The emergence of a movement against corporate personhood in the U.S.

Move to Amend is a movement fighting (in the U.S.) against the damaging legal fiction of Corporate Personhood.

Excerpted from Kaitlin Sopoci-Belknap:

“Throughout the country … (are) … organizing against “corporate personhood,” a court-created precedent that illegitimately gives corporations rights that were intended for human beings.

The movement is flowering not in the halls of Congress, but at the local level, where all real social movements start. Every day Americans experience the devastation caused by unaccountable corporations. Thanks to the hard work of local organizers, Boulder, CO could become the next community to officially join this growing effort. Councilmember Macon Cowles is proposing to place a measure on the November ballot, giving Boulder voters the opportunity to support an amendment to the U. S. Constitution abolishing corporate personhood and declaring that money is not speech.

At the forefront of this movement is Move to Amend, a national coalition of hundreds of organizations and over 113,000 individuals (and counting). Move to Amend is committed to building a grassroots movement to abolish corporate personhood, to hold corporations accountable to the public, and ultimately to fulfill the promise of an American democratic republic.

Boulder is not alone in this fight, nor is it the first community to consider such a resolution. In April, voters in Madison and Dane County, WI overwhelmingly approved measures calling for an end to corporate personhood and the legal status of money as speech by 84% and 78% respectively. Similar resolutions have been passed in nearly thirty other cities and counties. Resolutions have also been introduced in the state legislatures of both Vermont and Washington.

Despite the momentum, Move to Amend organizers know this won’t be an easy fight. Corporate America controls traditional media, and has invested heavily in politicians, lobbyists, and extremist groups to oppose our efforts. We can’t expect Congress to act, nor can we depend on the courts to solve a problem of their own making. We draw our strategy and inspiration from the great social movements of history.

The abolition of slavery, the struggle for women’s suffrage, trade unions, and the civil rights movement all started with grassroots organizing. The ruling elites denounced these movements as un-American, and they will make the same accusation against this effort. Others claimed that those movements went “too far,” and were unrealistic. Thankfully, folks before us did not quit or give up. They gained traction with solid strategy, unwavering commitment, and moral authority.

Move To Amend proudly identifies with this tradition of engaged citizen participation. Building momentum with local organizing and resolutions is our best chance of driving a constitutional amendment into Congress. Recent events in Boulder provide an example of this strategy in practice. Months of education, organizing, and advocacy by Boulder Move to Amend empowered Councilman Cowles to provide political leadership and prepared the community to respond.

Awareness of corporate personhood in Boulder is now higher than ever before. It is widely viewed as a mainstream issue, having earned the support of local Democratic Party leaders. Answering critics of the measure, Boulder County Democratic Party Chairperson Dan Gould recently told the Daily Camera that corporate personhood is an issue that must be addressed locally. “This is as important as municipalization, this is as important as school bonds,” he said. “This is immediate.”

Move to Amend is gaining momentum rapidly in communities throughout the country precisely because the problems of corporate power are most evident locally. Developers seeking special favors pour money into elections. Big polluters avoid investigations and litigation by hiding behind their illegitimate “rights.” Bad employers lie to the public about unfair labor practices with no legal consequences. People see it every day. They get it and they’re ready to fight back. Move to Amend is here to help them do that with a strategy for long-term success.”

Here is the rationale for abolishing corporate personhood:

* The General Critique, summarized by Charlie Stross:

“The rot set in back in the 19th century, when the US legal system began recognizing corporations as de facto people. Fast forward past the collapse of the ancien regime, and into modern second-wave colonialism: once the USA grabbed the mantle of global hegemon from the bankrupt British empire in 1945, they naturally exported their corporate model worldwide, as US diplomatic (and military) muscle was used to promote access to markets on behalf of US corporations.

Corporations do not share our priorities. They are hive organisms constructed out of teeming workers who join or leave the collective: those who participate within it subordinate their goals to that of the collective, which pursues the three corporate objectives of growth, profitability, and pain avoidance. (The sources of pain a corporate organism seeks to avoid are lawsuits, prosecution, and a drop in shareholder value.)

Corporations have a mean life expectancy of around 30 years, but are potentially immortal; they live only in the present, having little regard for past or (thanks to short term accounting regulations) the deep future: and they generally exhibit a sociopathic lack of empathy.

Collectively, corporate groups lobby international trade treaty negotiations for operating conditions more conducive to pursuing their three goals. They bully individual lawmakers through overt channels (with the ever-present threat of unfavourable news coverage) and covert channels (political campaign donations). The general agreements on tariffs and trade, and subsequent treaties defining new propertarian realms, once implemented in law, define the macroeconomic climate: national level politicians thus no longer control their domestic economies.

Corporations, not being human, lack patriotic loyalty; with a free trade regime in place they are free to move wherever taxes and wages are low and profits are high. We have seen this recently in Ireland where, despite a brutal austerity budget, corporation tax is not to be raised lest multinationals desert for warmer climes.

For a while the Communist system held this at bay by offering a rival paradigm, however faulty, for how we might live: but with the collapse of the USSR in 1991 — and the adoption of state corporatism by China as an engine for development — large scale opposition to the corporate system withered.

We are now living in a global state that has been structured for the benefit of non-human entities with non-human goals. They have enormous media reach, which they use to distract attention from threats to their own survival. They also have an enormous ability to support litigation against public participation, except in the very limited circumstances where such action is forbidden. Individual atomized humans are thus either co-opted by these entities (you can live very nicely as a CEO or a politician, as long as you don’t bite the feeding hand) or steamrollered if they try to resist.

In short, we are living in the aftermath of an alien invasion.”

* A critique of Corporations as legal entities, Piet-Hein Van Eeghen:

“While it is common to list various typical corporate features, such as entity status, limited liability and perpetuity, there is really only one defining feature: entity status. Entity status means that certain legal rights and duties are held by the corporation as a separate, impersonal legal entity. In the case of the private business corporation, entity status implies that title to the firm’s assets is held by the corporation in its own right, separate from its shareholders. Illustrative of the fact that the corporate form of private enterprise deviates from traditional forms of private property, entity status renders the legal position of both corporate shareholders and managers (directors) awkward and ambiguous. As for corporate shareholders, they are commonly regarded as the owners of the corporation, but they are owners only in a limited sense. Shareholders do not have title to the assets of the corporate firm, but merely possess the right to appoint management and to receive dividends as and when these are declared; title to the firm’s assets reverts back to shareholders only when its corporate status is terminated. The lack of ownership rights over assets is illustrated by the fact that, in contrast to partners in an unincorporated partnership, corporate shareholders cannot lay claim to their share of the assets of the corporate firm nor do they have the right to force their co-partners to buy them out. Corporate shareholders can liquidate their investment only by selling their shares to third parties. In short, the ambiguity in the legal position of shareholders lies in the fact that, while certain traditional ownership rights rest with them (profit accrual and power to appoint agents to manage the firm for them), other traditional ownership rights are exercised by the corporation as a legal entity separate from them (title to the firm’s assets).

As for corporate management, their legal position is equally ambiguous. Managers are appointed by directors who are the representatives of shareholders. Ultimately, management is thus the agent for shareholders, managing the corporation as their representative. This, however, is only part of the picture. While management is the agent for shareholders in the sense of being ultimately appointed by and accountable to them, it is also the agent for the corporation itself. After all, in order to manage the corporation’s assets, management must legally represent the corporation as the titleholder to these assets. And because the corporation is an impersonal legal entity, agency for the corporation lends a significant degree of autonomy to the position of management, which is precisely why it has proved so difficult to make shareholder control over management more effective, despite the many legislative measures aimed at enhancing management accountability to shareholders. The significant degree of autonomy inherent in the legal position of corporate management was, of course, the main theme of Berle and Means’s (1932) seminal work on the corporation. To sum up, the position of management is ambiguous because management acts as agent for two principals, the shareholders and the corporation.

Other typical features of the corporation like limited liability and perpetuity are not independent, original attributes, but are derived from its entity status.

Shareholders possess limited liability because they do not own the corporation’s assets and are, consequently, also not liable for claims against these assets. Responsibility for corporate debt rests with the corporation in its own right rather than with them….

The corporate feature of perpetuity can also be traced back to the corporation’s entity status. It is because assets are owned by the corporation in its own right rather than by shareholders that the death or departure of shareholders does not affect its continued existence. While unincorporated partnerships need to be legally reconstituted each time partners leave, die, or are added, corporations continue irrespective of who holds their shares. The corporation’s entity status thus gives it a life independent of the life of its shareholders, which is the sense in which it is commonly said to possess perpetuity or immortality.”

Source: Piet-Hein Van Eeghen in Journal of Libertarian Studies. Part I, “The Clash With Classical Liberal Values and the Negative Consequences for Capitalist Practice.

* Kevin Carson, continuing to cite Van Eeghen, summarizing classic Liberal Objections:

“Above all, Van Eeghen objects to the corporate form as illiberal because entity status gives the corporation statelike features:

Originally only state institutions (central, regional, and local government) possessed corporate status, which seems entirely natural and appropriate. If we wish to escape Louis XIV’s infamous dictum “l’état c’est moi” (“I am the state”, which is the starkest, most chilling expression of state absolutism from which even ardent monarchists at the time recoiled, the state should indeed be given a legal entity separate from its officials. Only if such a separation exists can state power be vested in the office rather than the person; and only when state power is vested in the office can it be circumscribed by law. All this is the ABC of liberty and the rule of law. But if it is essential to the preservation of liberty and the rule of law that the state has a natural right to corporate status (entity status), it should equally be essential to the preservation of liberty and the rule of law that private individuals, when pursuing their own interests, are denied such a right and act in their personal capacity, which obviously does not exclude the possibility of private individuals acting as agents for each other….

… incorporation for private business is objectionable from a liberal point of view because it grants a distinctive feature of the public sector, namely entity status, to private concerns without the accompanying restraints of democratic and legal control. As such, the private corporation constitutes an illegitimate mixing of the legitimate domains of the private and public sectors. If it is agreed that entity status is indeed a typical attribute of the state, then anarchocapitalists who advocate a stateless society have even more reason to oppose private firms taking on state-like attributes such as happens when they acquire corporate status.

Another objection is that the corporate form

contravenes the basic liberal (and common law) principle of personal responsibility….. Andrew Fraser… remarks in this vein: “Corporate law has been designed to facilitate a legalized flight from responsibility by those who nominally own the corporate system.”

Corporate shareholdership is a licentious and irresponsible form of ownership because it is granted privileges of ownership (accrual of profits and the appointment of agent-managers) without carrying the obligations of ownership (payment for losses). If shareholders receive the full benefit of enterprise when things go well, why should they not also carry the full cost of enterprise when things turn awry?8 Similarly, corporate management is licentious because it enjoys the privileges of ownership (control over assets by virtue of being the agent for the corporation) without having to face the burdens of ownership (payment for acquisition or loss bearing) and without being accountable to natural persons who do carry the full extent of these burdens, as shareholders don’t do either. As already mentioned, insofar as management is accountable to shareholders, such accountability is difficult to make effective especially when shareholdership has become highly diluted.

It’s also worth noting that the immortality that goes with corporate entity status was, in the past associated with illiberal concentrations of power. For example, the Church (whose precise legal status as a quasi-public agency varied from country to country) was able to accumulate property from one generation to the next without ever lacking an heir, which meant that the process of accumulation was never reversed. The mass of property accumulated in its “dead hand” ratcheted steadily upward over the generations, and became the source of ever-greater political influence. The statutes of mortmain (“dead hand”) were specifically designed to counteract this process. In modern society, the immortal corporation becomes a comparable concentration of wealth and political influence.”

* Dave Pollard on ending the personhood of corporations

“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.”

* Julian Assange: Corporations offer no Civic Freedoms

“The corporation as a nation state has the following properties:

* Suffrage (the right to vote) does not exist except for land holders (“share holders”) and even there voting power is in proportion to land ownership.

* All executive power flows from a central committee. Female representation is almost unknown.

* There is no division of powers. There is no forth estate. There are no juries and innocence is not presumed.

* Failure to submit to any order can result in instant exile.

* There is no freedom of speech. There is no right of association. Love is forbidden without state approval.

* The economy is centrally planned.

* There is pervasive surveillance of movement and electronic communication.

* The society is heavily regulated and this regulation is enforced, to the degree many employees are told when, where and how many times a day they can goto the toilet.

* There is almost no transparency and something like the FOIA is unimaginable.

* The state has one party. Opposition groups (unions) are banned, surveilled or marginalized whenever and wherever possible.

These large multinationals, despite having a GDP and population comparable to Belgium, Denmark or New Zealand have nothing like their quality of civic freedoms.”

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