Why and how are corporations “people”?


Why and how are corporations “people”?

In: Other

Corporations are independent entities. So if the corporation makes a defective product, you can sue the company for damages, but not the worker that assembled the product of the engineer that designed it. This is a long-standing principle, which is not very controversial.

What raised some questions was a decision by the US Supreme Court that also protected “speech” by a company. In this way, companies earned the “right” to make political statements. You could sue the company, or it’s managers, and both were equally protected by the First Amendment. Historically the managers has always had such a protection, but extending it to the corporation was new.

Corporations are not “people”, but they are “entities”, and there are many laws that govern them as “entities”. Similarly to how environmental protection laws treat a forest, or the oceans, or the planet, as “entities”. They’re not people, but you can still think in terms of “their best interests”.

Corporations are not physical people, they are legal entities equal to people. There is a good reason for that. If you own a company, you can sign stuff in your name. But if there is 10 or 100 people owning a company, you don’t want to need all of them to sign everything about the company. So you create an legal entity through which everything for the company will be done, without always having all the owners involved.

Those corporation have similar rights as people, because people transfer their assets into those companies and these legal entities would be useless if not protected by rights. Because who would transfer their assets to something not protected by the law.

Corporations exist to provide a legal entity to protect people from the risks associated with running a business or group, and to streamline the decisionmaking process. For example, if you have a business run with shared property, you effectively need the permission of every single person in that business in order to do something like sign or negotiate a contract or whatever. Instead, the law allows you to create a legal entity separate from the people who own/run the business to serve as a surrogate person for these kinds of situations, thus that surrogate person is afforded some of the rights that normally would only be afforded to people. The debate over corporate personhood is mainly just the legal debate over how many and what kind of rights are given over to corporations. However, the core concept is extremely old, particularly in legal systems that descend from the Common Law system of the British Empire.

The sticking point these days is corporate speech, and whether or not that right is/should be afforded to corporations.

‘Corporations have neither bodies to be punished, or souls to be condemned, they therefore do as they like.’
Edward, Baron Thurlow, Lord Chancellor of England, c.1788.