11/25/2009 05:12 am ET | Updated May 25, 2011

The Corporate Marionette

The recent Supreme Court hearing on the free speech rights of corporations has reignited the debate about corporate personhood. Corporate personhood refers to the handful of rights that corporations share with people, rights like property ownership and contracting. To most, the notion is prima facie a legal fiction: there are certainly no corporate persons walking around except the starched and ironed suits I see hustling down Wall Street every day.

But others take the concept to the extreme. Libertarians, those lovers of money, equate free speech with the ability to spend cash and so support the right of the wealthiest among us -- corporations -- to manipulate elections in their favor. A more reasonable extension of corporate personhood, which has emerged recently in talks about how to improve regulation of the financial system, encourages financial firms to create "wills" that would provide for the dispensation of their assets and liabilities in case of collapse.

No matter your opinion on corporate personhood, the renewed debate has inspired another important question: Why the corporation? In a timely reprisal of Charles Perrow's great book Organizing America, Understanding Society reminds us that the corporation was not an inevitable organizational type:

Perrow tells the story of how the American economy came to feature the large corporation as its central business organization -- an outcome that was far from inevitable. He argues that the large corporation is a historically contingent creation; other forms of enterprise activity could have emerged. And he teases out of this account a pretty compelling set of conclusions that are very supportive of [the] basic line of thought concerning the disproportionate power that is wielded by corporations and their officers.

As the Supreme Court considers expanding corporate personhood, it is worthwhile remembering that corporate America was not handed down to us from above. Indeed, the notion of the inevitability of the corporation often leads us to assume that the private sector and the public sector are competitors, constantly at loggerheads with one's gains equaling the other's losses. But this is far from true: the private and public sectors are symbiotic, feeding off each other, with corporations furthering their interests via shirked external costs that the government mops up and government regulation, as the Supreme Court case demonstrates.

The warring conception of the public and private sectors has produced a constant debate between the Democratic and Republican parties about the expansion of government versus its retrenchment: when government acts, does it act to grow itself or to limit its own size? But the GOP, out of power, has assumed a new default position: the status quo.

This provides progressives an opportunity to shift the conversation from a debate about more and less government to one about better and worse government. Indeed, this shift is not only possible, but critical. As Jeffrey Sachs writes:

In short, we have arrived at a point where the challenges of sustainable development -- including public health, infrastructure, energy and national security--require changes not only to policy but also to basic public management systems. In many crucial areas, tinkering will no longer suffice: we need an overhaul to regain government control over regulatory processes, reduce lobbying, restore public planning and ensure the adequate financing of skilled public managers, and align public management systems with holistic strategies.

It may seem obvious and productive, for instance, to frame the health care debate as a policy battle between the government and nasty private insurers. The reality is that the health care debate is about the government improving its regulation of the insurance industry, even if part of this involves creating a new government program.

The inner workings of government are much more advance in thinking about enhancing government performance. A day before congressional testimony entitled "Getting To Better Government," OMB Director Peter Orszag announced an award for federal employees who come up with ideas for improving government performance (perhaps an idea taken from the private sector). And the stimulus package is, among other things, an experiment in government performance measures. Similarly, progressives must take up good management - which often involves good regulation - as a cause as important as good policy ideas.

Libertarians argue that corporations would yield plentiful bounties for the entire country, if government would just get out of the way. The truth, though, is that corporations depend on government for their very survival. Remembering this makes them seem much less frightening.