Document Type

Article

Publication Date

2024

Abstract

Scholars often use the theories of corporate personhood—aggregation theory, concession theory, and real entity theory—to justify corporate rights through analogy. That is, theories of corporate personhood attempt to explain what rights corporations ought to have based on what kind of person the corporation is like. If corporations are like individual human beings, then corporations should enjoy all the same rights that human beings do. If corporations are like states, then corporations should owe the same obligations that a state owes its citizens. Of course, many scholars have addressed the weaknesses of this kind of analogical reasoning. As Dewey argued long ago in the Yale Law Journal, the analogies suggested by the theories of corporate personhood are imperfect. Corporations are different than human beings and states. Perhaps more importantly, however, the theories of corporate personhood do not, on their face, answer what rights individuals ought to have or what obligations a state must undertake. Without these answers, using the theories of corporate personhood to define and delimit the rights of corporations is fruitless. As a result, many scholars favor a functionalist or instrumentalist approach over the theories of corporate personhood. What matters, according to these scholars, is not so much what a corporation is. Instead, what matters is how the ascription of legal rights to corporations impacts human beings, who have indefeasible claims to legal and constitutional rights. The theories of corporate personhood have very little to say about the latter. Rather than reasoning by analogy, as theories of corporate personhood might suggest, a functionalist or instrumentalist approach would have us jettison questions about what corporations are and what kinds of persons they look like. Instead, they would have us embrace questions about how corporate legal rights might obstruct or vindicate the rights of human beings.

In this Article, however, I argue that scholars are too quick to reject the utility of using theories of corporate personhood to justify corporate rights. The theories need not be used as analogies. Instead, after appropriate modification, they can be understood as arguments that provide compelling reasons to reject, embrace or modify the legal rights ascribed to corporations. Each responds, in its own way, to the unique challenges and opportunities that corporations present to human freedom. For example, the aggregation theory recognizes that corporations can serve individual autonomy rights in the marketplace. The real entity theory suggests that human freedom is sometimes best vindicated through organized social relations. The concession theory admits that corporate rights at least sometimes violate the equal and conflicting rights of those who interact within and around the corporation.

To make the theories of corporate personhood useful, however, they require some conceptual modification. Namely, they must be cleansed of the misguided ideological and ontological assumptions that ground them. Those assumptions must first be identified and then excised. Accordingly, this Article argues that the theories of corporate personhood present the question of corporate rights as a series of conceptual dichotomies. Ontologically, the theories of corporate personhood categorize corporations as either public or private. Normatively, they force a choice between positive law and morality and between rights and democracy. Specifically, aggregation theory suggests that corporations are private and protected by pre-political natural rights that are antithetical to democratic regulation. The concession theory, on the other hand, suggests that corporations are public and legitimate expressions of sovereign authority that are antithetical to individual rights. Finally, the real entity theory holds that corporations are private entities that supply their own legitimacy that may enforce norms antithetical to both rights and democracy or both.

The Article next explains why these conceptual dichotomies present false choices. Contemporary understandings of constitutional liberal democracy do not divide the world into two distinct ontological spheres. What counts as “public” and what counts as “private” is the conclusion of a normative argument about the proper scope of rights, not an assumption from which arguments about rights begin. Further, constitutional liberal democracy does not outsource its normative authority. It is designed in a way that ensures that citizens never need to choose between transcendental norms and positive law. In fact, liberal constitutional democracy was specifically designed to avoid politicizing our deeply held but inconsistent ethical values. Finally, constitutional liberal democracy holds that rights and democracy aren’t antithetical, but co-original: democratic citizens are meant to help shape their own rights. By participating in the democratic process, citizens play an equal role in creating the rights that they give themselves.

After diagnosing and resolving these conceptual mistakes, I show that theories of corporate personhood provide a useful framework for considering whether corporations merit legal and Constitutional rights. Aggregation theory reminds us that corporate freedoms often serve individual freedoms. Real entity theory reminds us that those freedoms are often enjoyed by human beings as they associate together. Finally, concession theory reminds us that democratic citizens have a right to shape their shared political, social and economic life. Concession theory also counsels that it is democratic citizens themselves, not delicate “philosophies of the subject” or transcendental liberal norms, that must shape their legal and constitutional rights. Thus, the theories of corporate personhood offer a framework for courts and citizens alike as they decide the rights that corporations ought to possess. The Article concludes by offering a balancing test that courts might use to accurately identify, assess, and weigh all the individual rights challenged or vindicated by corporate rights. Even if rights are best constructed by citizens themselves, courts may at least ensure that none of these rights are occluded in judicial analysis.

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