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Corporations Are People, Too?

July 27, 2009 9:17 PM

Unlike Mike, I cannot say that I disagree with everything Mike says in his post. In fact, I agree with much of it. I do disagree with a few crucial points, however. Mike's entire first paragraph seems unobjectionable to me with the exception of one word. Corporate employees acting within their agency role are indeed acting on behalf of their principals. But their principal is not the corporation. Their principals are the shareholders who own the corporation. Their fiduciary duty is to shareholders, not to the corporation, which is a legal construction and not a real entity. This is not a semantic quibble on my part. As long ago as 1935, Felix Cohen was warning us about the danger of reifying abstract legal concepts in general and the concept of the corporation in particular. (See Felix Cohen, Transcendental Nonsense and the Functional Approach, 35 Colum. L. Rev. 809 (1935).) In my opinion, this tendency to treat corporations as real entities is responsible for much of the confusion about and support for corporate criminal liability.

I probably only disagree with one word of Mike's second paragraph as well, in this case, the word is 'morally.' Mike asks, "does it make any sense to say that it is not a "morally responsible agent" when its contract breach costs taxpayers millions of dollars or its poorly designed automobile blows up on impact and kills innocent people?" Yes, indeed it does. It may not make sense to ask whether a corporation is a legally responsible agent for purposes of such contract breaches or torts, but it certainly makes sense to ask whether the corporation is a morally responsible agent. Because it is not.

There is nothing logically offensive about the concept of vicarious legal liability. But there can be no such thing as vicarious moral responsibility. Moral responsibility applies only to intentionally acting agents who are causally responsible for producing certain consequences. Corporations are not morally responsible agents because 1) corporations are not agents, 2) corporations are not causally responsible for the actions of their employees, and 3) corporations do not act intentionally.

Corporations are not agents because they are not real entities. (This is the Transcendental Nonsense stuff again.) We speak as though corporations act rather than human beings because it is convenient and useful to do so. But we should not be misled by our semantic conventions into reifying the corporation. There is no "thing" there. There is only a complex set of relationships among a wide flung group of human beings.

Corporations are not causally responsible for the actions of their employees because corporations do not act, only people do. Corporations can exert causal influences on its employees in the sense that individuals in groups can get each other to behave in ways that none would if acting alone. But this effect is fully explainable in terms of the interior desires and beliefs of the individuals in the organization that lead them to behave as they do. There is no need to postulate "some kind of ghostly organizational spirit that is present in the organization and that somehow exerts external pressures and forces on its members." (See Manuel Velasquez, Debunking Corporate Moral Responsibility, 13 Bus. Ethics Q. 531, 544 (2003).)

Corporations can be said to act intentionally only in a metaphorical sense. We often attribute purposes or beliefs to groups on the basis of a pattern which the activities of its members exhibit. But this does not mean that the group has real intentions in a literal sense. We frequently speak of markets as "trying" to find a bottom, but that does not imply that the market is literally capable of intentional action. With no corporate brain in existence, a corporation is incapable of acting intentionally in a literal sense.

Why make a big deal over moral as opposed to legal responsibility? It makes no difference with regard to the assignment civil liability. As Mike points out, there are quite good reasons for holding corporations liable for breach of contract or tortuous actions. I can easily justify respondeat superior liability in tort. The reason lies in Mike's own question "Is there something different about criminal law that would lead us to a different result?" The simple answer to this is not no, but yes. Criminal responsibility is different in kind from civil liability. Criminal responsibility is concerned with punishment, not the proper adjustment of benefits and burdens among the members of society. And punishment requires blameworthy action. Human being can behave in a blameworthy way. Fictitious legal constructs cannot. Vicarious moral responsibility is an oxymoron. That is why there should be no corporate criminal liability despite the fact that there can be corporate civil liability.

In pursuing this line argument, I am probably doing a disservice to the reader by focusing on such a philosophical point. So, for purposes of our continued exchange, let me abjure further reliance upon it. Even if there were some sense in which moral responsibility could be attributed to corporations, criminal punishment would still be unjustified because it is improper to punish those who are innocent of wrongdoing, and punishing corporations as opposed to the individuals who commit the offenses does precisely that.

 

 

 

FEATURED DISCUSSION ARCHIVE:


Obamacare Decision: Reactions, July 2012
Law School Faculty Diversity, May-June 2012
Class Actions, May 2012
Constitutionality of Individual Mandate, March 2012
Human Rights and International Law, February-March 2012
The constitutionality of President Obama's recess appointments, January 2012
Do caps on medical malpractice damages hurt consumers?, December 2011
Trial Lawyers Inc.: State Attorneys General, October 2011
Wal-Mart v. Dukes, April 2011
Kagan Supreme Court nomination, May-June 2010
Election roundtable, November-December 2006
Who's the boss, September 2006
Medical judgement, July 2006
Lawyer Licensing, May 2006
Contingent claims, April 2006
Smoking guns, July 2004

Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.