I was just informed that someone had covertly uploaded a modified picture of me on my Wikipedia entry and overwrote the previous image–made my forehead look bigger etc.
I have previously posted (Intellectual Property & Scarcity) on some of Eugene Volokh’s utilitarian arguments in favor of IP; see the post Dirty Little Secrets and Intellectual Property Solutions, by Stephen Gordon of Hammer of Truth, discussing my views and those of Volokh.
As you may recall, I was banned some time back from the Liberty & Power blog. Well, I’m ba-a-a-ack. Thanks to the kind intervention of several L&P; peeps including Aeon Skoble, David Beito, Wendy McElroy, Roderick Long, Anthony “Tee-Boy” Gregory, and William Marina, they let me back in.
And on this topic–see my recent comments on the topic of the ninth and tenth amendments in reply to one of Aeon Skoble’s posts. My comments are pasted below, sans context:
I have pointed out before that the entire notion of “privacy” in terms of rights, seems confused. For example, even the term “private property” seems a bit misleading–the essence of property is that it is a scarce resource that has been acquired, homesteaded and brought into the homesteader’s ownership; property requires publicly ascertainable borders, and acquiring unowned resources means embordering it (as Hoppe perceptively argues–on the nature of ownership, see Hoppe’s A Theory of Socialism and Capitalism, chs. 1, 2, esp. pp. 5–6, 8–18, discussing notions of scarcity, aggression,
property, norms, and justification, and ch. 9, esp. pp. 130–145;
also links in this post).So property is in a sense necessarily “public”–the very function of property rights is to establish intersubjectively ascertainable borders that others can see and avoid, in order to avoid conflict.
But this is sort of a semantic point.
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Mark–good comments.
Aeon:
“So if there is no explicit power to violate privacy given to the government, which there isn’t, then we retain our natural right to privacy.”
Aeon, I respect what you are trying to do, but in my opinion, you do here what too many libertarians do, when discussing the federal Constitution–you use “the government” in a generic way, that would include the states too.
But this is contrary to your reasoning, which is sound, more or less, I think–your point is that if a power is not enumerated, then because the fed gov’t is one of strictly enumerated powers, then it does not have the power to do it. yet of course this does not apply to the states, which are governments of general or plenary legislative power, not enumerated powers.
Also you use the 9th amendment to buttress your point that the fed gov’t is one of limited and enumerated powers–you don’t really use it to argue for unenumerated rights, as you seem to start to do. You basically are arguing that if there is not a power enumerated to infringe on a right, then it must be part of the 9th’s unenumerated rights.
I think this is a bit confused. Hear me out.
You would be better to point to the 10th Amendment if you are going to make the argument that lack of an enumerated power to violate the right to privacy means they don’t have the power. This argument (IMO) has little to do with the 9th.
I view the proper structural reading of the Constitution as follows. First, as the 10th and its history and structure shows, the feds have only enumerated powers; if a power is not granted, the feds have no power. You don’t even need to point to a right. The rights listed are just safeguards, sort of a secondary system. They are trumps, or side-constraints. So for example, Congress has no power to censor speech in the first place; but if they try to do it, the 1st amendment would be violated too. It is a backup. You only need to constrain a power that is assumed to exist.
But what if Congress tries to violate an unenumerated right, like right to “privacy”? Or the right to marry who you want? Etc.? Well again, the first argument is: Congress has no enumerated power to legislate in this field. If that fails, what is the backstop argument–the 9th amendment? I suppose, but this is loosey-goosey. How do you konw what is an enumerated right?
Consider this case: Congress passes a law banning murder. This is clearly unconstitutional because there is no power enumerated for this. But suppose the Court finds a power somewhere–in the interstate commerce clause, say. Notice that you cannot find a right now as a backup; the only way to do it would be to say, well the 9th amendment must protect an unenumerated right to commit murder. But obviously no one would argue this. Why not? It’s logically the same as using it to argue there is a right to privacy. In both cases, (a) Congress has no power delegated to it to regulate “privacy” (or abortion etc.) and it also has no power granted to it ot regulate murder; and (b) none of the enumerated rights cover the right to privacy, or a right to commit murder. What is the difference between these cases? How could you, by merely relying on the enumerated-powers scheme of the Constitution, and the rule of constrution laid down in the 9th Amendment, to distinguish between them?
In my view, the 9th amendment is largely worthless except as (a) reinforcing, in tandem with the 10th amendment, the idea that the feds have only limited powers: only those enumerated and delegated to them (I discuss some of these issues re the 9th and 10th here); and (b) perhaps providing some kind of presumption of liberty to force the feds to bear the burden of justifying any given law that infringes on some kind of common law liberty interest, as Randy Barnett argues, if I recall. I am, however, skeptical of (b) since, although I like the idea as a libertarian, it just seems too much of a later invention by modern, libertarian, wishful thinking; a substitution of what the Constitution really says for what one would like it to say; it’s hard to believe this is a natural implication of the original understanding of the Constitution’s text and structure.
(I must say, btw, the notion of a right to privacy seems ridiculous to me. It’s vague and undefined. Why is this part of libertarianism, or even consistent with libertarianism. We support individual rights which are in essence property rights; and we oppose aggression, or the invasion of those rights. What has this to do with a “right to privacy”? But this is neither here nor there.)
In any event, I would not oppose the 9th setting up a presumption of unconstitutionality whenever any liberty is infringed (as I believe Barnett proposes), but notice that this presumption would be reached only if we pass the first test, which is asking if there is a Congressional power enumerated.
It seems to me that if there is no power enumerated, then the Court would either recognize this, and strike the law down (in which case it does not need to look at the “rights” in the Bill of Rights); or it ignores this and implicitly assumes that there is a power enumerated. In this latter case, if you do presume Congress has power to legislate, it’s hard to say there is an unemerated right standing in the way of this power. In other words, if the Court recognizes that Congress indeed has limited powers, then the Bill of Rights, including the 9th amendment, is unnecessary; and if it does not recognize this, then the 9th amendment, at least, is going to be useless (as it has proven to be).
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“we by nature have _all_ (negative) rights, and governments only have those powers given to them to secure those rights.”
Aeon, as I noted in the longer post here–this use of “governments” is treating states like the feds. But it is simply not true that state governments have “only those powers” given to them to secur
e those rights. States in fact have general (sometimes called plenary) legislative power. This does not mean, as some unfairly and dishonestly suggest, that states have unlimited power; but it does mean that they have a wide range of power to regulate various actions, not just those that secure our natural rights.In other words, U.S. States are simply not libertarian minarchist states. A minarchist state has strictly limited and defined powers, but states are not so limited. U.S. states–indeed, all modern states in the world today, have much broader powers than permitted even by libertarian minarchist theory. The one exception is the US federal government: it actually has less power than a minarchist state would (in some areas): for example a minarchist state could outlaw and prosecute murder; the federal government may not. (Of course there are things the feds are empowered to do that a minarchist state would not be, e.g. tax, draft, build roads, coin money.)
So you can think of modern states as having a wide set of powers, which is a superset of the powers of a minarchist state. The US federal government, by contrast, has a set of powers that only intersects with the minarchist set of powers–it has some powers a libertarian state would not; but it lacks some powers that a libertarian state would have, due to the uniquely federal and limited nature of the federal government’s original charter.
From the Mises Blog, October 27, 2005 (archived comments below):
Piet-Hein van Eeghen’s article “The Corporation At Issue, Part I: The Clash With Classical Liberal Values and the Negative Consequences for Capitalist Practices,” in the latest issue of the JLS, argues that “the corporate form of business organization is inherently incompatible with the principles of classical liberalism.” (Further summary of van Eeghen’s piece reprinted below.) [see The Corporation at Issue, Part I: The Clash of Classical Liberal Values and the Negative Consequences for Capitalist Practices and The Corporation at Issue, Part II: A Critique of Robert Hessen’s In Defense of the Corporation and Proposed Conditions for Private Incorporation]
I have elsewhere posted a brief reply to other libertarian critics of the corporation (that reply is reprinted below), and more or less defended the pro-corporation view of Objectivist Robert Hessen.
Part II of van Eeghen’s article, to be published in JLS 19.4, will offer a critique of Robert Hessen’s defense of the corporation, but I will go ahead now and summarize some of my comments on Part I. I found most of van Eeghen’s arguments to be beside the point, at least for what to me is the basic question, which is: does respecting corporate status violate anyone’s rights?
Van Eeghen implies it does, because of limited liability. It seems to me that the corporation basically says shareholders are not liable for contractual obligations of the corporation. Obviously this could easily be recreated solely using private contracts. The person or company who does a deal with ABC Corp. is in effect agreeing not to pursue the assets of the shareholders if the company owes him money. So whose rights are violated? As for tort liability—well, I am not aware of corporate law limiting the liability of any person, shareholder or otherwise, for torts he commits.
In libertarian law, if you have a complex organization or business, you need to show some given person is responsible for the tort committed by someone else if you want to hold them responsible. It’s a causation question (Pat Tinsley and I go into the issue of causation and responsibility in Causation and Aggression). If the FedEx truckdriver negligently runs over you, is the shareholder responsible? Well, why would he be responsible in the first place? Because he gave a bit of money to the company? But so do customers! And banks. And suppliers. (And actually, most shareholders never gave money to the company—they bought the shares from a previous shareholder.) Because they control the company’s actions? Well they had no more influence over the concrete decisions of the truck driver, or his direct supervisor, than an influential creditor or customer.
The point is if you can make a case that a given person other than the one directly responsible (the truck driver) is causally, jointly liable, fine—then under libertarian principles this person is also liable. In such a case I am not aware that corporate law grants them immunity from suit; and if and to the extent it does, then it should not (I don’t think it does but would need to check this). If there is a problem with the law in this regard, it is with the law’s failure to assign liability according to sound principles of causation.
If some critic of the corporation thinks some managers, and perhaps some directors, in a given incident are causally responsible for the tort, then fine, say so, and make the case. I would not oppose this in general. I believe it’s very difficult in most cases to connect the actions of the shareholder to damage caused by an employee of a company in which the shareholder holds stock. But if it could be shown in a particular case, then fine, he is liable. What has this to do with corporate law, which as far as I know primarily is aimed at limiting the liability of shareholders for contractual debts of the company—which is perfectly libertarian.
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From Roderick Long’s summary of the JLS issue:
Walter Block has argued in an earlier issue — JLS 16.4 (Fall 2002) — that “Henry Simons Is Not a Supporter of Free Enterprise.” In “The Corporation At Issue, Part I: The Clash With Classical Liberal Values and the Negative Consequences for Capitalist Practices,” Piet-Hein van Eeghen offers a qualified defense of Simons by taking up what he sees as one of Simons’s key insights: that the corporate form of business organization is inherently incompatible with the principles of classical liberalism.
The problem with the corporate form is that it grants to private business a distinctive governmental feature — legal personhood, and the accompanying privilege of limited liability — without the correlative burden of democratic accountability; granting such a status, van Eeghen argues, constitutes an un-libertarian surrender of individual responsibility, and confers the benefits of ownership without its corresponding costs, thus enabling corporations to concentrate power and externalize risk in ways to which libertarians should object. (Part II, to be published in JLS 19.4, will offer a critique of Robert Hessen’s defense of the corporation as an institution.)
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Legitimizing the Corporation [from LRC blog]Marginal movements tend to draw their share of nuts and cranks; unfortunately, libertarianism is no exception. In addition to claims that we don’t (not “shouldn’t” but “don’t”) owe income tax, or “that hiring an attorney means abandoning personal sovereignty before the law, or that having a yellow-[or gold-]fringed flag in a room means you are under martial [or admiralty/maritime] law,” there are also a fair number of libertarians who view the modern corporation with suspicion. They are concerned that the corporation is viewed as a “person” and believe, erroneously, that corporations shield corporate employees from liability for negligence.
I usually find that the opposition to corporations comes from leftists, or, if libertarians, from ignorance of contract and corporate law…. most people don’t even realize that if a FedEx truck runs you over negligently you can sue the driver. They think he is immune from suit or something. But it is the other way around; if a FedEx truck negligently hits you, it is of course the driver that is responsible. His employer is responsible for its employee’s own negligence and liability only because of the doctrine of respondeat superior; but if the employee is found to be non-negligent, the employer-corporation is off the hook too. This is in fact why corporations usually defend their employee and themselves when sued for the employee’s actions.
But opposition does not always stem from ignorance of the law or leftism: for example, one critique comes from two libertarian-Austrian attorneys: “De-legitimizing the Corporation: An Austrian analysis of the firm”, Jeffrey F. Barr & Lee Iglody, Austrian Scholars Conference 7, March 30-31, 2001, Auburn, Alabama.
Robert Hessen’s (a Randian) In Defense of the Corporation is a good defense of corporations. He shows that they don’t require privilege from the state to exist; they can be constructed from private contracts. One of Hessen’s articles nicely summarizes some of his views. Some excerpts are pasted below. My view is that corporations are essentially compatible with libertarianism. As for voluntary debts being limited to the corporation’s assets; this is no problem since the creditor knows these limitations when he loans money. What about limited liability for torts or crimes? As mentioned, the person direclty responsible for a tort or crime is always liable; sometimes the employer (which is often a corporation) is also liable for the employee’s actions, via respondeat superior. Who else should be responsible? In my view, those who cause the damage are responsible. Shareholders don’t cause it any more than a bank who loans money to a company causes its employees to commit torts. The shareholders give money; and elect directors. The directors appoint officers/executives. The officers hire employees and direct what goes on. Now to the extent a given manager orders or otherwise causes a given action that damages someone, a case can be made that the manager is causally responsible, jointly liable with the employee who directly caused the damage. It’s harder to argue the directors are so directly responsible, but depending on the facts, it could be argued in some cases. But it’s very fact specific. Perhaps the rules on causation should be relaxed or modified, but this has nothing to do with there being a corporation or not—for the laws of causation should apply to any manager or person of sufficient influence in the organization hierarchy, regardless of legal form of the organization (that is, whether it’s a corporation, partnership, sole proprietorship, or what have you).
Excerpts from the Hessen article—
The actual procedure for creating a corporation consists of filing a registration document with a state official (like recording the use of a fictitious business name), and the state’s role is purely formal and automatic. Moreover, to call incorporation a “privilege” implies that individuals have no right to create a corporation. But why is governmental permission needed? Who would be wronged if businesses adopted corporate features by contract? Whose rights would be violated if a firm declared itself to be a unit for the purposes of suing and being sued, holding and conveying title to property, or that it would continue in existence despite the death or withdrawal of its officers or investors, that its shares are freely transferable, or if it asserted limited liability for its debt obligations? (Liability for torts is a separate issue; see Hessen, pp. 18-21.) If potential creditors find any of these features objectionable, they can negotiate to exclude or modify them.
Economists invariably declare limited liability to be the crucial corporate feature. According to this view the corporation, as an entity, contracts debts in “its” own name, not “theirs” (the shareholders), so they are not responsible for its debts. But there is no need for such mental gymnastics because limited liability actually involves an implied contract between shareholders and outside creditors. By incorporating (that is, complying with the registration procedure prescribed by state law) and then by using the symbols “Inc.” or “Corp.,” shareholders are warning potential creditors that they do not accept unlimited personal liability, that creditors must look only to the corporation’s assets (if any) for satisfaction of their claims. This process, known as “constructive notice,” offers an easy means of economizing on transactions costs. It is an alternative to negotiating explicit limited-liability contracts with each creditor.
Creditors, however, are not obligated to accept limited liability. As Professor Bayless Manning observes; “As a part of the bargain negotiated when the corporation incurs the indebtedness, the creditor may, of course, succeed in extracting from a shareholder (or someone else who wants to see the loan go through) an outside pledge agreement, guaranty, endorsement, or the like that will have the effect of subjecting non-corporate assets to the creditor’s claim against the corporation.” This familiar pattern explains why limited liability is likely to be a mirage or delusion for a new, untested business, and thus also explains why some enterprises are not incorporated despite the ease of creating a corporation.
Another textbook myth is that limited liability explains why corporations were able to attract vast amounts of capital from nineteenth-century investors to carry out America’s industrialization. In fact, the industrial revolution was carried out chiefly by partnerships and unincorporated joint stock companies, rarely by corporations. The chief sources of capital for the early New England textile corporations were the founders’ personal savings, money borrowed from banks, the proceeds from state-approved lotteries, and the sale of bonds and debentures.
Even in the late nineteenth century, none of the giant industrial corporations drew equity capital from the general investment public. They were privately held and drew primarily on retained earnings for expansion. (The largest enterprise, Carnegie Brothers, was organized as a Limited Partnership Association in the Commonwealth of Pennsylvania, a status that did not inhibit its ability to own properties and sell steel in other states.)
External financing, through the sale of common stock, was nearly impossible in the nineteenth century because of asymmetrical information—that is, the inability of outside investors to gauge which firms were likely to earn a profit, and thus to calculate what would be a reasonable price to pay for shares. Instead, founders of corporations often gave away shares as a bonus to those who bought bonds, which were less risky because they carried underlying collateral, a fixed date of redemption, and a fixed rate of return. Occasionally, wealthy local residents bought shares, not primarily as investments for profit, but rather as a public-spirited gesture to foster economic growth in a town or region. The idea that limited liability would have been sufficient to entice outside investors to buy common stock is counterintuitive. The assurance that you could lose only your total investment is hardly a persuasive sales pitch.
No logical or moral necessity links partnerships with unlimited liability or corporations with limited liability. Legal rules do not suddenly spring into existence full grown; instead, they arise in a particular historical context. Unlimited liability for partners dates back to medieval Italy, when partnerships were family based, when personal and business funds were intermingled, and when family honor required payment of debts owed to creditors, even if it meant that the whole debt would be paid by one or two partners instead of being shared proportionally among them all.
Well into the twentieth century, American judges ignored the historical circumstances in which unlimited liability became the custom and later the legal rule. Hence they repeatedly rejected contractual attempts by partners to limit their liability. Only near midcentury did state legislatures grudgingly begin enacting “close corporation” statutes for businesses that would be organized as partnerships if courts were willing to recognize the contractual nature of limited liability. These quasi-corporations have nearly nothing in common with corporations financed by outside investors and run by professional managers.
Any firm, regardless of size, can be structured as a corporation, a partnership, a limited partnership, or even one of the rarely used forms, a business trust or an unincorporated joint stock company. Despite textbook claims to the contrary, partnerships are not necessarily small scale or short-lived; they need not cease to exist when a general partner dies or withdraws. Features that are automatic or inherent in a corporation—continuity of existence, hierarchy of authority, freely transferable shares—are optional for a partnership or any other organizational form. The only exceptions arise if government restricts or forbids freedom of contract (such as the rule that forbids limited liability for general partners).
Update: See further discussion and my list of resources on this in Sean Gabb’s Thoughts on Limited Liability. Update: Roger Pilon’s Corporations and Rights: On Treating Corporate People Justly also has some very good stuff on why limited liability does not give any special privilege to shareholders. See also my post Legitimizing the Corporation and Other Posts.
Comments (55)
See the post on Daily Apology; text below:
In a recent post I noted that around 15 years ago, Palmer published two law review articles (Intellectual Property: A Non-Posnerian Law and Economics Approach and Are Patents and Copyrights Morally Justified? The Philosophy of Property Rights and Ideal Objects) arguing against patent and copyright and also critiquing the wealth-maximization “law and economics” approach of Richard Posner. In the first article cited he criticizes “A jurisprudence that claims to be based on “law and economics” but that would constructively assign or rearrange rights as part of a strategy to achieve some pre-determined outcome (maximization of utility or of wealth, for example) …. ” Notice that Palmer characterizes Posner’s wealth-maximization framework as one that would lead to the rearranging of property rights to try to maximize wealth.
Now Posner is of course a Coasean. And in fact others such as Rothbard, Walter Block (2, 3), Gary North, and Hoppe (2) have made a similar observation about implications of Coase’s views (see also the views of Roy Cordato (2); Timothy Terrell‘s and Sebastian Storfner‘s summaries of Austrian critiques of Coase). Some of them note that the Coase Theorem could be interpreted as a recommendation that courts assign property rights so as to maximize wealth–in fact this is exactly what uber-Coasian Posner recommends, at least according to Palmer.
What is interesting is that in Palmer’s campaign to smear Hoppe by repeatedly distorting Hoppe’s views, he also has attacked Hoppe several times (1, 2) for interpreting Coase the way Palmer interprets Posner. He says Hoppe’s and Rothbard’s reading of Coase as meaning that “that courts assign property rights to contesting parties in such a way that ‘wealth’ or the ‘value of production’ is maximized” is an “absurd parody of an interpretation” and a “bizarre misstatement” of Coase. Palmer goes on:
Hoppe once attacked another panelist at a conference who had discussed the Coase Theorem by accusing the panelist (and Coase) of arguing that judges should be empowered to confiscate and rearrange property whenever the judge determined that the new distribution would be efficient. Now Coase has never said that and that’s not a part of or even an implication (at least, not without a number of questionable additional premises) of the Coase Theorem.
So, let me get this straight: Palmer’s interpretation of Coasian wealth-maximizer Posner is reasonable, while Rothbard and Hoppe’s interpretation of Coasian wealth-maximizer Coase is absurd and bizarre…? Of course a given interpretation of Coase is open to reasonable criticism, but is Palmer’s attack here–given his history of blatant distortions of Hoppe’s views, repeated even after being exposed, and given his similar views on one of the chief Coasians–a reasonable one, or merely evidence of his desperate attempts to smear Hoppe?
For links to other libertarian critics of Coase, see this post.
See the post on Daily Apology.
Also, from Pilon on Patents:
Palmer on Patents
Tom Palmer’s recent comments about patents are interesting in view of his previous publications about intellectual property.
First, around 15 years ago, Palmer published two law review articles (Intellectual Property: A Non-Posnerian Law And Economics Approach and Are Patents And Copyrights Morally Justified? The Philosophy Of Property Rights And Ideal Objects) arguing against patent and copyright and also critiquing the wealth-maximization “law and economics” approach of Richard Posner. Note that he opposed patents on principled grounds, and rejected the wealth-maximization approach. E.g., as he noted in the first article (p. 303),
A jurisprudence that claims to be based on “law and economics” but that would constructively assign or rearrange rights as part of a strategy to achieve some pre-determined outcome (maximization of utility or of wealth, for example) overlooks the analogy between the spontaneous order of the market and the spontaneous order of a legal system.
I.e., according to Palmer, Posner’s wealth-maximization framework would lead to the rearranging of property rights to try to maximize wealth. Something he presumably opposes.
Anyhoo, back in 2003 some of Cato’s scholars (Doug Bandow and Michael Krauss) came out in favor of restrictions on free trade based on the notion that reimportation of drugs would allow consumers to avoid some of the monopoly price charged due to the US patent system. Cato’s adjunct scholar (and utilitarian) Richard Epstein has also argued in favor of patents, especially in the field of pharmaceuticals, and on this ground also opposed reimportation. Thus, as I have noted previously, support for intellectual property rights leads once again to the undermining of genuine private property rights, such as the right to trade.
This call for restrictions on free trade caused an outcry in the libertarian community, prompting Ed Crane and Roger Pilon to meekly disavow Bandow’s and Epstein’s protectionism. Interesting, this piece apparently endorses “the need for drug patents to encourage R&D”–this apparent endorsement of a utilitarian, wealth-maximization approach to policy seems to conflict with Pilon’s principled, deontological, non-utilitarian, rights-based libertarianism–as shown in his 1979 Georgia Law Review article “Ordering Rights Consistently: Or What We Do and Do Not Have Rights To” and his 1979 University of Chicago Ph.D. dissertation, “A Theory of Rights: Toward Limited Government.”
In recent posts Palmer appears to bend over backward to soften his previous principled anti-patent stance so that he does not conflict with other pro-patent Catoites–apparently now including Krauss, Bandow, Epstein, Crane, and Pilon. Writes Palmer:
I’ve been critical of the patent system in the past. Mr. Brady has given me a quiz about whether I conform to his vision of right-thought or have drifted further into thought crime[,] as he defines it. I am not a fan of the patent system and think we could generally live well without it. (I’ve posted a few articles on my web site indicating why.) The one exception to that general hostility to patents, as I have suggested elsewhere, is the system of patents for chemicals, notably pharmaceuticals. Because chemical compounds are relatively easy to reverse-engineer and can be successfully marketed independently of their role in a larger product (unlike, say, innovations in jet engine design, which often are only valuable as part of a kind of engine), patents may indeed generate incentives for innovation that greatly improve human welfare. That’s an argument for them. Since the innovation has the characterstics of public goods (costly to exclude and non-rivalrous in consumption, the latter being the relevant feature here), a good profit maximization strategy ought to be price discrimination, by which those who can pay more do so and others pay less.
Re the “public goods comment–note in the “Non-Posnerian” above piece Palmer’s sensible criticisms (pp. 284-85) of the coherence of the very notion of public goods. As for the “suggested elsewhere” comment, he must be referring to this post, where he writes:
Pharmaceuticals and chemicals offer undoubtedly the best cases for patent protection on utilitarian grounds. In my Hamline Law Review article …, p. 301, I quoted from a study by Edwin Mansfield from the American Economic Review in which he pointed out that “patent protection was judged to be essential for the development or introduction of one-third or more of the inventions during 1981-1983 in only 2 industries — pharmaceuticals and chemicals.” That seems not to have changed. The reason is pretty easy to understand: reverse-engineering in the case of chemicals (which broadly includes pharmaceuticals) is quite easy. In the case of pharmaceuticals, at least, R&D costs are very high and would still be high even without some of the very costly efficacy tests imposed by the Food and Drug Administration. Furthermore, the benefits of new pharmaceuticals are enormous. If one were to make a case for patent law, that’s the strongest industry for which to make it.
Palmer has elsewhere rejected the wealth-maximization approach, so what does it matter that pharmaceuticals is the “best case” that can be made under this approach? Why does he say the case of patents for pharmaceuticals is “one exception to” his previous “general hostility to patents,” when this case is utilitarian and wealth-maximization based, an approach he has rejected (and presumably he still maintains that even under the wealth-maximization approach the case fails).
Note how snippy he is to Mark Brady’s questions to him about patents–“Mr. Brady has given me a quiz about whether I conform to his vision of right-thought or have drifted further into thought crime[,] as he defines it.” It is as if Palmer is annoyed that in response to his seemingly pro-patent comments, his previous principled and anti-patent writings are being waved in his face. Given so many of his colleagues’ utilitarian endorsement of patents, is Palmer now embarrassed by his previous opposition to both? Is he trying to say that he is still principled, and anti-patent, but that the dominant pro-patent, utilitarian approach of prominent Catoites is “respectable”–or that he has (sort of?) softened his “hostility” to this approach? It wouldn’t be the first time Palmer’s views have “evolved“.
From Mises Blog, 10/11/2005. Archived comments below.
The following is from an email list discussion regarding the issue of enforceability of voluntary slavery contracts.
XX,
I agree re “valid” and also re the problem with lawyers. But I believe it’s the opposite: most mainstream lawyers usually mean positive law; and when they confuse the two, they are not usually as bad as the layman, who is even worse in confusing positive with natural law. But if you get a libertarian lawyer, he is probably much better able to separate the two realms than the layman or mainstream lawyer. In speaking precisely however his precision is often disregarded by non-libertarians or non-lawyers.
Re valid: yes, it’s a normative term that is sort of fundamental and irreducible, and is tied up with the notion of legitimacy and justifiability (and thus justice and rightness).
Nonetheless: if you view contract as transfer of title then the main criteria are: was the seller the legitimate owner? And, did he adequately manifest his intent to transfer that title to another. It is only if you view contracts as “binding” “agreements” or “binding promises” that you start to really ask all kinds of (mainstreamish) publicy policy oriented questions, like, “should” “we” “give effect to” this “agreement”–should “we” “treat it” as “binding”. But if it’s just A handing over his property to B, then all we do as outsiders is recognize the new ownership status of the thing, and public policy questions become less relevant.
You wrote: “(2) Natural law theorists talk all the time about “the nature of man”, “the nature of things” etc.; just re-read the first chapters of Rothbard’s _The Ethics of Liberty_…”
Yes. And as Hoppe has pointed out, and as I agree,
Agreeing with Rothbard on the possibility of a rational ethic and, more specifically, on the fact that only a libertarian ethic can indeed be morally justified, I want to propose here a different, non-natural-rights approach to establishing these two related claims. It has been a common quarrel with the natural rights position, even by sympathetic readers, that the concept of human nature is far “too diffuse and varied to provide a determinate set of contents of natural law.”
Furthermore, its description of rationality is equally ambiguous in that it does not seem to distinguish between the role of reason in establishing empirical laws of nature on the one hand and normative laws of human conduct on the other.
See Hoppe’s Economics and Ethics of Private Property, at 313 (quoting Gewirth); also A Theory of Socialism and Capitalism, note 7, p. 235.
Or as Hoppe elaborates elsewhere:
The relationship between our approach and a “natural rights” approach can now be described in some detail, too. The natural law or natural rights tradition of philosophic thought holds that universally valid norms can be discerned by means of reason as grounded in the very nature of man. It has been a common quarrel with this position, even on the part of sympathetic readers, that the concept of human nature is far “too diffuse and varied to provide a determinate set of contents of natural law” (A. Gewirth, “Law, Action, and Morality” in: Georgetown Symposium on Ethics. Essays in Honor of H. Veatch (ed. R. Porreco), New York, 1984, p.73). Furthermore, its description of rationality is equally ambiguous in that it does not seem to distinguish between the role of reason in establishing empirical laws of nature on the one hand, and normative laws of human conduct on the other. (Cf., for instance, the discussion in H. Veatch, Human Rights, Baton Rouge, 1985, p. 62-67.)
In recognizing the narrower concept of argumentation (instead of the wider one of human nature) as the necessary starting point in deriving an ethic, and in assigning to moral reasoning the status of a priori reasoning, clearly to be distinguished from the role of reason performed in empirical research, our approach not only claims to avoid these difficulties from the outset, but claims thereby to be at once more straightforward and rigorous. Still, to thus dissociate myself from the natural rights tradition is not to say that I could not agree with its critical assessment of most of contemporary ethical theory; indeed I do agree with H. Veatch’s complementary refutation of all desire (teleological, utilitarian) ethics as well as all duty (deontological) ethics (see Human Rights, Baton Rouge, 1985, Chapter 1). Nor do I claim that it is impossible to interpret my approach as falling in a “rightly conceived” natural rights tradition after all. What I claim, though, is that the following approach is clearly out of line with what the natural rights approach has actually come to be, and that it owes nothing to this tradition as it stands.
A Theory of Socialism and Capitalism, note 7, p. 234-35; see also Economics and Ethics of Private Property, p. 313 n. 15.
XX, you also said:
Now when it is said that “man is born free” my understanding is that this refers to a categorical property of man, since in a somewhat different sense, under actual historical conditions some men were indeed born in slavery… This categorial property is unalienable and therefore it is not meaningless to assert that the impossibility of certain types of contract results from the nature of man…
And here is where I think I cannot follow you, for a few reasons. For one, I just find this language too diffuse and imprecise (at least in this casual, condensed form here) for me to be sure exactly what it means. I don’t think of contracts as being “impossible” as a “result” of the “nature of man”. For example I am not sure what you mean by a contract being “impossible”. As far as I can tell, this has to mean that the transfer of title intended to be accomplished by means of the contract … somehow “has no effect”. I wouldn’t bother to call that ‘impossible” but I guess you could.
I would think of impossibility in a context such as this: X agrees to sell Jupiter to Y, or to make gravity stop functioning, or to give Y a square circle, for a certain price; and X agrees to pay damages to Y if X does not deliver the promised item. The question would arise, when X invariably fails to deliver Jupiter, stop gravity, or make a square circle, does X owe contractual damages to Y? Technically he owes it because of the specified occurrence of the condition (the condition being: failure to deliver). However, I could see a doctrine of contract law developing in a free society that treats such contracts as mere word-games, and non-serious, that is, not evincing a real intent to transfer the item. (but this is really just an empirical or conventioanl question.) In other words, to say a contract is “impossible” simply refers to whether one of the specified performances or conditions is really possible; and the reason we ask this is to determine the full context, so it can be determined whether or not the apparent intent to transfer title is genuine, or just some kind of non-serious wordplay between the parties who never really meant it.
There are a million type of purported “slavery” contracts–or agreements, if you prefer–that you could posit, and I suppose each would have to be analyzed on its own terms to see if it makes sense or is enforceable. From my point of view, an agreement to do something cannot be specifically enforced, precisely because one has no power to sell one’s body. But it is not because there is some “metaphysical impossibility” involved in “alienating one’s will”. As I have repeatedly stated, in my view a real, effective slavery relationship requires only that the master have the right to use force against a recalcitrant slave–despite the slave’s will. And that simply cannot be done by contract, for reasons i’ve given before.
But it has nothing to do with impossibility. It has to do with the nature of ownership: ownership means the right to control, and one’s right to control one’s body is precisely why a slavery contract is not enforceable: at the time the master tries to use force against the slave, the slave can refuse to give consent, because the slave has the right to control his body. Slavery can only be a consequence of the slave’s somehow having lost this right to control. This can be done only if the slave has committed aggression against the master, thereby entitling the master to punish etc. the slave. But “signing a piece of paper” does not commit aggression.
Stephan
Archived comments:Archived comments
Comments (9)
- averros
- First of all, one needs to be clear about one thing: the body is a material thing, and the soul or consciousness or will (whatever you call it) is not. It is either something supernatural (if dualists are correct, which I personally think unlikely) or a kind of software, some quantity of information constituting a program (which can, in theory, be run on any computer having enough memory and appropriate interpreter).In both interpretations the “soul” and the body are separable. In fact, any work-for-hire involves temporary alienation of employee’s body in order for employer to get a use of its muscle force or “computing time” of its brain and soul. That is what the physical nature of “labour” is, it being a rent on one’s body. Any employer recognizes the fact that one’s body (and brain) are multitasking, and a significant portion of employee’s bodily and mental activities is not made available to employer; and that different people make (because of trained ability, or because of ethics) larger or smaller portions of it available – this is what differentiates “good” worker from “bad” worker.To improve employee performance, all employers use some kind of persuasion – it can be psychological (employing vulnerabilities of human psyche to manipulation by others) or material (adjusting pay to performance). The “violent” persuasion (i.e. physical pain or restraint) is a taboo nowadays, although it merely differs from other kinds of persuasion by a degree, not by a kind – all kinds of persuasion merely manipulate the state of dopamine circuitry in the brain, by different routes. (Physical punishment can be far less damaging or unpleasant than psychological, but it is also can be very bad, and physical rewards, such as tasty food delivered by an employer as a display of appreciation seem to be quite acceptable).
Difference in degree begs a question of who decides what exactly workplace persuasion is acceptable and which isn’t. A consistently libertarian point of view is that it is solely a matter of contractual agreements between employee and employer. It follows that an employer overstepping agreed-upon methods of “employee motivation” is liable to compensate any damage stemming from this overstepping.
There, obviously, are other ways of partial alienation of someone’s body – by selling body parts such as hair, blood, or organs, for example. A reverse process is, of course, purchase and implantation of body parts or prostetic devices. There is really no question that if someone removes a prostesis from his body he can sell it like anything else – but one would be hard pressed to find the qualitative difference between body parts and prosteses which are becoming increasingly close functionally to the “natural” body parts.
Note that the brain functions can be also improved by prostetic devices – the implantable “brain chips” are already a reality.
So… if someone can sell his body by parts or rent it out, why shouldn’t he be able to sell or rent it permanently (meaning, until it wears out and dies)? Obviously, it is kind of hard to imagine that there can be rewards high enough for someone to do that – but people are known to be able to sacrifice their lives for some psychological rewards, so it stands to reason there can be rewards (for example, a knowledge that someone’s family is enjoying better living, etc) which make this kind of trade worthwhile for the “slave”.
In fact, the slavery itself (with attendant feeling of lowered and better defined responsibility, and feeling of being taken care of) can be a powerful psychological reward (which explains both some aspects of BDSM and the seemingly unstoppable desire of populace at large to hoist a State upon themselves). These desires are a part of human nature, so it would be unreasonable to deny their existance and prohibit their satisfaction.
Finally, there’s such thing as performance bonds, which can be set arbitrarily high by the parties involved (there is no way to objectively value employer’s mental distress and loss in case of non-performance, so it must be solely a matter of voluntary agreement) – resulting in either delivery of promised goods or forced extraction of bond payment by the courts, which (in case if the bond amount exceeds worth of performer’s posessions) may result in what amounts to slavery (i.e. forced labour for the benefit of the employer). This creates yet another route to voluntary slavery (i.e. parties making an agreement featuring very high performance bond with an implied understanding that the slave-would-be would not be able or will fail to deliver).
So, no matter how you slice it, a consistent application of libertarian principles and the principle of subjectivity of value does not exclude voluntary slavery or limit methods of persuasion which can be inflicted upon a voluntary slave – as long as they stay within the conditions set forth in the contract (such contracts do exist, in BDSM subculture, specifying things like “no permanent or life-threateing damage during punishments” or “no permanent marks on the skin” – although they are unenforceable under the democratic laws). In fact, inability to sell one self’s to slavery amounts to restriction of his right of ownership of his body.
Now, the involuntary (or “real” slavery) is another matter – but here the case is clear, and I think nobody would argue that it is bad precisely because it involves aggression upon the slave leading to him being deprived of use of his property (i.e. body – which he didn’t agree to sell or rent).
Digression (talking about metaphysical impossibilities):
It would be very interesting to consider implications of technology capable of actually separating functioning consciousness from its original body (it is estimated that computers will reach the necessary capacity to run a full simulation of the brain within 20 years or so – today’s technology is limited to simulating one column in neocortex); the capability to read and record the exact states of neurons is also becoming feasible – the resolution of imaging methods such as MRI is improving fast.
What is the legal status of the computer running a simulation, and able to argue that it feels and claim its rights? Can this simulation own things? What becomes of its right to its body (i.e. a computer which presumeably is already owned by someone)? Obviously, one can make a copy of this simulation, are those different “persons”? How do they divide their posessions? What is the definion of a single personhood, anyway? Do we make slaves of AIs and “uploaded” humans? And if so, can we be justified in doing so (I hope, not)?
I would argue that libertarian law is the only consistent legal system which can be adapted to the existance of non-human (or ex-human) intelligence.
The democratic laws would inherently create confilict by a priori disposessing such creatures – and, conceivably, triggering a war which can result in extinction of biological humans. Given that capabilities of human bodies do not change fast, unlike capabilities of computer hardware – the economic (and, therefore, military) dominance of such intelligence is inevitable (if it can be created at all, which few people in the relevant scientific fields doubt).
Simplarly inevitable are mass protests of neo-luddites who would complain that the new technology is taking away their likelihoods. (In fact, the opposite is true – because of the law of comparative advantage; even if the non-human and ex-human intelligencies are vastly more productive and smart and therefore vastly richer than humans, the trade with them will make humans richer, too).
Now, for now it seems too far away; in fact many of us may live long enough to see it. The notion of “electronic brain” was invented mere 70 years ago. This gives some urgency to getting people to understand that libertarian society is not just something nice to have – we either create a law which allows our peaceful coexistance with superintelligent beings, or be treated as slaves or, worse, as vermin. For a libertarian, there’s nothing to fear from people or beings which are much more capable than himself – as long as they share his ethics.
- Stephan Kinsella
- “First of all, one needs to be clear about one thing: the body is a material thing, and the soul or consciousness or will (whatever you call it) is not.”Maybe it’s reducible to the body, however, or a mere epiphenomenon of it. In any event, it does not matter–the point is you never “homestead” your body. You have to already have a body to homestead other things; and things have to be unowned to be homesteaded. If you were a free floating soul with an existence independent of any body and the ability to act without a body, and could just swoop down and choose an *unowned* body to inhabit–just as you might pick up a discarded coat and decide to wear it for a while–then I would say body-ownership is analogous to ownership of other things that you appropriate from the state of nature. But so far as we can tell, this is not the case. Your identity or soul, whatever it is, does not roam around, living and acting, and find an unowned body to inhabit. So one’s relationship to and ownership of one’s body is categorically different than one’s ownership of external scarce resources that one homesteads.
- averros
- Stephan –> …the point is you never “homestead” your
> body…> ownership of one’s body is categorically
> different than one’s ownership of external
> scarce resourcesOne of the reasons I digressed into futurism is to make explicit that this assumption of categorical difference is invalid. The plausible futurist scenarios serve as gedankenexperiments to test the theory.
Software exists independently from hardware. It is as simple as that. Hardware is scarce, software (information) can be replicated infinitely. *These* are categorically different, not the different kinds of hardware.
In fact, your body is built by your genetic software. There’s nothing of significance is left in it from the original sperm and ovum except for the information.
To build it, you (to be more precise, your genetic program) needed chemicals and energy – supplied by your mother’s body and, after the birth, by the food you were given. So you didn’t homestead your body – you made it from the scarce resources which were given to you by your parents.
Now, modern humans cannot survive not only without their bodies but also without tools they make. For a ethologist or a biologist there’s really no difference between “innards” of an organism and the external contraptions its genes tell it to build (i.e. the nest, the honeycomb, the anthill) – any complex organism modifies its habitat in order to survive and reproduce. The technical term is “the extended phenotype”. Is there really any categorical difference between a hand and an axe? The modern scientific understanding is that there isn’t.
A grown human continues to rebuild his body (which keeps falling apart with alarming speed, BTW) by supplying it with nutrition and shelter – for which he has to trade or homestead resources. So if he finds a berry and eats it a part of it is transformed into some components of his body – so, yes, it can be said that one’s body is partly homesteaded.
If he wants to have children (and people generally do – those whose genetic program is not instsent enough on doing so don’t leave offspring, so the “deficient” genetic program is eliminated) he has to give part of these resources to them so they can develop to the point when they can sustain themselves.
In a sense, at birth you don’t homestead a body – you are given it as a gift.
Now, if we assume that there’s some technology allowing the state of the brain to be recorded and stored – does recreating a body from chemicals (it was already done with viruses, and demonstration of the principle in bacteria is coming) and replicating the anatomy of the brain (check the progress in tissue engineering, including 3-D cell printing on degradable scaffolds) from the stored state information – any different? It merely makes explicit the fact that resources going into building your body were already owned by someone.
I would say that the fact that you were given the resources which became your body _without your consent_ invalidates any claim for compensation for use of these resources by their former owners. They are yours not because you homesteaded them, and not because they are categorically different, but simply because they were imposed on you without your consent by the voluntary act of their original owners, so you have no obligation to return them, meaning that your body is wholly yours.
BTW, this applies to the artificial bodies as well – as soon as someone becomes conscious in the artificial body, the body cannot be taken from him, and he cannot be made a slave just because the body was created from chemicals (or chips and motors, or whatever). Now, if he (in some previous body) made an arrangement to purchase a new body, he is responsible for whatever payment for the serivce he had promised. If there were no such promises and the new body was created on the whim of whoever did it, the newly incarnated person received it as an irrevocable gift. Assuming otherwise would permit creation of an involuntary slave by copying someone’s mental state and embodying it.
- averros
- Sorry for the numerous typos in this and previous message… I really should spell-check before posting 🙂
- van den Hauwe
- Stephan, “Rights” are ultimately grounded in “facts”; the “ought” has its foundation in the “is”. That is why it has to do with possibility/impossibility. (“Impossible” means “cannot exist by virtue of the way certain things are, their objective nature…) The ultimate reason why person X has an inalienable right to think and choose and make judgments for himself is that, as a matter of fact, only person X (and nobody else) has the capacity to make these judgments, choices etc.
- David White
- averros,I refer to long blogs as “globs” and boring or unintelligible globs as “blahglobs.” And though they may strike readers as both, I think your posts qualify as the former but not the latter. Why? Because, whether you call yourself one or not, you are a Singularitarian (e.g., www.singinst.org) who therefore addresses issues like this one from an entirely different perspective. Do the math — www.kurzweilai.net — and it is clear that with another twenty or so doublings of computing power (30 years or so), we will have achieved superhuman intelligence, after which biological humanity will be on the slippery slope to extinction.But fear not. For if the old (originally Latin) aphorism is true (and I for one believe it is), then we are on the verge of a whole new reality:
“There is nothing in nature greater than man. And there is nothing in man greater than mind.”
- averros
- David — I do not identify myself with the singularitarian group, although I certainly know about them (too much handwaving to my taste and too little specifics – the trend is obvious to anyone with eyes to see but there’s a lot of less than certain steps in between – and it can be derailed or subverted to nightmarish purposes by the statist criminals). So I’d rather talk about bayesian networks and truth maintenance systems than about how magic Moore’s law is going to make computers magically smart.I’m more of a pragmatic mindset, trying to figure out where things are going and how to live through the interesting times. I pretty much came up with libertarian philosophy on my own, just like having extropian ideas long before learning that there’s a name for it (by virtue of growing up in a place well isolated from Western discourse). In fact, my 15 minutes of fame came from applying technology to help to bring down one of the most evil regimes:)It is certainly gratifying to see that the technology on which I spent a significant portion of my life is being used to create and organize the opposition to the collectivist plague.
- Stephan Kinsella
- Ludwig: “”Rights” are ultimately grounded in “facts”; the “ought” has its foundation in the “is”. That is why it has to do with possibility/impossibility. (“Impossible” means “cannot exist by virtue of the way certain things are, their objective nature…)”Well, “grounded” here has ambiguous meanings… and of course, if you justify rights, or “ground” them, the argument or demonstration will of course take note of facts. That does not mean that norms are derived from pure facts. Perhaps a base norm has to be simply posited or introduced or agreed upon by consensus, to make any headway. This is similar to Rand’s view that all values are based on the choice to live; but the choice to live is therefore necessarily an extra-moral choice.”The ultimate reason why person X has an inalienable right to think and choose and make judgments for himself is that, as a matter of fact, only person X (and nobody else) has the capacity to make these judgments, choices etc.”
As lawyers would say–connect it up. I don’t see at all how the proposition that slavery contracts should not be enforceable follows from this general musing. Look: don’t you agree that criminals can and may be jailed? But couldn’t you say about them, “you can’t jail someone for a crime, because their rights are inalienable–after all, only the criminal has the capacity to make judgements and choices; ‘therefore’ no one else has the ‘right’ to assume control over them in this way” ??
- David White
- averros,”(too much handwaving to my taste and too little specifics – the trend is obvious to anyone with eyes to see but there’s a lot of less than certain steps in between – and it can be derailed or subverted to nightmarish purposes by the statist criminals).”Kurzweil’s new book goes into a fair amount of detail, but I don’t pretend to be sophisticated enough in these matters to be any more than an interested bystander. I’m with you, however, in being very afraid of how statists will affect matters, and to read what DARPA’s up to (see “Perfecting Humanity” in the May 30 issue of Fortune magazine) is to know why.
A liberal I know sent me this column by Dershowtiz, Telling the Truth about Chief Justice Rehnquist. Here’s an edited version of my reply to him:
***
Well. Rehnquist had his problems. But the problem is the standard liberal analysis of course is that their entire understanding of civil liberties and the Constitution is perverted, dishonest, distorted, and twisted, leaving them no coherent and honest basis to criticize conservatives. On balance I believe Rehnquist and his type–Scalia, Thomas, and on lower courts, people like Alex Kozinski–have a much more honest and sounder view of the Constitution and a judicial philosophy that is more protective of civil liberties than those of leftists such as Dershowitz.
Let me give you an example. Leftists like Dershowitz support the very notion of federal judicial review of state legislation, based on the Fourteenth Amendment, and based on an expansive reading of the Bill of Rights. Moreover they support a broad reading of federal power under the Interstate Commerce Clause.
In fact the IC clause was never meant to be so broad. And in fact the Fourteenth Amendment was never meant to incorporate the bill of rights and apply it against the states. And the extensions of “penumbras of emanations” of the rights in the 4th amendment etc. to yield a right to privacy which includes the right to abortion; and the idea that the death penalty is unconstitutional–are all utterly absurd and dishonest. The fact is that the only way for the federal government to get away with implementing the liberal revolution is to shred the Constitution. For example for the Congress to pass antitrust laws, minimum wage, wage and hour legislation, the Americans with Disabilities Act, etc.–all the darlings of the left–the Court must ignore the original federalist scheme of the Constitution which established a severely limited federal government of enumerated powers. The feds were never granted power to legislate in any of these areas (2); and the Bill of Rights–including the ninth amendment–was meant to emphasize this. So the liberals support the idea of what is effectively a judicial coup d’etat: the Court assuming (a) the sole power to construe the Constitution (which it was never meant to have); (b) exercising this power to disregard the original meaning of the Constitution and to construe the Interstate Commerce clause–basically meant to establish an internal free trade and free movement zone within the US–as a grant of authority to Congress to legislation on whatever it wished, even including telling a farmer he could not grow wheat in his own back yard (the infamous New Deal-era Wickard case) on the basis that if he were permitted to grow his own wheat, he would then not buy as much from other people, some of which would be out of state, thus “affecting” interstate commerce!; and (c) ignoring the limits placed on Congress in the ninth amendment that makes it clear Congress cannot pass such laws.
Of course, the biggest danger to our civil liberties is that of a tyrannical state. The entire Constitution was designed as a straightjacket on the federal government to guard against this. If you advocate judges just ignoring limits placed on them and the fed government, you are in favor of unlimited government. It is insane to endorse federal officials being able to choose which limits on their power they can ignore. But that is what liberals do. Who is the greater threat to civil liberties?
Moreover, in their zeal to abolish any racism at all, any differences between people or recognition thereof in furtherance of their irrational egalitarianism, combined with their yankee/intellectual hatred of the South, they have endorsed blatant misreadings of the Constitution and the Fourteenth Amendment to give federal judges the raw power to tell states what to do–to subject state laws to scrutiny under the bill of rights which was meant only as a limit on the feds. The liberals have turned it on its head: they regularly ignore the limits of the bill of rights when it comes to federal laws–for example they ignore the second amendment and the ninth amendment, which would limit federal firearm regulations and economic regulations such as wage and hour laws; and they have turned the Bill of Rights into a source of power for the feds: they use it for authority to impose busing and desegregation on the states, to strike down state death penalty and abortion and sodomy laws, even though these things are clearly not unconstitutional because the founding generation did not understand such laws (some of which are unlibertarian I grant) to be contrary to the basic rights established in the Constitution.
So here you have liberals who are self-proclaimed advocates of civil liberties supporting lawlessness: disregard by federal officials of the limits placed on them by the Constitution; supporting massing increases in federal power which of course leads to abuse; willingness to have the feds violate property rights; willingness to tolerate the chilling effect on free speech wrought by affirmative action and antidiscrimination laws; and denigrating “commercial free speech” (ads, etc.) and even political speech (PACs, campaign contributions) as not deserving constitutional protection! The liberals do not really care about rights: they do not care about preserving the carefully constructed constitutional system that places limits on the feds to prevent them from violating rights; they do not care about property and economic rights, which are essential to remaining free from government control and being able to exercise personal liberties; they do not care that their egalitarian-based affirmative action and anti-discrimination laws suppress free speech or violate property rights. They do not care if the Constitution “really” permits the feds to pass these laws or the federal judges to do what they want to the states: they only care about results, results in the service of egalitarianism and welfare-socialism. I am 100% serious about this. It is blatantly clear what they have been about for the last 70 or so years. And then they have the gall to call someone like Rehnquist a threat to civil liberties? It is obscene. Rehnquist–for all his faults; and I could tell you many, from my correct, sound, honest, libertarian legal-constitutional perspective–is 10 times better than these lefties are, in terms of supporting the true basis for protection of individual rights and liberties.
It is hard to find a single clear case of an area in which the conservatives are genuinely bad, that the liberals are not just as bad. For instance: drugs and war–I don’t see the liberals advocating drug decriminalization. And I don’t see them being anti-war in a principled way–and the worst wars in US history were started by democrats–Lincoln’s bloody civil war (I count him as a democrat since the democrats embrace him), Wilson and WWI, FDR and WWII, JFK/LBJ in Vietnam. Name one single area the democrats are better than the Republicans? Abortion is just about the only one, and even here, it’s not clear, since even for libertarians abortion is debatable (and liberals adopt dishonest, Constitution-shredding decisions like Roe v. Wade to get their way; and the extreme liberals are not even opposed to grisly, inhumane, late-term abortion). And there are many areas the conservatives are much better than the liberals: economic liberties; decentralization; constitutional theory (original understanding rather than a “living document”); even
personal liberties such as free speech–Rehnquist (and O’Connor) voted against laws against flag burning, while allegedly pro-free-speech liberals like Brennan, Thurgood Marshall, and Blackmun voted to uphold laws jailing people who burned the flag (Texas v. Johnson); and they support commercial free speech, which liberals do not; and they oppose, to some degree, affirmative action, antidiscrimination, and speech codes which undoubtedly give rise to substantial chilling effects and thus infringements of free speech.
I really believe the libertarians are off somewhat when they say conservatives are better on economic liberties, and liberals better on personal liberties. My view is that conservatives are significantly better than liberals on both axes; and libertarians are better still, on both axes. The spectrum I see stretches from principled advocacy of human liberty (libertarianism); next would be principled conservatism, which has flaws; next would be welfarism/liberalism/soft socialism, which is worse than conservatism in almost every way; and next, outright tyranny and totalitarianism.I am sick of the smug, totally out of place self-righteousness of liberals–their disdain for law and for the realities of human nature, their monomaniacal pursuit of the irrational goal of egalitarianism coupled with their utter ignorance of economics and Luddite hatred of industrialism and capitalism–their endorsing communism and socialist regimes which have literally murdered and led to the deaths and impoverishment of quite literally hundreds of millions of innocent people in the 20th century alone–their pretense that they are the sensitive, caring types, when in reality they are dishonest and willing to condone mass suffering and even death in the pursuit of their naive, impossible, faux-utopian dreams. See Thomas Sowell, The Vision of the Anointed: Self-Congratulation As a Basis for Social Policy. What about their belief in religious liberty? How to explain their attack on trivial stuff like a statue of the ten commandments in a courtroom courtyard when they usually turn a blind eye to the overt religious establishments of most other states–e.g., their darling Israel, which, as Charley Reese point out, “In any other country, settlements in which only Jews are allowed to live, connected by roads that non-Jews are forbidden to use, would be cited as an example of discrimination, if not racism. Israel, however, is the grand exception to America’s morality and ethics.”
The conservatives, while not perfect, are better than the liberals in almost every way. Being an evil criminal minded person, as activist liberals are, is one thing; not being aware of this is arguably worse; but advocating criminal ideas while pretending to be holier than thou is adding insult to injury. At least a normal robber does not pretend to be anything other than he is; there is a certain degree of honor and honesty in what he does: he takes risks himself–his victim might shoot him; he does not pretend to be helping his victim; and after he mugs him, he generally flees and leaves him alone (see the similar comments about the highwayman by Lysander Spooner, in No Treason No. VI: The Constitution of No Authority, Section III). The liberal establishes a systematic, ongoing, pernicious type of theft and regulation of others lives; he does not go away; he pretends to be helping his victim; he adopts a self-righteous pose about it; and worse, he wants not only to force people like you and me to be coopted into his system, to obey their laws and regulations, to turn over control of our businesses and even our homes to their decrees, to pay their outrageous, confiscatory taxes–but not even to be able to complain about this, without being accused of racism or bigotry or extremism. Ever heard of Chutzpah?
BTW for a pretty balanced and fascinating account of the Court’s battles, including Rehnquist, the book Closed Chambers by Edward Lazurus–a liberal and former Blackmun clerk–is very good. Lazurus is able, unlike most liberals, to present the conservative/liberal debates on the court from each others’ perspectives–and to show that one interpretation of the Rehnquist revolution was that it was an understandable backlash against decades of extremist liberal judicial activism that itself undermined and distorted the original Constitutional system.
Sorry for venting, but I’ve about had it with self-righteous liberals.
Adapted from the Mises blog, 9/18/2005 (no archived comments):
Austrian Law and Economics
Apropos nothing, I’ve just added a few pieces to my site scanned from my paper files, on the topic of (Austrian) law and economics:
- Joseph Becker, Comment, “Procrustean Jurisprudence: An Austrian School Economic Critique of the Separation and Regulation of Liberties in the Twentieth Century United States,” Northern Illinois University Law Review 15 (1995): 671–718 (my annotations): my comments in the JLS Libertarian Literature Review (which I ran under Hoppe’s editorship for a while until he was unfortunately replaced and the JLS became a disaster): “Becker, Joseph, Comment, “Procrustean Jurisprudence: An Austrian School Economic Critique of the Separation and Regulation of Liberties in the Twentieth Century United States,” Northern Illinois University Law Review 15 (1995): 671– 718. Uses both Austrian economic theory (e.g., Ludwig von Mises and Murray N. Rothbard) and Austrian economic legal and ethical theory such as that of Rothbard and Hans-Hermann Hoppe, to criticize two precepts of U.S. constitutional jurisprudence: (1) that economic liberties are inherently different from fundamental liberties, can be conceptually separated, and should be afforded different levels of scrutiny and protection under the U.S. Constitution; and (2) that economic regulation benefits society as a whole and passes the minimal rationalbasis test of constitutional review. “
- Crespi, Gregory Scott, Exploring The Complicationist Gambit: An Austrian Approach To The Economic Analysis Of Law
- Katz, Avery Wiener, Positivism and the Separation of Law And Economics (my annotations)
- Schwartzstein, Linda A., “Austrian Economics and the Current Debate between Critical Legal Studies and Law and Economics” (PDF; my annotations) (in: Symposium: The Future of Law And Economics), 1992
- ——, An Austrian Economic View of Legal Process
- Wonnell, Christopher T., Contract Law and the Austrian School of Economics (my annotations)
- Edward Stringham & Mark White, “Economic Analysis of Tort Law: Austrian and Kantian Perspectives“
***
Update: See also Josef Šíma, Praxeology as Law & Economics.
“The person or company who does a deal with ABC Corp. is in effect agreeing not to pursue the assets of the shareholders if the company owes him money. So whose rights are violated?”
But how many firms of any size don’t use the goverment sanction that is a “veil of immunity,” otherwise called incorporating? I mean, if you can get a large immunity from debts just by the relatively smaller cost of incorporating, why wouldn’t a self-interested investor/owner do so?
So once every firm of any substantial size is incorporated, what real “agreement” (really choice) is there?
Published: October 27, 2005 10:13 PM
The question, it seems to me, as I already stated, is: whose rights are violated by incorporation? If no one’s rights are violated, what is the (liberarian) complaint? If you feel incorporation actually violates a given individual’s rights, please specify who and how. it it not clear from your amorphous question exactly who you think has their rights violated, and why exactly what action or institution or mechanism. Can you be explicit?
Published: October 28, 2005 1:25 AM
Or am I missing something?
Published: October 28, 2005 7:10 AM
Would a moral person want credit without liability?
Published: October 28, 2005 10:05 AM
My reservation, and the reservation many of my far-left anticapitalist and anarcho-syndicalist frends have about corporations is with the special, government-conferred advantages enjoyed by certain corporate forms after the Santa Clara County v Southern Pacific Corporation case (http://www.ratical.org/corporations/SCvSPR1886.html), specifically with the differential tax treatment and conferring of an artificial corporate “personhood” upon the corporate entity as opposed to the individual stockholder’s real personhoods.
My own conviction is that if corporations were transparent to law except for their contractual limitation of liability, and the shareholders of the corporation obtained no legal advantage whatsoever over unincorporated businesses or individual persons, then I would have no objection to the corporate form at all. But just taking into account the egregious difference in taxation between a privately-owned business at its owners’ death and a corporation’s tax liability at corporate succession it should illustrate how the interaction of the corporate form with the law as we now know it confers assymetric advantages on stockholders that individuals are prevented from enjoying.
Published: October 28, 2005 10:25 AM
Published: October 28, 2005 11:27 AM
You can do collective action via private contract.
When you create something called a corporation, it is normally to avoid problems like people dying (so a corporation could own something in perpetuity), or liability (instead of a real person, you have an amorphous blob to try to sue).
Lets say I incorporate myself. Should Me, Inc. have any greater or lesser rights or responsibilities than Me, the person? The corporation can’t marry. But what else is different? If nothing, then there is no reason to have corporations. If there is a difference, then it might be a method to violate rights. If I can protect Me, the person’s assets from a suit against Me, Inc. (can Me, Inc. be jailed?), then there is a problem.
Published: October 28, 2005 1:29 PM
Seriously, the ideal of a corporation really does leave very little to quarrel with in an Austrian sense. But the Constitution, bless its founders hearts, is ostensibly written to protect the rights of individual PEOPLE, not GROUPS of people. Union Pacific v Santa Clara changed this, basically saying the rights allegedly guaranteed to individuals by the Constitution were also guaranteed to particular arrangements of people in groups. If we believe that the Constitution as such has any integrity (and I am not as ready yet as some to give up on it completely), then the supremes of that day should have remanded the case to the states, which is where corporation law and contracts was rooted until that time.
Published: October 28, 2005 4:30 PM
Published: October 28, 2005 5:00 PM
Whether or not the victim can collect damages from the corporation’s assets is beside the point. The point is that the original damage to person or property is encouraged by a protectionist type scheme, allowing some to take injurious action towards others, in a legal atmoshphere they know will apportion the damges incrementally to shareholders.
The law may not say that such a dynamic is it’s intention. There may be no law stating that this behavior is legal. Rather the incentive to injurious conduct is an unintended consequence of a protectionist scheme. The scheme removes the disincentive to injurious conduct, by apportioning the penalty for such conduct among share holders.
If it is argued that laws of incorporation are benign, and that the entire structure could be created by contract, or is an implicit contract, the contract envisioned would have to include the victim also. The implicit contract would then be something such as: “I agree to participate in a system where an injurious act may be committed against me due to incentives created by laws of incorporation, etc…”
To the extent laws of incorporation shield (protect) the wrongdoer, by apportioning penalty to a larger group, this system is harmful from the point of view of those harmed,who may have preferred not to be harmed in the first place, even if they can collect financially from the corporation’s share holders.
Published: October 29, 2005 11:35 AM
Check your premises. The state is a corporation. This is explicit in local governments and public service monopolies (dams, water districts, PBS), but equally true of nation-states. Privately held corporations are no different in legal character. Their existence as “fictional legal persons” and the impersonal character of limited liability distorts the entire legal system. Think Enron. No one individual was personally liable, all were shielded more or less by the byzantine structure of an impersonal corporation.
Wolf DeVoon
Published: October 30, 2005 8:43 AM
Published: October 30, 2005 2:59 PM
It depends on whether you think this sort of freedom of contract exists under Bork’s ink blot. If you don’t, then your question is understood and requires no answer. If it does exist, then the government granted immunity effectively destroyed this particular right of contract (implicit elimination of the right).
Published: October 30, 2005 7:23 PM
I’m not following you. Are you saying that incorporation protects everyone associated with the company, from shareholders and upper management to the delivery truck driver, from any legal ramifications of their actions at all?
I thought Stephan’s point was that this is not the case. The truck driver can be charged for negligence etc, and so can his superiors. My understanding is that the point of incorporation is to simplify contracts which are permissible on a one-by-one basis: that is an agreement that creditors can hold the shareholders only responsible for debts only to the extent that the pooled funds of that corporation can cover them, and not leave the shareholders personally liable for such debts.
That means that we can buy shares in a company, and at worst loose our entire investment, but no more, and we don’t have to hire a lawyer to write up a contract each time stipulating we only agree to be liable for our investment.
Published: October 31, 2005 9:58 AM
Published: October 31, 2005 12:31 PM
Let me reply in reverse order to some of the posts so far. Note that I have posted a reply or two already to Gil Guillory’s separate post about this topic (in which reply I elaborated on the nature of “fraud”).
adam knott:
Not sure what you are trying to say. Talk of incentives is irrelevant; this is the language of a utilitarian. We are talking about principles–rights–here. The issue of what to do with the prospect of “waste” of assets available to pay damages, in the period between filing of a suit and its resolution, is technical and uninteresting, not really relevant to the question of whether limited liability is libertarian or not. It is not related to limited liability, since the issue you describe could occur in a partnership or other type of entity. It is not only corporations that have employees. Or maybe I am missing your point. If so, please clarify and restate it clearly, making your assumptions clear, with a clear question.
Gregory White:
Rights have nothing to do with recognition in a constitution, especially the federal Constitution which protects rights (from federal invasion) primarily by limiting and enumerating federal powers. Legal recognition of incorporation does not, in any event, destroy any right. It simply gives an option to individuals to conveniently organize their affairs exactly like they have a right to do by private contract, anyway.
Wolf DeVoon:
I’ll answer despite the “Check your premises” comment that always sets off my Rand-dar. I think you are confused. I am not arguing that there should be corporate law. I am anarchist and think it should all be private. But some libertarians–increasingly apparently those ignorant of just what corporate law says–say corporations are illegitimate becuase of their limited liability. As you are assuming here. In a private society you could have a company called Enron, based on a founding contractual agreement among shareholders whereby each shareholder’s liability for contractual debts of the entity is limited to his investment. Each contract between Enron and some third party would be subject to these limitations. Every third party is voluntarily agreeing not to pursue the assets of the shareholders in case of a claim, but to go only after the defined assets “of the company”. This is not unlibertarian. Libertarianism does not counsel hostility to “impersonal” corporations any more than it counsels wearing birkenstocks and smoking weed.
Vince Daliessio:
The Constitution has nothing to do with state recognition of corporations. This is a state law matter. The state does not need to find authority in the federal Constitution to enact a law; and there is no limit on states recognizing corporations in their state constitutions or in the federal one.
To call a corporation a legal person is just a convenient legal fiction. In a libertarian society it would just be a way to conceptualize a complex contractual arrangement.
However, you are right, in a sense: I would like to see incorporation law changed so that the corporation is not viewed as a “person”, at least for income tax–corporations should not be taxed; rather the real owners should be the only ones taxed, and only once, not twice.
tz:
Corporations are formed to provide a convenient way to invest in a company without having to have direct control or input and liability. This is not rocket science.
This betrays a confused understanding of this area. It is utterly silly to say that if there is any real reason to form a corporation then it must be because it violates right. Bah.
Vince:
It’s the other way around. Corporations should not be taxed at all–since this is just double taxation of shareholders. Conferring personhood on corporations actually subjects them to unfair taxation on top of what the shareholders have to pay.
The primary complaint about the corporate form is that it gives limited liability. It has nothing to do with its tax status. Of course, there would be no taxes in a free society so this is irrelevant.
Today, however, a corporation is a legal person so has to pay (corporate) income tax. Then, any dividends paid to shareholders are taxed again. This means the shareholder is taxed twice. Compared to the investor in a different form of business, such as sole proprietorship or partnership, who is taxed only once.
Billwald:
This is almost not worth replying to. It is neither unlibertarian, nor immoral, to “want” credit, without liability, nor to arrange it, if you can, without committing fraud.
Quasibill:
Yes, it should be simple, but so many laymen have such a confused notion of the issue of limited liability yet still feel compelled to have strong opinions on this, that an explanation is needed.
Published: November 2, 2005 2:18 PM
I think you are missing my point as stated above. If the question is whether laws of incorporation are “un-libertarian”, I’m saying that laws of incorporation comprise a protection scheme. If….fines are levied against corporations for crimes committed by individuals. Then, laws of incorporation “protect” individuals from having to pay the full amount of the penalty. Thus, those people “get-away” with committing the crime, to the extent the law allows the penalty to be paid by the “corporation” via laws of incorporation. Laws of incorporation have the effect of a protection scheme, if, fines are levied against corporate assests, for crimes committed by individuals. From a libertarian point of view, this, to me at least, seems un-libertarian, and I would want to opt-out of a system that lessened the penalty to some, for a crime committed against me.
If the question is, whose rights does this violate? Then it would appear this would depend on one’s definition of “rights”. I assume the exact definition of rights varies from libertarian to libertarian such that honest libertarians can disagree as to what constitutes ones rights ?
Published: November 2, 2005 6:05 PM
No and Yes. Habeas Corpus is in the original federal Constitution, for example. The orignal Anti-federalist argument was that if any right was in the original — such as Habeas Corpus — then those rights not enumerated could not be assumed to exist. In other words, it was inconsistant. The Federalists finally turned what had been the anti-Federalist argument into Federalist favor by promising a Bill of Rights. (See Levy’s Origins of the Bill of Rights.) These amendments, by definition, are part of the federal Consitution and they include enumerated and unenumerated rights. The 9th is limitless regarding the number of rights (see Barnett’s Restoring the Lost Constitution).
Stephan K writes: “Legal recognition of incorporation does not, in any event, destroy any right.”
I already mentioned that it will implicitly (effectively) destroy available contracts. You’re left with saying there is no such specific right of contract, or saying that implicit destruction is somehow more acceptable than explicit destruction. Even if the implicit effect is deemed low, it opens a very large door.
Stephan K writes: “It simply gives an option to individuals to conveniently organize their affairs exactly like they have a right to do by private contract, anyway.”
So you’re saying you can write a contract that will survive bankruptcy? How is that? And could it effectively happen? After all, the legislation reverses what the “would be” contracts would say . It goes from a contract saying “I will release you from your debts to me should you become insolvent” without the legislation to “We need a contract that does not absolve you from your debt to me should you become insolvent.” Are the comparative costs of these two contracts different, and who is burdened most by each?
If the legislation doesn’t change the nature of the private contract and the burdens of creating it, then it has no reason to exist and no one should object to its termination.
Published: November 2, 2005 9:35 PM
The founders of Empire hereby agree that they shall not be jointly or severally liable for the actions of Empire’s managers, employees, or secret agents.
Published: November 3, 2005 5:15 AM
Wolf DeVoon:
You do not understand. When shareholders agree to limit their liability what they are doing is appointing managers and instructing those managers that in every agreement the manager makes using or obligating the “firm’s” assets, the agreement will make clear to the other side that they cannot pursue the assets of the shareholders. It is not just a decree exempting themselves from liability; rather, it is a refusal to enter into a contract (indirectly) with third parties with unlimited contractual liability. This is contractual liability only; not tortious.
This is in no way analogous to DeVoon’s “Empire” case.
Published: November 3, 2005 8:13 AM
More than anyone else in the ancap realm, I’ve had real hands-on experience as general counsel. There is no improvement in moral character or business fidelity when government is unable to govern.
Published: November 3, 2005 8:54 AM
Published: November 3, 2005 9:55 AM
Published: November 3, 2005 10:23 AM
Wolf: Re your cryptic last opst– why don’t you clearly, carefully, coherently spell out exactly what your position is? Are you still trying to maintain that organizing the firm with limited liability is somehow antilibertarian? If so, spell it out–and without the ignorant mischaracterizations of how corporations and corporate liability actually work, that accompanies many of the attacks of the left-libertarians.
Published: November 3, 2005 10:42 AM
I don’t think there’s anything cryptic in that forecast. The meaning of minarchy is less public scrutiny of private action. Anarcho-capitalism abolishes regulation altogether. I’m in favor of both, provided that we abolish corporations.
There is no fundamental human right to incorporate as a state, a family trust, or a limited liability hippie commune. The thing at issue is the rule of law and the definition of legal persons who are competent to sue or be sued.
An association (mafia, corporation, trade union) blurs the existence of natural persons and shifts the blame for intentional wrongdoing. I used the example of a security service. Subscribers and lenders form a privately-held company. It grows by merger with another PDA whose customers are dope dealers and arms merchants. The entire enterprise is predicated on evil, and its shareholders are culpable for organizing the damn thing.
Nominee shareholders and anonymous cyberbanking compound the problem. What is needed urgently is to “pierce the corporate veil” and hold people individually responsible for their actions — especially what purpose they advance by paying in funds to an impersonal corporate collective.
I’m always prepared to be mistaken. But I think 19th century history suggests that individual entrepreneurs were benefactors, whereas the worst actors were states, membership orgs, and limited liability corporations.
Published: November 3, 2005 11:20 AM
I feel like you must either be an anti-industrialist lefty type, or ignorant of what you are talking about, to make these comments. Have you read the seminal work on this by Robert Hessen, In Defense of the Corporation?
What exactly do you mean, “abolish” corporations? 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.
So for example an employee’s agreement basically says he will be paid for his labor–but only out of a defined pool of assets; and if this pool is insufficient, he is out of luck and cannot sue the owners/shareholders individually. Is this contract unlibertarian in your view?
The limited liability afforded corporate shareholders is similar to this. So what is the problem?
What about liability for harm done to third parties with whom there is no privity of contract? If some tortious action harms someone, it is committed by an individual–some employee of the firm. Of course that employee is liable. Arguably, his managers or those who authorize or direct this action, are also liable. But why would the shareholders be liable? Did they cause the harm? They are not active managers. Their primary contribution is money. Customers also give money to the firm–are they also personally liable for all torts committed by employees of the firm? What about suppliers–by selling supplies to the firm, aren’t they enabling its torts? Surely, they are liable too, right? And banks who lend the company money–well, they are just adding fuel to the fire. Let’s outlaw lending of money, purchasing of goods, and selling of supplies, forthwith!
In my view a reasonable theory of libertarian causation would not hold a shareholder necessarily liable for harms committed by employees hired by a corporation in which the shareholder owns a share. So the fact that a shareholder of a modern corporation is not liable for torts of the company is also not contrary to libertarian principles.
As Hessen argues in his seminal but apparently largely unknown work, the corporation indeed should not be seen as an entity. Rather it should be seen as based on contract.
Do people have a right to “incorporate”? Depends on what you mean. To me it simply means a convenient shorthand for a complex contractual arrangement. Do people have a right to collectively invest their money in a business? Sure. Do they have a right to agree among themselves as to who is going to run the business? Sure, why not. Do they have a right to refuse to deal with outsiders who do not agree to give them limited liability? Sure. If you invest in a company are you automatically causally responsible for harms committed by its employees? I don’t see why you are.
I was unaware that “blurring” was a crime. This is the problem with trying to reason by metaphor and analogy.
What does this have to do with anything? If you want to make out a case in a given situation, that some individuals’ actions are causally responsible for harms committed by others–go ahead and make the case. Don’t just assume it. And don’t assume that it applies *in general*. Most companies are not “predicated on pure evil” (whatever that means). The investment of funds in a business is not per se enabling evil. If thereafter the company’s personnel start to perform evil actions, then you have a question, as with all crime, as to who is responsible. Maybe some managers started going bad–they would be responsible. But why would the shareholders be? I own 10 shares of IBM. If an IBM vice president I never heard of decides to use IBM cash to start up an assassination division, why am I responsible for this? I didn’t cause it. What can I possibly do to prevent it? Sell my shares to someone else? “Vote” for a different board of directors at the next annual shareholders meeting?–sure, we all know how causally efficacious voting is.
No one disagrees that people should be held responsible for their actions. BUt you have to first establish that in some reasonable libertarian theory of causation, the *mere act of investing* makes one culpable for actions committed by the company one invests in. And if you try to argue this, you are going to have a difficult time exempting customers, vendors, lenders, etc.–anyone who “aids and abets” this company.
I say it takes more than just “dealing with” the company to be responsible for its actions–just as my “dealing with” you does not make me responsible for your actions. Take a murderer who is employed by ABC Corp. You could argue that ABC Corp. “invested” in the murderer by paying him a salary; enabling him to purchase his weaponry etc. So now, all the sharehlders, bondholders, lenders, vendors/supppliers, contractors, and even customers of ABC corp. should be liable for the murders right? After all, they “enabled” ABC Corp., which enabled the murderer.
How far down the chain do you want to go? Any moron can show that the chain of literal, “but-for” causation extends forever. What we have to find in the law is proximate cause–the real, responsible cause for a crime. It is absurd, in my view, to maintain that investing in a company makes you causally responsible for the actions of its employees.
(Moreover, at a given point in time, most shareholders of a company never actually invested a dime in it–they just purchased the shares from an original shareholder.)
Could be. What does this have to do with anything? Hell, you could argue that history suggests that most terrible crimes have been committed by white males. Most congresscritters are white males. So what? Want to outlaw them too?
Published: November 3, 2005 11:45 AM
I don’t wish to derail the discussion from your point, but I feel compelled to point out that merging with a company “…whose customers are dope dealers and arms merchants�? is not an unethical action from a libertarian point of view. One person’s dope dealer is where another person buys pain relief medicine, or recreational drugs.
But swapping in “murderers and thieves�? as customers, does not seem to add to your argument. If I have a murderer for a customer, and I am a grocer and I sell him food, is my operation unethical? Should the shareholders be liable for murder or conspiracy to murder?
But maybe your objection is: the employees themselves become murderers and thieves on behalf of the management of the company. I don’t think that incorporation protects any of these people from legal ramifications of their illegal activities. Furthermore, if it can be shown that individual shareholders are also responsible for instigating murder and theft, then I also don’t think incorporation protects them either.
I just think it would be hard to show that the majority of shareholders of some company could be shown at fault individually for any illegal activity some employees may have participated in. It’s like this: should most American tax-payers be tried for assisting in mass murder in a foreign country? I think it is fair to argue that they had no direct say in the event, regardless of the degree to which they may have financed it.
Published: November 3, 2005 11:48 AM
Yes, absolutely. The Bush Administration refused to ratify the International Criminal Court. Claims executive power to detain indefinitely and torture anyone, anywhere, without due process of law. U.S. taxpayers had a moral duty to stop it. Too late to claim ignorance.
What we do with our capital is leverage good or evil. There are very few “wertfrei” economic results.
Published: November 3, 2005 2:57 PM
LOL
SK> “You are confusing individual rights with positive rights;”
Hardly, and you never outlined a needed distinction, (you actually wrote “any right”).
SK> “… and failing to recognize the distinction between the feds and states.”
Nonsense. So you were asking about rights — individual or positive — and the whole time referring simply to those rights recognized/generated only on a state-by-state basis, rather than on a federal basis? Who knew you were purely standing on the 10th while simultaneously asking about whose rights were violated?
SK> “Yes, I would agree the ninth amendment arguably provides extra limitations on the feds; but it has nothing to do w/ the sttes, whcih are the ones that establish incorporation laws.”
1. It isn’t only the 9th that imposes “extra limitations.”
2. The 14th directly gives the Feds reach into the states, including commercial matters.
3. There is not now, nor has there ever been some sweet and clear line regarding when “states rights” will prevail, and when an issue will come under federal jurisdiction. That’s why they’re called cases rather than classes. The two contra-ideas have always been in tension. (By Separation of Powers design.) To originally ask about “whose rights” and then 35 posts deep wave off the original question by claiming “states rights” is to say you never took the question seriously.
I have enjoyed the following quote from Rothbard’s Man, Economy, and State (http://www.mises.org/rothbard/mes/chap15d.asp):
Rothbard is saying people should be free to incorporate, and I agree. He’s also saying government should have nothing to do with it, including an explicit grant of immunity from debts (by “privilege of limited liability” and charter grants), as I originally said and you rejected.
With limited liability to debts granted by government charter, the “right of a free individual” to effectively choose the contract is destroyed by implication. In practice they have little choice but to accept the limited liability condition, since it is a government granted privilege that any business person would quickly seize on. You have not justified the privilege. Moreover, even if you argued there would be no net outcome difference since “free” corporations would simply “announce the limited liability,” it does nothing for your argument, since this claim simply says the legislation does nothing and thus has no reason to exist.
Shareholders/investors/owners get personal immunity from their firm’s debts by the government grant of privilege, via firm bankruptcy. This means creditors can’t recover their property (their money). Most libertarians believe in property rights as actual rights, not as some metaphor or whatever you believe it is.
You apparently don’t like free markets and free contracts when it comes to corporate liability. You have done nothing to justify the legislation. Whether it is state or federally generated is fundamentally irrelevent to the underlying principle.
It would be one thing to argue that the loss of certain rights may worth the returned benefit. But that is not your tact. Your’s is to deny creditors claim to their property by government sanctioned immunity.
Published: November 3, 2005 3:32 PM
…we all know how causally efficacious voting is.
“causally efficacious” Heh. Love that phrase–I’ll have to use it some time…
Published: November 3, 2005 3:49 PM
Published: November 3, 2005 3:51 PM
I am a libertarian. I am talking about rights–meaning our individual rights. Now whatever the local state happens to enforce.
this is boring and nitpicky. but you started pointing to the constitution as the source of rights. It is only the source of positive rights–and only as pertains to the feds, at that. I was talking about individual or moral or natural rights. Moreover, the states are the ones that have corporations so even if we are talking positive rights, the constitution is irrelevant.
I don’t agree. The 14th only gives the feds limited authority over states–primarily to make sure they treat blacks and whites equally. Anyway, it was illegally ratified, so there.
No, it’s saying I don’t give a damn if teh corporaiton takes your positive rights from you, if they are not also genuine, libertarian rights.
Yes, and I agree completely with this.
I am not sure that limited liability for torts is granted anyway. And it does not seem to me that shareholders would be liable for such torts in the first place. They did not commit them.
Er, I agree dude.
It’s not granted by government charter. It’s granted by people voluntarily dealing with an entity that has adopted the corporate form. By incorporating and naming myself ABC Inc., it’s equivalent to what Rothbard said: by incorporationg, one is “simply announc[ing] to their creditors that their liability is limited to the capital specifically invested in the corporation, and that beyond this their personal funds are not liable for debts, as they would be under a partnership arrangement. It then rests with the sellers and lenders to this corporation to decide whether or not they will transact business with it. If they do, then they proceed at their own risk.”
You are confused. Who cares if people “quickly seize” on it? If it’s something they have the right to do, so what?
“You have not justified the privilege.”
It’s not a privilege. It’s just recognition of exactly what you quoted Rothbard above as saying they have the right to do.
Dude, I am an anarchist and against all legislation. I do not think there should be this kind of legislation. This whole debate, however, is a response to the lefties who continuously whine that corporations are illegitimate *because the shareholders have limited liability*. This is NOT what is wrong with corporations, since indivdiuals have a right to form corporations without the aid of the state.
THis has nothign to do w/ limited liabilty. That is the bankruptcy law. Criticize that if you want.
I don’t think the legislation is justifed; no legislation is justified (except a law disbanning government and nullifying all other legislation). THe question is, is a corporation with limited liabilty unlibertarian? Hessen has demonstrated it could form on the free market solely by means of private contract and free association.
Some people voluntarily organize themselves as limited liabilty, just as Rothbard says. They use the state’s mechanism since the state has monopolized the field, but it’s the same thing. Creditors then deal w/ this entity with eyes open. they are not defrauded; they accept the risk.
If anyone argues libertarians should form their own corporations by private contract instead of using the corporate form provided by the state, I say this is stupid. No one is obligated to be a martyr. This is why libertarians are such LOSERS.
Published: November 3, 2005 3:55 PM
I agree. I don’t understand what is so difficult about it either. I think the explanation is some people are abysmally ignorant of the way real corporations and business work, and/or they have adopted the luddite, leftist hatred of “big business.” It’s really embarrassingly stupid.
Published: November 3, 2005 3:57 PM
Well that is flatly wrong. The Bill of Rights is loaded up with natural rights, not the least of which is the 9th. In addition, and as you wrote, “the [original] federal Constitution which protects rights (from federal invasion) primarily by limiting and enumerating federal powers.” True enough, the Constitution has natural rights, liberty, freedom (pick your favorite) written all over the face of it, even if not explicitly. Sure, there are positive rights that do exist as trades by the people for the police powers granted to the government. But underlying a positive right such as “trial by jury,” however, is the natural right to be free. That is, the state has to use due process to justify taking your natural rights away. In addition, I believe many of the states call out natural rights in their own constitutions. So that part of your argument likely doesn’t wash even on its own terms.
SK> “I was talking about individual or moral or natural rights. Moreover, the states are the ones that have corporations so even if we are talking positive rights, the constitution is irrelevant.”
No, it’s not irrelevent because if you’re talking natural rights, some arbitrary legal boundary such as state/federal holds no principled barrier. You plop these boundaries down where argumentatively convenient and ignore them otherwise. Since natural rights theory says “first come rights, then comes the law” (including constitutions), it wouldn’t matter if natural rights were articulated in any constitution, state, federal, or otherwise. You can’t be consistant and limit your argument to states creating incorporation laws and in the next sentence totally delimit the breadth by saying your concern is natural rights.
gw>> To originally ask about “whose rights” and then 35 posts deep wave off the original question by claiming “states rights” is to say you never took the question seriously.
SK> “No, it’s saying I don’t give a damn if teh corporaiton takes your positive rights from you, if they are not also genuine, libertarian rights.”
A claim to one’s own property is profoundly a Lockean natural right (covered, at least, under the 9th), not a positive right. I’ve argued no “positive right” issue, so you’re way off base. In fact, the government corp charter is the associated positive right, or even license. You’ve got it exactly backwards.
gw>> In practice they have little choice but to accept the limited liability condition, since it is a government granted privilege that any business person would quickly seize on.
SK> “You are confused. Who cares if people “quickly seize” on it? If it’s something they have the right to do, so what?”
LOL. The problem is you refuse to see the real distinction between the two arrangements. If you were simply to argue that the difference between the arrangements was quite small, I might be able to agree. But you just don’t want to admit it or address it in any way, so I reckon little more needs to be said.
gw>> You have not justified the privilege.”
SK> “It’s not a privilege. It’s just recognition of exactly what you quoted Rothbard above as saying they have the right to do.”
No and no.
SK> “I do not think there should be this kind of legislation. This whole debate, however, is a response to the lefties who continuously whine that corporations are illegitimate *because the shareholders have limited liability*.”
I’m not a lawyer, so maybe you’re using “limited liability” in a way that has specific meaning I don’t know about. I’m talking about liability regarding debts, and I only mean it in a basic way, not legal lingo if it happens to be exclusionary here.
gw>> Shareholders/investors/owners get personal immunity from their firm’s debts by the government grant of privilege, via firm bankruptcy.
SK> “THis has nothign to do w/ limited liabilty. That is the bankruptcy law.”
They are granted personal immunity from the firm’s debts by government law, not by private contract. Creditors are legally cut off from recovering their property (a natural right) by law rather than by free contract. Free contract is circumvented here. (If creditors chose to do so by free contract there would be no discussion between us.) This is the distinction you’ve ignored since the beginning. That the immunity finally happens to show up at bankruptcy — a separate set of laws — is notwithstanding. I’m simply noting it, and you’ve not justified your legal compartmentalization — especially when you also claim to care about boundaryless natural rights.
SK> “THe question is, is a corporation with limited liabilty unlibertarian?”
I believe we agree that it is very much “libertarian” if it is done under free contract and it is clearly anounced and agreed upon by creditors. But that is not strictly the question you originally asked. You play very loosely.
SK> “If anyone argues libertarians should form their own corporations by private contract instead of using the corporate form provided by the state, I say this is stupid. No one is obligated to be a martyr. This is why libertarians are such LOSERS.”
Oh, give me a break. I said in my first post that is what a business owner could and should do and now you’re repeating it back to me. I would no more restrict myself from the immunity granted than I would refuse to use the internet. There are principles and there is common sense.
Published: November 3, 2005 7:22 PM
Positive rights are whatever is decreed by teh state. If they happen to match natural rights, they are still positive rights.
This is all irrelevant and beside the point.
Move along, sir, move along.
Sidetracks. I’m not gonna do forensics on what you said, blah blah blah, it does not matter. Limited liability corporations are not unlibertarian, because they don’t violate anyone’s rights. That’s the issue.
Actually that is not at all my argument. My argument is that luddites and leftists and business-ignoramuses say corporations are invalid *because they have limited liability*, and they view this as some privilege bestowed by the state. They have accepted the Ralph Nader anti-corporate propaganda. The point is there is nothing magical about limited liability; it can be constructed by private contract, so whatever objections you people have to the corporation, limited liability is not one of them.
LImited liability means your liability as a shareholder is limited ot what you invested; unlike your liability if you are a partner in a partnership, in which case you are personally liable for the debts of the partnership, without limit.
No. The government only 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.
There is no natural right here since it is not “their property”–they never had an agreement to recover against the shareholders’ property.
It is a “free contract”. If you don’t want to buy toothpaste from Crest, go buy it from the homeschooling luddite down the corner who makes it in his spare time.
Tutorial over, GW, this has become boring, elementary, monotonous, and depressing.
Published: November 3, 2005 8:38 PM
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.
Published: November 3, 2005 9:44 PM
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?
Published: November 3, 2005 10:08 PM
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.
Published: November 4, 2005 6:36 AM
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.
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 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.
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”.
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.
WEll, if you mean my smartass comments, I apologize if I offended anyone, especially those who have the greatest need to lighten up.
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.
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.
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?
Published: November 4, 2005 7:50 AM
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.
Published: November 4, 2005 8:14 AM
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.
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.
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.
Published: November 4, 2005 12:16 PM
When I had a seat on the Pacific Stock Exchange, the Exchange did not allow Corporations to own seats because of the limited liability. Large entities can pick and choose who they do business with and the terms under which they do it. The same with banks, leasing companies etc. If a bank or lending institution wants more safety when lending to a corporation, they can (and do) demand collateral. The fact that there is a hierarchy of priority of claims against the assets of a corporation allows people with different aversity to choose an investment vehicle with the appropriate level of risk.
Published: November 4, 2005 2:02 PM
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!
Published: November 4, 2005 8:39 PM
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.
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.
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.
As everyone knows, the libertarian principle of “by your own wits” applies here.
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.
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.
What? If I make an offer subject to certain terms, and you accept, then you have accepted these terms.
Yes, I do–opposing lefties, anti-industrialists, anti-corporate hippies, and those who oppose what free individuals do with their own property.
Published: November 4, 2005 9:28 PM
Published: November 5, 2005 1:10 PM
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.
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.
Published: November 5, 2005 4:32 PM
Published: November 5, 2005 5:21 PM
Sure. Of course, I regard even the imposition by the state of a tax on a company as a “fine”.
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.
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.
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.
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.
Published: November 5, 2005 5:59 PM
Published: November 5, 2005 6:36 PM
But it’s not that limited of a point–the entire attack on corporations rests on this little thing.
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.
Published: November 5, 2005 6:52 PM
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.
Published: November 6, 2005 1:04 AM
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.
Published: November 6, 2005 1:12 AM
Published: November 6, 2005 1:36 AM
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?
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.
Okay. THe purpose is to make money by any legal means.
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.
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.
Published: November 6, 2005 9:54 AM
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.
Published: November 7, 2005 2:38 PM