From: Mike Lorrey (mlorrey@datamann.com)
Date: Mon Jul 23 2001 - 12:00:09 MDT
Felix Ungman wrote:
>
> On måndag 23 juli 2001 12.26, Russell Blackford <rblackford@hotmail.com> wrote:
> >We all understand how it [corporations] works. How is it *justified*?
>
> That's good (although i got the feeling that not everyone understand how they work).
>
> >Felix, it is quite possible to have capitalist acts (exchanges of goods,
> >services, money) without restriction, yet make no provision for limited
> >liability corporations. The truth of the matter is merely: "The principle of
> >limited liability corporations is central to mercantilism."
>
> Thats correct. But not very convenient. I could in theory emulate the Corporation Act by private partnership/customer/supplier contracts. But the overhead would just be huge. However, this is not a justification in itself.
Why would you say so? Why is it then that there are more businesses
unincorporated?
>
> > The investor is
> >getting money back if the thing makes a profit. Why isn't s/he jointly and
> >severally stuck with liability for the company's torts and breaches of
> >contract? (Actually, this *would* be the situation at common law.) Why
> >should the government be able to pass a law allowing the investor to limit
> >the risk?
>
> That's easily justified. Unless he ownes more than 50% of the company (very common situation), he has no control of its actions. He shouldn't be held responsible for the consequences of someone elses actions. It's the foundation of common law. But this
is not a justification of the corporation, just that if there such a thing as a corporation, limited liability of the stock holder is critical.
This is the same sort of BS that rationalizes genocide.
Every member of a corporation is responsible for its actions, just as
every citizen of a country is responsible for the crimes of its leaders.
Societies get the governments they deserve, and corporations get the
management they deserve. We should not be surprised when those
structured poorly abuse their power, and we should not hold the members
of each blameless for the results of the poor implementation they voted
for or permitted to come into force. If you don't like it, you should
divest or lead a takeover movement. Doing nothing is complicity.
>
> >Maybe if there were no such laws, one approach to get *some* of the benefits
> >of a corporation would be for the entrepreneur, a natural person, to simply
> >borrow money from various investors and remain liable for the full loss. But
> >this assumes that the investors are not actually trading, they are just
> >creditors - just bankers. This is not a corporation. There is still a
> >natural person with full liability, unattractive as that may be to
> >entrepreneurs.
>
> You'll always have this option. In fact it's not uncommon for individuals entrepreneurs to do it this way. But it doesn't scale well, and is not an argument againts corporations.
It only doesn't scale well specifically because of the way that tort
issues have been distorted by mercantilist influence over government.
>
> >(1) where does the state get the moral authority to enter into such
> >contracts? Why isn't it restricted to making contracts for the purposes of
> >running the military and the police force (and a minimal court system)?
>
> Value added services. Even today, states compete with other states to offer better legal and taxational environments for corporations. Smart minarchist states would do this even better.
Note how many corporations file in states like Delaware and Nevada yet
have no actual presence there outside of a post office box. This is
another sheltering tactic of mercantilism. Corporations should only be
able to file in the states where the most of their assets are. No state
should grant such licenses unless the corporation assets are in places
the state can easily get at them.
In a libertarian system, this sort of sheltering would not occur,
because since the state is supplanted by a private insurance company as
the broker of liability protection to the corporation, and the insuror
has contracts using the assets of the company as collateral (which
includes its stock), the company cannot shield itself from liability
directly, and its stock can be seized from its investors to satisfy
liability judgements that arbitrators have issued in cases brought by
the insurors of the company and any claimants against it.
>
> >If the government passes a law that says I can't get the full amount that
> >the members of a trading association owe me, isn't this theft of my chose
> >in action against the members of the trading association?
>
> How would you get your money back from a physical person? It's the same thing. In fact, with a corporation you'd be better of, because there's always a capital stock available.
Sorry, a corporation need not posess liability protections outside of
insurance. You get your money from your insurance carrier, who pursues
collection of judgements against the corporation and/or its insurance
carrier. In cases where both carriers are the same, the client with the
least assets /coverage chooses the arbitrator.
>
> >(2) Felix, what do you mean "just as any other first class citizen of that
> >state"? *I* sure wasn't created by a contract with the state. As far as I
> >know, my parents used a totally different method! I find this very puzzling.
> >Have you left something out here, perhaps?
>
> Sorry, I slipped my mind. Either skip that part, or append "should be".
The child is produced under contract between two parents and licensed by
the state. Out of wedlock births are unlicensed partnerships where the
rule of posession dictates unless other contracts are agree upon.
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