28 October 2011

Corporations As People?

I’m annoyed at myself! I’ve talked about corporate corruption on several occasions over the year I’ve been on blogging and videomaking, and not once have I brought up the point that corporations are granted special privileges based on the claim of personhood. The reason why I’m annoyed is because the amount of times that corporations are brought up by anti-free marketeers is too numerous to count. This leads to circular reasoning within argumentation, where governments are removed from the free market only for corporations to rise up as the new tyrants.

This is fallacious because corporations are a product of the state, and thus would naturally be removed along with the state itself. The reason for this is completely obvious given that corporations are not people, and it is a strawman to claim otherwise. Corporate personhood is simply a ruse for corrupt businessmen to escape punishment for immoral business acts like corporate crime. The list of criminality is long, and here are a couple of examples:
“General Motors, Standard Oil of California and Firestone Tire and Rubber, were convicted of purposely destroying eco-friendly inner-city rail transit systems in more than 100 US cities. The companies were each fined $5,000 and one executive was fined a dollar.”
“In July 2003 Xerox reported certain ‘improper’ payments totalling $700,000 from their Indian subsidiary to government officials.”
Corporate personhood has been very effective for amassing wealth since it was first introduced as far back as 1819. Naturally it is not really corporations that have amassed the power, but the ruling class – like politicians, oligarchs, or the corporate elite. The argument for corporations as people is what is called legal fiction, which is a term describing how a legal rule can be exploited in a manner that it wasn’t intended for, and in the case of corporate personhood this is done by extending the fourteenth amendment to a corporation. Thanks to this rule individuals are able to break laws and psychotically exploit society, facing no punishment due to the legal barrier the corporation provides – only the corporation can be held accountable for its business practices, as opposed to the individuals that make the decisions in the company.

This leads to further fallaciousness, by anti-free marketeers, regarding what would happen without the state to regulate the market - and so the perpetual cycle of the state “helping” the citizen through regulation continues. But in truth it is the state that primarily uses the corporation for its own ends – for it is a useful tool to control the masses while funnelling wealth and revenue to the ruling class.

Like the corporation the state is also legal fiction given that it fully absorbs us into legal and social processes, literally creating a strawman version of our identity from the second we are born. This identity is no more real than the tooth fairy, and by repeatedly accounting for this via our signature, appearance in court, or by generally acknowledging our subservience to the state, we are dragged further into this illusion, like being walked through a hall of mirrors:

Why on earth would we do this? As though the answer is not obvious! The state holds all the power through the police, courts, military, and all other forms of coercion, and thus if we do not obey we are assaulted. We basically have no choice but to obey if we wish to escape punishment, though this makes the authority of the state no more legitimate. Corporations and states are fictional ideas – they are not real! They have no basis in objective reality, and they are only empowered by us. Corporations and states are not born – they are not a product of Mother Nature. So how could they exist without fiction? The answer is they can’t! So for all those who keep talking about corporations taking over the world in a free market, or gaining a monopoly without the state, or any other similar manner of nonsense, they need to start critically analysing exactly why the corporation has so much power to exploit us – and yes, it is the state that is the source.

Despite how, by any stretch of the imagination, it is abundantly clear that corporations are not people, this doesn’t stop politicians saying otherwise, like Mitt Romney:

Romney claims that corporations paying taxes makes them people. Really? Does the fact that houses are liable for state or council taxes make them people too? Of course not, because people pay the taxes that the state requires for owning a house. Likewise, directors and shareholders own a corporation, and thus pay taxes required by the state for the corporation’s existence. It makes me despair that anyone has to go through the effort of exposing such logical inconsistency, but sadly this is where statism has led us.

In spite of this explanation I’m sure there are still those who would argue how corporations would dominate a free market, or that the corporation is responsible for exploiting the economy – but they are nothing to do with a the free market, and thus cannot exist without the state or legal fiction! Corporation destroy choice, leading to the monopoly that suppresses free market forces. A good reputation, which would be highly prized in a free market, is also unnecessary to uphold when the state protects the corporation, especially when the public lacks consumer choice or legal standing.

All of this is thanks to statism, which is an inherently monopolistic concept. Absolute power corrupts absolutely, and this is why the very idea of a state existing to restrict power and monopoly is ludicrous. How on earth could giving so much power to one entity restrict power or create choice? - The state is the epitome of power and monopoly! There is no force with a bigger monopoly than the state - period, and anyone who thinks otherwise needs to wake up.

This is RockingMrE - over and out!


  1. It's interesting how the phenomenon of individuals in positions of power abrogating personal responsibility by hiding behind a corporate or collective identities has become so prevalent. I wonder what effect it would have on their decision making if they're subject to personal liability. Would Gordon Brown have been more careful with the nation's economic fate if he've been wary of the prospect of facing the Ceausescu sanction?

  2. Max Weber defined the state is the social entity enjoying the monopoly of "legitimate" violence. Abolish the Army, police and prison system, and the state disintegrates.

    The law of corporations evolved out of the medieval law governing the lord-serf system, and later law governing the master-servant relation. A master is legally responsible for the actions of his servants. The master can discipline his servants, but cannot evade responsibility for misdeeds by pointing to the servants who were allegedly responsible. Trouble is, a corporation can pay a fine, but cannot do prison time.

    Corporations emerged out of a desire by capitalist entrepreneurs for limited liability. The owners of a corporation cannot do worse than have their shares become worthless. If a corporation incurs debts, or is found liable for an amount, it cannot pay, the creditors have no right of recourse over the shareholders. No one would buy shares if shareholders were jointly and severally liable for the misdeeds of a corporation. It is too difficult for shareholders to monitor the internal actions of corporations. The only people willing to be business owners would be people with executive authority and intimate knowledge of the business. Meaning that all businesses would be closely held as proprietorships or partnerships, the situation before the 1850s.

    Limited liability emerged around the North Atlantic as a way to encourage the entrepreneurship the Industrial Revolution required to thrive. It was then thought that raising capital by issuing shares was important. We now know that that is not the case. The main role of the sharemarket is to make hostile takeovers possible, and to reward or punish the managing directors and other ultimate decision makers, by linking executive compensation to the share price.

    I am surprised that the 1984 incident at the Bhopal plant owned by Union Carbide did not lead to more reflection on the nature of the modern corporation and its ultimate liability for its misdeeds. Something like 10-20,000 people died as a result of that incident, far more than have died from any nuclear accident. All I know is that Union Carbide has ceased to exist.

    1. Interesting points yet again. I like the way you expanded into discussing the stock market. I am starting to wonder myself if there is any true purpose for a stock market in the present climate. Perhaps without state intervention it would become something useful.