Academic journal article Fordham Journal of Corporate & Financial Law

Corporations Are People Too: A Multi-Dimensional Approach to the Corporate Personhood Puzzle

Academic journal article Fordham Journal of Corporate & Financial Law

Corporations Are People Too: A Multi-Dimensional Approach to the Corporate Personhood Puzzle

Article excerpt

I. INTRODUCTION

During the last year, controversy has raged over the unprecedented amount of money authorized by Congress to bail out failing corporations. Mega-corporations like AIG, Citigroup, and Bank of America, have received billions of dollars in federal aid.1 Auto industry giants also received massive bailout funds.2 The policy underlying the decision to rescue such companies was that they are simply too large to be allowed to fail. Their role in the economy, the millions of jobs they provide, and the investments they support, are all deemed to be so significant that letting certain corporations fail completely would arguably have disastrous consequences.3

Opponents of government bailouts asserted that mismanagement and/or greed caused the corporations to falter and, therefore, these companies deserve to be dismantled by the free market. The feeling is that they made their bed, and now they must lie in it. Giving them billiondollar hand-outs is simply throwing good money after bad. We are not obligated to nourish these giant corporate persons or even to preserve their existence.

Interestingly, the bailout debate raises deeper questions about what it is, exactly, we are bailing out. Who or what is it that we are trying to save? Is it the millions of employees who depend on the continuation of the corporation for their jobs? Is it the shareholders who have risked their capital by investing in the corporation? Is our concern for the customers who look to the corporation to provide essential goods and services? Are we trying to help the suppliers, vendors, and communities that depend on their ongoing relationships with the corporation for their own survival? Or, more cynically, does saving the corporation mean saving the politicians whose political careers are dependent on large annual corporate contributions?

Proponents of corporate bailouts seem to believe the corporation is an aggregate of all those human beings who participate in and depend on the success of the corporate enterprise. When we save the corporation, we are really saving all the individuals who are behind it.4 Critics of this approach seem to view the corporation differently. They see the corporation as a separate entity that either succeeds or fails on its own merits. When a corporate person is dysfunctional or begins to fail due to its own systemic weaknesses, then that corporate person should be left alone to die.5 Our belief in the survival of the fittest gives us confidence that other corporate entities that are healthier and more efficient will rise up and take the place of weaker ones. The national debate over bailing out corporations reveals that the corporation itself means different things to different people.

These contrasting views of the corporation reveal fundamental concerns about the nature of the corporation and its status as a person in our society. This component of the debate is not new. Whether or not the corporation should be viewed as a separate person that owes and is owed certain obligations has puzzled legal theorists for years.6 Because of the meaning and value we attach to personhood in our society, deciding whether a corporation is a person helps us decide what its rights and duties are and how we can expect it to behave. It gives us a normative framework for how we should view corporations, how they should be treated, and how they should treat us.7

Some argue that the corporation is not a person at all. It is merely a legal construct, a fictional entity, an artificial creation of the natural persons who form the corporation for their own purposes.8 It has no real, independent ontological existence of its own. It has no body, mind, or soul. The corporation is simply a creature of statute and is dependent on the law to give it form and function.

Others argue that the corporation is not so much a creature of law as it is an association forged by the mutual agreement of the individuals composing it. …

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