Bring back the corporate death penalty
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I’m a huge fan of the corporate death penalty, a legal process in which a corporation is forced to dissolve or stop existing. (This is actually the only death penalty I support, because the state executing humans isn’t just unethical, it also doesn’t work to deter homicides. But unlike what the Supreme Court believes, I don’t think of corporations as human.) More formally known as judicial dissolution, the corporate death penalty basically happens when the government is so pissed off by the corruption or damage a corporation causes that it yanks away their charter.
The mechanism has existed since at least the 19th century, but it has only been used a few times, usually in response to severe environmental destruction. In 1890, the North River Sugar Refining Corporation was dissolved by New York’s highest court on the grounds that it was abusing its power as a corporation. The judge’s opinion contains this little gem: “The life of a corporation is indeed less than that of the humblest citizen…”
My, how times have changed!
It’s hard to find any modern examples of the corporate death penalty, but that doesn’t mean critics of abusive business haven’t attempted to invoke it. Goldman Sachs, Wells Fargo, Equifax and even the National Rifle Association have all been the target of calls for this form of execution.
There is at least one semi-recent example of the government destroying a business as punishment for corruption. Arthur Andersen was once one of the “Big Five” accounting firms (it’s now the Big Four) that dominate the financial sector. Among the company’s biggest customers was Enron, the energy company that infamously filed for bankruptcy in 2001 after widespread internal fraud was uncovered. The largest corporate bankruptcy in American history at the time, Arthur Andersen was instrumental in helping Enron cover up that fraud by destroying evidence, and the firm was indicted and found guilty of a narrow charge of obstructing a Securities and Exchange Commission official proceeding. Arthur Andersen surrendered its CPA license, effectively putting the firm out of business in 2002, although the Supreme Court later overturned the conviction. But the damage was done, and the firm no longer exists.
Generally, while calls to invoke judicial dissolution don’t result in much action, it’s still fun to fantasize about which corporations should face execution. Perhaps there should be a reckoning for Flock Safety, whose mass surveillance devices have spread like a plague through communities, and are ripe for abuse from police and riddled with false positives. Or we could break up Amazon for a million reasons. But to pick one just from this month, the company is planning to build a power plant (for fueling artificial intelligence data centers, naturally) so big it threatens to instantly become the country’s largest polluter. That seems like a decent rationale for invoking the corporate death penalty. And Taylor Farms would certainly top the list for anyone glued to a toilet bowl lately, thanks to the company’s alleged indiscretion handling lettuce laced with the “explosive diarrhea” parasite.
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In another universe, one in which Donald Trump hadn’t secured a second term, he may have been convicted of the fraud he was accused of and his companies could have been liquidated by using the corporate death penalty. Indeed, people were floating the idea before the 2024 election, which allowed Trump to dodge the numerous lawsuits against him that may have resulted in total dissolution of his businesses. It could still happen one day, but it doesn’t seem likely any time soon.
Much like jury nullification — another legal mechanism that is not widely known — there is a reason the corporate death penalty isn’t part of the Overton window, the range of acceptable discourse in the mainstream public. The corporate death penalty is the kind of thing that keeps the ultra-rich scared. It’s why corporate shills love to make the excuse that using the corporate death penalty would unfairly punish employees and bring shocks to the economy. More likely, it would persuade big business to pursue due diligence instead of profits over people and the environment.
“This weapon might help minimize corruption but with collateral damage,” John F. Hulpke, a professor at University College Dublin, wrote in the Journal of Management Inquiry in 2017. “But if society is serious about wanting to curb corruption, all weapons must be considered, including this one.”
In yet another universe, we would restructure corporations to have more than one bottom line beyond their shareholders. So-called public benefit corporations do actually exist, and with a triple bottom line: a dedication to people, planet and profit, essentially in that order. Corporate responsibility could encompass so much more than making the stock market rise. There are approximately 10,000 of these entities in the U.S. It’s difficult to get an exact number of corporations in the U.S., but the IRS flagged 6.8 million active corporate returns filed in 2022, so to say there’s a big gap in ideology here is a major understatement.
Corporations aren’t people — they’re technology. And if our corporate law is actually outdated and destructive tech, maybe we should update it. Don’t worry, the rich will still make plenty more than they need, but it doesn’t have to come at the expense of everyone else.
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