As it seems I have angered my conservative friends with my stance on the corporation, I think I should explain why I oppose it and how I came to this position. But first, it will require a brief glimpse into my background. I hold a degree in philosophy and in sociology. Before I switched majors, I lacked 18 hours from completing my mechanical engineering degree. I was accepted to a graduate program in philosophy as well as law school. That’s when life stepped in and changed my plans. I experienced something that had a profound effect on me, and it started the long process of knocking me off my high horse. I know that just made several of you snort as you think I’m still full of myself. Well, I’m working on it, but, if you think I’m full of me now, you should have known me when I was in college. Anyway, the point is, I left my formal schooling before it was complete, but I continued to study on my own. As a result, I worked through a lot of stuff that others had tackled long before I was anything, but, unbeknownst to me. It wasn’t until a few years ago, when I “returned to the land of the living” – so to speak – that I discovered most of what I thought of as “original work” was old news. Never the less, this is how it is that I am so sure of myself on so many things. If I can reach the same conclusions on my own that such great men as Cicero, John Locke, and Thomas Jefferson reached, then I feel I am in good stead. Unfortunately, as my personal studies focused mainly on my own work, buttressed by what I had read of the classic thinkers before leaving school, I tend to be woefully lacking in my awareness and understanding of many more modern thinkers and events. As I shall soon demonstrate, the “corporations are not people” movement is among the things I was unaware of – until Don asked me about it.
Now, I as I hope regular readers will already know, I hold an affinity for Locke’s view of Natural Rights and Natural Law because it seems patently self-evident to me. Consequently, I reject the Hobbesian position as demonstrably false. In this sense, I agree that society is formed through the Natural Right of every individual to freely and willingly contract with each other. We form governments to protect our rights, not to grant them, and we retain the Natural Right to alter or abolish any government we deem to be a threat to those rights. Were the Hobbesian to make an honest observation of history, he would find this to be true. No matter how powerful, what government has never had a fear of its people? None! Even the most brutal of tyrants has a natural fear of a popular uprising. And why should that be if not for an innate understanding of Natural Law. It’s like Jefferson said:
“Questions of natural right are triable by their conformity with the moral sense and reason of man.”
–Thomas Jefferson: Opinion on French Treaties, 1793. ME 3:235
So, at least for me, Locke’s view of Natural Law forms the framework around which man should govern his own law. Accordingly, I see any law that we write which conflicts with Natural Law is a violation of Natural Law and, as such, an injury to it and every individual in that society. So, this is where I begin the explanation of my objection to the corporate structure. Again, the words of Thomas Jefferson:
“A free people [claim] their rights as derived from the laws of nature, and not as the gift of their chief magistrate.”
–Thomas Jefferson: Rights of British America, 1774. ME 1:209, Papers 1:134
A corporation does not exist in nature. It is as much a construct as government. This means it depends on the laws of man for its existence, and not on those of nature. Now, let me be clear about this next point. I do not find an inherent or necessary violation of Natural Law in the corporate structure – so long as it remains under the authority of the people. If the people create it by mutual agreement, they must be allowed to retain control over it, as well. However, if a corporation is given the legal status of personhood, or it is held to be the private property of a few individuals, then a clear violation of Natural Law is committed. Once again, to Jefferson:
“What is true of every member of the society, individually, is true of them all collectively; since the rights of the whole can be no more than the sum of the rights of the individuals.”
–Thomas Jefferson to James Madison, 1789. ME 7:455, Papers 15:393
First, Natural Law deals with real individuals, and the corporation is an artificial entity. By definition, a corporation acting as a person is a violation of Natural Law in and of itself. But, as Jefferson points out, it is a violation of Natural Law to make the corporation greater than or above any individual in the society responsible for creating it. As a corporation is theoretically immortal, making a corporation into a person makes it greater than every individual in the society that created it. The same applies if the corporation is made private property. If it takes the willing agreement of the whole society just to bring a corporation into being, turning around and making that corporation the sole property of just a few members of that society again violates Natural Law by taking away the authority of those who do not share in ownership. It must be remembered that no government has the authority to do either of these things as, under Natural Law, no individual has the Natural Right to contract away the rights of another and, in both examples, that is exactly what happens when a corporation is made a person and/or private property. The thoughts of Jefferson and a friend on this issue:
“A right of property in moveable things is admitted before the establishment of government. A separate property in lands, not till after that establishment. The right to moveables is acknowledged by all the hordes of Indians surrounding us. Yet by no one of them has a separate property in lands been yielded to individuals. He who plants a field keeps possession till he has gathered the produce, after which one has as good a right as another to occupy it. Government must be established and laws provided, before lands can be separately appropriated, and their owner protected in his possession. Till then, the property is in the body of the nation, and they, or their chief as trustee, must grant them to individuals, and determine the conditions of the grant.”
–Thomas Jefferson: Batture at New Orleans, 1812. ME 18:45
“All the property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition. He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.”
–Benjamin Franklin, letter to Robert Morris, 25 December 1783, Ref: Franklin Collected Works, Lemay, ed., 1
I contend that the practice of allowing corporations to function simultaneously as people and private property is at the heart of a great deal of our economic problems. Consider the philosophical and legal problems connected to the following:
n If a corporation is a person, how can anyone own it without violating the 14th Amendment?
n If a corporation is a person, how can it own another corporation without violating the 14th Amendment?
n If a corporation is a person, why can’t I get it on the phone?
n If a corporation is a person, how does it testify in its own defense if charged with a crime?
n If a corporation is a person, how do we put it in jail should it be found guilty?
n If a corporation is a person, how do we execute it if the sentence is death?
n If a corporation is a person, then what is its lifespan?
n If a corporation is private property, then how can it be publically traded?
n If the stock holders are the owners of the corporation, why can’t they come to work and give orders to the employees?
n If the stock holders are the owners of the corporation, then why can’t they come to work and just remove property equal to the value of their stock?
All of these objections represent conflicts between man’s law and Natural Law: conflicts that lead to additional laws intended to deal with the unforeseen problems that always arise when Natural Law is broken, and which will inevitably lead to more conflicts requiring more laws.
In truth, an RNL commenter actually stated what the whole purpose of the corporate structure was designed to do: shield the individual from legal and financial liability. This is as clear a violation of Natural Law as can be had. Natural Law is built upon the personal responsibility and accountability of the individual. To design a system that allows someone to operate with impunity for their actions and without real risk to their own finances is to violate that individual accountability – not to mention the founding principles and ideals of our system of government.
But there is another problem with making persons of corporations and of giving those persons the status of private property: it creates a path to creating a new aristocracy that, sooner or later, will threaten the very society that created it:
Suppose a corporation reaches the size of GE, or larger. It owns hundreds of other corporations and, therefore, has access to vast amounts of money. How does one stop that corporation from pushing laws – or worse – regulations that limit the ability of competitors to compete? Let’s say this corporation pushes an environmental protection law that is intended to save the wetlands. It makes it illegal for anyone to do anything with a wetland. If they do, they go to jail for 5 years and pay a $10 million fine. Now they are a hero: they saved our wetlands. Except, when they want to build, they just do it. The corporation can’t go to jail, and $10 million is pocket change to them. In the mean time, the private property rights of any wetland owner were just trampled. What’s more, if this corporation falls into the hands of a family, or even a group of people in selected association, such as the members of an elite group from a specific college, by definition, it has become an aristocracy.
It also allows the dead to inherit the earth and dictate to the living:
Take the case of a living trust. Suppose, when a certain person dies, she owns an amount of private property equal to ½ of one state and 1/3 of another, adjacent State. Before she died, she set up a living trust to make a “preserve” out of this land, dictating that it can never be sued – ever, for anything. So, when she dies, this trust – a corporation – becomes immortal. But the trust is not a person. It is just a vehicle by which this dead woman can dictate to generations to come what is and is not done with the land. Worse, this dead woman is demanding that she be allowed to dictate from the grave based on the willing agreement of the people that makes it possible for her to even own that land in the first place.
Jefferson referred to this as the dead inheriting the earth and it’s why our founders favored laws mandating all inheritance be divided equally among all surviving heirs:
“If the overgrown wealth of an individual is deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree; and the better, as this enforces a law of nature, while extra-taxation violates it.”
–Thomas Jefferson: Note in Destutt de Tracy’s “Political Economy,” 1816. ME 14:466
It was a sentiment wholly in line with a meritocracy and echoed by Alexis de Tocqueville:
Grant me thirty years of equal division of inheritances and a free press, and I will provide you with a republic.
But let’s look to how the modern corporation is used. Stocks have been changed so that most people who own stock in a company have little to no say in the operations of that company and do not collect any income from their stocks unless and until they sell them. If I am an owner of a private property, shouldn’t I share in the management of that company as well as the profits? If a person sets up a corporation, solicits investors and then tries to start a company and fails, the corporate structure shields him from any liability. We say the investors should have known better. But what if the company fails because the “capitalist” made deals with his “union” that paid them far more money than they deserved? Today, the laws would do nothing to that capitalist. And what if, after the company fails, that capitalist next tries to run for public office and is given a huge sum of money from the very same union that had a hand in the bad decision that caused the company to fail and the investors to lose their investment? Today, this is still legal, but it is also a form of legal plunder made possible only because the laws have been written to allow it. That brings us to the words of another oft cited political philosopher on the RNL:
It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.
Now, admittedly, Bastiat was referring to the wrongs of socialism, but read this and see if you can’t equally apply it to the laws governing the modern corporation, as well:
Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame and danger that their acts would otherwise involve… But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them and gives it to the other persons to whom it doesn’t belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. Then abolish that law without delay … No legal plunder; this is the principle of justice, peace, order, stability, harmony and logic.
I didn’t touch on the problem of corporations donating to political campaigns where they cannot vote – even though they are people. Or the issue of international corporations, which are often controlled by foreign nationals opposed to the best interest and security of this nation. And then there is the fact that, as a socially constructed fiction, the corporation – person, property or not – is, by its very nature, a product of socialism. It depends on the agreement of society for its very existence. How much more clear a violation of Natural Law can there possibly be? And this is why I object to corporations as persons and as private property. Not because I say so, but because I have read the reasoning of greater minds than mine and have tried to move myself within the foundation of their thinking. What’s more, I do not do this because I oppose the free market of private property, but to seek a consistent understanding of how man can best organize and operate his daily affairs without violating Natural law and the Law of our Creator.
That said, I wholeheartedly support private property and free enterprise. I just happen to know that there are ways to do it that do not violate Natural Law: ways that hold the individual responsible for his/her actions and which respect the rights of the rest of society. Proprietorships, partnerships, co-ops and even charter companies are all examples of how things were done before we perverted our laws and made corporations into people. Each of the above examples would also go a long way to resolving a great deal of the problems created by the money and power associated with today’s modern corporations.