The Corporation

What is the Austrian view of The Corporation?

As a former liberal, I may have sided with much of the solutions stated in the Documentary, however, as a libertarian, I don't think the solutions would necessarily provide desired outcomes.  The Documentary paints the Corporation as a somewhat evil entity.  Perhaps it is not Corporations that are inherently evil, but the collusion with government that provokes the evilness.

http://www.youtube.com/watch?v=Pin8fbdGV9Y&feature=PlayList&p=FA50FBC214A6CE87&index=

http://en.wikipedia.org/wiki/The_Corporation

There's a bunch of videos by Advocate1234 on YouTube that criticize The Corporation for being a misleading pack of lies. It is true that some corporations are in bed with and benefit due to the State, but it is another thing to extrapolate that tendency universally.

-Jon

I don't like that particular film.

Perhaps we need to define precisely what a corporation is before getting into the question of their legitimacy. Because if a corporation is defined as a state-created legal construct or charter or precedent, I oppose all of them in principle. That is, if the very definition of what a corporation is requires some kind of collusion with or legally defined privilege from the state, then they may very well be viewed as arms of the state to varying extents. But if the corporation is defined in a more broad sense that doesn't necessarily have anything to do with the state, then my position would be more of a mixed bag depending on the relationship between the individual institution in question and the state.

Jon Irenicus:

There's a bunch of videos by Advocate1234 on YouTube that criticize The Corporation for being a misleading pack of lies.

JI, Thanks for pointing me to the otherside of the story.  I never intended for my statement to be universal, just observational of a subset of corporations

Brainpolice:

Because if a corporation is defined as a state-created legal construct or charter or precedent, I oppose all of them in principle.

BP, this is an interesting point.  Is there a way around forming a legal entity "corporation", perhaps with a group of individuals forming a "corporation"?  It's also a catch 22 in the US, because it is a challenge do business without some for of incorporation, ie Incorporated, LLC, etc...

ViennaSausage:

Jon Irenicus:

There's a bunch of videos by Advocate1234 on YouTube that criticize The Corporation for being a misleading pack of lies.

JI, Thanks for pointing me to the otherside of the story.  I never intended for my statement to be universal, just observational of a subset of corporations

Brainpolice:

Because if a corporation is defined as a state-created legal construct or charter or precedent, I oppose all of them in principle.

BP, this is an interesting point.  Is there a way around forming a legal entity "corporation", perhaps with a group of individuals forming a "corporation"?  It's also a catch 22 in the US, because it is a challenge do business without some for of incorporation, ie Incorporated, LLC, etc...

What if it were de-centralized, founded on the basis of voluntary inter-action via contracts (amid those that compose of this "corporation"), and contracts of use for those outside of it, etc.? 

I'm not sure if that would still be a corporation, unless the name were to evolve to suit such an arrangement.  I'm a bit out of my league with this topic, however. 


Also, seeing The Corporation made be throughly disgusted (a few days after the afterglow of watching a documentary usually wears off) at the manipulation "documentaries" employ.

I haven't seen one since, and would be cautious in the future of doing so (although, the bullshit (penn & tellers) "interview" with noam chomsky kind of renewed hope).

 If you are dealing with an entity that has an "Inc." or "Corp." in its name, you are agreeing that you will not hold the shareholders personally liable because the corporation's employees didn't install your deck correctly.  A uniform body of law enforced by the state within its jurisdiction extends this concept to indirect transactions:  the tort claims of people who are injured when your deck collapses.

It is a useful and moral financial arrangement, and anarchic fiefdoms would likely carry over the concept.

In other words, it's a responsibility avoiding and cost externalizing mechanism that the state grants some institutions. It's a nice way to avoid having anyone within the institution be held responsible for screwing up. I don't see how, in the absence of the legal construct or privilege granted by the state, this will continue at all.

As far as I'm concerned, once you eliminate all of the various privileges and protections that the state grants, including IP laws, a large "corporation" is unsustainable. Indeed, a "corporation", as it currently exists in legal terms, couldn't possibly exist.

 It's real simple.  Me and my group of people with guns a/k/a Byzantine's Private Defense Agency will let you deal with the corporations whose charters we grant and whose interests we protect in exchange for your relieving the shareholders of legal liability.  This means you get goods and services at prices you could not otherwise afford and investors get returns on their savings they would not otherwise get.  Since the corporate form is beneficial to large numbers of people it will be utilized, state or no state.

I'm trying to point out that it is impossible or unsustainable without a state, that it came about as a result of a state-created legal construct or privilege in the first place, and hence once such a legal construct is removed it would be impossible to avoid liability in this way and on such a large scale.

In my understanding, individuals should be liable for their actions. Merely creating a legal construction that defines the institution as whole as a "person" doesn't change this. If someone wants to sign a genuine voluntary contract that removes liability from who they're dealing with, that's their loss, but I don't see how anyone in their right mind would do so in the absence of a state to universalize this and provide it as a privilege backed by political force.

Futhermore, in many ways it is not beneficial. It is totally unbeneficial to the people who have legitimate complaints but are unable to hold anyone liable. It is totally unbeneficial when you have people who deserve restitution yet this legal construct is a huge blockade in their way from recieving such restitution. It only removes the responsibility of individuals to restitute their victims. It only benefits people who want to avoid responsibility.

Brainpolice:

I'm trying to point out that it is impossible or unsustainable without a state, that it came about as a result of a state-created legal construct or privilege in the first place, and hence once such a legal construct is removed it would be impossible to avoid liability in this way and on such a large scale.

States are extremely powerful institutions, so very few things would be on as large a scale as they are today.  But all that would be necessary is that the corporate form provide mutual benefit to enough people that have an interest in its preservation that they can maintain it against objectors.

If every outlay of capital meant the schlep who bought five shares of stock could get a knock on his door because a Home Depot employee ran over somebody 2,000 miles away, then the cost of capital would be so prohibitive that the market would find a way to lower its cost.  Like using the corporate form.  Same thing with consumer goods.  Mass production and logistics would be unsustainable on all but a very small scale without cost-shifting and risk-spreading devices such as the corporate form.  Since people like rising living standards instead of being autarchic farmers, then they'll demand and use cost-shifting and risk-spreading devices.

Brainpolice:

In my understanding, individuals should be liable for their actions.

All shareholders do is provide capital.  Thus, their loss should be limited to the amount of capital they provided.

Brainpolice:

Because if a corporation is defined as a state-created legal construct or charter or precedent, I oppose all of them in principle

This is merely a question I have about your quote above. Nearly all other business structures have to be allowed by state charters. Does this make them illegitmate?

Deist:

Nearly all other business structures have to be allowed by state charters. Does this make them illegitmate?

 Just a comment: I think (I'm not positive, though), even under current statism, that limited liability only applies to normal business transactions.  Torts and crimes are not (and shouldn't be) subject to this.  I'm not sure if this is true in every situation today, but, in any case, I don't see anything un-libertarian about contractually specified limited liability.

Nitroadict:

What if it were de-centralized, founded on the basis of voluntary inter-action via contracts (amid those that compose of this "corporation"), and contracts of use for those outside of it, etc.? 

A centralized organization is no less voluntary than a decentralized organization. Centralization can fall victim to bureaucracy and corruption as you get away from individual market incentives, but the market strives to find the best balance.

Increased centralization, in both private and government sectors, is aided in part by increase efficiency as compared to a few hundred years ago.

Brainpolice:

Do you see the irony in denouncing corporations as collectivism and simultaneously demanding that collective guilt be employed against them?

Brainpolice:

It is totally unbeneficial to the people who have legitimate complaints but are unable to hold anyone liable

You're flailing at phantoms again. Limited liability does not mean that no one is liable. It means that a certain group of people are not liable, in addition to, the actual actors.

Just because this is not explicitly contractual does not mean its not inline with a voluntary society or libertarianism. If a taxi was to unknowingly drive a murder to the scene of a crime we would not hold the taxi liable, despite not having contract with the victim. Having a system to determine liability in the absence of contract is the entire point of law. If people could contract for every eventuality law would be pretty simple indeed.