Make this an educational holiday season with Big Business and the Market: Friends or Foes?, an online course with Peter Klein and Art Carden, starting December 27.
From the description:
“Are large corporations products of the free market, or are they created by interventionism? Where do firms come from? How do they affect the communities in which they do business? In four lectures, Art Carden and Peter G. Klein will explore the theory of the firm, the effects of “big business,” and the political economy of the business environment in an interventionist society.
The video lectures are online. Lectures will be 7:00 – 8:30 pm Eastern Time on the following dates: Tuesday, Dec. 27, Thursday, Dec. 29, Tuesday, Jan. 3, and Thursday, Jan. 5. They will be recorded and made available for enrolled students to download.”
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A corporation is not an independent force of nature. It arises from a government-granted charter, issued under the authority of government-made laws. These “Laws of Corporations” comprise a very extensive and obscure area of specialty for attorneys and law students.
For example, in Pennsylvania, the laws of corporations are found in Purdon’s statutes, Title 15, Part II. Under this part are four subparts, 9 articles, 24 chapters, 84 subchapters, and 658 sections. Then, of course, there are regulations, forms and court cases interpreting these laws.
Does anyone still think that a corporation is a free-market entity?
Kinsella on just this subject:
http://blog.mises.org/18762/corporate-personhood-limited-liability-and-double-taxation/
Executive summary, please. I can make my point in a few paragraphs. Kinsella needs to do the same.
You’re not supposed to say “executive summary”, you’re supposed to say “tl;dr”. Fail.
Thanks, Peter, I didn’t know that one. It applies perfectly here. I agree with Kinsella on intellectual property, but I refuse to wade through his lengthy and inconclusive ramblings on corporations.
How do you know they’re inconclusive if you refuse to wade through them?
Sorry, I assumed as you being an adult you were intellectually curious.
I was wrong.
Executive summary: Corporations violate no rights; ergo, they are legit. It doesn’t matter the State sanctions them, just as, for example, the State sanctioning property rights does not render property rights bad. Bam, call me professor HL; Kinsella fanboi in da’ house.
I think we all understand that corporations as they exist today are chartered by the actions of state governments, and have certain legal characteristics due to that origin.
The more interesting question to me is the following: if corporations were not so chartered, in a free market economy, would large firms still exist in some form?
I hope that the course will address that topic, at least, that is how I read it.
I think they would. They’d be smaller and there wouldn’t be as many of them – but large corporations would still exist. There is no reason why you can’t set up a corporation contractually without the state.
Setting aside the technicalities of charters and corporate forms, any enterprise simply a collection of people co-ordinating their activities towards some economic (productive) end. IN a free market, economies of scale tend to mitigate for larger firms, while the costs of bureaucracy and management (and a progessively larger principal/agent problem which grows with hierarchical depth – just ask any government department), which mount with increasing size, tend to mitigate against larger firms. IN a free market, firm size for any particular enterprise will tend to settle where these tendencies are optimally balanced, and in any industry you would probably see a wide range of firms distributed according to an inverse power law, with a few large firms shading down to many small ones.
It is my view that intervention, be it monopolistic/oligopolistic licensing, corporate laws and limited liability charters, health and safety regulations, minimum quality standards, onerous reporting requirements, are all artificial barriers to entry , which have the effect of mitigating for increasing concentration and the growth of hegemonic behemoths, shifting th eabovementioned optimal balance towards monopolistic giants, because the protection afforded to incumbent businesses by these interventions outweigh the drag costs of ever-larger corporate bureaucracies, (It is no coincidence that the larger a company is, the more its employees behave like civil servants). Furthermore, economies of scale come into play in a perverse fashion, in so far as sheer size drives th emarginal costs of regulatory compliance down , so only the large players can afford to trade at all profitably! ,
I havent done any research, but I would confidently predict that there will be a clear inverse correlation between any given sector’s degree of concentration, and the amount of regulation that industry is subjected to. And nowhere is this clearer than in the banking sector, where the handful of colossii have been the longstanding beneficiaries of massive interventions, and where it is more or less impossible for any small startup to find a profitable niche without deploying a massive initial capital outlay, just to meet the onerous costs of opening for business!
whoops, that should read ‘Positive’ correlation…..
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