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Time to end corporate personhood

Posted on December 4, 2012 by | 5 Comments

People, it’s time to get real. The rich don’t want to stay rich because it allows them to consume vastly more resources than you and me. Vast wealth does not equate 1:1 to vast consumption. Once needs have been met and wants have been sated wealth is about far more than that; it’s about status. But beyond that, once mere status has been surpassed vast wealth buys you power. It’s not really about stuff. Any old moderately well off person gets to buy more stuff than they know what to do with.

Let me give you an example. A while ago an academic research group investigated who was the richest person in history. The measure they settled on was measuring wealth in terms of the number of average incomes of contemporary citizens from the same state that it would take to equal a given rich person’s wealth.

If memory serves the answer was Carlos Slim, the Mexican telecoms magnate, whose wealth is equivalent to the earnings of 440,000 average Mexicans.

The point is this: when Carlos Slim gets up in the morning he doesn’t eat 440,000 fried eggs for breakfast. He doesn’t own 440,000 cars. Indeed he has a reputation for leading a fairly unremarkable life. He lives in a 6 bed house in Mexico City. He drives himself around. Yes, he collects art, but he has built a public museum to house much of it. In short he’s a fairly down-to-earth multi-billionaire.

However as the Telegraph article observes: “The reach of his dominion is so large that the average Mexican will wake up on sheets bought from a Slim-owned store; buy their morning bread from a Slim-owned bakery; and drive to work in a Slim-insured car. They will call friends on a Slim-owned (sic) mobile phone, lunch at a Slim-owned restaurant, and smoke Slim-owned (sic) cigarettes.” That’s power.

I’m not even sure that it’s the super rich that should be our primary concern. After all where businesses are wholly owned by a Slim or a Warren Buffet, a George Soros or a Bill Gates, they’re capable of having a moral dimension. Of course the super-rich are often super-rich because they’re super-ruthless, but there’s no inherent contradiction. If you wholly own a business you get to decide the principles on which it operates.

Publicly listed corporations on the other hand are a very major problem. A blog post by Rob Manuel of B3ta captured the notion very neatly: “Psychopaths, as explored in Martha Stout’s wonderful The Sociopath Next Door, will tell any lie to achieve their aims and not be troubled by conscience. They represent about 4% of the population, and the corporation is effectively psychopathy encoded into law. A publicly traded company legally has to choose the option of maximising profits for shareholders – to be a corporation with a conscience is to break the law.” Or as Joe Sullivan, Facebook’s CSO (and a former California D.A.) summed it up neatly when we met last year; “Corporations are not moral entities.”

There are good reasons why listed corporations are required to maximise profits for shareholders – primarily because the maximisation of profit is relatively easy to assess and it serves the ostensible aims of those shareholders, whereas other considerations are nebulous and could easily be used as a smokescreen for fraud.

But however good the reasons are it means that the world is run for amoral organisations and amoral ends while the rest of us are expected to act in a moral manner.

Look at the contrast between the Microsoft Corporation and Bill Gates. They are not one and the same – despite rumours to the contrary. Back in the 90s Microsoft was seen to be using its power in the market to destroy the competition either by breaking its own software so it didn’t work with that of competitors, or through bundling or by buying up competitors and killing them off.

Microsoft would surely argue to toss with that description but it oughtn’t to dispute that that perception was widespread, and so back in the 90s Gates, as the face of Microsoft, was demonised as ruthless and amoral.

Now he’s using his billions through the Bill and Melinda Gates Foundation to do good stuff. So is he a good person or a bad person?

Truth be told the Gates you see now is probably the Gates he always was. However a good guy in a corporate straight jacket is constrained to be an evil Borg. The corporation admits of no morals. It will eat your children unless the cost of doing so outweighs the benefits. Freed of corporate constraints and with the vast resources at his disposal Gates champions many worthy causes and funds them too.

Instead of moral judgements corporations carry out a cost benefit analysis. In other words ‘what is it going to cost us?’ So they’ll ask themselves ‘will we get caught?’ They’ll ask themselves ‘what is the highest fine we’re likely to have to pay?’ They’ll ask themselves ‘what will this cost us in damage to our reputation?’ They’ll ask themselves ‘will the compensation we’ll have to pay to a dozen families for killing their loved ones outweigh our projected profits?’

So what’s the answer?

Their answer will be ‘take the most profitable course of action’. Ours must be; we’ll treat you like any other entity without morals – we’ll put up bars around you to keep people safe.

It’s the ultimate hypocrisy of the political right that it constantly lectures people about being moral while absolving corporations of any moral obligations whatsoever. If we all acted like corporations there would be anarchy (and not in a good way).

Yet it’s corporations that increasingly set the tone of Western society. To function within them it certainly helps to align your values with theirs. Expediency takes over from right and wrong, profitability from usefulness, worth is measured in terms that work on a balance sheet not on a hymn sheet.

When the great minds of The Enlightenment hoped to see the influence of organised religion wither it wasn’t that they hoped that society would become less moral. Rather they hoped that the principles shared by the world’s great religions would be freed from the bonds of the institutions that had set themselves up as gatekeepers over them and parlayed that position for wealth and power on Earth rather than a place in heaven.

But as the churches retreated from public life corporations filled the void with an anti-morality. We owe much of the world we have inherited to that phenomenon. When conservative religious societies in other parts of the world reject Westernisation it’s in part because they recognise not a different morality but, all too often, the absence of morality.

Some, myself included, suspect that corporations may collapse under their own weight in an increasingly agile, fast moving culture. So many big players look flat footed compared to their smaller rivals. Others argue we should take a collective sledgehammer to corporations.

Short of that there are certainly measures that are open to us that would have a radical effect on the corporate world.

The first would be an all out assault on the notion of ‘legal personality.’ Legal personality is essentially a legal fiction that assigns personhood and the rights that go with it to a non-living entity, such as a corporation. Thus a corporation, in the US, enjoys the right to free speech and that stretches to making campaign donations, just as would a citizen-voter. Obviously corporations have more money than citizen-voters and buy a bigger shout.

They can also sue and get sued and because they can get sued the corporate shell can (albeit not in every instance) shield directors, shareholders and employees from legal action. If you find a corporation guilty you can’t jail it. You can only fine it or take other measures – often rather paltry (fines are rarely stated as a percentage of turnover, for instance and if they were the cost based judgements that corporations make might be rather diffferent). The ultimate sanction in a civilised society (as opposed to one that allows the death penalty) is to deprive criminals of their liberty.

All of us, whether rich and poor, have only so many days, so many months, so many years upon the Earth. Take a year from a poor man and take a year from a rich man and it’s a great leveller.

If a rich man gets caught speeding the fine is meaningless. Take away his licence and it’s an annoyance; he’ll hire a driver. Take away his freedom and finally he experiences justice just as a poor man would.

So corporations get rights but they don’t get the same responsibilities or the same obligations as the rest of us.

If we insisted that the individuals at the top of corporations took responsibility, real responsibility, personal responsibility, for the actions of the organisations they ran, if we didn’t allow the buck to stop with an abstract entity, if we limited the rights of corporations so their only real rights were those of their workers and shareholders as citizens, we might be a lot further down the road to a world where the moral sense that guides most of us through life would be the same moral sense that guided the way business is done on our planet.

And if we didn’t allow companies a voice but only their workers and shareholders as citizens then we might find that power returned to where it belongs – with, all of us, rich, poor, young, old, men, women, gay, straight – that’s what the founding fathers meant when they introduced their newborn constitution with the words; “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

It’s a sad irony that those words ring hollow in modern America – because we the people, and not we the corporations, is what it’s all about.

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Comments

5 Responses to “Time to end corporate personhood”

  1. Philip GrantNo Gravatar
    December 4th, 2012 @ 6:05 pm

    Undoing corporate personhood is an interesting idea, but what about alternatives that already have some limited traction in terms of pushing back against the assumption that the sole aim of business is to maximise profit? I am thinking here of what in the UK is called a CIC (Community Interest Company) or in various parts of the US (including California and New York) a Benefit Company, that is to say companies that are legally obliged to make a positive environmental and social impact as well as make profits.

  2. AcanthusNo Gravatar
    December 5th, 2012 @ 1:07 am

    Good article. Yes, corporate personhood should be ended. People are people and entitities aren’t.

    To really make an impact, limited liability should also be removed. Big corporations harm the public by hiding behind limited liability. If they had unlimited liability then they would need to buy insurance to cover the damages they might cause – and the insurers would require lots more safety than current regulations do. Unlimited liability would also help stop the trend towards megacorps, as it would tend to favour smaller companies where managers had much more control over what was done.

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