MarketWatch made a startling error when it reported last year that Amazon’s Climate Pledge, created as a corporate commitment to carbon neutrality, had secured signatories like Microsoft and Unilever. Amazon’s Climate Pledge is measured against (and competes with) the timeline of the Paris Climate Agreement, a treaty from which the United States notably began its process of withdrawal around the same time. In its report, MarketWatch described the Paris Agreement as a “voluntary . . . pact that includes major governments and private companies alike.” This is wrong. The Paris Agreement is a legal instrument of international law, signed and ratified by States alone. A company cannot be party to it.
Yet perhaps it is understandable that some might conflate “major governments” with “private companies” today. Merely contrast the impeachment proceedings against Donald Trump for his role in the insurgency at the Capitol—proceedings that are barely getting their procedural legs weeks into a new administration—with the immediate crackdown on his bully pulpit by social media companies. The latter’s decisiveness led to such headlines as: “How CEOs became the 4th branch of government.”
This blog post offers a modest provocation about the language we use to speak of corporations. Our jurisprudence directs us to describe them as legal “persons,” even as public discourse increasingly identifies them as acting more like governments. The contrast is timely since corporate purpose has reentered the spotlight. In 2019, the Business Roundtable, which is comprised of the CEOs of major American companies, released a statement emphasizing “a fundamental commitment to all of our stakeholders,” rather than the traditional profit-driven vision of shareholder primacy. Similarly, in 2020 the World Economic Forum updated its Davos Manifesto to declare: “The purpose of a company is to engage all its stakeholders in shared and sustained value creation.” Some C-suite leaders have contended that “business must have a purpose beyond profits, and that such purpose can, over time, benefit both stockholders and stakeholders.” All this marks a shift away from the “secular” approach to business, or business for business’s sake only.
And against the backdrop of this shift is a decade of Supreme Court jurisprudence, from Citizens United to Masterpiece Cakeshop, that has extended constitutional rights and protections to corporations by treating them as legal “persons.” The idea that a corporation is protected by the Bill of Rights has been met with popular pushback, as evidenced in book titles like Corporations Are Not People: Reclaiming Democracy from Big Money and Global Corporations. On the other hand, more recent books like Kent Greenfield’s Corporations Are People Too (And They Should Act Like It) suggest an encompassing idea of corporate personhood that includes citizenship—not only its privileges but also its civic and social responsibilities.
Such an expansion of corporate personhood should be met with hesitation. Although thinkers like Greenfield seek to reform the social role of corporations, employing the extended metaphor of citizenship might only further codify an already misplaced theory. Elizabeth Pollman’s scholarship has shown the corporate personhood theory to be, by various turns, an inheritance from disparate legal traditions and an accident of Supreme Court jurisprudence in applying those histories to our contemporary moment. If the personhood metaphor is not inevitable, we should not try to address our concerns with it by expanding it.
After all, citizenship implies some measure of equality, and large corporations are not democratically equal to human citizens. Citizens do not commit to matching or exceeding international treaty obligations like the Paris Agreement. Nor do they commit to human rights obligations. No citizen is a many-bodied workforce equaling the size of a major U.S. city. Unlike corporations, citizens are subject to the law’s forceful coercion, not only by fines but by imprisonment. Citizens require no internal governance structure to authorize contractual obligations, cannot limit the legal liability of parts of themselves, do not require an internal suite of leaders to make decisions, and cannot be acquired or merged into the bodies of other citizens. Indeed, each of these corporate qualities tends to suggest a different metaphor: the corporation as a commonwealth, a government, a miniature State.
The comparison is not new. In 1979, Ralph Nader and Mark Green described giant corporations as “tantamount to private governments.” They wrote:
One definition of “government” would be “an entity that can tax, coerce or even take life.” But what is price-fixing but corporate taxation? What is the poisoning of a Love Canal but coercing citizens to ingest industrial pollution? What is the willful marking of defective Firestone 500 tires but the needless taking of life? . . . [Our largest firms] can spend decisive amounts in elections, determine which towns thrive and which gather cobwebs, corrupt or help overthrow foreign governments, develop technology that takes lives or saves lives.
They went on to say that such power has resulted in two operational governments in our society, one political and the other economic. Only the former is democratically accountable to its constituents.
Moreover, the link between corporations and States is borne out in the early colonial history of the corporation. Some governmental structures—like the development of police powers along piracy routes or of comity for cross-jurisdictional recognition—ontologically link the early State to the early corporation. Indeed, some early corporations, like the English East India Company, were chartered to serve as de facto colonial administrations overseas. Other charters, like the Mayflower Compact, literally laid the groundwork for a new nation. Such corporations also founded cities that still stand today: Montreal by the New France Company, Jamestown by the Virginia Company of London, and Albany and New Amsterdam (now New York) by the Dutch West Indies Company.
One might say these are exceptions from a unique colonial period. Yet perhaps the massive reach of today’s tech industry is an exception from our own unique period. That a defeated President can cause a mass migration to media bubbles like Parler suggests that, even in the digital age, corporations govern a kind of “territory.” And lest we forget, the State itself is as much a legal fiction as the corporation, as illustrated by the ongoing struggles for recognition of modern States like Palestine, Taiwan, and Kosovo.
Now consider the relationship between a decline in government legitimacy and the rise in social corporate leadership. Spurred by the climate crisis, widening wealth gaps, and the indictment of industrial interests in exacerbating both, this decade has seen a spate of arguments rising to defend the “heroic” potential of capitalism, going so far as to claim that “only global corporations have the resources, global reach, and self-interest to build a better world.” These visions point to more than a partnership between business and government. Like Amazon’s Climate Pledge, they point to the inadequacies of government to solve the world’s problems. They point to corporations stepping in to fill that vacuum.
How far might such an ethos lead? I wrote last year about Hong Kong’s governance crisis, where the private sector has risen to meet the people’s needs in the face of an oppressive and non-representative government. One insight from the situation there is that if constituents cannot vote by ballot, they will vote with their wallets.
In the United States, one would do well to observe the corporate response to Donald Trump’s desperate refusal to acknowledge his electoral defeat, hindering an orderly transition of power. As early as three days after the election, top CEOs gathered in a secret meeting to talk “about what collective action would be necessary if they see an imminent threat to democracy.” The next day, the Business Roundtable extended their congratulations to the new President- and Vice President-elect. During the DealBook Online Summit, JPMorgan’s CEO called for a peaceful transition of power alongside the telling remark that “CEOs are being asked to do a lot of things today that they weren’t asked to do in the past.”
The crisis attended by corporate leadership might be less immediately obvious. For example, Impossible Foods manufactures “meat made from plants” for the sake of planet and climate. Of the animal agriculture industry, whose greenhouse gas emissions and land footprint are responsible for an “environmental catastrophe,” Impossible Foods founder Pat Brown has said that if he “could snap [his] fingers and make that industry go away,” he would do it “in a heartbeat.” But rather than act through government policy, Brown chose to solve the problem by creating a competitor industry, undertaking a “more subversive solution . . . [to] create products that compete successfully in the marketplace that are produced by animal farming.” He has used the word “subversive” elsewhere, too, stating that “the most powerful, subversive tool on earth is the free market.” Whatever your normative position on whether Impossible Foods should be the one to make an entire industry obsolete for the public good, it should at least give you pause to know that a private corporation would and in theory can do so.
As corporations increasingly grow into a role of ordering and regulating society, our jurisprudence is left far behind by continuing to apply a metaphor as inapt as personhood. This point may appear petty or pedantic. But we live by our metaphors; for example, they gird our cultural understanding of “arguments” by the use of words like “indefensible,” “attack,” “demolish,” “won,” “strategy.” Metaphors are systematic, determining and directing our cultural narratives. To unwittingly embrace an inapt metaphor would be to implant a tragic flaw where there need be none. If we acknowledged that corporations act less like persons and more like governments, we might engage and regulate them with more care, discussing constituencies and accountability rather than morality and citizenship, and we would be more closely attentive to both their power to harm and potential to solve.
Henry W. Leung: J.D. Candidate 2021, UC Berkeley School of Law and California Law Review Vol. 109 Associate Editor. The author wishes to thank Prof. Amelia Miazad and her Business in Society class.
Henry W. Leung, The Corporate Commonwealth: Reconceiving Our Metaphors for Business in Society, Calif. L. Rev. Online (Feb. 2021), https://www.californialawreview.org/the-corporate-commonwealth.