Corporations, Persons, and Penn State University | The Triangle

Corporations, Persons, and Penn State University

Bill Moyers once said, “I’ll believe corporations are people when Texas executes one.”

Is a corporation a person? That’s not an easy question to answer because the word “person” has more than one meaning. The word “person” can be used in a theological sense, though I doubt anyone means to claim that a corporation is a person in that sense. The word “person” also has a legal sense, and corporations unavoidably have some of the rights of a “person” in that sense: the rights to own property and enter into contracts. In that sense, though, neither slaves nor most women were “persons” a few hundred years ago. (But this paragraph should be taken with caution, as I am not an expert on religion or law.)

In another sense, a corporation cannot be a person. The sense I have in mind would be expressed in the sentence, “A person should be held responsible for the consequences of his or her decisions.” A corporation cannot be held responsible, nor, really, can a corporation be said to make decisions.

The quotation from Moyers — which he attributed to a Texan friend — illustrates the reason I say that a corporation cannot be held responsible. A corporation cannot be punished. Let us think a little about punishment. There are a few countries that still impose corporal punishment for some crimes. The convicted criminal may be “caned,” that is, whipped with a length of rattan. What is it that makes this a punishment? Presumably it is the pain, and perhaps also the humiliation. Pain is a subjective experience, though no doubt it has biophysical correlates, and humiliation is certainly a subjective experience. Here at home, a felon may be imprisoned. What makes this a punishment? Presumably it is that imprisonment, even at its best, is an unpleasant subjective experience. Alternatively, a criminal may be fined. This deprives the criminal of resources he might otherwise use to purchase luxury goods. But why purchase luxury goods? Because they provide us with pleasant subjective experiences. To punish a person is to deprive the person of pleasant subjective experiences or to impose unpleasant subjective experiences on the person. It follows that a corporation cannot be punished since a corporation has no subjective life. It is true that because a corporation can own property, the corporation can be fined.

But that does not punish the corporation because the corporation does not experience subjective suffering from the deprivation. It does deprive some of the human individuals associated with the corporation, and they, not the corporation, are the ones who experience subjective deprivation. They are the ones punished by the fine.

For the same reasons, a corporation cannot be rewarded for its good deeds, nor does it make sense to say that a corporation has made a decision. A decision is in the first instance a subjective event of commitment to one rather than another alternative. Since a corporation does not have a subjective experience, it cannot be said to make decisions. All in all, it makes no sense to say that a corporation could be held responsible for its decisions.

The events of the last year at The Pennsylvania State University illustrate this. Penn State is a nonprofit corporation. The penalties imposed on Penn State by the NCAA did not punish the corporation, because the corporation can experience no subjective suffering. It did, however, punish students, alumni, area merchants and other human beings who can experience subjective suffering. (The claim that the monetary cost of the penalty will not be borne by student tuition does not deserve to be taken seriously.) Quite rightly, the criminal prosecutions for the Penn State affair focused on human beings who made decisions as officials of Penn State.

As for the NCAA, it too is a corporation, or, more exactly, a conspiracy in restraint of trade. It has no legal authority to punish anybody. It might, however, deprive Penn State of any possibility of playing against other NCAA schools, and if it did so, then football at Penn State would be much less profitable than it is. (I am not saying that the NCAA would actually succeed in doing that, but that threat is what gives the NCAA power to punish Penn State.) Officials of Penn State apparently calculate that Penn State football will be more profitable after paying $60 million in fines and accepting the other sanctions than it would be if Penn State were out of the NCAA. And they are probably right — membership in a successful monopoly organization can be very profitable.

I have not been a fan of Gov. Tom Corbett, but I hope his lawsuit against the NCAA succeeds. He is right to say that the victim of these sanctions is not Penn State but the people of Pennsylvania because Penn State is not a person and so cannot be a victim of anything. This is a dispute between two corporations, and corporations should be tolerated only to the extent that they make the lives of real human beings better.

Roger McCain is a professor of economics at Drexel University. He can be contacted at [email protected].