Kevin Carson: Sympathy for the Devil, BP. I reply in detail in the comments.
Sheldon Richman, Self-Regulation in the Corporate State: The BP Spill. My comments to Richman:
This is a good piece–unlike Carson’s (uncharacteristically) weak one on this topic. Of course, Lew’s comments were not a defense of BP of the type Sheldon rightly criticizes; none of us are under any illusions that there is no corporatism going on here. And even if BP was too careless and negligent, that doesn’t mean we ought not feel sympathy for them (presupposing they will in the end take the brunt of the costs of the damages).
Tokyo–of course the state should get out of the incorporation business altogether, just as it should get out of marriage. Of course it should end its limited liability grants (and it should also end its court system that would impose liability for torts etc. in the first place).
The question is: in a free market, with the state out of the way, if a contractual-”corporation” were formed–call it a Hessen–would passive “shareholders” have liability for torts committed by employees/agents of the Hessen they held a share in? You have to argue for it, carefully. Pilon and Hessen have explained why there is no need for a limited liability grant b/c there is no reason to impose vicarious liability on a shareholder in the first place — https://stephankinsella.com/2009/10/26/pilon-on-corporations-a-discussion-with-kevin-carson/ .
To argue otherwise you would need to articulate a careful, libertarian-based theory of causation and responsibility which none of the left-libertarian opponents have done, to my knowledge. Rather they just assume it’s obvious that a shareholder should be liable and would be, if not for the pernicious limited liability privilege. They just point to a few “moral hazards” and incentive effects they don’t like, as if consequentialism were not controversial. Or they just trot out an unthinking “owners are responsible for their property”–which is doubly flawed: first, owners are responsible for their actions, not their property; second, relying on the state’s own legal classificaiton scheme to call a shareholder an “owner”–ownership is the right to control and obviously the shareholder can’t fly the corporate jet or use the corporate boardroom or set policy or manage employees etc. see http://blog.mises.org/8993/the-over-reliance-on-state-classifications-employee-and-shareholder/
So the shareholder’s role in the company is limited, and if you come up with an ad hoc vicarious responsibility conclusion to get what you want, it’s going to rest on an at least implicit causation idea that is so broad that you would also have to say that many other actors connected to the Hessen are also vicariously liable for its torts: employees, creditors, suppliers and other vendors, consultants, customers, attorneys, accountants, stakeholders, and on and on.
Mr. Carson obviously rejects, or doesn’t understand, elementary economics. You can easily detect this from all of his writings. So the differences in points of view are practically irreconcilable.
So if the shareholders don’t own the corporation then who does?
Or are you creating a free market without owners?
Also you ignore the fact that by owning a share in a corporation the shareowner has voluntarily joined a collective and that voluntary collective of shareowners does have the right to fly the corporate jet, or use the boardroom or set policy. Collectively they have the power to fire anyone in the corporation and put themselves into any position they want.
Shareholders are not necessarily investors–I can buy a share from an original investor and give him money, not the corporation.
“So if the shareholders don’t own the corporation then who does?” There is no corporation. THere are only assets. The state has perpetuated the personality theory of the corporation as an excuse to regulate and tax it. In a free market there would just be original founders who pool some assets via a contract that specifies how the capital is to be used, including procedures for appointing managers who directly control the assets. Thus ownership is in a sense divided because ownership is the right to control.
So take assets owned by Google (in a free market). Who owns these assets? Well, we say google owns them, as shorthand. Shorthand for what? To refer to the corporation-contract that specifies who has the right to control the property. The shareholders have certain rights, as to board members, managers, and other employees–and evne others, such as creditors and customers and tenants and whatnot.
Suppose you own a car but you lease it for a year to your friend. During that year who owns it? You do, but you can’t use it! So ownerhsip has been split. Better to say you have what’s called in the civil law ‘naked ownership” and the other guy has usufruct. And so on.
No, shareholders are investors, not owners. Any first-year accounting student can tell you that. Owning common stock in a company gives you a claim on the firm’s equity, not on its assets. Owning stock in a company gives you no hand in managing the company either – shareholders can join forces to hire/fire directors, but not employees.
But they can tell the directors to fire employees and if they don’t they can fire the directors and replace them until such time as they get directors who will fire and hire the employees that the shareowners want, plus allow the shareowners to fly the corporate jet, and use the corporate boardroom and set policy.
So back to my other question, if the shareowners are not the owners of the corporation then who is? I thought that ownership was one of the bedrocks of a free market?
DJF,
Share holders are the owners of the cooperation. period. The executives are employees. And the consumers are well…consumers. The State has obviously corrupted the process of the joint stock company, nevertheless, it is still a joint stock company and the shareholders are its owners.
Shareholders have a right to a company’s assets during liquidation although the rights of other creditors such as banks supersede the shareholders so they are usually left with nothing.