TL;DR

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TL;DR

I'm writing a Long Thing because this subject is too meaty for a Short Thing. But Long Things are hard to read, so here's a TL;DR.

A hot day in Des Moines

5 years ago, on the campaign trail in Iowa, Mitt Romney said that corporations are people. His comments were immediately met with outrage and ridicule. Since then, a number of watershed issues have emerged where the idea that "corporations are people" seems to be the centerpiece.

Of course, corporations aren't human beings. As Elizabeth Warren said, they don't cry, they don't dance, etc etc. I don't see anyone on the right or the left or in the Supreme Court arguing with this and it's obviously not what Romney meant.

What are we arguing about?

So what did Mitt mean? When he says corporations are people, he's saying two things:

1. A corporation ultimately consists entirely of people; a corporation is an association of people combined in one body.

2. It is accordingly useful to create the legal fiction that a corporation is a person; this lets the corporation enter contracts, have legal rights and obligations, and in general do business in ways that would otherwise be impossible.

In recent years, the concept of corporate personhood has been applied in ways that have caused indignation. The Citizens United decision confirmed that a corporation is entitled to free speech, which includes unlimited political spending. The Hobby Lobby decision granted a corporation freedom of religion, which allows for not directly covering employee contraception on the grounds that it is un-Catholic.

This so-called legal fiction has been stretched and contorted to a ridiculous extent, many argue.

My mission

I want to present a different argument. My claim is that a corporation is, in reality, as much a person as you and I are. Moreover, treating corporations like people is desirable and even the solution to many of the problems facing society today.

If this claim seems outrageous to you, it's likely because you think of human beings and people to be the same thing. But corporate personhood is no more a fiction than the personhood of human beings; that is to say, personhood itself is a construct. This becomes clear when we closely examine the relationship between being human and being a person.

Personhood is a contract

Sometimes, human beings lose the rights and responsibilities of personhood. This happens when a criminal loses the right to vote, or when someone is declared insane and passes off rights to next of kin or the state.

And increasingly, we're seeing cases where non-humans ought to be granted personhood. For example, when we domesticated animals, we entered a contract with them that entitles them to a good quality of life. And any number of sci-fi works — Ex Machina and Her are two recent examples — claim that sufficiently advanced AI are people, too.

In this way, our approach to corporate personhood is an early opportunity to get ethics right. The sooner we are able to abstract personhood away from the human condition, the better positioned we will be for future issues. Personhood is, in its simplest form, the ability to sign and honor a contract. Any entity that can sign and honor a contract is a person; the test of personhood is the social contract of being a person.

I would much rather be generous than stingy with dishing out the rights of personhood; to be generous is to risk absurdity (a human being marrying a horse; a corporation casting a vote). To be stingy is to risk tyranny and the destruction of society (denying rights to others; restricting our ability to get anything done).

History is littered with low points where we failed to treat humans like people; we are yet to screw up by letting anyone into the club.

As we improve as people, we widen our invitation to personhood.

Keep it simple, stupid

My reasons go beyond ethics. Remember, 90% of the businesses in the United States are closely-held, ie., private, corporations. Our mental model of corporations often covers only large conglomerates, but legally there is not necessarily any difference in the rights of Starbucks and your local coffee shop. The more we attempt to divvy up the legal rights of companies into smaller groups — eg., "S corps" vs "C corps" vs "B corps" vs "nonprofits" vs "unions" vs ... — the more illegible the law becomes.

Even worse, that illegibility favors the very rich, and complex structures emerge like Super-PACs and the offshore incorporation schemes exposed by the Panama Papers. A simple and expansive concept of personhood reduces exploits in the system and levels the playing field.

There's no doubt that the Citizens United and Hobby Lobby cases revealed significant problems in our society. But in both cases, corporate personhood is a red herring.

Citizens United is about spending, not corporations

Citizens United shows that if left unchecked, unlimited political spending will drown out the voices of the less-financed. This is a problem that has nothing to do with corporations — in fact, Citizens United is a nonprofit, and most political spending today is initiated by individuals through Super PACs. Disclosure, tax reform, and limits on spending are all reasonable areas to explore here. Removing First Amendment rights of corporations is not.

Hobby Lobby is about women's rights, not corporations

Hobby Lobby shows the tension between religious beliefs and basic civil liberties. Health care includes access to contraception and is meant to be universal. So all entities should be required to provide it in some form, without requiring the taxpayer to subsidize the religious beliefs of those entities. Ideally, insurers are able to provide a solution that allows religious entities to provide universal health care without infringing on their beliefs; if not, the right to religion must give way to the right to health. This should apply as equally to employees of a church as to employees of a corporation. Once again, policy is simplified when we extend personhood to human beings, religious organizations, and corporations.

Good companies act like good people

When we look at companies that impact our everyday life, we find that we favor companies that act — and treat us — like people. We want companies to post their mission publicly so that we can see if it resonates with our values; we prefer companies that have a simple and human-friendly terms of service; we like it when we can have a conversational exchange with a product, whether it's a human or a bot on the other end. In short, when companies act like people we are more able to create trust and understanding with them.

A common misunderstanding — held even by Justice Stevens — is that corporations have a mandate to maximize profits. This is untrue, even of publicly held companies. Profit or shareholder value, "is not the explanation, cause or rationale of business behavior and business decisions, but the test of their validity." The move by companies like Etsy and Kickstarter to reincorporate as "B-Corps" is laudable but not necessary — the traditional model of capitalism wholly supports such mission-based ventures.

Bad companies act like bad people

Just like human beings, corporations are not immune from acting like "bad people." To some extent, the behavior of corporations mirrors the behavior of its major stakeholders; greed, fraud, etc. often come directly from the top. And like any other organism, when a corporation's existence is threatened it may behave in desperate, alarming fashion. Most insidious is behavior that emerges when any group of people get together. Various psychological studies show how quickly good behavior disintegrates in groups (Sherif, Asch, Milgram, Lombardi).

Once we start treating companies like people, we can teach them some manners

So what can we do to encourage corporations to be good people?

For one thing, we can — and do — hold the partners responsible for the behavior of their corporations. When a corporation is found not to honor a contract, ie., not behave like a person, litigators will "pierce the corporate veil" and go after the shareholders. When a corporation commits a crime or acts in an "insane" way, natural persons are held responsible. When a child commits a crime, the parents are potentially liable for neglect.

For another, we should encourage corporations to be more transparent. They ought to disclose political contributions in the same way that people do, for example. In many such cases, by treating corporations like people will require them to be more transparent and consistent about their values, allowing people to make better decisions about whether to do business with them. Transparency should not be seen as "extra work" for companies, but rather as a byproduct of their activity. We do this to a large extent with publicly held companies — we should do the same with private companies without burdening them with overhead. We can only trust companies when we understand and share their values — same as people.