Corporate Rights and Property Rights are Human Rights: Why it’s a Mistake to Conflate a Right with the Means Used to Exercise it
Ilya Somin • January 21, 2010 8:28 pm
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:
[T]he dichotomy between personal liberties and property rights is a false one. Property does not have rights. People have rights. The right to enjoy property without unlawful deprivation, no less than the right to speak or the right to travel, is in truth a “personal” right.... In fact, a fundamental interdependence exists between the personal right to liberty and the personal right in property.
When I criticize decisions like Kelo v. City of New London, the objection is not that government has violated the rights of land or buildings, but those of the people who own them.
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.
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Should People Acting through Corporations be Denied Constitutional Rights Because Corporations are “State-Created Entities”?
Ilya Somin • January 22, 2010 4:52 pm
One of the standard arguments put forward by critics of the Supreme Court’s decision protecting corporate political speech in Citizens United is that people aren’t entitled to constitutional rights when they use corporate resources because corporations are “state-created entities.” If the state can create an entity, it supposedly also has the power to define its rights any way it pleases. This is slightly different from the argument that people using corporate resources don’t deserve constitutional protection because corporations aren’t “real people.” But it has many of the same weaknesses, and some additional ones as well.
I. Media Corporations are “State-Created Entities” Too.
The first problem is that, like the “real people” argument, it applies to media corporations as well. On this view, the government would be free to censor the New York Times, Fox News, the Nation, National Review, and so on. Nearly every newspaper and political journal in the country is a corporation. If the Supreme Court accepted this view, it would have to overturn decisions like New York Times v. Sullivan and the Pentagon Papers case.
II. The Impact on Other Constitutional Rights.
A second issue is that this logic applies not only to corporate free speech rights, but to all other constitutional rights exercised through the use of corporate resources. If people using state-created entities don’t have free speech rights, they don’t have any other constitutional rights either. After all, the supposed power to define the rights of state-created entities isn’t limited to free speech rights. Thus, government would not be bound by the Fourth Amendment in searching corporate property (including employee offices). It could take corporate property for private use without paying compensation because the Fifth Amendment would no longer apply. It could forbid religious services on corporate property (including that owned by churches, most of which are after all nonprofit corporations). If the Free Speech Clause of the First Amendment doesn’t apply to corporate property, neither does the Free Exercise Clause. And so on.
III. Nearly Everyone and Everything is Probably a “State-Created Entity.”
Third, it’s important to consider what is meant by “state-created entity.” If the term refers only to institutions that literally would not exist absent state authorization, it does not accurately characterize many, perhaps most corporations. If the federal government passed a statute abolishing corporate status tomorrow, most actual corporations would still exist and still continue to engage in the same business or nonprofit activities. They just would do so under different and perhaps less efficient legal rules (maybe as LLCs, partnerships, or sole proprietorships). But they wouldn’t all just collapse or go away. There would still be a demand for most of the products produced by corporations.
If “state-created entity” doesn’t refer to the mere existence of organizations currently defined as corporations but to the particular bundle of legal rights currently attached to the corporate form, then it turns out that virtually all other organizations are state-created entities as well. Universities, schools, charities, churches, political parties, partnerships, sole proprietorships, and many other private organizations all have official definitions under state and federal law. And all have special government-created privileges and obligations that don’t apply to other types of organizations.
Even individual citizens might be considered “state-created” entities under this logic. After all, the status of “citizen” is a government-created legal entitlement that carries various rights and privileges, many of which the government could alter by legislation, just as it can with those of corporations (e.g. — the right to receive Social Security benefits, which the Supreme Court has ruled can be altered by legislation any time Congress wants). In that sense, “citizens” are no less “state-created” entities than corporations are.
So government could enact laws requiring citizens to limit their political speech in exactly the same ways in which corporate speech can be limited (or at least condition their continued status as citizens on obedience to the government’s censorship rules). It’s true, of course, that the physical person who has the legal status of “citizen” would still exist even if that status did not. But the physical property and other assets of the legal entities known as corporations would also continue to exist if corporate status were abolished. Indeed, as noted above, many of the entities themselves would also continue to exist under different legal forms. Perhaps you want to argue that native-born citizens aren’t “state-created” entities because the Constitution requires that they be granted citizenship at birth. If so, naturalized citizens are still “state-created” since Congress has the discretion to decide which if any foreigners will get citizenship rights.
By now, the main point should be clear. If you define “state-created entity” narrowly, then it won’t include most corporations. But if you define it broadly as any legally defined status that carries government-granted rights or privileges, then pretty much every important private organization is a state-created entity. Individual citizens may be “state-created entities” as well, and naturalized citizens certainly are. Going down this road would destroy constitutional rights for just about everyone. That may be why even the liberal justices most enthusiastic about campaign finance regulation have been unwilling to really bite this particular bullet. True, Justice Stevens’ dissent does note that “A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it.” Yet even Stevens stops short of stating that this by itself proves that corporations don’t have free speech rights. I doubt that Stevens and the other liberal justices are willing to really follow that logic. For example, they’re not going to overrule New York Times v. Sullivan or conclude that the government has the power to search corporate property unconstrained by the Fourth Amendment. Yet that is where the “creature of law” argument inexorably leads. The better approach is the common sense conclusion that people are entitled to full constitutional rights whenever they use their privately owned resources to exercise them, whether those resources are legally assigned to “state-created entities” or not.
UPDATE: I should clarify that in this post, as before, I’m not arguing that corporations themselves are “persons” with constitutional rights. Rather, I’m asserting that their owners and employees are such persons and that that status enables them to use corporations to exercise their constitutional rights. Similarly, partnerships, universities, schools, and sole proprietorships aren’t people either. But people can use them to exercise their constitutional rights, and the government can’t forbid it on the sole ground that they are using assets assets assigned to “state-created entities.” This distinction was unfortunately obscured in the current post by my shorthand references to “corporations’” rights. I only used that terminology because it’s cumbersome to always write something like “people exercising their constitutional rights through corporations.”
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JoeSixpack says:
It’s been a while since I took corporate law but I am pretty sure that ultra vires actions by a corporation are not crimes that are punishable by force of government.
I find Prof. Somin ‘s argument compelling and am not convinced by the dissenters attempts to dance around the other constitutional rights that we tend not to question when applied to corporations. Certainly corporations (through their owners) have a right to remain silent, right to counsel, due process, search & seizure, etc. Even on the media corporation point, my initial thought was that these entities can hide behind freedom of the press even if they don’t have freedom of speech, but there is no reasonable basis to say that entities have some constitutional rights but not others. If the government CAN restrict the freedom of speech of corporations, it also CAN restrict freedom of press and all other constitutional rights.
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Ilya Somin says:
...If, on the other hand, you want to argue that the power to constrain state-created legal entities relates to the exercise of some constitutional rights but not others, you must explain which ones those are, especially since the COnstitution itself nowhere mentions any such distinction. And even if free speech rights are the only ones that can’t be exercised through state-created entities, that still leaves the problem of media corporations.
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Ilya Somin says:
But isn’t there at least an argument that media corporations are accorded separate treatment in the text of the First Amendment? For First Amendment purposes, the NYT, Fox News, etc., are (or were, at any rate) collectively referred to as “the press” (regardless of the exact medium), and the Constitution specifically protects “the press” from Congressional interference: “Congress shall make no law ... abridging the freedom ... of the press.”
THere is such an argument, but it’s wrong for reasons that I discussed in this post. If media corporations don’t have free speech rights because they are state-created entities, they don’t have “press” rights for exactly the same reasons. The right to freedom of the press is not a right extended to a particular group of people (such as “the media”). It’s a right of all people to engage in particular set of activities (such as publishing newspapers).
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