Money, Power, and Free Speech: A Legal and Political Examination of the Constitutionality of Corporate Personhood
By: Ananya Ramesh
Corporate Personhood
Corporate personhood refers to the concept that corporations are associations of persons and, therefore, are granted rights typically granted to people. This legal doctrine means the corporation itself, sans employees and other people belonging to the business, has rights of its own. Over the years, rights given to companies have included First Amendment freedoms and privileges outlined in the Fourteenth Amendment. These rights have allowed corporations to engage in legal actions similar to those of individual citizens, such as filing lawsuits, owning property, and entering into contracts.
In essence, corporate personhood establishes that a corporation, as a legal entity, can function as a person under the law, allowing it to hold and defend its rights as separate from the individuals who own or operate it. This recognition has profound implications, as it grants corporations the ability to perform certain actions that would otherwise be reserved for human individuals.
The concept of corporate personhood is founded on the idea that corporations, similar to people, should be able to participate in legal and economic activities independently. This principle ensures that businesses can operate with continuity and stability, irrespective of changes in ownership or management. As legal entities, corporations can be held accountable for their actions, making it possible for them to have legal repercussions for negligence or wrongdoing, much like individuals can be sued for damages or violations of the law. This protection helps to ensure the interests of those interacting with the business, such as customers, employees, and investors, are safeguarded under the law.
Additionally, corporate personhood helps create a clear legal distinction between the assets and liabilities of the business and those of its shareholders or executives. This separation allows individuals involved in a corporation to limit their personal liability for the actions or debts of the company, encouraging investment and fostering economic growth. By granting corporations the status of "persons," the legal system provides them with the tools necessary to grow, evolve, and continue to participate in the marketplace, ensuring the success of commerce and trade in a global economy.
However, the grant of rights to corporations also requires careful scrutiny. It underscores the importance of ensuring that these legal protections are used responsibly and that the increased influence of powerful corporations does not compromise the rights of individuals and the public interest.
Santa Clara County v. Southern Pacific Railroad (1886)
This term was first created under Santa Clara County v. Southern Pacific Railroad (1886). In this case, fences owned by the Southern Pacific Railway Company were taxed under California state law. In their Statement of Facts, Southern Pacific Railroad alleges that The State Board of Equalization of California had included fences in the assessment of Southern Pacific Railroad, which were then apportioned among the counties based on the railroad's mileage.
The railway company alleged that California’s state constitution only allowed taxes on "the franchise, roadway roadbed, rails, and rolling stock." The issue in this case is whether it was constitutional for California to increase property taxes due to additional property value from a railroad company's fence construction fences, and whether the state board was wrongfully taxing property. The case was decided May 10, 1886 in a unanimous decision. Justice John Marshall Harlan delivered the opinion, stating that the State tax Board has improperly taxed Southern Pacific Railroad Company by including the value of fences and excluding deductions for mortgages. These actions violated the California state constitution’s requirements for a separate assessment of land and improvements. While the Court’s ruling was focused on the issue of taxation and property rights, its implications extended far beyond this narrow scope, setting the stage for later decisions regarding corporate rights under the Constitution. In the years following the decision, the legal interpretation of corporate personhood continued to evolve.
Many legal scholars and courts have debated the extent to which Santa Clara granted corporations the same protections as individuals, particularly in terms of civil rights and liberties. Although the Court did not explicitly state that corporations were to be treated as "persons" under the law, the language of the decision allowed for this interpretation, which led to the expansion of corporate rights in later cases. This case also highlighted the complex relationship between business and law, illustrating how legal precedents can influence the rights of corporations in a manner that impacts both economic and political landscapes. The verdict in this case allows for corporations to have the same freedoms as individuals, creating tax benefits and further legal representation in any civil or criminal legal proceedings that corporations are impacted by. The case of Santa Clara County v. Southern Pacific Railroad thus serves as a critical turning point in understanding corporate personhood and the extension of constitutional protections to entities that, while not human, hold significant power in the legal and economic system.
Citizens United v. The Federal Election Commission (2010)
While Santa Clara County v. Southern Pacific Railroad introduced the concept of Corporate Personhood, Citizens United v. The Federal Election Commission (FTC) (2010) fully defined the term through the Supreme Court’s verdict that political speech is vital for a democracy, and this value does not change if speech comes from a corporation. In Citizens United v. The Federal Election Commission (FTC), Citizens United wanted to publish a documentary criticizing Hillary Clinton ahead of the 2008 Democratic primaries. This film, Hillary: The Movie, was created by the conservative nonprofit organization to oppose Clinton’s candidacy as the democratic pick for the 2008 election. The FTC opposed the film’s release, stating that corporations could not spend money on political broadcasts 30 days before a primary election and 60 days before a general election. Citizens United responded that this prohibition from the FTC was in violation of the First Amendment — specifically the freedom of speech. The Supreme Court ruled in a 5-4 decision in favor of Citizens United, supporting Citizens United's First Amendment rights. The verdict held that federal restrictions against corporate spending are unconstitutional. Under the ruling,corporations and unions have the same First Amendment Rights as people and are allowed to engage in political speech. The decision became a defining moment in American political history, significantly altering the landscape of campaign finance and corporate involvement in elections. Critics argue that the decision undermined principles of democratic equality by giving corporations the ability to use their vast financial resources to sway public opinion and political outcomes.
The verdict of Citizens United v. The Federal Election Commission has led to an increase in corporate spending towards elections and has been met with criticism by some who argue the decision gave corporations the power to significantly influence elections. On the other hand, supporters of the verdict have argued that the ruling is important for the protection of the First Amendment and allows for a greater range of perspectives to be heard during elections and campaigns.
The ruling in Citizens United v. The Federal Election Commission has led to the creation of Super PACs. PACs or Political Action Committees are regulated by The Federal Election Campaign Act —legislation that governs raising and spending of money in federal elections in the United States. PACs make limited contributions as well as individual expenditures towards a political candidate or party. Super PACs only make individual expenditures, meaning that instead of limited contributions, they are solely funded through donations that are made for a specific candidate, rather than for a party nominee. Individual expenditures advocate for a certain candidate, rather than in support of a political party or campaign. They are also not subject to limits on the amount that may be donated and usually fund campaign ads and other forms of advertisement. Alternatively, limited contributions include constraints on the amount donated and do not include donations from corporations. Corporations typically create their own Separate Segregated Fund PAC, or more commonly, donate to Super PACS.
Super PACs or individual expenditure-only committees, got their names in the verdict of Citizens United. Unlike traditional PACs, Super PACs are not permitted to donate directly to candidates or parties. Instead, they can raise and spend unlimited amounts of money on independent political activities, such as running advertisements or organizing rallies to support or oppose political candidates. This distinction stems from the Supreme Court's interpretation that the First Amendment protects the right to spend money in the form of independent political expenditures under Freedom of Speech.
The creation of Super PACs significantly expanded the role of money in politics, allowing wealthy individuals, corporations, and labor unions to funnel large sums of money into the political process. While these groups cannot directly coordinate with candidates or political parties, they can spend vast amounts of money to influence elections, often through attack ads or advocacy campaigns. This shift has had profound effects on the dynamics of political campaigning, as candidates and political parties increasingly rely on these outside groups to fund and disseminate their messages.
Arguments for Corporate Personhood
A significant amount of the support for Corporate Personhood comes from the argument of economic viability. Having corporations treated as people under the law increases the legal protections for businesses. Businesses can then expand, innovate, and create jobs, all contributing to economic growth. By having access to legal rights such as the ability to sign contracts and own property, corporations can engage in complex business transactions, enter new markets, and contribute to job creation on a larger scale. Supporters of Corporate Personhood often argue that this principle allows for economic growth. Investors may be more likely to invest in corporations that have clear legal protections and the ability to enter into contracts, thus creating a more predictable and stable environment for businesses. Therefore, these legal protections that Corporate Personhood provides increase safety for investors, through provisions in the Constitution and Amendments now being granted to corporations as well as people.
This economic stability also fosters an environment where companies can attract long-term investments, ensuring that they have the necessary resources to sustain their operations, conduct research and development, and scale their businesses. In turn, this stability leads to a flourishing economy where businesses not only contribute to wealth creation but also provide better products, services, and opportunities to consumers.
Another prominent form of support for Corporate Personhood comes from the protections of the First Amendment. Through the belief that corporations are people, there is greater advocacy and representation of the interests of the people within the corporation. Corporations will be able to use their rights such as Free Speech to advocate for or against policies that directly impact their business, employees, and the economy, such as tax policies and regulatory changes. Due to the fact that corporations are made up of employees, managers, shareholders and many other groups of people, first amendment rights present an opportunity for the interests and beliefs of these people to be represented through the company. The ability for people’s beliefs to be represented through a corporation attracts more attention and has greater consequences due to the value of donations that corporations make, therefore increasing the likelihood that these values will be represented by politicians. The ability to advertise and market is now also a protected right of companies. This allows for corporations to express themselves to the general public via public reactions projects, marketing campaigns, and other forms of advocating products or services that their company offers. The large platform that corporations have also allow for viewpoints on social and cultural debates to be published, alongside political viewpoints, therefore creating large and constitutionally protected platforms for advocacy. Supporters of corporate personhood argue that the collective interests of the many individuals involved in a corporation are just as important as individual speech, and thus, the corporation should be able to exercise these rights on their behalf.
Corporations by nature represent the collective will of diverse groups, including shareholders, employees, and customers, allowing for a wide range of opinions and causes to be promoted through their platforms. This diverse representation makes a corporation a unique vehicle for expressing ideas that may not be as easily voiced by individuals alone. By amplifying the voices of these varied groups, corporations contribute to public discourse in meaningful ways, particularly in times of social or political change. For example, legal firms that represent clients in matters related to Intellectual Property Rights and Artificial Intelligence, might be more inclined to donate to a candidate whose campaign policy directly benefits the firm’s stance on these matters.
Corporations are often key players in promoting social change and raising awareness on critical issues, from environmental sustainability to human rights, which they can champion through their First Amendment rights. Corporate support for progressive causes, such as the adoption of renewable energy practices or advocating for fair labor rights, showcases the potential for corporations to use their platform and resources for broader societal good. Corporations, when allowed to express their opinions freely, have the capacity to influence public opinion and policy on a large scale, ensuring that important issues receive the attention they deserve.
Additionally, by participating in social causes, corporations can drive innovation that aligns with these values, often leading to the development of sustainable products and services that can have a lasting impact on society. For example, companies in the tech and energy sectors have made significant strides in advancing clean energy, thus helping to address critical global challenges like climate change. The legal protection to advocate for these causes ensures that companies can continue to act as catalysts for change, while also fostering a broader, more inclusive dialogue around pressing issues. Therefore, if a company feels strongly about a political or social issue, there are legal protections to ensure that they are free to donate towards their beliefs.
Arguments against Corporate Personhood
One of many criticisms towards Corporate Personhood and its constitutionality is the increased wealth inequality across the United States. Large corporations, by virtue of their vast capital and influence public policy, can contribute to an economic system where the wealthiest corporations and their shareholders control a disproportionate share of wealth. Through this disproportionate representation being reflected in politics, campaigns will grow farther and farther away from creating policies that benefit people, rather than businesses. This concentration of economic power has already been proven to detract from market fairness and hinder the growth of smaller businesses. Allowing corporations to control political influence as well will increase the gap between the will of the people versus the will of businesses.
Due to the fact that corporations can use their vast financial resources to influence elections and public policy, they often shape regulations that serve their interests, rather than those of ordinary citizens or small businesses. By prioritizing corporate personhood, critics argue that the balance of power shifts further from the public to large corporate entities, resulting in a system that favors the wealthy and further marginalizes the economically disadvantaged.
As corporations accumulate wealth and power, they have the ability to create favorable laws and policies that perpetuate their dominance, often at the expense of workers, consumers, and the environment. The increasing power of corporations in the political sphere — also known as Corporate Gigantism —means that decisions on taxes, labor laws, and environmental regulations can be heavily influenced by corporate interests, which may not align with the well-being of the general population. The concept of Corporate Gigantism creates an uneven playing field where individuals and smaller companies are disadvantaged by the sheer financial power of large corporations.
The concentration of power within corporations can also result in political campaigns being less targeted at the needs and expectations of the average person. Policy decisions that could benefit working-class families, such as healthcare reform, affordable housing, and income equality measures, are often sidelined in favor of policies that serve corporate interests. Instead, campaigns may be focused on promoting policies that benefit the corporate elite, potentially leading to policies which exacerbate income inequality and reduce economic mobility for the general population. Corporate funding of political campaigns leads to a system where the voices of everyday citizens are drowned out by the interests of large corporations. Critics argue that this undermines the democratic process, as politicians may become more responsive to corporate donors than to their constituents.
Additionally, critics contend that the ability of corporations to exert political influence can lead to regulatory capture, where government agencies become more focused on serving the interests of large corporations rather than protecting the public. In cases where corporations are able to influence regulatory bodies or even legislation itself, the result can be weaker protections for consumers, workers, and the environment. For example, in industries like pharmaceuticals, energy, and finance, powerful corporations may lobby for deregulation, leading to practices that can harm public health, the environment, and the stability of the economy. The ability to funnel vast amounts of money into political campaigns only exacerbates this issue, as corporations are able to effectively "buy" influence and policy outcomes, thereby perpetuating a system that benefits the wealthiest and most powerful at the expense of the public good. Super PACs, due to the unrestrained amount of donations allowed, result in significant growth in the influence of organizations that have the money to make these donations, typically large corporations. These corporations typically fund candidates whose policies will benefit them, resulting in a lack of representation and power for candidates whose political strategy benefits entities other than corporations.
Furthermore, critics argue that corporate personhood also leads to a form of corporate welfare, where large corporations are able to receive government subsidies, tax breaks, and other financial benefits, despite their immense profitability. This subsidization of large corporations with taxpayer money diverts resources away from programs that could benefit struggling communities or address urgent societal issues such as poverty, education, and healthcare. It creates a situation where the government is essentially propping up the largest and most profitable corporations, while neglecting the needs of the public.
Conclusion
Corporate Personhood has become one of the most contentious issues in modern legal and political discourse. Rooted in the landmark case of Santa Clara County v. Southern Pacific Railroad (1886), it has evolved to shape how we understand the rights and powers of corporations within the context of American constitutional law. The expansion of corporate rights, particularly following decisions like Citizens United v. FEC (2010), has fundamentally altered the political and economic landscape of the United States. Supporters argue that corporate personhood provides legal protections essential for economic stability, growth, and the ability to foster innovation. On the other hand, critics assert that it exacerbates wealth inequality, diminishes democratic participation, and undermines public interest.
As corporations continue to gain constitutional protections typically afforded to individuals, the implications for democracy and social justice are profound. The growing influence of corporate entities in both the political arena and the economy has led to increasing concerns about the concentration of power and the disproportionate influence they wield over policy decisions that affect the broader public. The debate surrounding corporate personhood thus raises critical questions about the balance between economic growth and social equity, individual rights and corporate power, and the meaning of democracy in an era of corporate dominance.
Ultimately, the challenge lies in finding a legal framework that respects the necessary role of corporations in driving innovation and economic progress, while also ensuring that their influence does not overshadow the voices of ordinary citizens. This ongoing debate highlights the need for careful consideration of how constitutional principles apply to modern institutions and the way those institutions shape the future of American society. As such, corporate personhood remains a critical issue in the struggle to define the limits of corporate power, safeguard democratic values, and ensure a fairer, more just society.
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