What the hell is corporate personhood?

In a previous post, I related the fact that the New South Wales government is considering a proposal to permit corporations to sue individuals. As I stated, this would have had a ‘chilling’ effect on those journalists and whistleblowers who spilled the beans on the disgraceful behaviour of the banks, that eventually led the government kicking and screaming into setting up the Banking Royal Commission1.

While many may consider that it is only fair to allow corporations to sue for defamation if something derogatory and untrue has been said about them, this is only the tip of the iceberg of how this ability could be used. The law of defamation is supposed to protect people’s reputations from unfair attack. However, it is commonly used to hinder free speech and to protect powerful and wealthy people from scrutiny. If you are sued for defamation, you could end up paying tens of thousands of dollars in legal fees, even if you win the case. If you lose, you could face a massive payout on top of the legal fees. If you do not have much money, you don’t have much chance against a wealthy opponent, whether they are suing you, or you are suing them. Cases can drag out for years, so that the costs can become enormous. Only the very wealthy can pursue such cases to the end, and the threat of suing for defamation is often used by the rich and powerful to deter criticism. It is seldom helpful to ordinary people whose reputations are traduced2.

The fact that the wealthy can already use this as a threat against the rest of us to discourage criticism, should make it abundantly clear where allowing corporations to sue for defamation will lead. Just imagine a program like the ABC’s Four Corners uncovering something unsavoury about a multi-billion-dollar corporation, as it did about sections of the banking and financial services industry. Does anyone think that such a huge company would NOT use defamation litigation, or even the threat of it, as a tool to cover up their malfeasance? I think it would almost certainly do so.

The most extreme current example of this idiocy is what, in the United States, has become ‘corporate personhood’. This is the legal notion that a corporation, separately from its associated human beings (such as owners, managers or employees), has at least some of the legal rights and responsibilities enjoyed by natural persons (i.e. individual humans). In the US, this phrase refers to the legal debate over the extent to which rights traditionally associated with natural persons should also be afforded to corporations. Currently, the interpretation of ‘person’ in the Fourteenth Amendment to the US Constitution has it that as organisations are collections of people, they should not be deprived of their constitutional rights when they act collectively. Treating them thus allows corporations to sue and be sued3.

We need to indulge in some history to explain how this came to be. Following the presidential election of 1904, charges were levelled at the victor, Theodore Roosevelt, regarding his acceptance of corporate contributions to his campaign. In response, Roosevelt called for the banning of corporate contributions to any political entity or for any political purpose. This resulted in the Tillman Act or 1907, which prevented monetary contributions to national political campaigns by corporations4. That Act held firm for 70 years. However, in 1978, the Supreme Court ruled for the first time that corporations had a First Amendment right to spend money on state ballot initiatives. That still did not allow direct corporate donations to politicians. Then came the Citizens United decision5,6, which extended to corporations, for the first time, full rights to spend money as they wish in federal, state and local elections. This unleashed a flood of campaign donations, which thrilled many in the business community6, because they knew that they could then effectively control the legislative agenda by buying politicians.

In Australia we currently have open slather with corporate donations and, as a consequence, corporations already control the current government’s legislative agenda. This is manifest by the urgency with which the current coalition government is attempting to give massive tax cuts to large corporations. This is bad enough, but the Berejiklian government of NSW is now considering giving to corporations the right to sue for defamation. So, not only will corporations control the legislative agenda, but they will also be effectively beyond scrutiny. This is another step along the way to a corporatocracy8, where, although we have a parliament, the real power lies with corporations. That is a democracy only for the wealthy and is a democracy in name only.


  1. http://www.blotreport.com/australian-politics/are-bloggers-next/
  2. https://www.uow.edu.au/~bmartin/dissent/documents/defamation.html
  3. https://en.wikipedia.org/wiki/Corporate_personhood
  4. https://en.wikipedia.org/wiki/Tillman_Act_of_1907
  5. https://en.wikipedia.org/wiki/Citizens_United_v._FEC
  6. https://www.npr.org/2014/07/28/335288388/when-did-companies-become-people-excavating-the-legal-evolution
  7. https://en.wikipedia.org/wiki/Political_funding_in_Australia
  8. http://www.blotreport.com/australian-politics/corporatocracy/


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