Moral Fiction or Corporate Persons? How Legal Convenience Became Economic Doctrine

A Note on Method
I write as neither lawyer nor economist, but as someone wrestling with questions that seem too important to leave entirely to specialists. What follows are draft thoughts—observations and arguments developed through reading and reflection rather than professional expertise. The questions raised here deserve more rigorous treatment than I can provide, but they also deserve to be asked by ordinary people grappling with the moral dimensions of our economic systems.

The Problem of Invisible Agents

There's something unsettling about watching a corporation apologise. The carefully crafted statements, the strategic contrition, the promise to "do better"—all delivered by human spokespeople on behalf of an entity that exists nowhere except in legal documents. Who, exactly, is sorry? And what does their sorrow mean?

This theatrical quality of corporate accountability reveals a deeper philosophical problem that has been centuries in the making. At some point in our legal and economic development, we decided that artificial entities could bear moral responsibility, hold property, and exercise agency in ways that seem properly reserved for actual persons. Yet these same entities conveniently lack the vulnerability that makes moral responsibility meaningful: they cannot be imprisoned, shamed, or genuinely reformed.

The question is not merely technical. It strikes at the heart of how we understand justice, responsibility, and the moral weight of economic power. When corporations commit crimes, who has actually transgressed? When they accumulate wealth, who benefits? And when they escape consequences, who has been protected?

From Partnerships to Persons: The Medieval Origins

The story begins not with grand philosophical declarations but with practical problems. Medieval merchants faced a simple dilemma: how to pool capital and manage risk across distances and time spans that exceeded any individual's capacity or lifespan.

Consider a thirteenth-century Italian merchant seeking to fund a trading voyage to Constantinople. A partnership contract might work for local ventures, but what happens when that contract needs recognition in foreign courts? What entity owns the ship when it arrives in a distant port? Who bears responsibility when promises are made to foreign creditors by agents the creditors have never met?

The medieval solution was ingenious in its simplicity: create artificial legal "persons" that could own property, enter contracts, and be recognised across jurisdictions. These entities—whether called commenda, universitas, or early corporate forms—solved immediate practical problems without initially claiming moral status. They were legal conveniences, not moral agents.

But convenience has a way of becoming doctrine. What began as practical tools for managing commercial relationships gradually acquired characteristics that seemed to belong properly to actual persons: the capacity to sue and be sued, to accumulate wealth, and eventually, to bear responsibility for wrongdoing.

The Enforcement Problem: Power, Legitimacy, and Coercion

The transition from legal convenience to widespread acceptance required more than clever legal theory. It demanded enforcement. And enforcement, in the medieval and early modern periods, flowed from power—particularly military and economic power.

The great trading companies that emerged from European expansion in the sixteenth and seventeenth centuries were not merely commercial ventures. The Dutch East India Company commanded forty warships and ten thousand soldiers. The British East India Company maintained private armies larger than those of most nations. When local rulers questioned the legitimacy of these corporate "persons," they faced not legal arguments but military consequences.

This enforcement through coercion reveals something crucial about the moral foundations of corporate personhood: it was not established through philosophical consensus but through the practical demonstration that these artificial entities commanded real power. Foreign courts began recognising corporate rights not because they were convinced by legal theory, but because they understood the consequences of refusal.

The arrangement offered mutual benefits—trade rather than theft, commerce rather than conquest—but always within a framework where the most powerful parties extracted the greatest advantages. Corporate legitimacy emerged from successful intimidation, gradually transformed into institutional habit, and eventually assumed the status of moral truth.

The Landmark Moment: New York Central Railroad, 1909

The philosophical transformation from legal tool to moral agent reached its definitive moment in New York Central & Hudson River Railroad Co. v. United States (1909). The case involved a straightforward scheme: railroad executives had arranged illegal rebates with the American Sugar Refining Company, effectively reducing shipping rates below published tariffs in violation of federal law.

The legal question was novel: could a corporation be held criminally liable for acts committed by its agents? The railroad's defence touched precisely on the philosophical problem that troubles us today. They argued that "to thus punish the corporation is in reality to punish the innocent stockholders" and that artificial entities could not possess the criminal intent necessary for moral responsibility.

The Supreme Court rejected this reasoning with language that fundamentally redefined moral agency. Justice Day wrote that corporations could indeed "be imputed with the knowledge of unlawful conduct by its agents acting within the scope of their designated authority." The Court declared that an artificial entity could possess "knowledge" and bear responsibility for "unlawful conduct."

Consider what happened in that courtroom: actual human beings—traffic managers, executives, presidents—had made conscious decisions to violate federal law. They possessed genuine knowledge, exercised real agency, and took deliberate actions. Yet the Court chose to prosecute not these individuals, but the corporate entity itself.

The decision revealed a practical calculation disguised as moral reasoning. Extracting penalties from the corporation was more effective than pursuing individuals who might flee, die, or lack sufficient assets to satisfy judgments. The "deepest pocket" belonged to the artificial entity, not its human controllers.

The Enlightenment's Ruthless Optimism

This legal development occurred within a broader cultural transformation that reshaped how Western societies understood individual agency and moral responsibility. The post-Enlightenment worldview combined boundless optimism about individual potential with ruthlessly mechanical approaches to extracting utility from others.

This paradox—limitless personal ambition coupled with systematic exploitation—found perfect expression in corporate structures. Individuals could pursue unlimited advancement through artificial entities whilst mechanically distributing the moral costs of their failures onto depersonalised institutional frameworks.

Corporate criminal liability represents not the solution to this moral hazard, but its institutionalisation. It creates a system where moral responsibility can be assigned without meaningful consequences for the actual decision-makers. The corporation pays fines drawn from shareholders and customers; executives retain their liberty, their wealth, and their positions.

This represents a fundamental shift in how society conceptualises justice itself. Traditional moral systems demanded personal suffering—imprisonment, shame, exclusion—for wrongdoing. But corporate liability substitutes economic consequences that preserve wrongdoers' continued participation in productive activity.

The question becomes: does prioritising economic growth over individual accountability represent moral progress or moral decay?

The Moral Fiction Exposed

What emerges from this historical development is not a coherent moral philosophy but a useful fiction maintained because it serves powerful interests. Corporate personhood allows the benefits of individual agency—property ownership, contract formation, wealth accumulation—whilst distributing the burdens of that agency across diffuse and artificial structures.

The fiction operates at multiple levels. Corporations are treated as persons when doing so facilitates economic activity: they can own property, sue for damages, claim constitutional rights. But they conveniently lose their personhood when genuine moral consequences are at stake: they cannot be imprisoned, shamed, or fundamentally reformed.

Meanwhile, the actual humans who control these entities enjoy a peculiar form of moral immunity. They exercise genuine agency through corporate structures whilst deflecting responsibility onto artificial entities that cannot meaningfully bear it. When corporations commit crimes, the penalty falls on shareholders, customers, and communities rather than on the individuals who made criminal decisions.

This arrangement serves economic efficiency whilst abandoning moral coherence. It enables the accumulation of unprecedented wealth and power within structures that systematically obscure accountability.

Questions for a Corporate Age

Our contemporary economy operates almost entirely through these artificial persons. They employ millions, control vast resources, and exercise influence that often exceeds that of governments. Yet the philosophical foundations of their moral status remain as questionable today as they were in 1909.

Several questions demand attention. If corporations cannot genuinely possess knowledge, intention, or moral agency, what does it mean to hold them legally responsible for crimes? Are we maintaining a useful fiction, or have we created institutional structures that systematically enable the abdication of individual moral responsibility?

When corporate penalties are paid from funds belonging ultimately to shareholders, employees, and customers rather than the executives who made harmful decisions, has any meaningful accountability been achieved? Or have we simply created elaborate mechanisms for socialising the costs of private moral failure?

Perhaps most troubling, if corporate structures enable individuals to pursue unlimited personal advancement whilst distributing the moral consequences of their choices onto artificial entities, do these structures represent the institutionalisation of a fundamentally exploitative worldview?

The Weight of Recognition

The historical development of corporate personhood reveals how legal fictions can acquire moral authority through repetition rather than reason. What began as practical solutions to commercial problems became foundational assumptions about the nature of agency and responsibility.

Understanding this history does not necessarily dictate particular policy solutions, but it does expose the contingent nature of arrangements we often take for granted. Corporate personhood is not a natural development but a series of political and legal choices made by particular people in particular circumstances to serve particular interests.

Recognising the artificiality of these arrangements opens space for questions we might not otherwise ask. Are there alternative ways to organise economic activity that better align practical efficiency with moral accountability? How might we structure business relationships to preserve the benefits of corporate organisation whilst restoring meaningful individual responsibility?

These are not merely academic questions. They bear on how we understand justice, community, and the proper relationship between individual ambition and collective welfare. They matter because the answers we give shape the kind of society we inhabit and the kind of people we become.

The history of corporate personhood suggests that legal convenience, once established, tends toward moral complacency. But history also suggests that arrangements maintained by power rather than principle remain vulnerable to challenge by those with sufficient courage to name them for what they are: useful fictions that have perhaps outlived their usefulness.

Corporate Conscience in a Marketing Age

Our contemporary moment offers a particularly revealing window into these tensions. Corporations now routinely take public stances on environmental protection, social justice, and political controversies—positions that would have been unthinkable when they were understood as mere business arrangements.

Consider the phenomenon of "greenwashing": companies that market environmental responsibility whilst engaging in practices that contradict their public commitments. Or observe how corporations adopt positions on contentious social issues during Pride month or Black History month, only to quietly retreat from those positions when convenient. These campaigns reveal something telling about our current understanding of corporate moral agency.

What exactly is happening when a corporation claims to "care" about the environment or "stand with" marginalised communities? If corporations cannot genuinely possess moral convictions, are these expressions simply sophisticated forms of marketing? And if they are marketing, what does it mean when society treats corporate moral positioning as though it represents authentic ethical commitments?

The practice raises uncomfortable questions about complicity and responsibility. When consumers support companies based on their stated values, are they engaging with genuine moral agents or participating in elaborate fictions designed to obscure the actual convictions—and interests—of the human decision-makers behind corporate facades?

While orporate moral positioning may represent the complete triumph of the dynamic we've been tracing: artificial entities claiming moral authority whilst the humans who control them escape moral scrutiny. The corporation takes credit for ethical stances whilst individual executives avoid accountability for the gaps between public commitments and private practices.

These developments invite further reflection. How should we evaluate corporate claims about social responsibility when corporations themselves cannot be genuinely responsible? What does it mean for democratic discourse when artificial entities funded by anonymous interests present themselves as moral authorities? And what happens to individual moral development when ethical choices become corporate branding exercises rather than personal commitments?

The questions multiply because the stakes continue to rise. As corporations accumulate unprecedented wealth and influence, their claims to moral agency shapes public policy, cultural values, and individual behaviour in ways that would astonish their medieval predecessors. Understanding how we arrived at this arrangement—and questioning its adequacy for our current circumstances—seems not merely academic but urgent.