Home > Uncategorized > Hobby Lobby and the Muddled Thinking of Corporate Personhood

Hobby Lobby and the Muddled Thinking of Corporate Personhood

Today much of the chatter is on the Hobby Lobby case going before the supreme court.  I don’t want to go too far into the case itself–I’ve made my views on corporate person-hood known already–but I do want to explore why it is that some very smart people keep insisting on corporate person-hood. The impetus for this post comes from this interview of Andrew Abela (dean of CUA’s business school) from the Klein-less Wonkblog.

To quote Abela in what I think is the key graf:

Here’s the thing. If the purpose of a firm, as I mentioned, is to do some good for some defined group of customers, then there’s a vast range of possibilities for the “good” that a particular firm can pursue, and it’s not unreasonable to think that some of these will be inspired by religious values (think of a kosher deli, or a halal butcher) or other moral values (say Tom’s Shoes, or Patagonia). This is what Hobby Lobby seems to be trying to do—to run their company in accord with a Christian view of what is good.

He also makes clear throughout that his view of Corporate Person-hood is in contrast to Milton Friedman’s view that the purpose of a firm is to maximize profits.  Let me go through this carefully (my last post on this was a little muddled).

Property Rights vs. Individual Rights

Miles Kimbel may be a better illustration of the mistake I see here.   To quote him:

There are two potential meanings of this statement, and I want to agree with both: 


1.   When the government taxes a corporation, the tax ultimately falls on some human being.

2.  When a corporation makes a decision, some set of human beings is behind that decision, and they are morally responsible for that decision.

So the  argument seems to be: 

  1. Corporations have social responsibilities such as taxes.  (As well as property and contract rights, implicitly)
  2. People have social responsibilities such as taxes.  (As well as property and contract rights.)
  3. And there are people who run corporations (hence those people are the corporation…?)
  4. Ergo, corporations are people.
  5. Hence, corporations have all the rights that people do.

In my last post on this topic, I really focused on debunking  #4 and #5, only briefly mentioning the problem I have with #3.   Basically, it does not follow from the fact that corporations have some rights that it necessarily must have others… the logic of {Property rights, contract rights} => Person-hood => {Political rights (i.e. free speech, political association), religious rights} is obviously fallacious.  The logic is flawed in both steps!  Individual rights are obviously a larger set than the traditional economic rights afforded to corporations, so why use them to justify full person-hood?  Then, even if I were to concede the first implication and call a corporation a person , it is clear that that corporation is not a person in the sense that I am… I can vote and go to prison, I can pray or I can not.   So how is it that person-hood-in-this-sense could convey religious or political rights?  You’ve already conceded that the corporation doesn’t have political rights by not extending sufferage to it.

What is the Objective (function)?

So why is it that smart people continue to make this argument?  Dr. Abela made me realize that the mistake is probably in misunderstanding #3.

In particular, I think that there is a widespread tendency to conflate the corporation’s interests and decisions with the decision-maker’s interests and decisions within the corporation.  

So, Abela is arguing that an objective function other than profit-maximization implies person-hood.   Forget for the moment that a person can have profit-maximization as their personal objective in life… Shouldn’t the objective function of a corporation (or an individual for that matter) have no bearing on the constitutional rights of that corporation or individual?  To be otherwise would be the worst kind of thought-police, even if your motives are good.  The same goes for investors whose objectives may not always be purely monetary.

If Elon Musk wants to blow, say, B$1 of investor money on a new–unlikely to succeed–flying car venture for Tesla… that’s his right.   But it’s Elon Musk’s right to do this because he has been entrusted to make decisions for Tesla by the investors, not because Tesla is a person.   Elon Musk is making that decision–not Tesla–and his investors are giving him their money because they believe in his vision, which may or may not include future pay-days.

Whether Musk behaves as a rational profit-maximizer is entirely besides the point: no one is forcing the investors to give him money.  Within the bounds of the law, there is simply no limit to what Musk can direct Tesla to do and if those investors don’t like it, they can go elsewhere.

Don’t conflate a corporation with the person who happens to be running that corporation at the time.  Apple is still Apple, even after Steve Jobs.   Disney is still Disney even after Walt Disney has passed.   The decision-maker is not the institution.

Categories: Uncategorized
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  1. March 25, 2014 at 4:15 pm

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