Corporate Rights and Property Rights are Human Rights . . . .

In my last post, I explained why it’s a mistake to deny free speech rights to people organized as corporations on the grounds that corporations aren’t “real people.” It’s true, of course, that a corporation is not a person. But the people who own and operate it are. “Corporate speech” is really just speech by people using the corporate form.

The mistake here is one we see in other contexts. Critics often denigrate rights by conflating them with the means used to exercise them. For example, a standard rhetorical attack on property rights is the claim that property rights aren’t really “human rights.” Property has no rights, it is said. Its true of course that property as such is not entitled to any rights. However, property rights actually belong to the people who own the property, not the physical objects themselves. As the Supreme Court explained in its 1972 decision in Lynch v. Household Financial Corporation:

This rhetorical tactic is most often used by liberals and leftists to criticize rights advocated by conservatives and libertarians. However, it’s important to understand that the same ploy can easily be turned on rights favored by the political left. Consider, for instance, the right to use contraceptives upheld by the Supreme Court in Griswold v. Connecticut. Contraceptives, after all, have no rights. They are inanimate physical objects, like any other property. Under the Connecticut law banning their use, women were still free to avoid pregnancy (e.g. — by abstaining from sex, or by using the rhythm method). They just couldn’t use this particular type of property to do it. It’s easy to see that any such critique of Griswold would be specious. After all, contraceptives are just a means that women use to exercise their rights to reproductive choice, albeit a particularly effective one.

The same point applies to corporate speech and property rights. When corporations “speak,” they are just a means that individuals use to exercise their rights of free speech — often a more effective means than the available alternatives. And just as the right protected in Griswold actually was a human right rather than a right belonging to the contraceptives, property rights are rights of human owners, not rights belonging to tracts of land or objects.

Abjuring this common rhetorical tactic doesn’t by itself resolve longstanding debates over the scope and content of human rights. You can still attack property rights or corporate free speech rights on other grounds. But it does help focus the discussion on real issues and reduce rhetorical distractions.

You are still not quite getting it. There are NO CORPORATE RIGHTS, just HUMAN RIGHTS ~ mine to be specific, and if you mess with my stuff (I own shares in numerous coporations) you are messing with me.

muawiyah, I agree that, if you own the controlling interest in a stock company whose officers you can thus summarily appoint or dismiss at will, or if you have enough proxy votes to obtain a seat on the Board of Directors, that company might fairly be regarded as a "projection" of your personality, and its policies, methods, short-range goals, and day-to-day actions as expressions of your views, opinions, and judgments.

But in the case of large companies listed on the Stock Exchange, the tens of thousands of small investors who own stock in them, and who can participate in annual stockholders' meetings, during whieh they can vote on selected issues and choose from a short list of candidates for a handful of executive positions, have no real "say" in the companies' operation. At least, they have no influence on (and probably not even actual knowledge of) a given company's support (lobbying) for, e.g., certain candidates for political offices in other states. The retail investors do not have the resources to actively follow the company's handling of, e.g., law suits for the clean-up of contaminated sites in New Jersey, the company's patent violations in another country, the company's perhaps legal, but ethically debatable practices regarding the use of bribes in some Middle Eastern principality where it wants to negotiate contracts, etc.

The small investors are so far removed from the positions of power, and have so little understanding of the company's inner workings, that the company cannot be fairly regarded as even the reflection of a shadow of the small investors' motivations, convictions, and judgments.

It may be hyperbole, but I dare say that even the Soviet Union was a fairer representation of the will of "the People" than, e.g., General Electric is of the will of the tens of thousands of small investors who have entrusted their money to it.

It is simply farcical to assert that your typical company listed on the NYSE is accountable to "the owners" in any meaningful way. When G.E. subtlely influences the outcome of democratic elections or the passage of bills in Congress, I dare say that often times a majority of the stockholders would be appalled by the company's stance.

Most retail investors know that they should be happy if they get a decent return on their investment, and have no illusions about expressing their political will through the company.

Regards,

You are asserting claims that should be accompanied with specific numbers. Like exactly how small must a minority stockholder be before he or she can have NO influence in the corporate affairs? Give me numbers.

Look, muawiyah, I don't claim to be an expert of jurisprudence, nor am I a financial "whiz." And, frankly, your latest question puzzles me. What if I did provide you with some "specific numbers:" Do you have some algorithm into which you could then "plug" them in order to deliver some sort of "score" or "probability value," or any other number on the basis of which you could judge my "claims." (And, actually, the word "claims" is a bit much; I would prefer to refer to my statements as enlightened suppositions.")

I should have thought that my frequent references to the "typical small investor" or "most retail investors" would have been clear enough. By that, I meant your "average joe," e.g., a married couple, both in their fifties, with their mortgage nearly paid off, kids grown up, etc., and with maybe $50,000 in liquid funds which they have, sensibly, invested in a diversified manner, i.e., they own perhaps $5,000 of G.E., $5,000 of United Technologies, $5,000 in an Emerging Markets mutual fund, $3,000 in precious metals mining companies, $10,000 in employees' stock (I'm assuming that the guy works for a company which enables him to purchase company stock at reduced rates), and the rest in long-term corporate bonds.

(Nota Bene: I'm by no means asserting that that is an optimal mix of asset classes, I'm just saying that it might be typical.)

So, now that I've "laid my cards on the table," what would you like to say about the amount of influence which these small investors might actually have upon corporate affairs?

(Oh, and let's also suppose that the married couple both have high school diplomas, and that they spend roughly 6 hours a year reading the Annual Reports sent to them from the companies in which they have stock, and maybe another 24 hours a year online reading articles specifically about the companies in which they have invested. This is to establish how educated and informed they are, and thus the extent to which they are capable of making truly rational, informed decisions and choices when it comes time to cast their votes at the Annual Shareholders' Meeting, or when it comes time to sell their stock because they see the company taking politically undesirable actions.)

Regards,

There are laws regulating stock corporations. A single stockholder with a single share has some rights so he can influence the organization to one degree or the other ~ depending on his intelligence and his access to counsel, or interest in doing so.

Your statement seemed to write off minority stockholders and that's just wrong. If they don't want an active part they don't have to be active.

There are also Partnerships ~ and you have partners with different percentages of the business. These things are corporations. And there are non stock non profit corporations, e.g. your typical church, Boy Scout troop, HMO, hospital, and so on.

The ways individuals influence the behavior of those sorts of corporations can vary.

Not everybody who is part of a corporation is an investor! Not every corporation has investors. Not every investor puts his money in a corporation.

The members of the USSC understood this.

You asked me for specific numbers - implying that numbers could matter - I then gave you specific numbers, and then you said that the numbers don't matter, since even a "single stockholder with a single share has some rights so he can influence the organization to one degree or the other." (A fact that I never denied.)

I guess now that we are merely quibbling about how much influence really matters.

I feel that current corporate law pertaining to how stockholders' meetings are held, what constitutes a "blocking minority interest" (sorry if that's not the right phrase; the German expression is "Sperrminderheit"), what constitutes a majority, who is eligible to take the floor, submit proposals, etc. - combined with the turgid informational style of most Annual Reports - make them a mockery of the democratic process. As a result, a retail investor holding a single share of a total of, say, one hundred thousand shares, has less "voice" than a single citizen voting in a municipal election of a mid-size city with a population of 100,000.

Consequently, I feel that it is wrong to accord stock companies equivalent civil rights as actual human beings possessing a "moral sense," since there is no undistorted, undiluted "will" of the individual stockholders "backing" the company.

The U.S. obviously does not have a direct democracy (and I'm not arguing that it should), but stock companies are much, much less democratic. I therefore feel that it would be improper to accord such "legal constructs" rights on a par with those of full-fledged citizens.

Not everybody who is part of a corporation is an investor! Not every corporation has investors. Not every investor puts his money in a corporation. [...] There are also Partnerships ~ and you have partners with different percentages of the business. These things are corporations. And there are non stock non profit corporations, e.g. your typical church, Boy Scout troop, HMO, hospital, and so on.

Thanks, muawiyah. I know that I said that I was no legal expert or financial whiz, but those facts were known to me. My objections about according "legal entities" rights comparable to those of actual human beings were focussed on the typical large stock companies listed on stock exchanges. At no time did I mention anything but stock companies. I think that it was obvious that I wasn't referring to, e.g., the Boy Scouts.

Regards,

Here's my take on the issue.

If the government restricts my speech by threatening to take one of my other natural rights, or by threatening to take property that I rightfully own (such as imposing a fine), then the government has violated my rights. In this situation the government leaves me worse off since I MUST choose between my right to free speech and something else that rightfully belongs to me.

However, if the government offers me a special privilege, and requires me to accept speech restrictions as a condition of using this special privilege, then my rights are not violated if I choose to accept the privilege and the conditions attached to it. This is just a bargain between me and the government. If I don't want the speech restrictions then I can choose not to accept the special privilege. This doesn't leave me worse off, since the special privilege is not rightfully mine in the first place.

No one has a natural right to avoid paying debts or making restitution (assuming solvency). And that is essentially what the state grants to those who incorporate - a limitation on personal liability that ordinary citizens and other business entities do not enjoy. Therefore, the liability protection offered by the government to those seeking to incorporate is a privilege, not a right. As a government-provided privilege, the government can require conditions (such as campaign contribution limits) for its use without violating anyone's rights.

Of course, even if a government action doesn't violate rights it may still be impractical or dangerous. If the government started quietly building prison camps all across the country it might not be violating anyone's rights with the construction itself, but it's still something we shouldn't let the government get away with. Corporate campaign contribution limits may fall in this category; not a violation of rights by itself, but still a very bad policy for other reasons.

I know I'm being very nit-picky here, but I think a correct understanding of rights is critical for promoting liberty.

I should also mention that it might be a rights violation if the government grants a privilege and imposes conditions for its use AFTER the privilege has been accepted. For that reason, I think imposing speech restrictions on corporations incorporated before the campaign finance laws were passed could be a rights violation.

I'd be interested to hear both of your thoughts.

Since the right to contract is elemental, and named in the Constitution, it can't be bargained away.

The advantage of limited liability is that of the government ~ the only privilege element is that which is lent to corporations and their constituent parts, and there are a variety of legal arguments about who gets to do what to whom with which ~ with almost infinite variation.

So, what is the value of limited liability to the government? Well, there's the matter of prisons ~ fewer are needed. Plus, people are encouraged to invest surplus to bring prosperity to everyone.

Since the right to contract is elemental, and named in the Constitution, it can't be bargained away.

I'm confused. The bargain I mentioned involved the right to free speech, not the right to contract.

And it seems like such rights are bargained away regularly in our society. As a condition for my continued employment, my employer can demand that I not talk politics or conduct outside business while on the job. So why can't the government demand, as a condition for continued liability protection in the corporate form, that I not make certain kinds of campaign contributions while using the corporate form?

The state isn't even asking me to permanently abandon my right to make campaign contributions. It's only asking that I restrict those contributions I make while operating through the corporate form.

In any case, if it's MY right to free speech/contract, shouldn't I be the one to decide whether or not I can bargain it away?

So, what is the value of limited liability to the government? Well, there's the matter of prisons ~ fewer are needed. Plus, people are encouraged to invest surplus to bring prosperity to everyone.

I'm not sure what you mean here.

Are you suggesting that the special liability protections enjoyed by those who incorporate are NOT privileges granted by the government, but rather are due to the shareholders by natural right?

You have it backwards ~ as the USSC just said.

Your employer may well be in violation of the law if he suppresses your speech "at work" (which is a lot of stuff, not just, sitting at a desk ~ it includes lunch and breaktime)

Your post has set me to thinking that the repercussions of this decision may extend far beyond the narrow range of what corporations can contribute to political speech in various forms, but also the degree corporations can control the speech of their employees, customers, suppliers and so on.

This could become a cottage industry ~ and in the end, reduce corporations to exercising control over nothing more than copyrighted or patented material.

America did quite well in using democratic forms of government BEFORE adopting fascism in its guise as campaign finance reform.

muawiyah, It would interest me to hear your thoughts about restricting the civil rights of stock companies, some of whose stock is held by foreigners. Should stock companies incorporated in the U.S., but owned in part by foreigners, be subject to more restrictions than stock companies owned exclusively by U.S. citizens.

I mean, you've written passionately about how you would feel were the government to restrict your rights (to Free Speech, etc.) by limiting the lobbying privileges of corporations - but you are, I am supposing, a U.S. citizen.

But how would you feel about the U.S. government limiting the rights of stock companies, 51% - 49% - or 24% of whose shares are held by foreigners living abroad?

Regards,

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