Saturday, August 13, 2011

In Defense of the Corporation

I've been hearing the Left complain about corporations since the late 90's.  Now there's a movie.  Sigh.  Stop listening to this nonsense, please.

There are two main groups of people complaining about 'corporate personhood'.

The first group are people who haven't spent more than 30 seconds thinking about it.  They either don't understand what corporations are, or just don't care enough to think logically through their own criticisms.

The idea of incorporation dates back to the 17th century.  The main purpose of a corporation is to allow a group of people to act as a single legal entity, and to shield them personally from liability for the actions of the group.  Without corporations modern business and life would not be possible.  For example, if your iPod blows up in your face - who would you sue?  You would have to individually sue every single Apple shareholder.  But you wouldn't be able to do that, since Apple wouldn't exist in such a world.  When someone sues Ford for a defective vehicle, the company doesn't go to a 60 year old retiree in Michigan and take his home away, because his pension benefits included shares of the company.

But it's not just the liability.  Greenpeace, for example would have to exist as a 'club', and you wouldn't be able to give them any money.  I'm not even sure what the Left wants... do they want to ban all forms of organization?  No concerted action by groups of people larger than two?  This comes right to our freedom as individuals to associate as groups - a right guaranteed by the First Amendment.

This first group is offended by a metaphor.  'Corporate Personhood' is a Legal Fiction, something that makes the legal process workable.  Without it, you would have to pick a guy in your 'business club' to pay the rent on your office space.  And he'd have to pay it to that other guy, the one that rents out the space.

Other Legal Fictions are things like Adoption - nobody believes that a piece of paper makes an adopted child suddenly the biological child of his adoptive parents, but pretending so from a legal standpoint simplifies everyone's life.

In the same way, nobody actually believes that the Ford Motor Company is a person.  It's a metaphor that should be stretched only as far as it is useful - and no further (for example, claiming that corporations are 'psychopathic').  Yes, there are companies that behave badly.  But there are real people behind those companies making those bad decisions, and the fact that they are incorporated means you have a way to punish them for it.  If they individually act in a criminal manner they can still be charged as individuals.

The second group complaining about Corporate Personhood are people who don't like capitalism, and think they have found a nice 'hook' for their song about it.  My response:

If a man isn't a Communist at the age of eighteen, there's something wrong with his heart.
If a man is still a Communist at the age of thirty, there's something wrong with his head.


  1. I might get back to you later about more aspects of how wrong you are, but first, dates...

    In 1495, they established the Thurzo-Fugger company, which is sometimes regarded as the first capitalist company in Europe.

    ... and, BTW, "sometimes" means "not always" and "in Europe" means "not everywhere".

    Remember, now, in 1495, that what would have guaranteed the corporate "charter" for a mining company operating in present-day Slovakia was a promise of somtimes-allied Germanic gangs (er, kingdoms) to mete out bloodshed to any who would challenge them in their operations.

    Still unwilling, here, to get into whatever your argument might be: Remember Bhopal? As I remember, four managers got nicked, "teh corp" paid some millions, no execs got punished, no wheel-turners or sprocket-twisters faced penalties, and tens of thousands died or were maimed. A few crore rupees were paid out to survivors, and a few crore more invested into local healthcare infrastructure.

    Bhopal is an example of the NO THROAT TO CHOKE problem.

  2. Yeah, wikipedia mentions the idea going back to Roman times at least. Clue is in the word itself. When I think of early corporations I think of the VOC.

    Bhopal: that's an indictment of a broken government and legal system, not of the idea of organizing for business. Contrast that outcome to something like Enron or Bernie Madoff, where actual punishment was doled out. [Note: I'm not saying our system isn't corrupt as all hell, just not nearly as bad as India]

    Incorporation is a tool, like a knife. Yes, it can be used for evil purposes, and often is. But it would be idiotic to ban knives. You want to ban murder and assault.

    Tell me what your alternative would be. How would you change the way corporations work that would be significantly different to stop people bitching about 'personhood'? You can't.

    Social and cultural systems evolve, and the modern corporation is the product of hundreds of years of that evolution. It's not perfect, no more than a chicken is perfect. But it's very tasty!