06 November 2011

Corporations (Again)

The Center for Public Justice recently posted a short piece here addressing morality and the corporate form of legal personhood. The CPJ blog notes that, at least formally, until the mid-nineteenth century corporations were specifically chartered by states to serve some aspect of the common good. The author, Jess Hale, fails to note that state legislators regularly acted out of self-serving motives when approving a particular corporation; the move toward general incorporation statutes were seen at least in part as a progressive, "good government" movement.

Hale also criticizes a view that champions the corporate form as "engines of monomaniacal wealth creation." Well, nothing should exist for such a stunted moral purpose (a point I obliquely addressed here), and many corporations exist for many other purposes. As I argued here, if corporations can assert a moral obligation to keep promises to them, then virtually all other aspects of morality must obtain with respect to the corporate entity as well. And just as we'd consider a person who sought only profit maximization to be less than human (see Jesus at Matthew 16:26), so to a corporation.

What does Hale suggest as a solution to the perceived failure of corporations to serve the common good? First, "if corporations do not serve the common good, perhaps we need to think again about conferring social benefits like limited liability and political participation on these limited forms of human association that society deems to be personal." Does Hale mean that the shareholders of all corporations should lose the benefit of limited liability? Or only those whose corporations fail to meet that standard? Given the contested nature of the common good, I assume he means the former. But what of individuals whose lives fail to serve the common good? Should they too lose social benefits like participation in the political process? It is the case that felons lose certain civil rights but that's only after conviction of a crime, not merely failure to promote the common good.

Second, Hale argues that "reining in shareholder supremacy—by reforming corporate governance in order to promote accountability to shareholders, workers and the public—needs to be deliberated." As my colleague Haskell Murray observes, corporate boards already have the power to promote interests of non-shareholder constituencies so I'm not confident of the practical results of what Hale suggests here other than additional sources of litigation.

Hale's insights are interesting but ultimately seem grounded in the exigencies of immediate circumstances. A more far-reaching examination of the corporate form is in order. We must have a deeper understanding of legal and civil personhood, especially as it pertains to artificial forms like the corporation, before attempting a scatter-shot reform of general purpose corporations.

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