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Thus, because owning stock in a corporation is to own a part of that corporation and corporations are people, owning stock is owning people. Owning people is slavery. Slavery is illegal. Owning stock in corporations is illegal slavery.

Since I'm cramming for my corporate law exam tonight, I'd like to demonstrate why the above argument doesn't work. Before talking corporations, let's start with some constitutional law:

1. Owning people is not per se illegal

To see why, you have to go to the Thirteenth Amendment.

Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

From Ikura's excellent writeup under corporate personhood:

Pre-emancipation jurisprudence (sometimes) regarded slaves as humans, though not as persons, and conversely, the Thirteenth Amendment's prohibition of slavery applies only to humans, permitting the ownership of corporations though they may be legal persons.

But what if you consider slaves to be people? Webster defines "slave" as:

A person who is held in bondage to another; one who is wholly subject to the will of another; one who is held as a chattel; one who has no freedom of action, but whose person and services are wholly under the control of another.

Note that these definitions deal with control, not ownership. For most conceptions of property, ownership and control are very closely interrelated: you don't own it unless you have control over it. Slaves are certainly no exception. But the amendment seems to open up the possibility that you can own a person so long as you don't control them. What kind of ownership wouldn't involve control? The ownership of stock.

2. Shareholders do not control a corporation

The stockholders of a corporation are said to "own" the corporation. What they actually own is the corporaton's stock, which carries residual financial rights and basic voting rights. Unlike owners of other assets, however, stockholders do not control directly the corporation. (Bauman et al., Corporations: Law and Policy 5th ed., West 2003, p. 33)

Although the shareholders are the owners of the corporation, this ownership does not carry with it the right of management... Except for attending the shareholders' meetings and casting votes in favor of directors, a shareholder cannot directly interfere with the directors or with the management of the corporation. (Emerson, Business Law 4th ed., Barron's 2004, p. 353)

In the traditional corporate model the shareholders have only limited powers to participate in management and control: their principal function is to select other persons—the directors—to manage the business of the corporation for them. (Hamilton, The Law of Corporations In A Nutshell 5th ed., West 2000, p. 232)

Owning stock is ownership without control. Think of it like owning a cat. And if you think a tabby is uncontrollable, imagine owning a lion that wanders around the neighborhood. You could sell it or give it to someone else, but it would pretty much do its own thing regardless of your feelings on the matter. It might like you, or it might not. That's what it's like to own stock. It's certainly not the same as, or even slightly similar to, holding a human in bondage, or owning a chattel, or forcing someone to submit to one's will. This leads into the debunking of the remaining third...

3. Corporations are not people for every legal purpose

Corporations are people for many legal purposes. They can own property and enter contracts. They have the freedom of speech and are entitled to equal protection under the law. They can sue and be sued. But there are quite a few areas of the law in which corporations are not treated the same as "natural persons." For instance:

  • Corporations are not protected from self-incrimination by the Fifth Amendment. See Hale v. Henkel, 201 U.S. 43 (1906).
  • Corporations never have the right to vote.
  • Corporations cannot contribute to federal political campaigns. 2 U.S.C. § 441(b).
  • States can bar corporations from spending their money on political advocacy. See Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990).

In fact, corporations were not interpreted to have any constitutional rights until 1886, when the Supreme Court decided Santa Clara County v. Southern Pacific Railroad Co., 118 U.S. 394. That was a good 20 years after the Thirteenth Amendment was approved. At the time, corporations were not nearly as readily equated with people under the law. And while corporations have been given many constitutional protections, they still don't have every constitutional protection: the law gives some, and holds some back.

So, you see, owning stock in corporations is not slavery. It's democracy.

(That last insane statement was brought to you by the Federalist Society, making the world safe for plutocracy since 1982!)

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