Corporations

[abirkmanis]

If the shareholders receive dividends, and later on its discovered that the oprations of the company has hurt other people/damaged other peoples property, the receivers of the dividends wont be liable, eventhough they profitted from the business practises. And it`s the owners/receivers of the dividends who have the funds to pay for the damages, not the employees.

Were the employees physically coerced to hurt/damage other people/property? If not, it’s their sole liability. If yes, there is a separate liability of the person who coerced them (not the shareholders as a group). It’s that simple.

[ClaytonB]

Building complex organizations with managerial structures and shareholding agreements, and so on, through voluntary agreements is perfectly compatible with libertarian philosophy.

Unfortunately, this is not all that “corporation” means today. The modern corporation is wholly a creature of the State and is, in large part, an extension of the will of the State.

I will give one example to help illustrate the point. I work for a very large corporation. Many companies used to pay out a “Christmas bonus” - I don’t know how common this is anymore - and the company I work for gives bonuses, as well. However, the bonus payout is now made at the beginning of the year, rather than the end of the year. How does that matter? Well, IRS tax rules cause the payroll department to deduct taxes for each “check” as if the amount of that would be the income throughout the rest of the year. In other words, a bonus payout check looks like the paycheck of a very rich person and is taxed like it… 40% FICA + payroll + State, etc. etc. Few people see even half of their bonus check. You will get the balance returned the following year after filing tax forms with the IRS and State. In the meantime, the money that you have been paid is just “out there” - you are not paid interest or any compensation for the withholding of that money.

I don’t know precisely why the company pays out at the beginning of the year rather than at the end of the year where the tax adjustment could be made much sooner. But I haven’t the slightest doubt that this must be the result of tax rules/regulations that set up the incentive for the company to pay out at the beginning of the year rather than at the end of the year. In this way, the corporation assists the State in robbing its employees of a massive chunk of change (we’re talking billions) for the duration of the year until tax forms can be filed the following year.

It is true that the interests of the State are not completely in line with the interests of private corporations. After all, the State would love to capture 100% of all corporate profits for its own use. Machiavelli wrote here about the tension between the nobles and the people and how the Prince (State) is situated between these two forces. The corporate Elites are the equivalent of the nobles in Machiavelli’s analysis. The power of the State rests in this tension between the people and the nobles, that is, between “workers” and “corporations”. Whenever it is convenient for its own interests, the State champions the cause of workers against the corporations (raising corporate taxes, increasing taxes on higher incomes, etc.) and whenever it is convenient for its own interets, the State champions the interests of the corporate Elite (catering to their lobbies, adopting anti-competitive regulations, etc.)

In summary, any view of corporations as simply either “good” or “bad” is too simplistic. The idea of a corporation qua corporation is perfectly compatible with libertarian values. Nevertheless, corporations as they actually exist are decidedly anti-libertarian.

Clayton -

[abirkmanis]

@Clayton: can we use a similar analysis to deduce that “humans as they actually exist are decidedly anti-libertarian”?

[Jack_Roberts]

The tax year runs from April to April so that may be why corporations started to move the tax from the end of the year to the start of the year I assume. But that realy would only be for accounting purposes. I get my bonus if i am lucky in February.

I think corporations or limited liability organisations could exist in a state less society but that aspect could affect the reputation of the business. Doing business with an organisation where the share holders or owners of the business have no liability, would be less appealing than doing business with an organisation that has liable individuals behind it.

Which product would you pick the soda where the owners have no liability for the possibility of a contamination or the one where the owner puts his reputation on the line. This autonomous, global, non-individual-liability entity might struggle to survive without a state and legal system available to manipulate and corrupt to its advantage.

With the state in the picture and regulatory bodies they create a false sense of security so people don’t need to worry about a soda producer selling contaminated products because the government gave them a corporation stamp and the regulatory bodies make sure your soda is safe. We are expected to put our faith in the regulatory bodies. Instead of individual liability the regulatory bodies exercise their power to issue large fines which end up in the coffers of the state. The corporations then continues on, with only a slap on the wrist to its reputation.

[Minarchist]

@Johnny Doe

But the shareholders could end up with profits, but without being economically liable.

That’s right. If a given shareholder played no role in the commission of a tort, he is not liable for that tort.

That one can only loose what one puts into a LLC, but one can make alot more than one puts into a LLC, without being economically liable for potential damages that occur after one has received dividends that far exceeds what one put into the LLC in the first place.

So what? You would prefer to hold people liable for torts for which they are not responsible? Suppose I lend you my car. If you hit and kill a pedestrian, should I be liable? I might be liable; for example, I would be liable if I knew that you were planning to go hit a pedestrian. And there are other possible circumstances under which I might be liable. But I am not liable simply in virtue of being the owner of the car - likewise with owners of corporate shares.

If the shareholders receive dividends, and later on its discovered that the oprations of the company has hurt other people/damaged other peoples property, the receivers of the dividends wont be liable,

They may or may not be liable. Whether a given shareholder is liable depends entirely on whether he had an involvement in the tortious action. If I own 10 shares of Coca Cola, and never vote or otherwise participate in the management of the company, I cannot possibly be liable for anything the company might do. If I’m a shareholder who does participate in the management of the company, and I get behind a certain policy, and that policy leads to a tort, then I am liable. But some other shareholder who also participates in management, but who opposes this same policy, is not liable. You see, it’s not that shareholders are never liable, it’s that they are not liable simply in virtue of being shareholders. To determine whether a shareholder is liable you use the same criteria as you would to determine whether any other person is liable, and you look at each shareholder individually. I’m against blanket liability and blanket immunity for shareholders.

And it`s the owners/receivers of the dividends who have the funds to pay for the damages, not the employees.

Firstly, the inability of a tortfeasor to pay restitution to his victim does not justify making other innocent people liable for that tort. Secondly, in many cases shareholders are going to be liable for corporate torts - just not all shareholders. Specifically, the biggest, richest shareholders will tend to be liable, because they’re the ones who are actually involved in management: as opposed to the retiree who holds 10 shares in his pension fund, Also, to be clear, I’m not suggesting that only those persons who physically undertake the tortious action are liable. For example, if corporation dumps toxic waste into a river and kills some people downstream, I’m not saying that only the guys who physically dumped the waste are liable. If they took this action on instructions from their boss, that boss is liable. If that boss came up with this scheme himself, the buck stops with him. But if it was a higher-level corporate policy, maybe emanating from the board of directors, well then the board too is liable: or at least those boardmembers who supported the policy. Why are they liable? Because they took actions which they knew (or reasonably should have know) would cause a tort.

[Minarchist]

@Jack Roberts

Which product would you pick the soda where the owners have no liability for the possibility of a contamination or the one where the owner puts his reputation on the line.

Whether the shareholders are liable for torts resulting from this contaminated soda or not, the reputation and profitability of their corporation is on the line. Fear of liability is not the only thing that drives owners or employees of corporations to avoid harming their customers.

[Jack_Roberts]

The point being that the non liable individuals of a corporation are more concerned about profit than they are about liability. They are only concerned about liability in so as far as how it will affect profits. They can always re-brand and set up another corporation and so on. It is just a different kind of liability.

But that is not to say that corporations could not exist even though the corporation owners or share holders have entered in to a contract with the customer where they have no liability. In some cases there would be little to no risk associated with the product. For example an iphone.

[ClaytonB]

can we use a similar analysis to deduce that “humans as they actually exist are decidedly anti-libertarian”?

Hm, I don’t see the parallel to my argument. What I’m trying to point out is that the entire corporate world is infused with cronyism. There are financial advantages (e.g. tax deductions) that accrue to anyone who owns and operates a business (which, above a certain size, is invariably incorporated). These advantages exist courtesy of the State. Hence, the entire structure of business is infused with privilege.

Of course, this is also true of anyone who lives in the US. The Fed in combination with the Pentagon are operating a globe-spanning, fiat money empire that silently extorts the citizens of subject nations, who are already much poorer than US citizens. So, just by virtue of living in the US, you are enjoying the benefits of empire by driving on the roads, using the electrical powerlines, etc.

The hubris and hypocrisy of leftist politicians who appeal to this fact (the “Elizabeth Warren syndrome”) is astonishing. They leave out the crucial point that the reason the USG is a net wealth advantage to the average American is the same reason the Roman government was a net wealth advantage to the average Roman citizen: it is operating a criminal, expropriatory empire that exacts tributes from foreign lands and brings those tributes home to enrich itself and buy the loyalty of its citizenry.

Clayton -

[gotlucky]

@Clayton

The hubris and hypocrisy of leftist politicians who appeal to this fact (the “Elizabeth Warren syndrome”) is astonishing. They leave out the crucial point that the reason the USG is a net wealth advantage to the average American is the same reason the Roman government was a net wealth advantage to the average Roman citizen: it is operating a criminal, expropriatory empire that exacts tributes from foreign lands and brings those tributes home to enrich itself and buy the loyalty of its citizenry.

Is the USG a net advantage to the average American? I can’t help but think that even Americans making $20,000 a year would still be better off without the government taxing them and interfering with the economy in general. Just imagine if a couple that makes $40,000 per year were able to keep that entire $40,000. Just imagine if farmers weren’t paid to not farm. Why do you think that the USG is a net wealth advantage to the average American?

[Minarchist]

The point being that the non liable individuals of a corporation are more concerned about profit than they are about liability. They are only concerned about liability in so as far as how it will affect profits. They can always re-brand and set up another corporation and so on. It is just a different kind of liability.

If a shareholder isn’t liable for a tort, then a fortiori he played no role in the decision to take the action which caused that tort. In other words, the only people who don’t care about whether an action causes a tort are the people who don’t have any effect on whether that action is taken in the first place. Hence, there is no possibility that someone can push for some action and escape liability for a tort resulting therefrom. If someone has no influence over the policy of the corporation (e.g. a shareholder who does not participate in management), who cares if they are unconcerned about the possibility of the corporation committing a tort, since their lack of concern does not infect corporate policy? You see my point?

[eliotn]

“The Fed in combination with the Pentagon are operating a globe-spanning, fiat money empire that silently extorts the citizens of subject nations, who are already much poorer than US citizens. So, just by virtue of living in the US, you are enjoying the benefits of empire by driving on the roads, using the electrical powerlines, etc.”

Can you please elaborate on this point? I can see how devaluing the dollar can hurt people in other nations, but the rest is a bit unclear (except for all the wars).

[Johnny_Doe]

@Andris Birkmanis

@Johnny Doe

If the shareholders receive dividends, and later on its discovered that the oprations of the company has hurt other people/damaged other peoples property, the receivers of the dividends wont be liable, eventhough they profitted from the business practises. And it`s the owners/receivers of the dividends who have the funds to pay for the damages, not the employees.

Were the employees physically coerced to hurt/damage other people/property? If not, it’s their sole liability. If yes, there is a separate liability of the person who coerced them (not the shareholders as a group). It’s that simple.

But how are the employees going to pay for the damages, when its the shareholders who has gotten most of the profits? Dont you think it`s a problem at all, that shareholders might get profits that are much larger than what they put into the company in the first place, without being liable for any damages that come as a direct result of the corporations operations/-profits that are made?

[Johnny_Doe]

@Minarchist

@Johnny Doe

But the shareholders could end up with profits, but without being economically liable.

That’s right. If a given shareholder played no role in the commission of a tort, he is not liable for that tort.

He provided the capital, i.e. the capital he provided made the tort possible. And the owners are part of the board of directors, or are at least represented.

@Minarchist

@Johnny Doe

That one can only loose what one puts into a LLC, but one can make alot more than one puts into a LLC, without being economically liable for potential damages that occur after one has received dividends that far exceeds what one put into the LLC in the first place.

So what? You would prefer to hold people liable for torts for which they are not responsible? Suppose I lend you my car. If you hit and kill a pedestrian, should I be liable?

Im refering to the profits/gains that are made as a direct result of a companies operations, so how else are damages to be paid, unless its the profits made from the corporations operations?

@Minarchist

I might be liable; for example, I would be liable if I knew that you were planning to go hit a pedestrian. And there are other possible circumstances under which I might be liable. But I am not liable simply in virtue of being the owner of the car - likewise with owners of corporate shares.

Im refering to the profits/money the owner receives, Im not saying the owner is directly responible for the damages, but that the money/profits that come as a result of the damages should be used to cover damages.

@Minarchist

@Johnny Doe

If the shareholders receive dividends, and later on its discovered that the oprations of the company has hurt other people/damaged other peoples property, the receivers of the dividends wont be liable,

They may or may not be liable. Whether a given shareholder is liable depends entirely on whether he had an involvement in the tortious action.

But what about the money that has been made as a direct result of the damages, should that money go to the victim/victims?

@Minarchist

If I own 10 shares of Coca Cola, and never vote or otherwise participate in the management of the company, I cannot possibly be liable for anything the company might do.

No not you, but the money you have received from the company, should be used to pay potential damages from the companies actions.

@Minarchist

If I’m a shareholder who does participate in the management of the company, and I get behind a certain policy, and that policy leads to a tort, then I am liable.

It makes no difference whether or not you voted in the general assembly, you`re not liable in todays system.

@Minarchist

But some other shareholder who also participates in management, but who opposes this same policy, is not liable. You see, it’s not that shareholders are never liable, it’s that they are not liable simply in virtue of being shareholders. To determine whether a shareholder is liable you use the same criteria as you would to determine whether any other person is liable, and you look at each shareholder individually. I’m against blanket liability and blanket immunity for shareholders.

@Minarchist

@Johnny Doe

And it`s the owners/receivers of the dividends who have the funds to pay for the damages, not the employees.

Firstly, the inability of a tortfeasor to pay restitution to his victim does not justify making other innocent people liable for that tort.

But the money/profits aren`t innocent, those profits are a direct result of the tort.

@Minarchist

Secondly, in many cases shareholders are going to be liable for corporate torts - just not all shareholders. Specifically, the biggest, richest shareholders will tend to be liable, because they’re the ones who are actually involved in management: as opposed to the retiree who holds 10 shares in his pension fund, Also, to be clear, I’m not suggesting that only those persons who physically undertake the tortious action are liable. For example, if corporation dumps toxic waste into a river and kills some people downstream, I’m not saying that only the guys who physically dumped the waste are liable. If they took this action on instructions from their boss, that boss is liable. If that boss came up with this scheme himself, the buck stops with him. But if it was a higher-level corporate policy, maybe emanating from the board of directors, well then the board too is liable: or at least those boardmembers who supported the policy. Why are they liable? Because they took actions which they knew (or reasonably should have know) would cause a tort.

But what about the profits(the money that was made as a direct result of the pollution), are those profits liable/should those profits be liable for the damages?

[ClaytonB]

@gotlucky: I don’t mean it in any kind of ultimate sense like “boy, am I glad we have the USG”. I mean it only insofar as I described its effects. This is, ultimately, what the leftists want to claim credit for. The neocons understand what the leftists often do not: sure, the USG manages to generate “over unity” effects with respect to the American public, but it does this by virtue of its ability to redistribute wealth from foreign lands to the US.

Clayton -

[Minarchist]

@Johnny Doe

He provided the capital, i.e. the capital he provided made the tort possible.

In lending you my car, I have provided you with the capital which made it possible for you to kill a pedestrian. Does that in itself make me liable?

And the owners are part of the board of directors, or are at least represented.

Some owners have influence over corporate policy, most do not. Suppose I own 10 share of Coca Cola; to say that I’m represented on the board is absurd. I have the exact same amount of influence over the actions of the board as does someone who owns 0 shares of Coca Cola: i.e. no influence whatsoever. As such, I can be no more liable for any actions the board takes than any random person on the street who owns 0 shares.

I`m not saying the owner is directly responible for the damages, but that the money/profits that come as a result of the damages should be used to cover damages…But what about the money that has been made as a direct result of the damages, should that money go to the victim/victims?

In trying to identify who is liable for a tort, I ask who is responsible. It seems you’re using a different standard; instead of asking who is responsible, you’re asking who benefits. If a person benefits from a tortious action, you want to hold them liable for it regardless of what if any responsibility they had for bringing it about. Now, consider the implications of this standard for liability. Suppose you kill my creditor. Well, I benefit from that, as I am now relieved of my debts. So I should be liable for the murder?

But the money/profits aren`t innocent, those profits are a direct result of the tort.

And if you kill my creditor, my profits (not having to pay back the loan) are also a direct result of the tort. So I should have to pay restitution to the victim?

But what about the profits(the money that was made as a direct result of the pollution), are those profits liable/should those profits be liable for the damages?

Profits/money cannot be liable for anything; only persons can be liable. Which persons? The persons responsible for the tort, and it is from out of their property (whether dividends or from a completely unrelated source) that restitution should be paid to the victim.

N.B. I think most of the conceptual problems re corporations result from thinking about them in the abstract. If instead you disaggregate “the corporation,” and break it down into its real constituent parts (actual human beings), it make much more sense.

[Albeaver89]

Corporations are property and as such cant own land or contracts. Its like asking if my dog owns the dog house. I own the dog house and the dog. So the owner(s) would own the corp, the contracts ect.

the group of people are only as moral/ethical as the individuals in the group. If perhaps, the group takes new people the ethics of the group change because the people in the group changed.

[Minarchist]

@Clayton

Are you saying that the empire makes US citizens better off than they would be otherwise (i.e. if the US followed a non-interventionist foreign policy), or only that one is better off living in the imperial center than in the imperial periphery?

[ClaytonB]

@Minarchist: Neither, though I think something can be said about the material advantages of living near the imperial center if you ignore the soul-sucking spiritual effects (cf The Hunger Games). My point is merely that the leftists are right that USG “generates more wealth” than it directly collects in taxes - the trouble with their argument is that they think it is magical government faerie dust that makes this possible where the reality is that it is exported central bank inflation and impossibly large debt levels made possible by the strong arm of the Pentagon.

Hans Hoppe lays it all out with his characteristic laser-precision in this article.

Clayton -

[Minarchist]

I think I follow, you’re saying the USG spends more in the US than it collects in taxes from the US (with foreigners paying the difference one way or another)?

[Johnny_Doe]

@Minarchist

@Johnny Doe

He provided the capital, i.e. the capital he provided made the tort possible.

In lending you my car, I have provided you with the capital which made it possible for you to kill a pedestrian. Does that in itself make me liable?

I`m(and always have been) refering to the actual profits/money that has been made as a result of a companies operations.

@Minarchist

@Johnny Doe

And the owners are part of the board of directors, or are at least represented.

Some owners have influence over corporate policy, most do not. Suppose I own 10 share of Coca Cola; to say that I’m represented on the board is absurd. I have the exact same amount of influence over the actions of the board as does someone who owns 0 shares of Coca Cola: i.e. no influence whatsoever. As such, I can be no more liable for any actions the board takes than any random person on the street who owns 0 shares.

You get to vote, you get to speak at general assemblies, you condone the companies operations buy buying/owning/keeping the stocks in that company. And I think you as a receipient of dividends from the company, should be responsible for any damages that the company might do to others/their property, up to the amount you have received in dividends + interest.

@Minarchist

@Johnny Doe

I`m not saying the owner is directly responible for the damages, but that the money/profits that come as a result of the damages should be used to cover damages…But what about the money that has been made as a direct result of the damages, should that money go to the victim/victims?

In trying to identify who is liable for a tort, I ask who is responsible. It seems you’re using a different standard; instead of asking who is responsible, you’re asking who benefits. If a person benefits from a tortious action, you want to hold them liable for it regardless of what if any responsibility they had for bringing it about.

I dont care about who is responisble(they should perhaps go to jail, but thats not what Im refering to at the moment)/benefits, Im refering to the profits that are made a a direct result of a companies operations, and that I think those profits(incl. dividends that are paid out) should pay for damages that occur/are uncovered.

@Minarchist

Now, consider the implications of this standard for liability. Suppose you kill my creditor. Well, I benefit from that, as I am now relieved of my debts.

Someone will probably inherit the claim.

@Minarchist

So I should be liable for the murder?

Only if you had any part in it, i.e. you ordered it for instance.

@Minarchist

@Johnny Doe

But the money/profits aren`t innocent, those profits are a direct result of the tort.

And if you kill my creditor, my profits (not having to pay back the loan) are also a direct result of the tort. So I should have to pay restitution to the victim?

Same as above.

@Minarchist

@Johnny Doe

But what about the profits(the money that was made as a direct result of the pollution), are those profits liable/should those profits be liable for the damages?

Profits/money cannot be liable for anything;

But should those profits/that money be linked(have to be paid to the harmed party) to potential damages that occur/gets uncovered

@Minarchist

only persons can be liable. Which persons? The persons responsible for the tort, and it is from out of their property (whether dividends or from a completely unrelated source) that restitution should be paid to the victim.

But the people who contribute the capital/make the tort possible, condone the potential damages by buying/owning/keeping the stocks in a company which risks doing damage to other people/their property. And the dividends they receive are then a direct result of the damages that can be done, and therefore I think these receipients should risk having to pay the dividends to the victims of the damage the company might do.

@Minarchist

N.B. I think most of the conceptual problems re corporations result from thinking about them in the abstract. If instead you disaggregate “the corporation,” and break it down into its real constituent parts (actual human beings), it make much more sense.