I think this is the pivot, so I snipped all the rest. You essentially claim universal equivalency when it comes to rights (legislation v. non-legislation), and I do not. There is little argument on particulars — and you’ve given some valid examples that I have agreement with. I haven’t even questioned that your assertion is substantially true. However, a set of true particulars does not prove the universalness (generality) of the theory. The limited set fundamentally can’t.

To be brief and restate, unlike you, I believe it is likely the legislation shifts (distorts) contract cost burdens such that some liability contracts­­­­­­ — those which might have been acquired by creditors without legislation — are in essence priced beyond the value of acquiring them (what I meant by “bargaining power”). Also, I have not been able to wave off the possiblity that the legislation effects competitiveness in acquiring these contracts due to the cost burden shift. If I am correct — and I cannot prove my assertion either — then I believe this is a rights issue, since it affects rights to form contracts and rights to property.

In any case, I have zero objection to free corporations since the idea is well within the rights of those choosing to do so.

I thought leftists attacked it on the grounds that you could conceivably have a bunch of people pool their money together, commit some crime, pay off the proceeds as dividends, and when people sue, you stiff them because the “corporation” is bankrupt.

I don’t think so. As far as I am aware, corporate laws regarding limited liability do not exempt you from liability for commission of a crime. Where do people get this notion?

Do individuals have a right to organize by means of contract in a way that resembles the features of a state? or a socialist commune? I say no.

This argument by analogy is question-begging. You have yet to show that a group of people having a certain contract with third parties is unlibertarian.

Limited liability regardless of purpose? purely to make money? Sure, you can do it today, by riding on Bill Gates’ coat tails or Warren Buffett’s — but it presupposes greenbacks and the NYSE. An anarchist society is not very likely to resemble the current one.

Okay. THe purpose is to make money by any legal means.

Anyway, I quit, having said my piece many times in this thread. Hold shareholders responsible for the actions of directors and managers, who are their fiduciary agents.

You throw “fidiciary agents” around as if it’s some magical term that does all your work for you–you have failed to even attempt to show how or why shareholders are causally responsible for torts or crimes committed by employees of the corportations in which they are shareholders.

Since protection against prosecution for criminal action isn’t what incorporation provides, i guess the leftists have no valid complaint. I am sure that Stephan has made this point more than once and in more than one way. Corporations don’t commit crimes. Individuals commit crimes. All incorporation does is protects investors’ personal assets from creditors; and that only if the creditor doesn’t insist in changing the contract to be able to go after some investors’ assets. It does not protect individuals from criminal prosecution.

Yes, but these people are not listening; they have been somehow brainwashed by leftist anti-corporate propaganda. In my view, this issue has become so muddled that any libertarian who has a critical view of the corporation without having first read Hessen’s book is irresponsible and holding forth on serious, complicated matters that he has not bothered to educate himself adquequately about.

Limited liability regardless of purpose? purely to make money? Sure, you can do it today, by riding on Bill Gates’ coat tails or Warren Buffett’s — but it presupposes greenbacks and the NYSE. An anarchist society is not very likely to resemble the current one.

Anyway, I quit, having said my piece many times in this thread. Hold shareholders responsible for the actions of directors and managers, who are their fiduciary agents.

I thought leftists attacked it on the grounds that you could conceivably have a bunch of people pool their money together, commit some crime, pay off the proceeds as dividends, and when people sue, you stiff them because the “corporation” is bankrupt.

O.K. I didn’t realize you were making the more limited argument of shareholder limited liability.

But it’s not that limited of a point–the entire attack on corporations rests on this little thing.

My mistake. My point, which possibly was not addressed directly to your point was, that the mercantilist institution of incorporation is not compatible with libertarian principles of justice.

I don’t know what this means. Do individuals have a right to organize by means of contract in a way that resembles the features of today’s corporation? I say, yes. That the state recognizes this is no more problematic than it recognizing and giving effect to any other contract.

I believe corporations have been fined thousands of times. Am I wrong?

Sure. Of course, I regard even the imposition by the state of a tax on a company as a “fine”.

I’m taking the liberty of defining a crime as unfair or unwarrented harm (agression, etc..) to others. (not welfare state’s definition) If corporations are fined, this ostensibly is for some harm (crime) committed.

Really? I would not make that assumption at all. We know for example that companies cannot really commit murder–only people can. So what kind of “crimes” they are dreaming up, who knows? IF they are legitimate crimes, they must be committed by individuals. These are the guilty parties.

The problem is the entity theory of the corporation–that it viewed as a legal person. There is no need that it be so–as Robert Hessen demonstrates in his classic book that apparently only 3 people have read. The attack against corporations is that in having limited liability it is getting a privilege from the state. Hessen shows that this is not true: people have the right and power to set up the same arrangement by means of contracts alone.

Then the fine levied against corporate assets is proof that the entire penalty is not levied against only those who were responsible. What is it that others are harping on regarding debt immunity? Answer: welfare state laws grant immunity from the PENALTY of not paying the debt back.

But you are here citing hypotheticals. Is this your basis for opposing corporations–that IF they get unfair benefits, then you “would” oppose them? In actuality, what we have is this: lefties and those hostile to industrialism and capitalism hate the corporation, capitalism, and business; and they do view the corporation as receiving priveleges from the state; therefore, they reason, the state does not need to grant these privileges–or it can condition the grant of these privileges on the corporation changing its behavior or paying more taxes, etc. BUt his whole notion rests on the positive argument that granting *shareholders* limited liability for contractual debts of the company, is somehow a grant of privilege. IT is not.

Any other issues about criminal penalties are irrelevant. If the state were to merely fine a company, and fail to prosecute the individaul who actually committed an action, that is simply another demonstration of the ineptness of public law enforcement. IT has nothing to do with whether free people ought to be able to arrange their affairs so that shareholders have “limited liability” as classically understood.

Incorporation debt releif is immunity from the penalty of going to jail for not paying back. Similarly with other crimes (harmful acts) committed by corporate members. If a penalty is levied, and those specific individuals responsible in the corporation do not have to pay the full amount, the full penalty, then to this extent have they received immunity from the penalty. (same as others are complaining aboout regarding debt) It is not what is written in the law, it is the unintended consequence of the law. If we know that the unintended consequences of the law are unlibertarian, then we have to conclude that the law is unlibertarian,

If the state fails to prosecute a given individual who is actually guilty of the commission of a crime, this is bad; this shows the state is inefficient; what it has to do with corporations I have no idea.

even if the wording of the law seems benign. I thought we were debating the idea of defending laws of incorporation, as to whether or not they are consistent with libertarianism?

My contention is simply the recognition of shareholder limited liability by the law of incorporation is NOT problematic, because shareholder limited liability is a result of freedom of contract. PEriod.

If fines are levied against corporate assets, for crimes committed by individuals of the corporation, that proves (at least partial)immunity by that fact.

You say “if”. Do you have any reason to believe that if a crime is committed by an individual who happens to work for a corporation, that he is granted immunity from this crime by virtue of the state’s incorporation law? IF so, please point me to a single example or statute that specifies this.

In order for this not to be true, one would have to maintain either that: 1. Fines are never levied against corporations for the crimes of individual corporate members, or 2. Such crimes are “victimless crimes” and so do not count as crimes.

I believe indeed some crimes corporations are accused of are #2. Also it is rare for corporations to be charged wiht crimes, since corporations are not actually “persons” and do not have intent, so to speak.

But this is all irrelevant. IF you could show that a given actual crime by a corporate employee meant only the corporation was liable, and not the employee, then I would agree, this aspect of “limited liability” is incompatible with libertarianism. So what? We are defending the corporation from the charge that limited liability for contractual debts is unlibertarian–since this is what most critics harp on.

Keep in mind also that the state has an unlibertarian scheme of punishment/torts.

Dude, you’re the one who’s making the same basic mistake repetitively and causing the hangup (because you don’t know foundations).

I have repeatedly maintained that adopting the corporate form is not unlibertarian. You people have yet to supply a single coherent reason that shows that it is.

SK> “My argument is that luddites and leftists and business-ignoramuses say corporations are invalid *because they have limited liability*,…”

No problem there if they acheive the limited liability via their own wits.

They did: they added “Inc.” to their name, and filed a few papers to make sure the state’s monopoly court system will recognize it. That puts people on notice. Good enough.

There is plenty of low hanging fruit when it comes to topics of leftist nonsense. Choosing to argue on a rare issue where they are nominally or partially right is probably not the brightest move.

Sigh. Tacitician libertarians always end up blaming the victim. It is the lefty types who are always in a little tizzy about big corporations who have made the challenge. We have just denied it.

I have absolutely nothing against a corporation forming limited liability with its vendors if it can do it via its own wits.

As everyone knows, the libertarian principle of “by your own wits” applies here.

And so we see your remarks are quite beside the point. The legislation distorts the market by destroying some measure of bargaining power on the part of creditors.

The notion of “bargaining power” is leftist to the core.

You are completely wrong. Because people are free to organize as a partnerhsip, or as a corporation; and because creditors are free to insist on personal guarantees (and they often do), you are utterly mistaken.

Stop right there. That’s the crux of the elementary error you make over and over and over again. That is not all the “sign hanging” does. It guarantees an immunity, destroying possible terms of negotiation.

It does not guarantee an immunity. First, the creditor can insist on personal guarnatees from sharholders. This is common in small corporations. Second, the creditor can refuse to deal with corporations, and only deal with sole proprietorships or partnerhsips.

In the free market it would be the same. Some people would organize themselves into a “limited liability company” by means of pure contract; others would be partnerships. Creditors could refuse to deal with the former if they wanted.

SK> “…helps hang a bright neon sign *recognizing that* the shareholders are broadcasting to all third parties: if you deal with us, you can’t come after our personal assets.”

Blah blah blah. The same endless assertion. Simply saying a firm can privately announce their “terms” does not mean those are the terms that will eventually be agreed upon in all cases.

What? If I make an offer subject to certain terms, and you accept, then you have accepted these terms.

You don’t get it because you don’t want to: you have an agenda.

Yes, I do–opposing lefties, anti-industrialists, anti-corporate hippies, and those who oppose what free individuals do with their own property.

A total non-sequitur — totally irrelevent. It doesn’t matter if it is true (it is), since the matter isn’t about positive rights. You’re the one who asked about rights, and then stated your concern about “individual or moral or natural rights.” Both the federal constitution and state consitutions call out natural rights. I only thought it would help you get a grip.

SK> “This is all irrelevant and beside the point.”

You don’t remember your own question.

SK> “Move along, sir, move along.”

Dude, you’re the one who’s making the same basic mistake repetitively and causing the hangup (because you don’t know foundations).

SK> “My argument is that luddites and leftists and business-ignoramuses say corporations are invalid *because they have limited liability*,…”

No problem there if they acheive the limited liability via their own wits.

SK> “… and they view this as some privilege bestowed by the state.”

Which has at least some truth to it, even if small in actual practice. Or rather it certainly is bound to affect some number of contracts and prevent some creditors under some situations from recovering property they otherwise could have.

There is plenty of low hanging fruit when it comes to topics of leftist nonsense. Choosing to argue on a rare issue where they are nominally or partially right is probably not the brightest move.

SK> “so whatever objections you people have to the corporation, limited liability is not one of them.”

Which I never came close to objecting to. I have absolutely nothing against a corporation forming limited liability with its vendors if it can do it via its own wits.

SK> “LImited liability means your liability as a shareholder is limited ot what you invested;”

And so we see your remarks are quite beside the point. The legislation distorts the market by destroying some measure of bargaining power on the part of creditors.

SK> “The government only…

Stop right there. That’s the crux of the elementary error you make over and over and over again. That is not all the “sign hanging” does. It guarantees an immunity, destroying possible terms of negotiation. Without government, the corporation can do no more than ask for agreement (sure, they can “announce” their resolute terms as well as I can announce the sky is green). If you were to say that many contracts, and maybe even most, would end up the same way if it were solely private, I would probably agree. But that won’t be the limit. The government distorts the market here — no question about it. And that distortion plays into natural rights. Some will not be able to recover their own property, where without the distortion, they could have otherwise formed a different contract. It will distort bargaining power in some circumstances. No doubt about it.

SK> “…helps hang a bright neon sign *recognizing that* the shareholders are broadcasting to all third parties: if you deal with us, you can’t come after our personal assets.”

Blah blah blah. The same endless assertion. Simply saying a firm can privately announce their “terms” does not mean those are the terms that will eventually be agreed upon in all cases. You don’t get it because you don’t want to: you have an agenda.

SK> “Tutorial over, GW, this has become boring, elementary, monotonous, and depressing.”

You give a great course in Logic-Lite! Thanks!

Stephan, I missed one of your earlier replies, before the ad hom attacks commenced. You wrote: Suppose 100 people want to each contribute $1000 to start a company, but not be actively involved in its management or be personally on the hook for contractual obligations and debts of the company, as they would be if they were partners in a partnership. So they all sign a shareholder’s agreement which sets up procedures to hire and appoint managers to use the funds and run the business. This agreement also permits the managers to enter into agreements with third parties–employees, customers, vendors, contractors–but requires that all such agreements include a clause limiting the liability of the sharholders to their initial investment.

The brunt of my criticism is purpose in founding a company. I’ve organized numerous corporations over the years and always chuckled at the boiletplate “…and all other lawful purposes.” What I am suggesting is that agreements to pool capital should be explicit regarding purpose, else the owners and assigns are no better than financial drunk drivers.

Why does there need to be a “purpose”, other than to make money (by any lawful means)? Where do you people come up with these standards? It amazes me that you trot them out as if everybody knows this, as if it’s not controversial, as if it’s quite obvious to everyone.

About a German citizen having a hyperbolic duty to attack the U.S., no comment.

Why? The German lives in “the world” doesn’t he? One of the world’s governments–one of “his” governents–is causing problems. He need fixee, no? by your logic, anyway.

Instead of reading Vin’s fantasy, I suggest that U.S. citizens have a legal duty to control their government, just as corporate shareholders have a duty to control their enterprise.

A *legal* duty? Of course they do not. You mean a moral or libertarian obligation? Why? You can suggest or assert it, but where is the proof? Why do you call it “their” government? Do they own it? Have a right, or power, to control it? Furthermore, you also just assume shareholders have a “duty” to control their enterprise. Actually, they explicitly do not have active control; they only have a right to select, by vote, the *directors*, who then appoint officers, who hire managers– is is these people who have the control and thus these people who have any duty to control the enterprise and make sure it does legal things only.

The brunt of my criticism is purpose in founding a company. I’ve organized numerous corporations over the years and always chuckled at the boiletplate “…and all other lawful purposes.” What I am suggesting is that agreements to pool capital should be explicit regarding purpose, else the owners and assigns are no better than financial drunk drivers.

About a German citizen having a hyperbolic duty to attack the U.S., no comment. Instead of reading Vin’s fantasy, I suggest that U.S. citizens have a legal duty to control their government, just as corporate shareholders have a duty to control their enterprise.

homeschooling luddite

Quite a smear. All opponents are dolts.

Wolf: First, it was a joke. Lighten up. Second, I did not say all homeschoolers are luddites–I was imagining some character who might make his own toothpaste, and invented this one.

The “free contract” litmus test amuses me. It would be alarming, except that no enlightened society would tolerate it. Equity routinely trumps contract.

What exactly are you saying? My position is rather simple (and it echoes that fleshed out by Robert Hessen in his definitive book on this, which apparently no one bothers to read before fumbling around, trying to reinvent the wheel). IF A has a contract with B, and if the contract limits what assets of B’s that A can pursue, then that should be given effect. And then it recognizes that the shareholder is in the position of B and the creditor or customer of B’s corporation is in the position of A. All talk of “equity trumping free contract” is just a distraction.

I sympathize with those who want Proctor & Gamble to float common shares and commercial paper. The idea, however, is to hold Mr Proctor and Mr Gamble or their heirs and successors personally liable for everything done or not done in pursuit of commerce.

I have no idea where you are coming from, but it does not sound like libertarianism. It sounds like some leftist anti-corporate animus. Am I wrong? If not, please enlighten me.

Your view, as best I can make it out, does rest on an implicit theory of causation. You need to flesh this out; you can’t just assume it.

For instance, if an ingredient in Crest’s secret formula is strontium 90, or they made a batch of poison Colgate to ruin a rival, there must be something other than “free contract” as a first principle of public justice.

Again, these abstract, amorphous sweeing principles are unclear in application. I have no idea what you mean by “free contract” and its relation to “a first principle of public justice,” whatever this latter thing might be. Look. In libertarianism, people are of course responsible for “their” actions. But other than clear cases of directly causing harm, you need a coherent theory of causation to connect the actions of someone only indirectly related to the harm done. If you want to argue that a shareholder is causally responsible for the actions committed by his corporation, you need to explain why–you seem to think you can just assert it and it’s obvious. It is not obvious. AS I have mentioned several times, the shareholder has no direct control or active involvement in management. He might not even have given money to the company–he might have purchased the share from another shareholder. So on what theory are you saying he is liable? That he has the right to vote to elect the directors? Why does *having this right* make you causally responsible?

In fact with your ridiculous comments about US citizen responsibilty for US government actions, it is apparent you apply a sweepingly broad notion of causation. That is your right, but in my view, it is not libertarian, and in any event, it takes more than just assertion–it must be established. I believe that if you make a genuine effort to show that US citizens per se are responsible for the government’s action, or that shareholders per se are responsible for the corporation’s actions, you’ll see that the effort founders. For example, if you were to have a theory of cause broad enough to implicate shareholders, you would also implicate its employees, vendors, bondholders, etc.–there is nowhere to stop, really. If you are hung up on shareholders being “special” because they are “owners” of the company, then you are focusing on a conventional positive law categorization. From the point of view of praxeology and economics, there is nothing categorically different or “special” about a shareholder compared to others who help and have influence on a company’s actions–a large bank who loans it money, for example, has far more influence on what the company does than does an individual shareholder (and gives it more money too). So would you hold the corporation’s lenders liable too? Where do you draw the line? Coherent line drawing requires a coherent theory of causation, not a kneejerk, leftist hostility to “the Man”.

A free society is not made more free by closing the law courts, nor by replicating the worst features of statism — in this case, corporate charters, trusts, nonprofit orgs, unions, etc.

WE libertarian advocates of the corporation do not advocate the state or the corporate form. We only say it is not inherently unlibertarian because it would be imitated by means of a web of contracts in a free society.

I agree that the thread became elementary and depressing, albeit for another reason altogether.

WEll, if you mean my smartass comments, I apologize if I offended anyone, especially those who have the greatest need to lighten up.

Yes, of course. It’s a democracy. If you mean ancaps and libertarians, rather than the broad electorate and mainstream parties, the answer is still yes. I was part of the antiwar vanguard in the 60′s and experienced what a handful of activists (Dave Dellinger, the Berrigans, Tom Forcade) can achieve.

And here we see again how there are two separate strains of libertarians: the “principle” libertarains, and the “tactic” libertarians. The latter type deludes itself (IMHO) into thinking victory is just aroudn the corner; that we “should do more”; that “we” “could do more”; and ends up adopting a “blame the victim” mentality. As Wolf seems to be doing here–after all if you are born here and don’t devote your life to some wasted cause of fighting The Man, then it’s your fault. Ridiculous. I don’t believe in blaming the victim, nor in attributing responsibility to people for others’ actions.

NOw that said, I would say that many Americans are somewhat responsible for the US’s actions, because they endorse or support it. But Wolf seems to think even those who oppose the state are responsible. This shows his un-nuanced implicit theory of causation is out of control.

In the present context, I think it is a moral duty to expatriate, communicate secretly about what can be done.

Okayyyy. Suree.. This is why libertarians have a somewhat … non-real-world reputation. I guess we all have a duty to buy and read The Black Arrow, too.

I am often wrong. I could be wrong about moral consequences, but it’s hard to understand why an American citizen should be exempted from guilt for the criminal actions of his government.

THe burden is the other way around, Wolf: they are exempt unless you can demonstrate by a good causal link, because they did not commit the actions. Hell, why shouldn’t a German citizen be responsible for American actions? After all, he could mount a private army and take on the US government–and if he dies trying, why, it’s his obligation as a Freedom Fighter, eh? No one has a right to a life, they have to pretend it’s Red Dawn and join the Wolverines, eh?

Yes, of course. It’s a democracy. If you mean ancaps and libertarians, rather than the broad electorate and mainstream parties, the answer is still yes. I was part of the antiwar vanguard in the 60′s and experienced what a handful of activists (Dave Dellinger, the Berrigans, Tom Forcade) can achieve.

In the present context, I think it is a moral duty to expatriate, communicate secretly about what can be done. The press is doing a good job of busting White House lies and recently outing CIA torture centers in Eastern Europe.

Look at it another way. 9/11 was punishment. We were tried and found guilty. Insurgents in Iraq and Afghanistan are inflicting more punishment. Cindy Sheehan and a growing number of military veterans are on the march.

In WWII, the civilian populations of Germany and Japan were punished so severely that both were transformed into peaceful free-market societies.

I am often wrong. I could be wrong about moral consequences, but it’s hard to understand why an American citizen should be exempted from guilt for the criminal actions of his government.

You had me at being “tried for assisting in mass murder in a foreign country”!

Honestly, do you believe any of us has any effect whatsoever on the federal Leviathan?

Quite a smear. All opponents are dolts.

The “free contract” litmus test amuses me. It would be alarming, except that no enlightened society would tolerate it. Equity routinely trumps contract. And the less we legislate, the more we need common law courts. Think asbestos you can about product liability and the duty of care that comes with a profession like banking, medicine, dentistry, structural engineering, law, etc. A “free contract” with a child or an idiot is void on its face.

I sympathize with those who want Proctor & Gamble to float common shares and commercial paper. The idea, however, is to hold Mr Proctor and Mr Gamble or their heirs and successors personally liable for everything done or not done in pursuit of commerce. For instance, if an ingredient in Crest’s secret formula is strontium 90, or they made a batch of poison Colgate to ruin a rival, there must be something other than “free contract” as a first principle of public justice.

A free society is not made more free by closing the law courts, nor by replicating the worst features of statism — in this case, corporate charters, trusts, nonprofit orgs, unions, etc.

I agree that the thread became elementary and depressing, albeit for another reason altogether.