 Ending the Personhood of Corporations:
Corporate Crime Reporter has a fascinating review of Robert Reich's new book Supercapitalism.
It's good to see a mainstream politician (Reich was Clinton's Secretary
of Labor) who gets why corporations are inherently pathological, and
what to do about it. Excerpt:
Companies cannot act with criminal intent because they have no human
capacity for intent. Arthur Andersen may have sounded
like a person but the accounting firm was a legal fiction. . . how can
any jury, under any circumstances, find that a company ‘knew’ that
‘its’ actions were wrong? A company cannot know right from wrong. A
company is incapable of knowing anything. Nor does a company itself
take action. Only people know right from wrong, and only people act.
That is a basic tenet of democracy.
As
I've reported before, the courts made a huge mistake decades ago when
they gave corporations 'personhood', the rights of persons under the
law without commensurate responsibility (their liability is limited by
law). When you give anyone (or anything) rights without
responsibilities you are asking it to behave irresponsibly.
I
agree completely with Reich that corporations should have no standing
whatsoever under the law -- they are fictions, constructions of
convenience that were designed for one purpose, the raising of money
for collective enterprise. They were never designed or intended to be
lobbyists or litigants, or to do anything other than hold and disburse
collective moneys in accordance with the needs of the enterprise while
protecting investors from financial liability beyond the amount of
their investment.
On the one hand, that means that they should
not have any legal standing in court -- no right to sue or to hear
'their' arguments. As non-persons they should not be allowed to
disburse funds or to lobby for political purposes.
The quid quo
pro, as Reich argues, is that they should not be allowed to be sued,
nor should they pay taxes. You don't sue the corporation, you sue the
executives, the directors, and (to the extent they vote for measures
that cause injury) the shareholders. Since the corporation is a
fiction, a financial holding instrument, no one should be allowed to
hide behind the corporation, and corporations as non-persons should not
be allowed to indemnify anyone from litigation. When any decision you
make exposes you to direct personal liability for the consequences of
that decision, you're going to act responsibly in making that decision.
Likewise,
corporations should not pay taxes. Today, corporations act as tax
shelters, because corporation taxes are lower than personal taxes.
Stripped of its personhood, corporations would not be able to shelter
shareholders from tax, because the income would flow through to the
shareholders and be taxed in those individual shareholders' hands. It
then makes no difference whether profits are distributed as bonuses,
share options, or dividends, or are retained in the corporation for
reinvestment. The individuals, real people have earned the profit, and they should pay tax on it. Corporations were designed to be, and should be, completely transparent.
The removal of personhood, of identity
to corporations has other implications as well. What happens when the
executives, directors and shareholders need to decide between two
courses of action, one of which will benefit the shareholders and the
other of which will benefit the employees or the community or the
environment? Today, executives and directors can be sued or dismissed
for failure to resolve such conflicts uncompromisingly in favour of
maximizing profit accruing to shareholders. The argument is that it is
'unfair' for executives and directors to be liable for balancing
conflicting needs and wants. Yet we all have to do this every day of
our lives -- e.g. we balance our personal needs and values against
those of our employer and those of our employer's customers, which are
often in conflict. Why should executives and directors be treated
differently?
I believe every corporation should have a charter,
developed and approved by shareholders, that stakes out their
collective philosophical position and guides directors and executives
in their actions. If it says damn the employees and the environment,
let's ravage the planet and offshore all the jobs to Asia to line
shareholders' pockets, that's up to them. As investors, community
members, and members of watchdog agencies, we will then be able to
determine whether we want to 'take any stock' in such a corporation,
and how much attention we should be paying to the actions of that
corporation's people and, when necessary, suing them personally for
violation of the law. If the charter says social and environmental
responsibility are paramount, and rank ahead of the financial interests
of shareholders, then shareholders will have no cause to complain if
short-run profit growth (and share price) suffers in the interests of
creating longer-term sustainability.
This is all about personal responsibility
for one's actions, including one's actions as a so-called 'agent' of a
corporation, and as someone who gives their money to those who run
corporations, in the knowledge that that money can be used in a variety
of ways, ways that have consequences. It includes the responsibility to
be informed and to take an active part in understanding what those
consequences are.
(a tip of the hat to Common Dreams, in my view the best aggregator of what's happening that's important in the world)
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