[update: see also Roderick Long, Advocatus Diaboli, and my and others’ comments; and Sheldon Richman, Walmart: Yea or Nay?, and my comments]
From the Mises Blog:
The Walmart Question, or, the Unsupported Assertions of Left-Libertarianism
In Three notes for the critics of the critics of apologists for Wal-Mart, Charles Johnson/”Rad Geek” weighs in on this matter, criticizing, inter alia, Huebert and me. The following is not so much a direct reply to Johnson, but rather my own independent take on the ongoing disagreements between libertarians and soi-disant “left-libertarians.”
First, I don’t think any of us normal libertarians disagrees with the left-libertarians that every one of the state interventions they criticize should be abolished. (I say “normal” libertarians here for want of a better term: I reject the implication that the left-libertarians’ opponents are “paleo” libertarians; but just non-left, or normal ones.) We all agree that eminent domain, government roads, pro-union legislation, minimum wage laws, and even state incorporation statutes (with their limited liability and corporate-legal-personality traits) should be abolished. We all agree that these various laws distort the economy and are unjust.
But the left libertarians keep making unsupported assertions pivoting off these fairly trivial, uncontroversial observations. For example, they seem to think some of these laws amount to a net benefit, at least for some corporations. I see no reason to assume this. I rather think that absent all these provisions (and other state interventions, such as taxation), the Macys and Walmarts would be on net much better off. Lockheed–maybe not. Federal employees–no. They’d be unemployed. But normal, productive firms? Call me crazy, but I think the state harms them, and harms the great bulk of people on net.
If you abolish the incorporation statutes, then per Hessen you’d still have corporations anyway, and probably still have limited liability, since there is no reason to attribute vicarious liability to “shareholders” anyway (see Corporations and Limited Liability for Torts). And even if you did succeed in holding them liable, corporate D&O insurance would simply be extended to cover shareholders too. This would lead to a very slight increase in costs to corporations, but no major systemic change that would lead us to expect international/long distance commerce and multinational enterprises would shrivel and die.
If you abolish eminent domain, then Walmart’s costs would increase ever so slightly. This is because as far as I know eminent domain is used only occasionally–I’ve seen no reason to think it’s even 1% of their stores; and even then, Walmart has to pay for the land. Yes, the price paid is presumably less than they would have had to have paid otherwise; or the land location is somewhat better than free market alternatives, but you can see this is all marginal: the location is a bit better; the price is a bit less–for a presumably very small number of stores. In my view, no sane person thinks Walmart’s basic business model would be affected in the slightest if eminent domain were unavailable.
As for state roads–the left-libs keep asserting that these provide a disproportionate advantage to “big box” retailers and other aesthetically displeasingly “big” firms. This seems to be an assertion to me. The mom and pop hardware store near my home has its shelves stocked with products manufactured in China, shipped using the same transportation networks that “big box” retailers use.
(Now I will grant that the larger firms probably benefit disproportionately from the effects of minimum wage and pro-union legislation, but you don’t hear the left-libertarians fulminating much about those laws–and certainly not against militant unions and “wildcat strikes” (see ch. 3 of Carson’s book). To some libertarians, there may be a perception–how justified, I cannot say, but in any event not that surprising–that left-libertarianism is a bit tainted by what appears to be a sentimental, bizarre rhapsodizing over “localism” and quasi-Marxoid ideas like “wage-slavery,” alienation from labor, “the workers,” and so on.)
And so what if you are right? Let’s say Walmart does receive some kind of net subsidy now. Well, so what? We all oppose the state actions that result in the subsidy. And here we come to what I think is perhaps the greatest weakness of the left-libertarian anti-corporate project. If their analysis merely led them to have different predictions than normal libertarians, who cares. We all agree that the state and its various interferences ought to be abolished; I’m sure we would all be willing to see what happens: whether we’d have a world of hippie hemp-wearing peace and love worker self-sufficient coop localist organic vegan acoustic guitar by campfire communes and kibbutzes, or a modern, vibrant, industrialized, capitalist world of international trade and multinational enterprises. Then this debate would be merely one of predictions and personal preferences; it would be similar to the way I think the debate between Rothbardians and freebankers on the fractional reserve “fraud” issue should be handled, namely, even though I agree with the former that fractional reserve banking is economically disastrous, I’d be happy to see fractional reserve banks compete with real banks so long as adequate disclosures were made to the customers.
But it is not merely a debate about predictions. It is used to inform their views of legitimate property holdings, and justice. In various debates, centered around the vandarchism issue–the legitimacy of hooligans’ bashing in Macy’s windows–the left-libertarians have steadfastly refused to grant that Macy’s and Walmart are the legitimate owners of their property. They seem to think there is no need to carefully adumbrate a theory of responsibility and then to carefully apply this to particular cases. Walter Block has attempted the beginnings of such a theory, e.g. see his Toward a Libertarian Theory of Guilt and Punishment for the Crime of Statism. But the left-libertarians seem to think they can just hand-wave at some libertarian deviations of Walmart, as if this suffices to show that Walmart is not the real owner. They think the debate instantly turns to the question of who the owner is: is it the workers, or the brick-throwing hooligans, or taxpayers, or is it unowned and subject to homesteading? But the assumption is that the corporation is not the owner. They think this is uncontroversial–or, at least, that they don’t need to provide an argument for this.
I think they do. Without a coherent theory, we are left with basically some kind of implicit unclean hands approach–if you can point to unlibertarian acts, then the actor or recipient has no rights. The problem is that if this theory is not spelled out, it can be used by anyone based on their pet preferences, to attack whoever they dislike. The thing is, we do live in an unfree world. Virtually every person, and every firm, is entangled in the state’s web. No one is lily-white. We all use the roads. We all “benefit” directly or indirectly from state spending of stolen funds. Mindlessly adopting a stark unclean hands theory without nuance or adumbration results in nihilism and a war of all against all. Under such a theory, there are no rights left; everyone is criminal, and has no property rights.
Obviously, this is not libertarian. To declare a firm like Macys or Walmart to be criminal, to penalize it by removing its right to exist and to own property–to refuse to condemn, on principled grounds, those vandals and squatters who trespass on or vandalize its property–requires a coherent theory of justice applied to individuals living in an unfree world. To my knowledge, the left-libertarians have not done this; they have not even tried. (N.B.: authors of papers along these lines are welcome to submit them to me for consideration for publication in Libertarian Papers.) Until they do, their anti-corporate screeds will continue to be perceived as inexplicably hostile attacks on commerce and industry, based on merely personal (and somewhat quaint and naive, if not bizarre) preferences. I won’t say put up or shut up–but I will say, put up, or expect to be relegated, in the minds of normal libertarians, to quasi-crank status.
***
Published: April 26, 2009 11:09 AM
Published: April 26, 2009 11:19 AM
Published: April 26, 2009 11:23 AM
Published: April 26, 2009 11:51 AM
Published: April 26, 2009 12:23 PM
if 4 people own something and 1 is using it…can it be said then that 3 people can actually own the item.
or are there really just competing usage attempts amongst the owners and more of a right to exclude others from use?
Published: April 26, 2009 2:40 PM
If my wife and I create a limited liability corporation called “Tree Ltd” and the tree falls over onto my neighbors car does this mean that only that corporation is liable and that the rest of my wife’s and I’s property is safe from lawsuit? So the only asset that my neighbor can get is the firewood from that tree to pay for the new car he needs.
Another question is who is an owner? If you want to talk about clear property rights of owners should there not there also be a clear definition of who is the owner or owners of that property?
If shareowners have voluntarily collectively joined together to own that property does this not also mean that they have voluntarily collectively joined together to take responsibly for that property. If we say that shareowners are not responsible for their ownership then who is, the management, the board of directors, nobody?
Finally a thought about a statement in the original article “And even if you did succeed in holding them liable, corporate D&O; insurance would simply be extended to cover shareholders too. This would lead to a very slight increase in costs to corporations, but no major systemic change that would lead us to expect international/long distance commerce and multinational enterprises would shrivel and die.”. How do you know what the costs will be, right now we have banks with billions and trillions in liability for bad business practices. They made huge amounts of contracts which they did not have the money to pay off and without government taxpayer bailout these corporations would be economic “black holes” which would have far more debt then any insurance could pay off. In fact AIG is an insurance company which can’t even pay off its own liability.
If it is true as the author states that this is only a minor cost then we should immediately end all government sponsored limited liability now since it is obviously not needed. However as shown by the banking and insurance business today, corporations are quite capable of creating massive debt that is beyond any possibly of insurance covering the costs and we need to decide who should be first in line to pay back what money that can be paid back. Is management responsible, is the board of directors, is the shareowners, is no one responsible?
So instead of talking about Wal-Mart which today seems and I repeat seems not to have massive liability for debt, lets change it too Citibank or Goldman Sachs or AIG which as we all know today have managed to created astronomical levels of debt they can‘t pay off. Who owns these corporations, who is responsible, who should be required to pay off the debt that these corporations have created? I don’t think anyone at Mises.org thinks that the taxpayer should pay off these debts so who do you think should, the management, the board of directors, the stockowners, those who lent these corporations the money they lost? Are these debts the responsibly of real flesh and blood humans or is it the responsibly of a piece of paper called a corporation that was created and run by real flesh and blood humans?
Published: April 26, 2009 2:41 PM
Published: April 26, 2009 3:03 PM
There is nothing whimsical about that tree if it falls on your car. So who should pay, the owner of the tree or the owner of the car, or should the assets of “Tree Ltd” be the only thing at risk?
“”””If I give somebody $50000 to invest and he instead uses it to rob the Federal Reserve’s New York branch(yes it’s whimsical, but better than a tree), should I be held liable because I unwittingly funded his misdeed?”””
But your not just an investor you as stockowner collectively have control of that corporation and appoint the board of directors who appoint the management. So if the people you put in charge rob the Fed then you say you have no responsibility for the corporation or the people you hired? What if you were a stockowner in “Rob the New York Fed Ltd” would you have any responsibility then?
So as I asked above, what is ownership, who is an owner and what benefits and costs are there in ownership. Also should there not be a clear title on ownership so those who own are known and their responsibilities clear?
Published: April 26, 2009 5:35 PM
A creditor has the option not to deal with a corporation, as does a consumer. In a free market, do you really think that these companies wouldn’t insert like-functioning clauses into contracts?
In all odds, the owners of your Tree Ltd are also its employees; in any case, they are culpable for their actions.
As long as you did not sanction their actions, then vicarious liability ought not apply(unfortunately, it often does in today’s legal system).
If I did not sanction an action and took reasonable measures against it, then I have fulfilled my obligation. Individuals acting against my wishes in my name do not make me liable.
Published: April 26, 2009 6:06 PM
So they hired some teenager to act as manager of “Tree Ltd” and he is responsible? He does not have the money to even buy his own car let alone buy me an new on. There are plenty of way of hiring employees with little or no assets to avoid liability if you claim that employees are to be held responsible
“”””If I did not sanction an action and took reasonable measures against it, then I have fulfilled my obligation. Individuals acting against my wishes in my name do not make me liable. “”””
But did you take reasonable measures against it. Did you inspect your tree, did you get insurance on your tree, did you warn your neighbor on the danger of parking next to your defective tree, did you chop down your defective tree?
And how about if you are a stockowner in AIG, did you keep track of what your corporation was doing, did you monitor the level of Credit Default Swaps which AIG took out? Did you organize with your fellow stockowners and remove the management which was sending your corporation over an economic cliff. What exactly did you do as part owner to take “reasonable measures” against the bad economic decisions of AIG? Or did you just collect your dividend and watch your stock price soar?
Published: April 26, 2009 6:55 PM
Published: April 26, 2009 7:27 PM
Published: April 26, 2009 8:05 PM
Published: April 26, 2009 9:51 PM
Published: April 26, 2009 10:21 PM
Published: April 26, 2009 11:54 PM
Published: April 27, 2009 3:16 AM
I’m trying to frame the issues to try to be clear on just where and why there is disagreement between libertarians and left-libs.
Published: April 27, 2009 8:01 AM
It’s this current lack of highly distributed mom&pop; model due to zoning restrictions and not paying actual cost of road use where I guess (no hard numbers) the big box stores get the benefit of state intervention.
Published: April 27, 2009 9:18 AM
Published: April 27, 2009 9:57 AM
Published: April 27, 2009 9:58 AM
Leftist: “True, but so are libertarians.”
Anarchist: “Property sux!”
Marxist: “Yes, overthrow Wal-Mart and create a communist state!”
Normal-Libertarian: “I don’t think it’s working….”
Left-Libertarian: “Enough of your corporate-statist apologetic and vulgarism! See, they like me…they really like me!”
Published: April 27, 2009 10:18 AM
Published: April 27, 2009 11:13 AM
Published: April 27, 2009 2:55 PM
http://www.econlib.org/library/Enc/Corporations.html
Published: April 27, 2009 3:08 PM
That means that there is also question begging, assuming what it seeks to prove, in “But the assumption is that the corporation is not the owner. They [left libertarians et al] think this is uncontroversial–or, at least, that they don’t need to provide an argument for this.” Rather than assuming that corporations are not owners, they see that there is a prevalent assumption that they are legitimately “persons” that can own things at all, and so they suppose that the burden of proof lies the other way. (Myself, I believe that certain types of corporation can exist without state creation and maintenance – I have mentioned monasteries – but the ones that need it have no more standing than the state itself has to create and maintain corporate status, and determining which applies needs to be worked out on a case by case basis rather than assuming corporate legitimacy.)
So it’s not “Without a coherent theory, we are left with basically some kind of implicit unclean hands approach–if you can point to unlibertarian acts, then the actor or recipient has no rights”. There is a coherent theory, and it has nothing to do with “unlibertarian acts” (except possibly as symptoms), it has to do with whether the “actor or recipient” has any proper existence at all in its own right as opposed to by state fiat.
So “To declare a firm like Macys or Walmart to be criminal, to penalize it by removing its right to exist and to own property–to refuse to condemn, on principled grounds, those vandals and squatters who trespass on or vandalize its property–requires a coherent theory of justice applied to individuals living in an unfree world” is missing the point and begging the question by casting it in the form “removing its right to exist and to own property” rather than “not assuming and stipulating its right to exist and to own property”. That makes requiring “To my knowledge, the left-libertarians have not done this; they have not even tried” applying the wrong test, just as it would be if all those things were being done in the name of my neighbour’s cat.
So this is all talking past the issues, on the back of a whole load of assumptions from the other direction.
Published: April 27, 2009 11:45 PM
“””“The neighbor should have insurance for these kind of events.””””
So you don’t properly maintain your tree and your neighbor must pay? And what if his insurance company was AIG whose stockowners had failed to maintain proper control of its debts so the insurance does not pay off the damage. Once again the owners according to some are not held responsible for what they own.
“”””What if a tree that was on unowned land fell on his car?””’
Then there is no ownership liability. Plus if the tree was unowned the neighbor could inspect and even take action to prevent the tree from falling on his property. Thanks for showing my point, if you can’t take responsibility for what you own then you should not own it.
I find it strange that so many free market types seem to have so little idea about the concept of ownership and while they love the benefits of ownership they seem to want to pass the buck on the responsibilities of ownership
Published: April 28, 2009 9:25 AM
Published: April 28, 2009 1:39 PM