From: Tim Hruby (hruby@his.com)
Date: Fri Jan 22 1999 - 11:42:44 MST
On 22 Jan 1999 01:54:25 -0000, phoenix@ugcs.caltech.edu wrote
> Indeed. Galbraith notes the risk-avoiding nature of the corporation.
> Limited liability, large size, ability to diversify, ability to replace
> its components... if businesses appeal for gov't protection less than
> individuals, that's one reason why.
Well, let's point out that the benefits of the corporate form are benefits
confered by governments, so in effect, the government has already provided
certain protections to orgainzations operating under the corporate form.
In particular, the benefits of stockholder limited liability and status as
a distinct legal entity are confered by government/legislative fiat --
there is no guarantee such benefits would exist/be protected in a
non-statist polycentric legal regime. This point is often overlooked in
people's analyses of how things would work in a PPL society.
And, _off of the top of my head without deep analysis_, the coercive
imposition against all potential claimholders of limited liabilty
protection for stockholders does seem to be an actual market-enhancing
benefit provided by coercive governments. It is not at all clear to me
that a potential tort-victim (as opposed to a contract partner) would
voluntarily agree to limit his potential claim for injuries in such a
manner (perhaps he would from a Rawls-ian "original position," but that
line of argument is by no means universally accepted, and I won't go into
it here). Yet without such limits, capital-owners would be _far_ more
hesitant in making investments over which they have minimal management
control. (Would you invest in Microsoft if Netscape could come after your
entire personal net worth for Bill Gates' alleged tortious competition?
Replace with Bhopal if you don't think that business torts would be
protected under a PPL system) There appear to be market-enhancing
externalities that result from coercively facilitating the formation of the
aggregations of capital we call corporations. Of course, perhaps the
market would be more efficient if we had fewer of these organizations and
tort-victims had more opportunites to be fully compensated under an
unlimited liability regime?
(Not that I am implying that I agree with the statement that corporations
petition for less government protection than individuals. I suspect that
they petition more than individuals, because corporations tend have larger
economic interests than individuals, and therefore tend to be in a better
position to afford the high costs of rent-seeking and to better profit from
the protection they recieve. Not to mention such distortions like the fact
that it is far easier for a corporation to sucessfully deduct the cost of
petitioning the government as a business expense than it is for an
individual.)
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