The politics of the left-oriented Occupy Wall Street (OWS) movement, like that of the right-oriented modern Tea Party movement, is not very well defined. But one of the things some of the OWS participants are calling for in their list of “demands” is an end to “corporate personhood.” In this they echo the views of left-libertarians who contend that state-chartered “corporations” are the source of grave social ills. [ See vol. 20, no. 1 and vol. 19, nos 3-4, of the Journal of Libertarian Studies, focusing on these and related issues, in particular articles by, and in response to, Piet-Hein van Eeghen’s anti-corporation views, and Kevin Carson’s views on mutualism. ]
Some of these issues were recently debated on the pages of Roderick Long’s blog, in the comments to his post “Double Standard.” Left-libertarians who oppose incorporation, and usually also “capitalism,” argue that firms derive some great benefit from the state by the privilege of incorporation. The standard leftist critique of the corporation is the “concession” theory outlined by Robert Hessen in his seminal study In Defense of the Corporation (see a key excerpt from Hessen corporation tort liability excerpts). They argue that the state grants to corporations three features: entity status, perpetual duration, and limited liability to shareholders, all of which are artificial and would not exist absent state intervention. Left-libertarians maintain that these privileges grant corporations more power than they otherwise would have, which distorts the market, nay, society in general. This gives rise to more “hierarchy” and “authoritarianism” than would prevail in what Hans-Hermann Hoppe calls a private law society, and indeed, to “exploitation” of the workers by the bourgeoisie.
The Alleged “Privileges” of Incorporation
Labor Theory of Value
There are several problems with the left-libertarian and leftist critiques of corporations. One is the acceptance of a Marxian-type labor theory of value—the idea that employers per se “steal” or exploit from workers the “social surplus product”—a discredited, hoary, unscientific view based on deeply flawed economics.
Entity Status
And as Hessen has pointed out, each of the three corporate features pointed to as a state-granted privilege—entity status, perpetual duration, and limited liability for shareholders—can be created purely by private contract. As for entity status (being able to represent the firm in lawsuits or for property ownership purposes, in the firm’s name) this is just a convenient legal fiction that could be created by means of trustees, or other contractual techniques (including agreements with private defense agencies, insurance companies, arbitral agencies, and the like). In any case, even stripped of this procedural convenience, firms could still organize themselves as joint stock companies or “corporations”.
Perpetual Duration
Hessen also easily disposes of the myth that perpetual duration is a privilege granted by the state; this can be achieved easily by means of continuity agreements and the like.
Limited Liability
The big objection to corporations is usually limited liability for shareholders. Now first let me mention that many non-attorney critics of this notion seem confused about what it means (and many attorneys also misapprehend it). They think the doctrine insulates a tortfeasor from liability even if he was negligent, so long as he is a shareholder. Or that the doctrine exempts managers and officers of the corporation from liability for torts of others. They are wrong. The doctrine merely says that shareholders are not jointly and severally liable for all the debts of the company that they have a share in. If a company that A owns shares in is sued and driven to bankruptcy, A loses the value of his shares but is not personally liable for the lawsuit against the company. (N.b.: to the extent some state incorporation statutes also limit the liability of managers for torts of the corporation, and not just that of passive shareholders, this is another matter and is more objectionable. However, the primary purpose of limited liability laws is to protect the shareholders from general liability; and in any case, officers and directors are routinely protected from any personal liability by the use of D&O insurance.)
Second, we have to distinguish here between contractual debts, and debts arising from torts (or even intentional crimes). As for the former, this is easy to dispatch: someone loaning money to, extending credit to, or engaging in a contract with a corporation is implicitly agreeing to pursue only the assets of the corporation itself in case of a claim, not the personal assets of shareholders (unless it insists on some shareholders personally guaranteeing a loan or contract, as if often the case for smaller companies).
So what about torts? The typical example is a truck driver for a company who negligently harms an innocent third party. The third party has no contract with the firm, unlike in the case of contractual debts noted above. The opponent of corporations maintains that the victim should be able to sue not only the employee-tortfeasor, and the corporation itself (to go after its assets and deep pockets, including its insurance policies), but shareholders themselves. After all, they are the “owners,” and should be liable too. Right? And thus, state limited liability provisions are short-circuiting the liability that shareholders would normally have. This lowers the cost faced by corporations; it makes shareholders less responsible in their decisions about who they elect for the firm’s board of directors; it lets the firm externalize costs onto the market.
The problem with this theory is the assumption that in a private law society, “shareholders” should be vicariously liable for the negligence of others. There is, in fact, no libertarian justification for this view, as libertarian theorists such as Robert Hessen, Murray Rothbard, and Roger Pilon have argued. [See Roger Pilon’s Corporations and Rights: On Treating Corporate People Justly, which has some very good stuff on why limited liability does not give any special privilege to shareholders; also my posts Legitimizing the Corporation and Other Posts; Rothbard on Corporations and Limited Liability for Tort; Defending Corporations: Block and Huebert (archived comments); Pilon on Corporations: A Discussion with Kevin Carson; Corporations and Limited Liability for Torts (archived comments); In Defense of the Corporation; also my comments (archived) to “Jeff Tucker’s post Scrupulosity and the Condemnation of Every Existing Business“; and list of resources on this in Sean Gabb’s Thoughts on Limited Liability (archived comments). ]
In this situation, some employee of a firm has committed some tort—a negligent act (such as a FedEx truck driver negligently crashing into some victim). Here the victim has a right to sue the negligent employee-tortfeasor. The question is: Who else’s assets can the victim go after? Can he sue the managers, or the directors, or go after corporate assets, or sue shareholders?
We have to recognize that the prima facie answer—the default condition—is no: each person is responsible only for his own torts, not for those of others. To hold someone else liable requires some kind of “vicarious liability” theory. To do this, you need a theory of causation and responsibility, which Pat Tinsley and I have tried to sketch out in Causation and Aggression. Yes, you can be jointly responsible with the actions of others if you engage with them in cooperative action to cause the illicit result: for example co-conspirators in crime, a gang of bank-robbers, and so on.
But holding employers—or shareholders—vicariously liable for actions of their employees relies on the offensive, paternalistic, feudalistic concept of respondeat superior—a master is responsible for his slaves’ or servants’ transgressions. As Hessen notes, this is just a vestige of the medieval mentality. Why would a shareholder be liable for actions of some employee? There are two aspects to being a shareholder that could conceivably give rise to vicarious liability for another’s direction actions. First, the shareholder may have contributed capital (money) to the firm. On the other hand, he may not have: he may have bought the share from a previous shareholder. This latter possibility is routinely overlooked by those who blame the shareholder for contributing money to a company that has an employee who commits a negligent act during the course of his employment. They assume that giving money to the corporation is akin to “aiding and abetting” it, so that the shareholder is responsible for all its debts that it incurs as a result of actions it engages in with the “aid” of the money contributed by the shareholder.
But contributing capital to a firm is nothing more than aiding it, which co-employees, customers, creditors, vendors, and suppliers also do. If you broaden causal responsibility so much that you would implicate a shareholder just because he gave financial aid to a firm (though as I noted, not all shareholders give money to a firm), then employees, customers, creditors, suppliers are also all liable, which is obviously absurd.
Second, the shareholder may have a vote in electing directors. But then again, he may not; not all shares are voting shares. Further, the shareholder might not exercise his right to vote; and if he does, he might vote against the directors who win; and even if his choice wins, his vote is almost never decisive; and, in any case, rarely is it the case that the director campaigns on a platform of directing managers to permit employees to engage in torts and negligence. These latter qualifications are rarely noted by corporate opponents who blame shareholders for corporate actions simply because they have a right to vote. But possessing a right to vote for directors does not obviously imply vicarious liability for torts committed by employees hired by officers appointed by those directors. In fact, the right to control property does not automatically imply responsibility. If I own a knife and it is stolen by a thief, I am not guilty of murder if the thief kills someone using the knife, even though I still own it. Ownership implies the right to control. It does not imply liability. Liability flows from actions, whether those actions employ means owned by the actor or not. In other words, whether one owns a means employed in an act of aggression is irrelevant. Likewise, having an ownership (control) right does not automatically imply responsibility. [ See my posts The Libertarian Approach to Negligence, Tort, and Strict Liability: Wergeld and Partial Wergeld and The Non-Aggression Principle as a Limit on Action, Not on Property Rights; also IP and Aggression as Limits on Property Rights: How They Differ. ]
(A related point is that shareholders are not even “owners” of corporate assets in the same way that I own a knife. The state legally classifies shareholders as owners, but we have to be wary of relying on state classifications. [ See my post The Over-reliance on State Classifications: “Employee” and “Shareholder”. ] The shareholder can influence board composition by vote, and has a right to receive dividends if paid, and some pro rata right to receive part of the assets of the corporation upon liquidation, but a Google shareholder doesn’t have the right to use the Google headquarters or corporate jet.)
What this means is that if you attribute vicarious responsibility to the shareholder merely because he has a vote—that is, he has “some influence” on who the directors are—then everyone who “influences” the firm is also potentially liable for torts of its employees—again, as in the case of holding people liable for aiding and abetting a firm, this can include creditors, who can influence company policy or board composition, employees and their unions, important suppliers, and the like. Again, this is obviously absurd.
The kneejerk and simplistic rules that would implicate shareholders for torts of employees based simply on the fact of ownership, voting, and contributing capital, would also render hundreds, thousands, maybe tens of thousands of people jointly and severally liable for the negligence of Pepsi truck drivers. This is obviously not a result compatible with libertarian theory.
So it seems that a shareholder who is truly passive and does not manage the affairs of the firm, nor make management decisions or direct the actions of employees, should not be liable for torts committed by such employees. Why should he be? Hessen, Rothbard, and Pilon are right.
It is important to recognize this because opponents of state incorporation claim that the state’s grant of limited liability to shareholders is a huge privilege granted to them that would disappear if the state were to get out of the business of granting corporate charters. In fact, here the state and the left-libertarians share the same presupposition: that absent state incorporation privileges, shareholders would be vicariously liable, via respondeat superior, for torts of employees of companies the shareholder owns stock in. The state uses this false claim to justify regulating the company; the left uses this false claim to exaggerate how much benefit existing state-chartered corporations must be receiving, and to predict that a state-free world would look vastly different, and that our current “capitalist” order is dominated by the state and not really free at all.
Likewise, as already mentioned, another fallacious view shared by the state and the left-libertarian opponents of incorporation is the idea that a corporation cannot exist unless the state grants it the privilege of “legal personality,” i.e. makes it a separate legal entity. The state makes this claim to hold itself out as the firm’s benefactor, and claims the right to place conditions on this grant—various regulations, etc. And if it’s a separate legal person or entity, why, gosh!, it owes income taxes! It’s a person, after all, isn’t it? And the left-libertarians join in this refrain by claiming that state incorporation grants the legal entity privilege to corporations, and they could not exist without it. Some privilege, that subjects you to regulation and income taxation! So: we can see that the state’s fallacious claim that it is granting a privilege of legal personhood to the corporation is used to justify double taxation: first, the corporation, as a “legal entity,” is subject to corporate income tax; then the shareholders are subject to capital gains or income tax when they receive dividends. Effectively, the shareholders are double-taxed. Some privilege.
But this view is confused too. As Hessen has explained (see previous references), a company having a “corporation”-like structure could arise on a free market using private contract alone. It could sue in “its own name” (as a convenience); it could have perpetual life; contractual debtors could go only against the corporate assets and not those of shareholders, since they agreed to it; and victims of torts of employees of the free-market “corporation” could sue the employee-tortfeasor but not the shareholders, since they are not causally responsible for his torts any more than the customers are.
Ending Incorporation
In any case, we can agree with the left-libertarians that the state ought to stop granting incorporation status. Contractual firms would arise—I don’t know if they would be called corporations, joint stock companies, limited liability firms or what—and the state would have less justification to subject them to income taxation—to impose double taxation on shareholders. Firms would be far better off—and shareholders would still have natural limited liability. What’s not to like?
Why left-libertarians think corporate status is some net “benefit” to every firm in the Fortune 500 (again, see the comments to Long’s post “Double Standard”) is a mystery to me. Removing SEC “public company” regulations (which cost each public company about $3–4M a year) and removing corporate income tax alone would be a huge boost to American capitalism. So what if the name of the standard form of organization changed? Small price to pay.
In sum, yes, get rid of state corporate chartering, and the corporate taxation and regulation that accompanies it.
For some more discussion of these and other ideas, see my post Capitalism, Socialism, and Libertarianism; I also discuss some of these issues in Episode 133 of This Week in Tech.
Appendix: Corporate America being “part of the state” and the calculation problem
(Update to this section: see also: Left-Libertarians on Corporations “Expropriating the Efforts of Stakeholders”; Is Macy’s Part of the State? A Critique of Left Deviationists; and my comments in response to Kevin Carson’s claim that “there’s probably some fraction of income over $250k that was really earned through hard work and enterpreneurship.” in “I’ve Never Seen a Poor Person Give Anyone a Job”.)
Some final comments. Note that the left-libertarians’ confused adoption of the state’s underlying rationale for monopolizing, regulating, and taxing corporate-firms causes them to conclude that the US economy is basically dominated by companies that are in reality parts of the state. Instead of viewing only some firms as closely in bed with the state—defense contractors, say—they view virtually all of corporate America as agents of the state. Even a Walmart or Apple are thought of as parts of the state—in a fascist sense, that is: they are nominally private but really parts of the state because of the various state “benefits” and “privileges” these companies receive. (See my post Apple vs. Microsoft: Which Benefits more from Intellectual Property?) Walmart benefits—maybe disproportionately—from state subsidies to highways etc. (though the local mom n’ pop shops ship things in from far away too). Nevermind the corporate taxes and SEC regulations. It “benefits” from the “privilege” of the state grant of entity status (which it does not need to exist, as Hessen shows) and from exempting its shareholders from general liability from torts of employees (which they do not need since they would not be personally liable anyway in a free society; and which could be taken care of easily anyway by a simple and cheap extension of D&O insurance; and which the corporation usually has sufficient assets to handle in any case).
Take Walmart: the left-libertarian thinks it is unlibertarian (in a “left-thick” sense) because it has bosses and hierarchies that allows it to “boss people around” in ways it could not get away with on the free(d) market. It is only able to get away with these thick-libertarian oppressions and exploitation because of the net benefit and privileges it gets from the state. The non-left-libertarian agrees Walmart and other companies’ structure etc. is distorted because of the state but sees no reason at all why a Walmart of some type could not exist on the free market—in fact, I would think it highly likely Walmart could do even better, shorn of the costs the state imposes on it too. (That is not to say that there would not also be more local, small, diverse companies, more self-employment, more self-sufficiency, more early retirement. The free market would be rich and diverse.) Even an Apple Inc., which now does benefit in some ways from patent and copyright law that it uses to suppress competition, could exist and prosper, by selling high-end hardware, like the Mercedes of computers—even if it would be less able to stop clones or maintain its closed model.
In the recent debate on Roderick Long’s blog, some of the left-libertarian commentators imply that virtually every one of the top 500 public corporations in the US is illegitimate, and part of the state. This of course implies that many others are too, and even that a vast swath, if not most, of the US economy is effectively part of the state. Now I’ve detected this implicit view before, and I’ve (informally, in blog posts and comments) observed one problem with this view is that it implies that the apparent “capitalist” prosperity we see is all a mirage. (See Is Macy’s Part of the State? A Critique of Left Deviationists.) This is because, if you accept Mises’s calculation argument, a centrally run economy cannot be economically prosperous. If most of corporate America is “really” part of the state, then the calculation argument means we must be in a USSR-style shambles, despite appearances to the contrary. Sure, I realize the GDP measure has methodological problems, and that the state exaggerates and propagandizes, but what’s more plausible: that we are really all poor, living in a 1970s Soviet-Style morass with just faked prosperity (hey, maybe we never made it out of the Malthusian trap in the 1800s after all; maybe the whole Industrial Revolution is a mirage!); or that there is actually a vast amount of prosperity generated by the underling genuinely free market economy despite the state’s depradations? As far as I can see, the left-libertarians have to argue the former; I think most sensible libertarians will take the latter view.
The former view is what results from the idea that most state corporations are “net beneficiaries” of the state. As the state cannot produce wealth but can only destroy it, if the bulk of US enterprise is a net beneficiary of the state it must come from the remainder of society, meaning an overall impoverishment for everyone—meaning the apparent prosperity and productivity of the last 20, 50, 200 years is a mirage. Simply declaring “hierarchical” firms that have a corporate charter “net beneficiaries” of the state is obviously the wrong criterion, since it leads to absurd results: it leads you to deny the evidence of free market generated prosperity that is before our eyes. (This may be one reason Kevin Carson objects repeatedly to my Misesian calculation argument along these lines.) Obviously we need a more selective way of determining whether a given firm is a net beneficiary of state aid or not. It has to be a minority of firms—otherwise we would be living in a USSR-style third world shambles. A firm that is heavily dependent on something that would not appear the same way in a free society would be suspect, such as the military defense contractors. Firms heavily dependent on subsidies, or IP (like Microsoft), would be more suspect than others, but even here, Microsoft provides a useful product, albeit at prices inflated by its copyright monopoly. It may not be possible to develop rigorous criteria, but why do we need to? We have systemic and economic reasons—plus common sense and experience dealing with many firms in society that obviously do more harm than good—to doubt the claim that most of corporate America is a net beneficiary of the state. Hell, most of us even think that individual humans who rise to the top of power, like Barack Obama, are harmed in a deep sense by achieving “success” and power the way they do.
Update: See David Henderson’s EconLog post, Hummel on Moss on Limited Liability, and Jesse Walker’s 2001 Reason post, Killing Corporations.
Now mises.org, they are peppered with foreign words.
I agree that it would simply take far too much digital ink to actually go through the entire calculation problem in addition to all the other issues you addressed… I often run into the problem myself trying to explain such views via conversation.
Didn’t need a state government for any of it.
Yes, he probably should, because he helped cause it–in the sense that Pat Tinsley and I lay out in the Causation article linked above.
Where is the case? I don’t think this case can be made. Some do. Not all, or even most, IMO.
If Bob knew about the purpose, then anybody would agree. If not, it’s a different story, and every state around the world disagrees in principle, because they immunize every officer that is responsible for the abuse. The state simply claims capricious power to apply the principle at whim.
If Bob knew about the purpose, then anybody would agree. If not, it’s a different story, and every state around the world disagrees in principle, because they immunize every officer that is responsible for any such abuse. The state simply claims capricious power to apply the principle at whim.
I didn’t think I was unclear:
Your “Labor Theory of Value” paragraph simply has no place in this piece. Apart from falsely characterizing the LTV as universally characteristic of left-libertarians (which is apparently its intent), it serves no function whatsoever. It neither introduces nor illuminates any of the subsequent material.
Well, that’s kind of the point.
You didn’t throw in a paragraph falsely claiming all left-libertarians prefer pistachio ice cream.
Or a paragraph falsely claiming all left-libertarians practice bestiality.
Why throw in the false LTV claim, since it has nothing to do with the piece?
You just changed the claim to “some” left-libertarians. The original claim was universal in scope. I can prove the original claim wrong with two four-word sentences:
I am a left libertarian. I am an Austrian subjectivist.
QED, not all left libertarians are LTV supporters.
All that said, my objection is less that the claim is false than that it has nothing whatsoever to do with anything in the rest of the piece. It’s as relevant to the question you’re addressing as the pistachio or bestality claims would be, which is to say not relevant at all.
I don’t remember making it universal. But if it was, I would agree that it is wrong insofar as some self-described “left-libertarians” reject this hoary doctrine. Okayyy. But then, you would need to carefully and rigorously define what ‘left-libertarian” means.
Okay. I am glad.
So, may I assume you join me in rejecting the LTV views of the other left-libs?
Right–so it’s like an editor’s comment. THanks, and as I said, it was jsut a blog post.
blockquote> It’s as relevant to the question you’re addressing as the pistachio or bestality claims would be, which is to say not relevant at all.
IT seems to me that what is relevant is substantive truth and accuracy, not the “appropriateness” of the placement of a given commentary.
I reject all variants of the Labor Theory of Value of which I am aware, regardless of whom is advocating for said theory.
“Value” is entirely subjective. What is something worth? Whatever it’s worth to the person valuing it.
Even the instrument of “price” doesn’t reflect some imaginary “objective” value. All that can be said about the price of an unsold item is that it reflects at least the lowest value its would-be seller places on it, and that nobody’s come along yet who places a higher value than that on it. All that can be said about price of a sold item is that it sold for at or more than the lowest value the seller placed on it, and for at or less than the highest value the buyer placed on it.
I am glad you say this, but elsewhere you said:
This implies, I am afraid, that you “own” your “labor” and its “results”.
Mr. Kinsella, I’ve embraced your arguments in opposition to intellectual property. IMHO, in this case you’re case falls flat.
Well you are just buying into the state’s classifications. Who says he “is” an “owner”? Ownership is the right to control. What resource does he have the right to control?
well if you call him an owner, as the state says, I guess you are done! How convenient for you. And why, again, does the right to control a resource imply that you are responsible for harms caused with that resource being used as a causal means? I realize you just want to rely on this without justifying it –but bear with me–how do you know this?
Is your chauffer or delivery man your property? do you own him?
Again, you are speaking simplistically. Did you read my post? I explained the problems with assuming ownership implies liability. And in any case, the owner of a corporation owns property, not people. Helloooo
So…. if a fedex truck driver runs you over, he is not really there?
Well that settles it, then! Let’s hang up libertarian theorizing–the “world” has “established” the “right way” to proceed!
Ah, well when you put it that way it’s all settled! Wow.
So… owning a piece of paper that represents a legal title to a sliver of a legal claim to the assets of a firm upon dissolution is … “dangerous”, “like” a pit bull? Wow.
It’s not a strawman at all. Since you ignorami cannot even articulate a coherent explanation of how corporations work much less what is your theory of rights or liability or causation, I am tyring to help you out by charitably articulating your implicit views for you.
This sounds like an amateur observation by a clueless grad student in a dorm room session bullshitting about stuff they have no clue about. With David Letterman playing in the background, and the whiff of Mary Jane from the suite-mate next door. Good for you! But when you buy a share of Exxon stock from a previous owner, using the stock market to facilitate the exchange, how do you “buy it”?–and what is “it?”; as a “going concern”–and pray tell, what is the relevance of GAAP terminology like “going concern” to libertarian theory? methinks you are utterly clueless.
We look for someone to blame, to take responsibility for actions that cause harm to others. When a corporation is the face of that blame, it rarely suffers as a private individual would. Even something as seemingly insignificant as social stigma can have a heavy effect on an individual and the way the rest of society relates to them – conversely, a corporation can perform a whitewash, pay off some directors and replace them. It is harder for an individual to do this, “finding God” may work once with one or two people but, generally ‘man’ is viewed by their actions. The corporation can blame previous corporate culture (ie the actual “real” people) and continue on with little real consequences after time.
If Dr Evil is responsible for forcing native Australians into slavery to ensure profits in his pearl diving industry, Dr Evil may well have his life shortened by someone who cares (I am being extreme only to stress a point). The Dutch East India company will simply replace their pearl diving manager with another individual who will likely carry on the same business practices.
Netterville was more thorough in his analysis of your paper, and I find his points compelling. I have tried to limit my position, to this single point of “responsibility and consequences”.
A share of stock in a corporation is an undivided ownership interest in the assets of that corporation.
Because it’s an undivided interest among many, control is exercised through collective instrumentalities, and there are options for exercising more control (common stock) or less control (preferred stock) as compared to other owners of interest, but the claim that control is not exercised is absurd.
“Is your chauffer or delivery man your property? do you own him?”
I own his work — that’s what employment is.
That’s how the state’s positive law classifies it. So what? Is it libertarian? Is it accurate? Do I, as a Google share owner, have a right to use the HQ for a meeting or the google corporate jet for transportation?
In any case: you guys seem wedded to the conventional notion that if you own something you “are” “responsible” for “it”. Why? This is not libertarian. Ownerhip is the right to control. It does not mean you are responsible for anything involving those means, unless you employ them as means.
Well I don’t think Rothbard, Pilon, and Hessen’s careful arguments about this are absurd.
Nonsense. You are in thrall to imprecise and metaphorical–maybe leftish?–concepts. No one owns “work”. Not the worker, not the employer. Work is just an action. You don’t own your actions. This is nonsense. It leads to confusion and imprecision. You own your body. Period. Not your “work”.
Like you say, ownership is the right to control.
You have the right to control — in other words you own — your actions.
The employer-worker relationship is an agreed transfer, on given terms, of ownership of the right to control certain of one’s actions, e.g. “from 9am to 5pm, Monday thru Friday, my hands will be doing what YOU want them to be doing rather than what I’d otherwise have them doing, in return for which you shall pay me $X.”
I disagree completely. First, the employment relationship is NOT one of slavery. The employer does NOT own the employee. HE does NOT own the employee’s body, or time, or actions. Rather, he transfers title to money on the condition that the employee use his body to perform certain specified actions. The employee’s ability to control his body, combined with his legally recognized right to his body, gives him the legal and practical ability to decide to perform an action to trigger the payment, or to withold services to induce the employer to enter into the bargain. IN short: the employment agreement is a one-way transfer of title: of money, which is conditionally transferred upon a certain specified triggering condition (which happens to be an action the employee can perform). But the action is not owned by either the employee or employer.
Right?
I find your elaborate construction more confusing than my simpler one.
Energy and the direction of it (“action”) are scarce resources, and I own some of them by virtue of having created them from other scarce resources (e.g. food) which I homesteaded or otherwise honestly acquired.
Since I own them, I can sell them. And in a wage labor scenario, that’s exactly what I’m doing.
As an example, when I worked at a factory where boat trailers were built, I was not selling the factory owner X trailers per day. Sometimes I came to work and was put to work loading trailers onto trucks for shipment. Sometimes I came to work and was put to work on the assembly line, hanging trailer parts on racks to be run through a paint sprayer and oven. One time, for about two weeks, I came to work and was told to get in a minivan and pull this or that trailer to this or that boat factory so that the fit between prototype boat and prototype trailer could be tested. The result of my work and the work of others was X trailers, but that’s not what the employer was buying from me. He was buying the use of my body and my energy at his direction for a set period of time.
As a side note, I don’t consider commodification of labor or the wage system to be inherently exploitative in some evil way as some left libertarians seem to. I suspect that the incidence of wage labor would go down, and its price up, in a freed market, but my toes would still be tapping if that were not the case.
Okayyy… but… so? this is an irrelevant comment, and distracts from substance.
No you don’t. This is all confusion and liberal arts metaphorical nonsense. You don’t own energy, or the “direction of it”. Now you wonder why I accused you guys of falling prey to a version of the labor theory of value.
Wrong. This does not follow at all. A huge confusion. Owning something does not mean you can sell it: for example your body (or do you believe in voluntary slavery?!).
And selling something does not mean you own it: You do not own your actions but you do own your body which gives you the ability to perform, or withhold, certain actiosn and thus “exchange” or “sell” them for payment.
“And in a wage labor scenario, that’s exactly what I’m doing.”
No, it is not “exactly” what you are doing at all. In a wage labor “scenario,” you are simply using your rights over your body to induce an employer to agree to transfer title to money to you if you perform certain actions. That is all. It is a one-way transfer of title. There is no *legal* exchange.
Right: legally speaking you were not “selling” anything, since you did not part with title to anything that you owned. How hard is this to grok?
Economically, he gave you title to his money, in “exchange” for getting “what he wanteD” which was your “doing X”. But that does not mean you owned X, or that you transferred title to X or to “doing X” to him. This is just a confusion. You guys really need to read Rothbard’s title transfer theory of contract. Sheesh.
I don’t either, but I really don’t care if it is, since “exploitation” is not aggression, and thus exploitation, whatever this means, is not a rights violation.
How else would one interpret relationships within an institution created by state fiat than with reference to “the state’s positive law?” Get rid of the state’s positive law and the corporation doesn’t exist, so the question goes away.
The right-libertarian argument that criticism of corporations are illegitimate since institutions like corporations might come into existence absent the state is like arguing that since some other economic actor in some other economic system might produce a car like the Volvo 740 wagon, it’s illegitimate to complain about the seat-warmer in my actual 740 wagon not working.
How is it that you think you know that?
“Same with corporations. At present they are companies, or firms, that receive a certain entity status from the state. Remove state incorporation and they remain companies with shareholders, employees, assets, products, contracts, customers. The company would exist. Amazon Inc. would now be Amazon LLP or Amazon Firm or whatever.”
Agreed. Companies absent state privilege would still be companies — companies without state privilege.
“So what?”
Yup.
You don’t.
Cool. Thanks for resolving that. Now that I know that, I’m just going to scrawl “you didn’t own those 667 kilowatt hours that I used last month, or the direction of them to my breaker box, so I’m not paying you for them” on my bill from Ameren UE instead of paying it.
“Owning something does not mean you can sell it: for example your body (or do you believe in voluntary slavery?!).”
No, I don’t believe in voluntary slavery any more than I believe in dry water. If it’s voluntary, it isn’t slavery. And if I can’t sell something, I don’t own it.
This is eristic. This sarcasm proves nothing. Today’s contract law is based on the idea of binding promises backed by consideration, for one. So who cares about what current law is? Are we legal positivists? Second, the contract can be viewed as a single unilateral title transfer from customer to “Ameren” [I assume this is some yankee utility company]: I hereby transfer $x to you IF such-and-such event happens (where the event may be: provision of certain kilowatts of electricity; it could aslo be: “if it rains tomorrow,” which does not mean either party “owns” the rain).
Evasion. The question in libertarian circles is whether a contract to sell your body into slavery is legally enforceable. Your trite formulation in your last sentence sounds like that of a politician, and does not answer the issue.
This is nonsense. Ownership means right to control. It is not obvious that the right to control implies the “rihgt to sell”. This is yet another assumption unbacked by anything but inchoate intuition and not carefully squared with other libertarian property rights principles.
Whether or not something is “legally enforceable” is, as you’ve pointed out numerous times, irrelevant to whether or not it is a right.
If I (voluntarily) contract to sell my body, it’s not slavery, any more than if I (voluntarily) contract to sell something else I own it’s robbery.
Slavery is involuntary servitude.
“It is not obvious that the right to control implies the ‘right to sell.’ ”
The right to control does not imply the right to sell, it subsume it. The specific activity of “selling” is an instance of the broader category of activities of “controlling.”
Correct. I should have said, whether it ought to be legally enforceable.
the contract is not slavery, but enforcing it might be. You are aware of the debate in this area, right? And you realize most libertarians do not believe a contract to sell your body ought not be enforceable, right? And I would think almost no left-libertarians think voluntary slavery agreements ought to be legally enforceable.
To enforce a slavery contract the master would need to be able to legitimately use force against the slave’s body, if the slave tried to run away, if he tried to change his mind. At that point, it would be involuntary–that is, not consented to. Your argumet would then be, “no no, he consented earlier, and that consent…. is somehow irrevocable.” Your argument relies on this last key step: saying that an earlier grant of permission cannot be undone; that you cannot change your mind. BUt where does libertarianism say this? Suppose a girl consents to a kiss. THe guy kisses her. It’s not a battery, since it’s consented to. What if she says, “You may kiss me anytime you like, from now to the end of time!” and so the guy plants a kiss on her at random times, every day, over the following week. Then one day she gets upset with him, and says, “Don’t you ever kiss me!” If he kisses her now, it is not with her consent. Why not? Because she changed her mind. Because when an action is to be performed that uses the body or property of, or that changes the physical integrity of, or that crosses the borders of, someone else, the question is of course: at the time of the use, is it consented to or not? And so that is just a question of proof and evidence and communication: if the person just said 3 seconds ago “go ahead” then we reasonably assume that he is consenting now. That is, the previous communication serves as evidence that this is a standing order or standing presumption he has set up, that persists until the moment of use. In the kissing example the girl’s consent given a week earlier persists into the future, as a default presumption of what her consent is at the time of each kissing act. Yet that is only because she has not changed this default assumption with a new communication.
If I step into the boxing ring to box you, we both consent to blows. If I say I will box you tomorrow, but then 5 seconds before stepping into the ring I get cold feet, you can’t physically drag me into the ring so that you can hit me.
Same with a guy who promises to be a slave. So long as he does not object to following orders or letting the master hit him, no problem; but when he changes his mind, at that point, he is no longer consenting.
I don’t think you’ve thought this through. You’re assuming that an contingent incident of one type of ownership is an essential feature of ownership per se. Ownership means the legal right to control. That does not imply the right to get rid of the right to control. I have explained this in detail elsewhere, e.g. http://blog.mises.org/18608/the-relation-between-the-non-aggression-principle-and-property-rights-a-response-to-division-by-zer0/ and http://www.mises.org/journals/jls/17_2/17_2_2.pdf . When you, as a body-owning agent, use your rightful control over your body to engage in the action of appropriating some previously-unowned and unused external scarce resource, then you become its owner by homesteading. This type of ownership can obviously be undone by the nature of its origin: an acquired thing can be un-acquired, or abandoned. The right to abandon it gives rise to the ability to sell it, since you can abandon it “to” a given recipient. Thus, the nature of ownership of acquired things means that you can, in fact, sell or give away the thing. However, the same is not true of the nature of ownership of our bodies, since we do not acquire our bodies by homesteading, in the same way; there is no original act of body-appropriation to “undo”. You own your body because of your intimate connection with it, not because you homesteaded it.
Thus, ownership does not imply the right to sell.
Only if the contract is defective in some respect.
“You are aware of the debate in this area, right?”
I’m aware of the existence of discussions in this area, and of their content. Characterizing those discussions as “debate” seems to be to me taking it a little far, given the crystal clarity of the matter. If it’s a voluntary contract, it’s not slavery, period.
“And you realize most libertarians do not believe a contract to sell your body ought not be enforceable, right?”
No, I was not aware of that. And I’m still not.
“And I would think almost no left-libertarians think voluntary slavery agreements ought to be legally enforceable.”
Since there’s no such thing as “voluntary slavery agreements” (if it’s a voluntary agreement, it’s not slavery), I suspect you’re right.
“To enforce a slavery contract the master would need to be able to legitimately use force against the slave’s body, if the slave tried to run away, if he tried to change his mind.”
Except that there’s no slave or master involved in the scenario. Your statement is the equivalent of “To enforce a contract under which one party was entitled to a television, that party would need to be able to legitimately use force against anyone trying to take the television, if someone tried to take the television, or if the party who owed and had delivered the television tried to steal it back.”
Which, of course, is in fact that case and is hunky dory in anything resembling rational libertarian theory.
“At that point, it would be involuntary–that is, not consented to.”
Only in the same sense that it would be “involuntary” for you to keep the television that you offered me $100 for, that I accepted $100 for, and that you now possess.
” Your argumet would then be, “no no, he consented earlier, and that consent…. is somehow irrevocable.’”
Whether or not the consent is revocable is a matter of the terms of the contract.
“Your argument relies on this last key step: saying that an earlier grant of permission cannot be undone”
I’m not saying that NO earlier grant of permission can be undone. I’m saying that a binding contract without provisions for its undoing can’t be done at the whim of one party.
You can’t have it both ways. Either you own your body, or you don’t. If you own it, then it is your property, and absent some convincing proof otherwise, the rules that apply to property in general apply to it specifically.
“If I step into the boxing ring to box you, we both consent to blows. If I say I will box you tomorrow, but then 5 seconds before stepping into the ring I get cold feet, you can’t physically drag me into the ring so that you can hit me.”
Actually, whether or not I can do that depends on the terms of any contract we have or don’t have pertaining to the matter.
“Same with a guy who promises to be a slave. So long as he does not object to following orders or letting the master hit him, no problem; but when he changes his mind, at that point, he is no longer consenting.”
And it doesn’t matter whether or not he’s “consenting.” If he’s sold his body, his body no longer belongs to him, so his consent or non-consent is irrelevant.
I think you don’t realize how much you are taking for granted and that you are reversing things, assuming too much. Contract is not a source of rights, as you are implicitly thinking of it; it is just a transfer of title to alienable property. Rothbard wrote on this in Ethics of Liberty. You could profit from reading it. This means that you can only transfer title to things that are alienable. You can’t assume it’s alienable because you make a contract. That’s question-begging. It’s frustrating you can’t see this. You can’t just make these mainstream-ish pronouncements relying on legal doctrines as if it settles it. You are just engaged in question-begging, because you apparently cannot even see that you are doing it.
It’s not crystal clear at all, and you are just being obstinate here. Talk to your fellow libertarians, man. This is an empirical matter, but I’d be willing to put some money on it.
Well, then I think you are a bit clueless. Ask around.
I cannot debate you on this if you are going to pettifog. You konw what i’m talking about. This is eristic and not serious, Tom. We are not really having a semantic debate, are we? If so, I’m not interested.
This is such eristic nonsense. Put effing quotes around “slave” and “master” if you want. Are you just trying to evade serious discussion? If so, you are doing a good job.
You are qeustion begging again. Can you not see this? This is now how you establish your point dude. YOu can’t show that contract includes the power to sell or bind your body, by just asserting that if you make a contract with the right terms it is effective to do this. tHat is just restating your conclusion.
THe questio nis whether it is “binding”. You seem to be totally unfamiliar wiht the libertarian view of contract–again, i urge you to read rothbard’s ethics of liberty chapter on this. Contracts have nothing to do with “binding” promises. They are just transfers of title to alienable property. And you can’t prove that bodies are alienable propety just by saying that you can make a contract to bind yoursefl–this is a perfect case of question-begging, circular reasoning.
I’m not thinking of contract as a source of rights, either explicitly or implicitly. Contract is merely an instrument. You can only contract with things you “own” — a word which we seem to agree means “have a right to control.”
Which brings this whole discussion down to the notion of property as alienable or inalienable. I have never seen any good case for the existence of the latter.
I think you are, when you characterize it as binding obligations.
But then you are question begging since you are assuming “right to control” implies “right to bind/alienate my future decisions about how to control”. It is question-begging, whether you see it or not. I am not saying you are wrong: there are good arguments for body-alienability. But you are not making them. You are question-begging. You apparently do not even see that your proposition is controversial and that you bear the burden of proof. You think it’s sufficient to hand-wave and spout statist legal positivistic legal doctrines as if that settles the issue. Sort of how the Civil War “settled” the issue of secession, I suppose.
Which brings this whole discussion down to the notion of property as alienable or inalienable. I have never seen any good case for the existence of the latter.
I believe that: you don’t seem to have read much in this area. I’ve given you resources: my articles, and many cites therein; Rothbard’s contract theory. You can handwave and pretend it’s simple, but you are wrong. And you are also wrong to think most libertarians would agree that a contract binding your body ought to be legally enforceable–or so I think: I’d bet good money on it. Find 5 of them. There’s you, Walter Block, and … crickets chirping.
I most manifestly do NOT bear the burden of proof. We both agree that I own my body. If you think there’s something I shouldn’t be able to do with that which I own, it’s your job to prove that to me, not my job to prove it to you.
As far as previously made arguments on the subject go, I’ve read some of them. I guess I’ll go re-read some of them, after looking back up the trail that we took into this dry hole to decide whether or not it’s worth it.
Again, you do not seem to see the issue. Yes, we agree you own your body. But that just means we agree that you have the right to decide who gets to use it. That is what we agree on. You are equivocating b/c you are saying we agree on ownership, but we only agree that you have the right to control your body; then you later use the ownership-means-right-to-sell meaning in an equivocating way.
You are so stuck in conventional legal thinking that you cannot see your error. You think “ownership of COURSE means the ‘right to sell’”. But that is wrong.
the “dry hole” is your arguing that we ought to be able to sell ourselves into slavery. sorry, “slavery.” Yeah, um, that’s really what will win over democrats to our side….
If the people protesting the injustice (perceived or real) of Wall Street Billionaires continuing to fatten their pocketbooks at the direct expense of working people is offensive to you because it doesn’t meet your intellectual standards regarding their ‘corporate personhood’ argument, then I suppose there is no real harm in making an argument out of it and declaring yourself a winner. I think that you could just as easily make the argument that it is unlawful and immoral to use the power of government to deprive one class of people of their rights (property – through taxation) to protect another class’ property through this privilege.
Do you not understand the damage that it does to all of us, our rights and our society to perpetuate the myth that what is good for corporations is good for the people? If not, I don’t think a thorough explanation will help.
Balderdash!
Rich
Or do you fail to understand its relevance to your argument?
Perhaps you misunderstood.
Person A is asked by person B to take him to a bank, being a good friend, person A obliges. After being dropped off at the bank, person B procedes to rob the bank, and then leaves.
Unaware of anythng amiss, person A drives off with person B.
Police soon catch up and person A immediately pulls over and submits to arrest.Now this:
Person A knows person B plans to rob a bank and agrees to help him by driving. He drives to the bank and person B procedes, as before, with the robbery. Person A drives off with person B but soon the police catch up. Person A pulls over, realizing there was no use in trying to escape and submits to arrest.Certainly, you could be tempted to say that the first person is not guilty but the second certainly is, but quickly it becomes apparent that this is in practice absurd. No one can know the workings of another persons mind, and therefore cannot, by the very laws of physics, be allows as evidence in a court room.
In neither instance did person A do anything objectively wrong, and therefore cannot, and should not, be prosecuted for thievery.Crimes are in actions, not thoughts.You are further wrong when you say that a person holding a knife threatingly to another person is simply an act of speech and is aggression because of the intentions of the individual in question. This is wrong, holding a knife threateningly puts the victim at *objective* risk, that he would not otherwise be in, regaurdless of the intentions of the knife wielder.Perhaps I am misunderstanding your position. I hope I am, because you seem to intelligent for this, Kinsella.