits. The Center for Public Justice Guideline on Economic Justice affirms using various institutions to facilitate different expressions of human responsibilities, including economic ones, in a manner that furthers the common good while protecting other responsibilities from unjust domination.
Today many would contest the idea that corporations seeking only profits for their shareholders are also necessarily serving the common good. The financial abuses underlying the 2008 crash alone raise serious doubts about any kind of inherent benevolence. Other stakeholders, including workers and communities, have legitimate concerns with how profit-seeking corporations affect the common good. Theologically, persons are more important than property.
Realistically, American society is not about to forsake the modern corporation as a means of doing business. Yet if corporations do not serve the common good, perhaps we need to think again about conferring social benefits like limited liability and political participation on these limited forms of human association that society deems to be personal. At least for large corporations the time may have come for looking at reforms that allow or promote their serving the common good. Reining in shareholder supremacy—by reforming corporate governance in order to promote accountability to shareholders, workers and the public—needs to be deliberated. Acknowledging corporate responsibilities other than shareholder benefit and enforcing fiduciary duties of corporate directors toward workers and other stakeholders would be a start. Kent Greenfield’s The Failure of Corporate Law makes worthwhile suggestions along these lines.
Without requiring public ownership of corporations or removing their First Amendment rights, we can change the legal infrastructure that enables the existence of corporations in order to promote more accountable and responsible pursuit of the common good by these privileged entities. If you are going to be a person, you need to be responsible for a broad range of relations—just like flesh and blood people are.
—Jess Hale is a Senior Legislative Attorney with the nonpartisan Office of Legal Services of the Tennessee General Assembly. His views are his own and do not reflect those of either entity. He participated in the Civitas public policy leadership program of the Center for Public Justice in 2005.
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Capital Commentary is a weekly current-affairs publication of the Center for Public Justice. Published since 1996, it is written to encourage the pursuit of justice. Commentaries do not necessarily represent an official position of the Center for Public Justice but are intended to help advance discussion. Articles, with attribution, may be republished according to our publishing guidelines.”