Re: Corporations
My mailbox has been flooded in recent weeks. It's hard to reply to all those ads for vi*gra and ci*lis! But it delayed my response to the following. my comments are interspersed. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine -Original Message- From: David B. Shemano [mailto:[EMAIL PROTECTED] So many things to say. The only argument offered why the corporation is more than a sum of contracts is limited tort liability. But as I said, that assumes that there is some inherent LAW that says the principal employer should be strictly liable for the torts of the agent, and that is simply not the case. Respondeat superior is a state imposed liability imposed for policy reasons. I am very surprised that members of this list would act as if there is an objective Platonic law and limited liability is a deviation from that law. I don't think anyone on pen-l invoked inherent or objective or Platonic law to argue that the corporation is more than a sum of contracts. (That would be an idealist argument, no? That's a no-no among us materialist dialecticians.) Rather, in practice, a corporation is more than the sum of contracts because this situation is _imposed_ by the state on society -- in the corporations' name. We've got government of, by, and for the corporations (the most organized form of capital). Second, I think the argument that limited liability is the primary benefit of the corporation is simply incorrect. I thought that it was a massive benefit for the shareholders more than the corporation itself. (This benefit, by the way, is the major argument against the view that the corporate income tax is double taxation. The shareholders are paying (incompletely) for the benefits of limited liability.) If limited liability were removed from corporations, there would be a massive shift from equity financing to debt financing. Of course, the shift would be massive only if limited liability were removed quickly. In other words, investors will call themselves creditors and not shareholders. The line between equity and subordinated debt is very close, but the courts have no problem calling one equity and one debt. Are you going to take the position that creditors should be strictly responsible for the tortious acts of their borrowers (assuming they do not control the acts of the borrower)? However, corporations would continue because of transaction cost advantages over partnerships and joint ventures. it's likely that corps would continue to operate. BTW, leftists would prefer to subordinate corporations to democratic control of one sort or another, rather than shifting the locus of control and the burden of liability from shareholders to creditors. Among other things, the taxpayers already receive a lot of the burden of corporate liability (since that's what's meant by limited liability) and so should be able to participate in the decisions of the corporations. Jim Devine's insistence [!] that limited liability permits shareholders to ignore external costs is simply not realistic. It ignores that the corporation remains liability for its tortious conduct, and shareholders care about their investments. To the extent that the corporation itself is not responsible for externalities, that is a different issue entirely unrelated to limited liability. I don't quite understand what this says. But it's interesting what limited liability can and does mean. A big stockholder can benefit mightily from some corporate crime -- but then sell the stock and thus not suffer the consequences when the corporation is caught killing the people of Bhopal, running a chain of houses of prostitution, or whatever. (correction: the case of a corporation owning houses of prostitution that I know of wasn't a shareholder-owned corporation. It was a mutual insurance corp that was legally owned by its policy-holders. According to the son of an executive at the company, it was the Equitable Life Assurance corp.) I have been accused of being reductionist. According to dictionary.com, reductionsist means: An attempt or tendency to explain a complex set of facts, entities, phenomena, or structures by another, simpler set: 'for the last 400 years science has advanced by reductionism... The idea is that you could understand the world, all of nature, by examining smaller and smaller pieces of it. When assembled, the small pieces would explain the whole' (John Holland). Based upon that definition, I accept the label. It is better than being wrong. Lewins Lewontin provide an anti-reductionist vision of science: for them, the smaller pieces make up the whole and therefore examining them helps us understand the whole. But a true scientist looks at more, refusing to accept the willful ignorance of a reductionist vision: it's important to look at who the whole affects
Re: corporations/More Side Issue
Charles asked: How do you avoid touching during sex ? Must be quite a trick. This is a slightly "schizo" answer maybe, but I would say, it could happen in a dream. John Lennon explains this as follows in his track #9 Dream, as follows: On a river of soundThru the mirror go round, roundI thought I could feel (feel, feel, feel)Music touching my soul, something warm, sudden coldThe spirit dance was unfolding. When as Annie Lennox sings "your crumbling world falls apart", then all you have left is a dream and a pocketful of mumbles. But, you could also think of it more soberly in terms of one of the besttracks by the band Blondie: When I met you in the restaurant You could tell I was no debutante You asked me what's my pleasure; "A movie or a measure"? I'll have a cup of tea, and tell you of my dreaming Dreaming is free I don't want to live on charity Pleasure's real, or is it fantasy? Real to real is living rarity People stop and stare at me, we just walk on by We just keep on dreaming Feet, feet, walking a two mile Meet meet, meet me at the turnstile I never met him, I'll never forget him Dream, dream, even for a little while Dream, dream, filling up an idle hour Fade away, radiate I sit by, and watch the river flow I sit by, and watch the traffic go Imagine something of your very own; something you can have and hold I'd build a road in gold, just to have some dreaming Dreaming is freeSee further:http://www.marx2mao.org/Lenin/GNA21.htmlhttp://www.russiangifts4less.com/Jurriaan
Re: corporations/More Side Issue
- Original Message - From: Charles Brown [EMAIL PROTECTED] How do you avoid touching during sex ? Must be quite a trick. Charles === Remember the condom scene in The Naked Gun? Ian
Re: corporations/More Side Issue
- Original Message - From: Charles Brown [EMAIL PROTECTED] How do you avoid touching during sex ? Must be quite a trick. Charles === Remember the condom scene in The Naked Gun? Ian Response Jim C: Or, there are those phone numbers for phone sex, plus new innovations in virtual technologies. Or, as that great exponent of family values Woody Allen put it: Masturbation is safe sex with the one you truly love. Jim C.
Re: corporations/More Side Issue
Sabri Oncu wrote: Of course, it is unsual for you westerners who forgot the closeness touching one another brings out but I don't blame you. It is just sad that you don't know how to touch and kiss each other except when you have sex. the westerners don't come close to us indians when it comes to being conservative about this stuff. we literally wrote the book on sex, but now we don't even touch or kiss each other during sex ;-) ;-). --ravi
Re: corporations/More Side Issue
OK. That's hillarious. Joanna ravi wrote: Sabri Oncu wrote: Of course, it is unsual for you westerners who forgot the closeness touching one another brings out but I don't blame you. It is just sad that you don't know how to touch and kiss each other except when you have sex. the westerners don't come close to us indians when it comes to being conservative about this stuff. we literally wrote the book on sex, but now we don't even touch or kiss each other during sex ;-) ;-). --ravi
Re: Corporations
that investors find the limitation of liability an attractive feature. What is wrong with that view? Wrong in what sense - moral culpability, economic benefits or private interest ? The search in on for new legal forms to offload costs and losses. LLCs provide tax and managerial advantages. J.
Re: corporations/More Side Issue
Jim: I think Sabri goes much too far. All contracts -- including unsigned ones -- are based on trust, not love. Not all but most and I agree. Trust is the main thing. What I had in mind when I wrote what I wrote was my contracts with my late father, my son, my spouse, a few close friends and the like. The issue is the following; If I heartlessly set up some objective functions and crank my optimization tools to optimize them, why should anybody trust me? What if the optimal solution of my objective function requires me to screw you? Best, Sabri
Re: Corporations
Wrong in the sense lacking explanatory power. David S.and I are conducting a fairly austerely nonmoral discussion about the nature and proper explanation of the corporation. jks --- Jurriaan Bendien [EMAIL PROTECTED] wrote: that investors find the limitation of liability an attractive feature. What is wrong with that view? Wrong in what sense - moral culpability, economic benefits or private interest ? The search in on for new legal forms to offload costs and losses. LLCs provide tax and managerial advantages. J. __ Do you Yahoo!? Yahoo! Mail - More reliable, more storage, less spam http://mail.yahoo.com
Re: Corporations/Side Issue
Mike B. writes: I'm wondering about these pressures to cut costs which Chomsky refers to. Don't they lead to the big, nice co:operative having to try to find cheaper sources of material via low wage, usually dictatorial political states? FWIW, David Schweikert's market socialist utopia of worker-managed co-operatives has two major institutions that are aimed at preventing the co-ops' profit-maximization from turning into this kind of thing: 1) a minimum wage, so that profit-max doesn't involve co-ops competing via a race to the bottom among themselves. [I think there must also be some rule about not hiring non-co-op members to do work. But I don't remember it.} 2) a special tariff on imports from countries that don't live up to labor standards. In this case, the revenues collected by making these imports more expensive to domestic consumers are supposed to be returned to the country whose imports are taxed as a lump sum (development aid). Jim Devine
Re: corporations/More Side Issue
Sabri writes: The issue is the following; If I heartlessly set up some objective functions and crank my optimization tools to optimize them, why should anybody trust me? What if the optimal solution of my objective function requires me to screw you? that's my concern, too. I think that life in market society (a commodity-producing society) encourages the screw you to benefit me objective function to be embraced. It's only the existence of other, non-market, institutions that prevent the Hobbesian war of each against all from taking hold fully. Jim D.
Re: corporations/More Side Issue
One of the problems with a capitalist society (or, more generally, a commodity-producing one) is that market competition encourages rampant individualism and instrumentalism, undermining the needed fellow-feeling and trust. A problem I think is that many leftist politico's think that solidarity is just about that fellow-feeling and trust, even although they do nothing to actually create that fellow-feeling and trust within their own ranks. I would say that is this is one of the most basic reasons why rightwing people are often more successful. Personally, I've had the experience of getting more work done in a church, than in a Marxist meeting. J.
Re: Corporations/Side Issue
Just to supplement Jim's comments, in Mondragon wages were set at comparable outside market wages and then profits at the end of the year were allocated to individual members savings funds which would be paid out on retirement. The purpose was to build up funds for investment in expanding the coops without having to rely on the commercial money market or banking system. All employees were required to become members except for specialists brought in for short term projects (e.g. an engineer hired to design a new product or process.) Wage differentials were regulated with a maximum differential of 3 to 1 although last I heard, they were considering raising this to 6 to 1 because of the difficulty they were having in attracting professionals as members as the co-ops moved more and more into high tech areas and into research and development. In the case of Yugoslavia, wages were set by the workers councils, usually at levels suggested by the managers. With the 1974 constitutional changes that introduced contractual self-management and the 1976 Law on Associated Labour, the financing of investment was abandoned by the state and the independent banks and was transfered to the enterprises from retained earnings and borrowings from their captive banks. This led to what became known as the 'Yugoslav disease' because the workers would distribute all the earnings in the form of wages leaving nothing for reinvestment. The enterprises would then borrow from their captive banks which basically printed the money with the resulting inflation that really was a major factor in the collapse of the system. This was, of course, illegal under Yugoslav law but by then the state authority was so dispersed and self-management so intrenched that little was done to curb it. Horvat claims, and I think he is right, that the real mistake was to abolish the state investment funds. It was during the time of the state investment funds (the period of market socialism) that the rate of economic growth and wage growth was at its highest. Nevertheless, the self-management system of setting wages did result in the most egalitarian distribution of wages in Europe, both in the capitalist and communist worlds. Paul P Devine, James wrote: Mike B. writes: I'm wondering about these pressures to cut costs which Chomsky refers to. Don't they lead to the big, nice co:operative having to try to find cheaper sources of material via low wage, usually dictatorial political states? FWIW, David Schweikert's "market socialist" utopia of worker-managed co-operatives has two major institutions that are aimed at preventing the co-ops' profit-maximization from turning into this kind of thing: 1) a minimum wage, so that profit-max doesn't involve co-ops competing via a race to the bottom among themselves. [I think there must also be some rule about not hiring non-co-op members to do work. But I don't remember it.} 2) a special tariff on imports from countries that don't live up to labor standards. In this case, the revenues collected by making these imports more expensive to domestic consumers are supposed to be returned to the country whose imports are taxed as a lump sum (development aid). Jim Devine Paul Phillips, Senior Scholar, Department of Economics, University of Manitoba
Re: Corporations/Side Issue
--- Devine, James [EMAIL PROTECTED] wrote: Mike B. writes: I'm wondering about these pressures to cut costs which Chomsky refers to. Don't they lead to the big, nice co:operative having to try to find cheaper sources of material via low wage, usually dictatorial political states? FWIW, David Schweikert's market socialist utopia of worker-managed co-operatives has two major institutions that are aimed at preventing the co-ops' profit-maximization from turning into this kind of thing: 1) a minimum wage, so that profit-max doesn't involve co-ops competing via a race to the bottom among themselves. [I think there must also be some rule about not hiring non-co-op members to do work. But I don't remember it.} 2) a special tariff on imports from countries that don't live up to labor standards. In this case, the revenues collected by making these imports more expensive to domestic consumers are supposed to be returned to the country whose imports are taxed as a lump sum (development aid). Jim Devine Thanks Jim. These reforms sound very nice and I'm sure that most people would be happier if they were put in force. Still, I remain sick to death of the poltical-economy of commodity production. Best, Mike B) = ...the safest course is to do nothing against one's conscience. With this secret, we can enjoy life and have no fear from death. Voltaire http://profiles.yahoo.com/swillsqueal __ Do you Yahoo!? Yahoo! Mail - More reliable, more storage, less spam http://mail.yahoo.com
Re: Corporations/Side Issue
Thanks for those insights, Paul. I really do appreciate them. They do confirm my suspicions about how the wages system and commodity production, no matter how nicely controlled, have historically tended in the direction of re-creating the social relation we know as Capital and the eventual domination of corporations and their States--totalitarian forms of economic and political rule. IMO, one needs to go in the opposite direction, away from commodity prodution and the wages system, in order to get to a classless association of producers who socially manage the means of production/consumption for use and need. Regards, Mike B) --- paul phillips [EMAIL PROTECTED] wrote: Just to supplement Jim's comments, in Mondragon wages were set at comparable outside market wages and then profits at the end of the year were allocated to individual members savings funds which would be paid out on retirement. The purpose was to build up funds for investment in expanding the coops without having to rely on the commercial money market or banking system. All employees were required to become members except for specialists brought in for short term projects (e.g. an engineer hired to design a new product or process.) Wage differentials were regulated with a maximum differential of 3 to 1 although last I heard, they were considering raising this to 6 to 1 because of the difficulty they were having in attracting professionals as members as the co-ops moved more and more into high tech areas and into research and development. In the case of Yugoslavia, wages were set by the workers councils, usually at levels suggested by the managers. With the 1974 constitutional changes that introduced contractual self-management and the 1976 Law on Associated Labour, the financing of investment was abandoned by the state and the independent banks and was transfered to the enterprises from retained earnings and borrowings from their captive banks. This led to what became known as the 'Yugoslav disease' because the workers would distribute all the earnings in the form of wages leaving nothing for reinvestment. The enterprises would then borrow from their captive banks which basically printed the money with the resulting inflation that really was a major factor in the collapse of the system. This was, of course, illegal under Yugoslav law but by then the state authority was so dispersed and self-management so intrenched that little was done to curb it. Horvat claims, and I think he is right, that the real mistake was to abolish the state investment funds. It was during the time of the state investment funds (the period of market socialism) that the rate of economic growth and wage growth was at its highest. Nevertheless, the self-management system of setting wages did result in the most egalitarian distribution of wages in Europe, both in the capitalist and communist worlds. Paul P Devine, James wrote: Mike B. writes: I'm wondering about these pressures to cut costs which Chomsky refers to. Don't they lead to the big, nice co:operative having to try to find cheaper sources of material via low wage, usually dictatorial political states? FWIW, David Schweikert's market socialist utopia of worker-managed co-operatives has two major institutions that are aimed at preventing the co-ops' profit-maximization from turning into this kind of thing: 1) a minimum wage, so that profit-max doesn't involve co-ops competing via a race to the bottom among themselves. [I think there must also be some rule about not hiring non-co-op members to do work. But I don't remember it.} 2) a special tariff on imports from countries that don't live up to labor standards. In this case, the revenues collected by making these imports more expensive to domestic consumers are supposed to be returned to the country whose imports are taxed as a lump sum (development aid). Jim Devine Paul Phillips, Senior Scholar, Department of Economics, University of Manitoba = ...the safest course is to do nothing against one's conscience. With this secret, we can enjoy life and have no fear from death. Voltaire http://profiles.yahoo.com/swillsqueal __ Do you Yahoo!? Yahoo! Mail - More reliable, more storage, less spam http://mail.yahoo.com
Re: corporations/More Side Issue
Marvin: I have a genuine interest in the issue, want to know more about it, and have no ax to grind. I think it was good of Juriann Bendian to raise it, and bad for Sabri to curtly dismiss his effort as a bad essay without any explanation except derivative are dangerous (indeed) and to invite me to kiss his sweet cheeks for pursuing the thread. Dear Marvin, We Turks kiss each other, male or female, on the cheeks. There is nothing bad about that. It is a show of sincerety and love. Of course, it is unsual for you westerners who forgot the closeness touching one another brings out but I don't blame you. It is just sad that you don't know how to touch and kiss each other except when you have sex. Maybe because, you like contracts more, who knows? Also, as our Sufi's say, you cannot fill a glass beyond its volume. What can I do if you are shallow? I cannot help you beyond your ability to receive help. Best, Sabri
Re: corporations, love, exchange and the philosophy of pop music
Why not simply say that human relationships are bound by love. After all, contracts are always conditional, whereas love is not. Let's have a think. This idea would possibly help to explain why many people disparage free love so much, as a dreamy hippy phenomenon, applying only to marginalised people, who just weren't brought up sexually in a correct way, and suffered from a post-war Dr Spock syndrome. But this liberal notion of course abstracts from the social relation within which that development occurs, concentrating on the isolated, possessive individual. If love is free, you cannot make money out of it, or obtain money from it; in addition, free love might indeed subvert moral-emotional principles, which depend on ideas of ownership, exclusivity and reciprocal obligation which are indispensable for: (1) private property boundaries (owning), (2) market transactions (distributing, through ownership transfer in exchanges) (3) capital accumulation (appropriation based on appropriation, i.e. cumulative appropriation) and (4) consumption (appropriation conditional on exchange). Certainly, love would seem to be best characterised as a life process, or practice, involving the interactions and relationships of giving, receiving, obtaining and taking, in which emotions, awareness and morality are necessarily implicated. This definition (often reflected in pop music, as young people try to work out what these relations are, how they really operate, and how you cope with them) would explain why love is so difficult to define, even if we can recognise, experience or feel love (incidentally, the indefatigable Marxist Ernest Mandel dedicated one of his books to his deceased wife, the journalist Gisela Scholtz (alias Martine Knoeller), for whom he said generosity was like breathing). It also means you could give too much or too little, take too much or to little, receive too much or too little, and so on. In fact, the equilibium equation for love might be difficult to reach, if indeed it could exist at all, rather than be a hypothetical state, or hypostasis. If love is unconditional or has no conditions, this implies (at least in some christian-type or Islamic-type cultures) an act of giving without any (immediate) reciprocation or expectation of reward. But if love is interpreted as a relation, process or practice, rather than simply a state of being or awareness, love may not be unconditional, because such an act of giving presupposes the non-existence of a scarcity, which would permit the giving to occur. Yet, there may be scarcity, and it might be not just a subjectively perceived, marginal utility-type scarcity or an anal-retentive type of scarcity perception, but an objective, materially imposed scarcity. Fact is, you cannot give something, if you don't have something to give, in the first instance. Conversely, the more you have, the more you are in a position to give. Hence, there may be an objective material basis for love; that is to say, to distribute love, it has to be created, and so long as human beings are not simply souls, but physical beings, living in a material world, that creation itself has material prequisites and sublimates. Furthermore, while unconditionally giving something might not in fact express love at all (as it might help somebody into hell, as when a mother smothers an infant), being able to unconditionally give something, might also mean a dissociation from any feelings involved. In Paris in 1844, Marx scribbled: Assume people to be human, and their relationship to the world to be a human one: then you can exchange love only for love, trust for trust, etc. If you want to enjoy art, you must be an artistically cultivated person; if you want to exercise influence over other people, you must be a person with a stimulating and encouraging effect on other people. Every one of your relations to people and to nature must be a specific expression, corresponding to the object of your will, of your real individual life. If you love without evoking love in return - that is, if your loving as loving does not produce reciprocal love; if through a living expression of yourself as a loving person you do not make yourself a beloved one, then your love is impotent - a misfortune. (MECW, Vol.3, p. 326, translation revised). In what Michael Perelman calls the perverse economy, the possibility for the permutations of exchange have become seemingly boundless, such that anything can trade against anything in an unlimited, relativistic postmodernist culture, which has its consequences for human development, because the trading process might in fact destroy more love than it creates, resulting in war. Specifically, the act of trading itself becomes viewed as a creative process, and creation becomes viewed as an act of trading, with the consequence that the production of love can no longer be distinguished from the appropriation or exchange of love. In that case, it may no longer be
Re: corporations, love, exchange and the philosophy of pop music - addition
Peter Drucker, the doyen of the management community, claims that 90 percent of all financial transactions in the world have no relationship with either production or trade [of tangible goods and services]. Drucker refers to this as the growth of the symbol economy (see Peter Drucker, The New Realities, London, 1989, p. 121; cited by Ankie Hoogvelt, Globalisation, Exclusion and the Politics of Resistance (1997), at: http://.vuw.ac.nz/atp/articles/hoogvelt_9704.html). Jurriaan
Re: Corporations
David B. Shemano wrote: I have been accused of being reductionist. According to dictionary.com, reductionsist means: ... Based upon that definition, I accept the label. It is better than being wrong. What really are we fighting about? i called your definition (of corporations) reductionist. i am not fighting with you. i used the term in a neutral sense. that said, there are multiple arguments against reductionism. the foundational ones are too detailed to hash out here. there is also the argument against reductionism that in its use, in complex fields, there is a tendency to oversimplify a problem, in order to solve it. reductionism can lead to wrong and dangerous conclusions. of course the onus to refute your argument (either on eco-theoretical ground, or methodological ground as a critique of reductionism) lies, to a large extent, on your detractors. An attempt or tendency to explain a complex set of facts, entities, phenomena, or structures by another, simpler set: 'for the last 400 years science has advanced by reductionism... The idea is that you could understand the world, all of nature, by examining smaller and smaller pieces of it. When assembled, the small pieces would explain the whole' (John Holland). this is an extremely (and wilfully/intentionally) naive definition. science rarely proceeded along this clean reductionist process. at best, the context of justification has at times tended to honour reductionism. may i suggest kline's works on the history of mathematics (math being the language of science) and of course feyerabend's expose and defense of methodoligcal anarchism? --ravi
Re: corporations/More Side Issue
Sabri Oncu wrote: After all, every human relation is based on some sort of a contract whether it is our relationship with our lovers, children, parents, siblings, friends and the like. Just that most these (unsigned) contracts are enforceable not by law but by love and we can always opt out provided that we choose to give up on love. Joanna: Why not simply say that human relationships are bound by love. After all, contracts are always conditional, whereas love is not. me: I think that Sabri goes much too far. All contracts -- including unsigned ones -- are based on trust, not love. (This may be good, since love can be an intense emotion that can morph into hate.) Since it's extremely hard to find a contract that's totally self-enforcing (i.e., ensures that someone [A] does _exactly_ what the other party [B] thinks he or she agreed to do) there has to be some good will (or fellow-feeling) to reinforce the written contract (getting A to do what A thinks he or she agreed to do without being monitored all the time) and some good will on the part of B to allow some lee-way, allowing for the fact that even honest people have differences in interpretation (the differences between A's and B's interpretation of the contract). Once this trust is there, the mutually beneficial results of the contract can be realized (though may not be realized all the time). One of the problems with a capitalist society (or, more generally, a commodity-producing one) is that market competition encourages rampant individualism and instrumentalism, undermining the needed fellow-feeling and trust. This makes contracts harder and encourages an over-use of monitoring (hierarchy) and the like, along with constant law-suits. This keeps the lawyers in business. Jim D.
Re: Corporations
Justin writes: Who said limited liability was limited to torts? The corporate forms protects its investors against all liabilities -- contractual, tort, property, civil rights and other statutory -- even criminal to a point, bankruptcy, etc. Yes, but it is only with respect to non-contractual liabilities that the limitation is state imposed. The contractual limited liability is, by definition, a matter of contract. As I initially said, the other party to the contract can bargain for a personal guarantee, which is very common. Moreover it is not treue that the only argument has been reference to limited liability vs. torts or anything else. A number of folks, Ian and myself include, have emphasized that the corporation is a creature of law that has real social efficacy like any other social groups. The contract is also a creature of law, and like the corporate form depends on that social entity the state, which not reducible to the behavior of the individuals in it. I don't disagree, except that if you remove the issue of limited liability, a corporation is ultimately reducible to a series of contracts, just like any other social group. Those contracts include agreements between the shareholders, agreements between the shareholders and directors, between the directors and officers, between the officers and employees, etc. The state recognized entity (the corporation) is a way to simpliy the transaction costs of these relationships. The corporate form, created by operation of law, is a different thing from the contract: It depends on the forbearance of the state in going after the shareholderholders for the debts of the corporation, something that the law does not permit the parties to contract around. (OK, you and I agree that we are not liable for debts to anyone else. Good luck making that one stick, fella!) This is not correct. It is possible to have the corporate form without limited liability. As I said before, the limitation of contractual liability can be a matter of contract (I promise to sell you widgets, but if I breach the agreement, you agree to cap your claim at X.). The ultimate benefit of the corporate form is transaction costs -- for a variety of reasons, partnerships have major disadvantages compared to corporations which are unrelated to limited liability. For instance, what happens if one of the partners dies or wants to leave the partnership? Can one partner bind all the other partners? Who has authority to speak on behalf of the partnership? The corporate form addresses these and other problems in a very effective fashion. I don't know why you bring up strict liability -- liability without fault. That exists in some cases as a matter of operation of the law. But it is sort of anomalous. Anyway, there is nothing inherent about any law -- positive law, enacted, common, constitutional, administrative whatever. It's all a social product of the state imposed of policy reasons or because of political influence or corruption or whatever. The point is that owner responsiblity for the acts of an employee is strict liability. If the owner negligently hires an employee, that is negligence. However, if the owner did not negligently hire the employee or otherwise commit a negligent act , imposing responsibility on the owner for the negligent acts of the employees is to impose strict liability, and that is a policy decision no different than determining shareholders should not be personally liable for the debts of the corporation. You may be right about the effect of abolishing the corporate form -- a big shift to debt-based financing. However, there are presumably reasons based in part on efficiency and lowerted transactions costs for equity based financing. There is no point in pretending these are the same or equivalent. Of course. However, investors will respond to the rules of the market. As I was thinking about it, another major consequence of the removal of limited liability would be to dramatically shrink the size of the corporation. In other words, large corporations would probably fragment into a multitude of independent corporations to ensure that one division is not liable for the acts of another division. I suppose that would be a good thing if you are a Lefty, because that would decentralize corporate power. However, it would significantly increase transaction costs. David Shemano
Re: corporations/More Side Issue
Jim wrote: I think that Sabri goes much too far. All contracts -- including unsigned ones -- are based on trust, not love. (...) One of the problems with a capitalist society (or, more generally, a commodity-producing one) is that market competition encourages rampant individualism and instrumentalism, undermining the needed fellow-feeling and trust. This makes contracts harder and encourages an over-use of monitoring (hierarchy) and the like, along with constant law-suits. This keeps the lawyers in business. I would basically agree with that, except that a contract might be based, for better or worse, both on trust and on love, or on neither - i.e. it may be precisely the lack of trust or love which forces the making of a contract, which would not be necessary if love and trust really existed (consider, for example, litigation disputes). In responding to Michael Perelman on Frank Partnoy's conscience, I wrote The question nowadays regularly arises as to what compliance to the law [in respect to derivatives securing the conservation and increase of value] would mean. The problem here is, that all sorts of new creative ideas for contracts and (as Sabri would say, deals) are dreamt up which are not even captured by legislation. This is the root of the dualistic free trade/protectionism debate, because the bourgeois is in favour of trade which improves the position of his own kind, but is against trade which harms his position. Bourgeois accumulation may be viewed as legalised theft, but unequal exchanges may not even be legalised. The radical, class conscious working class typically inverts the bourgeois position, thus, where the bourgeois calls for free trade, the working class calls for protection, and vice versa. Since however both classes are human beings living in the same society, there might be some degree of overlap permitting of class compromise, in which case the question arises whether it is a good compromise benefiting both classes or whether it is a rotten compromise (a sell-out masking a a mutually beneficial deal). If the overlap is too large, the compromise is so well understood it becomes tautological and need not be discussed. If the overlap is very small, the compromise becomes rhetorical nonsense generating indifference. This is forgotten in Fukuyama's sociology of trust, because it abstracts from the fact the the bourgeois classes seek to regulate the market in their own favour. But this story has another implication. As I have said previously, the perfect crime is the crime which is not a crime since then it considered a crime, and can be prosecuted legally as such. This could be construed in two ways: either negatively, the crime is not recognised in law as criminal, or else positively, the crime is actually endorsed by the law, in which case, it is not a crime at all legally speaking. This is what bourgeois derivatives culture is all about, and it has its corollary in proletarian culture wars, which are the only source of moral debate vital to a blooming culture, since, for better or worse, they test out the limits of the status quo. Parasitism leads to the disintegration of bourgeois culture, because it is forced to derive a justifying morality from other social classes. If the crime is actually endorsed by the law, then it can only be viewed as a crime from a different moral perspective, in which case we are back with the problematic of difference which bedevils postmodernist culture. As soon as that moral perspective is admitted as valid, then the universalist pretensions of bourgeois law are invalidated. The question then arises as to what moral behaviour would be, and how we would know that. And moral behaviour ultimately depends on the practical ability to secure the conditions for survival and improve life, and so then we can discuss the practical ability of individuals to survive and improve life... while the social foundations of capitalist society remain unquestioned. Here the difference between the liberal and the Marxian view of ethics begins to show up. In answer to the question, why should I be moral ? the liberal answer is essentially a stasis: (1) all morality is based on a no harm policy (do unto others..., don't do unto others...) (2) moral rules intrinsically apply to all individuals under the same circumstances (3) Premiss (2) permits rational discussion of morality and moral rules (4) being moral means adhering to moral rules (5) adhering to moral rules guarantees the autonomy of persons, permitting survival and improvement of life. The Marxian critique of the liberal answer is essential dynamic. For a start, ethics for Marx could not be discussed in abstraction from real practical activity, and consequently could also not be discussed separately from class interests and self-interests; an ethics abstracted from real practical activity, he considered an ideological, not a scientific discourse (NB the question then is how exactly this should be
Re: Corporations
Yes, but it is only with respect to non-contractual liabilities that the limitation is state imposed. I disagree. First, a contract is state imposition or creation. A contract, in law, is a promise the law will enforce. Second, the limited libaility accorded corporations is a matter of the corporate form, not of contract. It is not contracted for, but is a creature of the legal process of incorporation. Third, there are lots of kinds of non-contractual, non-tort liability that incorporation offers limited protection against. The contractual limited liability is, by definition, a matter of contract. As I initially said, the other party to the contract can bargain for a personal guarantee, which is very common. That has nothing to do with the nature of incorporation. I don't disagree, except that if you remove the issue of limited liability, a corporation is ultimately reducible to a series of contracts, just like any other social group. Not all social groups are contractual and voluntary. I am not a Jew in virtue of an agreement. Nor is the working class, etc., or members thereof, (in) that clas because of a contract. Moreover, saying take away limited liability, and a corpration is just . . . is to remove the essence of thing. The state recognized entity (the corporation) is a way to simpliy the transaction costs of these relationships. Transactions cost analysis has its place in explaining why the firm/market boundaries fall where they do -- indeed in a planned system, in explaining the firm/firm boundaries. But you have not said why TCA explains why some firms are limited liability entities -- that there are corporations. The obviosu explnataion is the simple and natural one, that investors find the limitation of liability an attractive feature. What is wrong with that view? I don't claim expertise in this area, and can be persuaded. I see from a quick persusal; of my limited library of corprate law that Easterbrook and Fishel seem to be in your court on the relevance of TCA, and while I don't defer to them blindly (to say the least) I recognize that they have real learning in the area, and I don't. So I will look at what they say and report back. This is not correct. It is possible to have the corporate form without limited liability. Not under any law of which I am aware, though I might be wrong. As I said before, the limitation of contractual liability can be a matter of contract (I promise to sell you widgets, but if I breach the agreement, you agree to cap your claim at X.). The ultimate benefit of the corporate form is transaction costs -- for a variety of reasons, partnerships have major disadvantages compared to corporations which are unrelated to limited liability. For instance, what happens if one of the partners dies or wants to leave the partnership? Can one partner bind all the other partners? Who has authority to speak on behalf of the partnership? The corporate form addresses these and other problems in a very effective fashion. Well, yes. But there are limited liability partnerships now. I work for one. I don't know why you bring up strict liability -- The point is that owner responsiblity for the acts of an employee is strict liability. Well, that's an interesting idea. A different interpretation is that if the employee acts as an agent of the owner, the owner is liable through agency principles rather than withouta shwoing of fault. That is, the fault is there -- it was in the agent's actions, but the principle is responsible. Negligent horing, supervision, is something different from responsibility for thetorts of the agent. As I was thinking about it, another major consequence of the removal of limited liability would be to dramatically shrink the size of the corporation. In other words, large corporations would probably fragment into a multitude of independent corporations to ensure that one division is not liable for the acts of another division. No doubt. I suppose that would be a good thing if you are a Lefty, because that would decentralize corporate power. However, it would significantly increase transaction costs. Not all lefties think small is beautiful per se. Small capital can be more vicious to workers than big capital, truth be told. The Small Business Assn is well to the right of the NAM, I think. Right now this is a big division in VA, where big capital in the state GOP supports higher taxes because public services in the state are in the toilet, and small capital, also in the GOP, is maintaining the anti-tax faith. jks jks __ Do you Yahoo!? Yahoo! Mail - More reliable, more storage, less spam http://mail.yahoo.com
Re: Corporations/Side Issue
--- paul phillips [EMAIL PROTECTED] wrote: Mike B wrote I agree, it would be much better, if workers ran and managed the the firms in which they exploited themselves for surplus value. Honestly though, hasn't the history of creating such entities, like say Mondragon or the Amana Colony or the kibbutz movement and all the utopian socialist movements of the past-- co:operatives included--proven that they always morph into the undemocratic, totalitarian corporate structures which we see ruling us today? In other words, hasn't wage-labour always resulted in the developement of capitalist social relations? Sincerely, Mike B) What evidence is there that Mondragon has morphed into an undemocratic, totalitarian corporate structure? Last I heard it was still going strong and expanding without any change in its co-operative structure. Check out the Mondragon website. I'm wondering about these pressures to cut costs which Chomsky refers to. Don't they lead to the big, nice co:operative having to try to find cheaper sources of material via low wage, usually dictatorial political states? And apologies to all (especially to jks) for bringing this topic up again. I just don't see a way out of the tendency of the rate of exploitation to increase as the rate of democracy decreases in economies dominated by the politics of commodification. Regards, Mike B) *** Re Mondragon Reply from NC, to Jeremy Gibson, on Mondragon. You're right to take this very seriously, in my opinion. It is a very substantial experiment in participant-owned economy, including production, finance, commerce and retail; and in terms of standard economic measures, it's been quite successful. There have also been problems. To what extent these derive from implantation within a state capitalist economy of the standard kind (e.g., the pressure to shift production to low-wage high-repression areas where workers will not be owners, violating the original principle that kept this to below 10% of the workforce) or to inherent factors of institutional structure (such as separation of professional management from workforce) is not so easy to determine, and merits careful thought. There is a lot of literature on the topic. A couple of fairly recent books are David Ellerman, _The Democratic Worker-Owned Firm_, and William Kathleen Whyte, _Making Mondragon_. There was a review a year or two ago by Mike Long in Libertarian Labor Review that I thought was quite well-informed, perceptive, and interesting (it was, incidentally, critical of my own criticism of Mondragon for hierarchic managerial structures); my understanding is that he might be a little less optimistic about the prospects himself, right now. Whatever one's assessment, this is an extremely important endeavor, in my opinion, and should be carefully studied. Noam Chomsky http://www.zmag.org/forums/chomforumacrh.htm = ...the safest course is to do nothing against one's conscience. With this secret, we can enjoy life and have no fear from death. Voltaire http://profiles.yahoo.com/swillsqueal __ Do you Yahoo!? Yahoo! Mail - More reliable, more storage, less spam http://mail.yahoo.com
Re: Corporations
You guys are too quick. I'll be repeating points others made while I was typing or sleeping. Here it is anyway. * * * David B. Shemano wrote: What is that word Marxists like to use to describe unreal objects that people think are real? Fetish? You see a bogeyman called a corporation. You are fetishing the corporation. I see tens, hundreds, thousands of contracts between real people intended to actualize a real end. The entity is an acknowledged legal fiction that minimizes transaction costs. That is all. Exxon is simply a shorthand way to describe thousands of real people acting in a united way, and the corporate form provides an expedient way of organizing those real people. In my reading of Marx, when people produce things that take an objective existence separate from them (the producers), that's objectification. When the objects take an autonomous life of their own, get out of the control of their individual producers, and even turn against them, that's fetishization or -- more generally -- alienation. Objectification can't be avoided, because we humans live through our engagement with the objective world. But alienation can be undone if individuals change the social conditions in which they produce and live. Since these conditions are social, they need to change them collectively. There are different levels of alienation, depending on how hardened the underlying level of objectification is. For example, we collectively create fashions. We may ignore them at a cost. But it's relatively harmless for individuals to ignore fashions. Michael does it all the time. :-) But money or the state are forms of alienation on steroids. We ignore them at our peril. The fetishization of corporations is not an optical illusion, the mere result of our inability to see the legal contracts that underlie it. They are a hardened objective reality because they are backed up by laws, i.e., by the power of the state, which is to say the power of individuals out of their immediate control. (Similarly, marriages -- even without children -- often spin out of the control of the partners, and yet people are trying to extend marriages rather than ban them.) These contracts are binding for individuals. We cannot close our eyes and dispel them, but -- if we were to marshal enough power against them -- we could certainly change the law that makes them possible. With corporations, there are several layers of alienation overlapping. Under certain social conditions (Engels: class divisions), people produce and reproduce a state. Again, the power of the state is the productive force of the individuals, but alienated from them. The state enacts and enforces a law that allows for individuals to form corporations, where these are legal entities invested with certain rights above and beyond those recognized to their individual stockholders (e.g., limited liability). In Marx, ownership is effective control over the utilization of an object. That's the content of the legal fiction. To the extent creditors, workers, communities, consumers, etc. have some influence on a corporation behavior, then they are in a small way co-owners of the corporation. Individuals or the citizens of a state (particularly workers) have an infinitesimally small amount of control over a corporation, unless they are organized and militant. Jim Devine says that, if corporate liabilities are limited, then the rest of the liability is imposed on others. David's reply, that those who could be harmed by the legal re-distribution of liabilities can choose not to enter a contract with the corporation, ignores the fact that it all depends on the underlying social conditions. Entering a legal transaction (e.g., trading in a market, which entails the enforcement of an implicit contract) with the parties having roughly equal power ab initio cannot fall far from a win-win outcome. However, if the initial power is unequally distributed between the parties, the transaction will tend to be a thinly disguised mechanism for the strong to abuse the weak. Perhaps a big bank can deal with a big corporation on a fair basis, but workers are not equally poised as the corporation to walk away from an employment contract. Workers are at a disadvantage because they need their jobs. The rights of corporations impinge upon the rights of individuals. Individuals can try to shape laws encroaching on private ownership (on whose basis corporations exist) and/or directly on the laws that regulate the existence and life of the corporation. But individual stockholders (somewhat in proportion to their stock) are in much better position to undo or alter their corporation. The corporation is alienated from them (the individual stockholders) as well, but they are in a much better -- privileged -- position to control it than regular citizens or workers. We need to change the law, they just need to vote their directors out, fire their CEO, change the bylaws. IMO, the real
Re: Corporations/Side Issue
This threatens to lapse into the dreaded market socialism debate. I do not want to get into that, and Michael won't allow it anyway. I will just say here, very briefly, that we do not know, but (a) the case of Mondragon is not so bad, and is unlike the others, and (b) there may be a difference between attempts to create a worker-controlled island in a capitalist sea, and the operation of worker-controlled enterprisers (whether corporations or other enterprise forms) where there is no or little wage labor, and they are the dominant form. I should mention (c) that at least one possible form of a worker-controlled enterprise is one in which the workers are not wage laborers but cooperators whose remuneration takes the form of a profit share rather than a wage. In my opinion, if something like a socialist market economy won't be stable and better than capitalism, then capitalist social democracy on the Western European model is the best we can do. For reasons you can look up in the PEN-L archives where I and othersd have discussed the issues, or can read in books -- I won't discuss them here -- I don't think that a nonmarket econimy would be either stable or better. But leave the point be. We are not faced today in America with a choice of any of these alternatives. If we could get social democracy, we'd think the revolution was over and we'd won. But it as utopian from where we stand as Marx's communism. jks --- Mike Ballard [EMAIL PROTECTED] wrote: --- andie nachgeborenen [EMAIL PROTECTED] wrote: Moreover one could imagibe a market society where, for eaxmple, the corporations did not have undemocratic power and wealth, and where the workers managed them themselves. Such corporations would be far less problematic than the largest ones we have -- including some of my clients. jks I agree, it would be much better, if workers ran and managed the the firms in which they exploited themselves for surplus value. Honestly though, hasn't the history of creating such entities, like say Mondragon or the Amana Colony or the kibbutz movement and all the utopian socialist movements of the past-- co:operatives included--proven that they always morph into the undemocratic, totalitarian corporate structures which we see ruling us today? In other words, hasn't wage-labour always resulted in the developement of capitalist social relations? Sincerely, Mike B) = Beers fall into two broad categories: Those that are produced by top-fermenting yeasts (ales) and those that are made with bottom-fermenting yeasts (lagers). http://profiles.yahoo.com/swillsqueal __ Do you Yahoo!? Yahoo! Search - Find what youre looking for faster http://search.yahoo.com __ Do you Yahoo!? Yahoo! Search - Find what youre looking for faster http://search.yahoo.com
Re: Corporations
Mike Ballard wrote: In other words, hasn't wage-labour always resulted in the developement of capitalist social relations? Not really. Cuba has paid workers in pesos since 1960 but if capitalism is restored there, it will be a result of other factors. Until an socialist economy has such an enormous surplus that makes cash unnecessary, there will be a need for some kind of rationing. Pesos, in effect, become a voucher. When pesos become concentrated among a minority of society that has a monopoly on political power, and when that minority begins to act to open up the door to wholesale foreign investment and privatization, then we can speak of capitalist social relations. This, of course, is what has transpired in China and Russia. -- The Marxism list: www.marxmail.org
Re: corporations/More Side Issue
There has been a lot of discussion of the question you ask about the behavior of people in a self-managed economy, some of it mathematized. For for formal discussion, see various works of Jaroslav Vanek, including, I think, The Labor Managed Economy, and Benjamin Ward's classic paper 'The Firm in Illyria: Market Syndicalism', American Economic Review, 1958; there is an older (almost all this stuff is older now), collection of papers and documents, etc., in an out-of-print 2 vol. set called something like Self-Managed Socialism, edited by Branko Horvat, Mihalo Markovic, and others. David Schweickart, a philosopher who has a PhD in math, has a fairly nontechnical but empirically grounded discussion in his Against Capitalism, Westview 1993. The general idea about is that in their economic activities, worker-cooperators will act as if they were profit-maximizers, but the fact that labor is not a cost gives them a different set of incentives from capitalist firms that are explored in the books and papers above. Somed of these incentives produce more internalization of cost and more socially productive behavior than profit-maxing under capitalism. Other social goals are attained through legislation (including taxation), refgulation, and planning. I don't think there is any need to put scare quotes around contracts in a market socialist society. A contract is just a legally enforceable promise, and any market society, maybe any modern society, will have a legal system and a set of rules for contract law. jks --- Sabri Oncu [EMAIL PROTECTED] wrote: Justin: Moreover one could imagine a market society where, for example, the corporations did not have undemocratic power and wealth, and where the workers managed them themselves. This is an interesting point. I have never been against optimizing objective functions, assuming that objectives can reasonably be mathematized. Here is a question Justin: What may be some objectives of workers managed corporations in the market society you imagine? Put differently, what kind of contracts such corporations and the persons that embody them will have to sign in this market society? Of course, before such a society is constructed we may never know what these contracts will exactly look like but what do you expect them to look like, approximately, that is? Best, Sabri __ Do you Yahoo!? Yahoo! Search - Find what youre looking for faster http://search.yahoo.com
Re: Corporations
I wrote: Corporations have _limited liability_ which means that that after a certain point (the amount of capital invested by the stock-holders) the state has declared that the costs of corporate malfeasance, accidents, etc. shall be absorbed by the taxpayers. Somehow my point was missed below, so I'll restate it: the limited liability law means that a corporation is much more than a bunch of voluntary contracts amongst individuals. The power of the state means that the whole is more than the sum of its parts, so that the corporation is a legal person. (A legal person that's like an actual person in many ways, with the obvious exception with respect to the right to vote. But I doubt that corporations -- especially the bigger ones -- need the power to vote. They dominate government anyway.) David S writes: ... The corporate form provides no unfair protection against contractual liability, because the other party is aware of the corporate form and can either bargain for a personal guarantee or not enter into the contract. I didn't say anything about unfair or fair. My thoughts -- not expressed in type -- were about fraud (Enron, etc.) and criminal pollution (Union Carbide in Bhopal, the power company at Three Mile Island, etc.) I'll ignore the etc. in my original comment. On the latter -- what economists call external costs and light-weight economists call neighborhood effects -- people were affected by the accidents were never involved with voluntary contracts. Union Carbide killed a lot of people who didn't consent to taking that kind of risk. (If anything, the market forces worshiped by self-styled libertarians drive people to take those risks: the poorest people will live where property values are least, which is often near the stinky (and potentially dangerous) factory. So it's the poorest who are most likely to die. (A true libertarian might say that poor people's lives aren't worth as much (on the market) so that it's appropriate in some way.) BTW, not only are external costs a matter of a corporation violating individual freedom, but according to standard economics, it's inefficient.) On the former, if corporate insiders are cooking the books (working with their tame accountants), it may _look_ as if there was some sort of voluntary contract between consenting adults, but one side (or both) is conning the other. Of course, as with the first case, when the matter goes to court (if it ever does), the corporation usually has more resources to hire lawyers, along with friends in high places (as Ken Lay has Dubya and Halliburton's Dick Cheney has Antonin Scalia). With respect to tortious[*] liability, the corporate form provides no protection for individuals who commit torts. The only protection the corporate form provides is a modification to the doctrine of respondeat superior (the employer is liable for the acts of the employee who commits an act in the scope of the employment). [*] tort (n.) from French for wrong, a civil wrong or wrongful act, whether intentional or accidental, from which injury occurs to another. Torts include all negligence cases as well as intentional wrongs which result in harm. Therefore tort law is one of the major areas of law (along with contract, real property and criminal law) and results in more civil litigation than any other category. Some intentional torts may also be crimes, such as assault, battery, wrongful death, fraud, conversion (a euphemism for theft) and trespass on property and form the basis for a lawsuit for damages by the injured party. ... [source: law.com's legal dictionary at http://dictionary.law.com/.] Since the corporation has power over the employee (because of the cost of job loss and the ability to deny promotions, etc.), it's only logical that the corporation take responsibility for the actions of the employee. (This is what David calls respondeat superior below.) The company says damn the torpedoes! maximize profits! and the employees try to impress their superiors by cutting costs (or dumping them on others) or by grabbing benefits for the company. It's a bit like the Nuremberg law, in which the officers in the armed forces are responsible for the actions of the enlisted troops, since they give the orders. (NB: I am not an expert on law in any way, so I am willing -- and able -- to be corrected on this and any other legal issue.) In other words, while the corporation's assets are liable for the acts of the employee, the shareholder's personal assets are not responsible for the torts committed by an employee, unless the shareholder himsef committed a tort or the shareholder did not respect the corporate form (alter-ego). it's the share-holder's greed -- as organized by stock markets -- that drives the company to accumulate power in order to maximize profit, which in turn puts people outside the company at risk in this situation. Why should the taxpayers pay for the
Re: Corporations
Coke, Sir Edward. 1612. The Case of Sutton's Hospital, 10 English Reports, Vol. 77 (Edinburgh: William Green Sons): pp. 937-76. 973: a corporation ... is invisible, immortal, and rests only in intendment and consideration of the law They cannot commit treason, nor be outlawed, not excommunicate (sic), for they have no souls, neither can they appear in person, but only by attorney A corporation ... is not subject to ... death. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
Re: Corporations
the limited liability law means that a corporation is much more than a bunch of voluntary contracts amongst individuals. The power of the state means that the whole is more than the sum of its parts, so that the corporation is a legal person. (A legal person that's like an actual person in many ways, with the obvious exception with respect to the right to vote. But I doubt that corporations -- especially the bigger ones -- need the power to vote. They dominate government anyway.) I agree that metaphysically a corp. is more than a series or collection of contracts among individuals -- it has to be. Individuals could not contract to limit their liability to the parties. The state has to allow them to do that. The corporation's existence depends on the sufferance of the law. However, the while the corp is collective entity, like a state or a union or any group that is more than the sum of its parts, t make a corp. a person within the meaning of the law required a specific _further_ legal act by a body (in the US the S.Ct.) with the power to say, as the S.Ct did, that a corp. is a person within the meaning of the 14the Amendment. I don't think is thsi is true in other countries. If its is, it requiresa specific legal act by a competent authority. With respect to tortious[*] liability, the corporate form provides no protection for individuals who commit torts. That is correct. The only protection the corporate form provides is a modification to the doctrine of respondeat superior (the employer is liable for the acts of the employee who commits an act in the scope of the employment). I don't understand this. Protection for whom? In other words, while the corporation's assets are liable for the acts of the employee, the shareholder's personal assets are not responsible for the torts committed by an employee, Yes unless the shareholder himsef committed a tort But that is irrelevant to his being a shareholder ot to the existence of the corporation. or the shareholder did not respect the corporate form (alter-ego). Well, the last is a bit confused. It is possible to pierce the corporate veil in certain cases and id certain conditions are met, reaching the assets of a shareholder (who may or may not be an individual). The conditions under which thsi is possible vary by state, but most states include the conditions of failing to respect corporate formailities, commingling funds, and importantly, using the corporate form to commit a fraud or injustice. it's the share-holder's greed -- as organized by stock markets -- that drives the company to accumulate power in order to maximize profit, which in turn puts people outside the company at risk in this situation. Why should the taxpayers pay for the clean-up? why should the neighbors of the company pay for the medical costs of the company's malfeasance? According to limited liability laws, they should (after a point). Even though they never made the decision to act in the way that caused the damage. But first, is not a specific problem with corporations. All capitalist enterprize externalize costs, whether or not they are corporations. Second, the short answer to your question is that the corporate form is permitted to limit liability because that's been determined by the legislature or the competent authorities to encourage investment, promote economic growth, and generally have benefits that exceed their social costs. The following is therefore false: The limited liability law is a free benefit given to corporations (at their own behest, basically, since they have influenced the courts in their favor since the 19th century), allowing them to shift risk to others. In theory, there is some compensation in that corporations are supposed to pay the corporate income tax. But in practice, that tax is very low and rapidly going away. Unless you think that the consequences for economic growth involved in abolsihing the corporate form, and requiring all investors to expose themselves and all their assets to potentially runious liability would not be as serious as many suppose. which is true in the case of big disasters. But the limited liability law is always in the background, allowing the stockholders to ignore the morality or immortality and the non-financial risk of their financial holdings. The taxpayers are acting as the cost-payers of the last resort, so that corporations don't have do act without a net. why? shouldn't those people who hired him -- the stockholders, through their agent, the Exxon corporation -- pay attention to who they hire? Uh, that's silly. It would be irrational to demand that sort of due diligence for every stock purchase. No one could do it. Because they're not held responsible, the stock-holders are able to ignore the risks they impose on others (external costs). This encourages corporations in their malfeasance. If stockholders knew ahead of time about their
Re: Corporations
Eugene Coyle wrote: This stuff is much worse than people have been asked to leave the list over i caution against this reaction, if at all this list is to be of use to non-technical (in this case non-eco) users of the list and the web. as one such person, i have non-technical reasons for believing that corporations (as implemented, not as theoretical entities) are a bad thing for various causes i consider important. however, it would be difficult for me to find the technical flaw in david shemano's reductive definition. i discovered this list through a web search which led me to the archives. the archives (if they are still public) are an internet resource that people will consult. the information content of the messages will affect the ranking of the archives in the search results. keeping these discussions productive will give us, on the left, a way to gain the attention of those looking for answers on the net, and present to them a different viewpoint or logic than is drummed into their head by popular media and mainstream literature. of course rehashing econ 101 may be a waste of time for the bulk of list members. in that case, i suggest that we compile a FAQ (as was the norm for both newsgroups and mailing lists) with such questions. the FAQ would serve not only as a repository that david and others can be pointed to, but also as a document on the web that would serve the purpose i outline above. my 2 cents, --ravi
Re: Corporations
first - and least illuminating - way to examine incorporated business enterprises is as legal entity (joint stock ownership, identification as person under law, continuous legal personality, limited liability)... as rule, potential corporation only needs to specify structure, procedures for stock issuance, principal officer's location, directors' names in order to be granted charter... modern incorporation laws - dating to late 19th century when delaware and new jersey wrote lenient/permissive measures (i think) - preserve considerable business advantages of earlier era when corporations were chartered for specific purposes, specified time periods, and public purpose (renewal dependent upon last item) while eliminating any promised public purpose as condition of existence... above begins to move examination of corporations from legal definition to focus on size, reach, and impact as economic institutions - 1) corporations are small percentage of total number of businesses but account for vast majority of sales and profits; 2) two-tirered structure within corporate sector with handful responsible for bulk of economic activity... above offers means to examine corporate influence on education, government, laws, politics, public opinion, etc, etc., in other words, their power in public affairs (not to mention dependence of economy on them)... michael hoover
Re: Corporations
I wrote: the limited liability law means that a corporation is much more than a bunch of voluntary contracts amongst individuals. The power of the state means that the whole is more than the sum of its parts, so that the corporation is a legal person. (A legal person that's like an actual person in many ways, with the obvious exception with respect to the right to vote. But I doubt that corporations -- especially the bigger ones -- need the power to vote. They dominate government anyway.) JKS wrote: I agree that metaphysically a corp. is more than a series or collection of contracts among individuals -- it has to be. Individuals could not contract to limit their liability to the parties. The state has to allow them to do that. The corporation's existence depends on the sufferance of the law. exactly. However, the while the corp is collective entity, like a state or a union or any group that is more than the sum of its parts, t make a corp. a person within the meaning of the law required a specific _further_ legal act by a body (in the US the S.Ct.) with the power to say, as the S.Ct did, that a corp. is a person within the meaning of the 14the Amendment. I don't think is thsi is true in other countries. If its is, it requiresa specific legal act by a competent authority. yes. ... I wrote: it's the share-holder's greed -- as organized by stock markets -- that drives the company to accumulate power in order to maximize profit, which in turn puts people outside the company at risk in this situation. Why should the taxpayers pay for the clean-up? why should the neighbors of the company pay for the medical costs of the company's malfeasance? According to limited liability laws, they should (after a point). Even though they never made the decision to act in the way that caused the damage. JKS: But first, is not a specific problem with corporations. All capitalist enterprize externalize costs, whether or not they are corporations. true, but the financial set-up of a corporation encourages them to maximize profits to satisfy external stockholders who don't care about environmental destruction and the like. So financial markets reinforce the normal behavior of any decentralized bodies (unions, worker-owned co-ops, etc.), encouraging corporations to embrace aggressive accumulation of external benefits and dumping of external costs. JKS: Second, the short answer to your question is that the corporate form is permitted to limit liability because that's been determined by the legislature or the competent authorities to encourage investment, promote economic growth, and generally have benefits that exceed their social costs. The legislature that set up the corporate laws -- along with the 19th century Supreme Court (competent authorities?) -- was bought and paid for by the up-and-coming corporation-owners (the Robber Barons) and similar rich groups. How can we assume that these people made the right decision? The Laborites, Populists, Socialists, Wobblies, etc., of the time were very critical of the way that the US government was dominated by the rich. How did you miss this fact? Similarly, the current legislators and competent authorities who determine corporate law are dominated by capitalist interests, especially in light of the shrinking power of labor and other countervailing powers. Why should we trust the legislature and authorities to do our thinking for us? The cost/benefit decision of the granting of limited liability (and other corporate rights) is not something that can be made objectively, since every individual and class would put different weights on the different costs and benefits that are added up, while interpreting as benefits what others see as costs, etc. It's not some apolitical decision that can be made by technocrats. JKS: The following is therefore false: The limited liability law is a free benefit given to corporations (at their own behest, basically, since they have influenced the courts in their favor since the 19th century), allowing them to shift risk to others. In theory, there is some compensation in that corporations are supposed to pay the corporate income tax. But in practice, that tax is very low and rapidly going away. JKS: Unless you think that the consequences for economic growth involved in abolsihing the corporate form, and requiring all investors to expose themselves and all their assets to potentially runious liability would not be as serious as many suppose. It's important to remember that the official definition of economic growth is the growth of Gross Domestic Product, i.e., the growth of the commodity-producing (market-oriented) part of the economy. This misses out on the non-market costs and benefits. Measures such as the Genuine Progress Indicator (http://www.redefiningprogress.org/projects/gpi/) try to measure economic growth in a
Re: Corporations
So many things to say. The only argument offered why the corporation is more than a sum of contracts is limited tort liability. But as I said, that assumes that there is some inherent LAW that says the principal employer should be strictly liable for the torts of the agent, and that is simply not the case. Respondeat superior is a state imposed liability imposed for policy reasons. I am very surprised that members of this list would act as if there is an objective Platonic law and limited liability is a deviation from that law. Second, I think the argument that limited liability is the primary benefit of the corporation is simply incorrect. If limited liability were removed from corporations, there would be a massive shift from equity financing to debt financing. In other words, investors will call themselves creditors and not shareholders. The line between equity and subordinated debt is very close, but the courts have no problem calling one equity and one debt. Are you going to take the position that creditors should be strictly responsible for the tortious acts of their borrowers (assuming they do not control the acts of the borrower)? However, corporations would continue because of transaction cost advantages over partnerships and joint ventures. Jim Devine's insistence that limited liability permits shareholders to ignore external costs is simply not realistic. It ignores that the corporation remains liability for its tortious conduct, and shareholders care about their investments. To the extent that the corporation itself is not responsible for externalities, that is a different issue entirely unrelated to limited liability. I have been accused of being reductionist. According to dictionary.com, reductionsist means: An attempt or tendency to explain a complex set of facts, entities, phenomena, or structures by another, simpler set: 'for the last 400 years science has advanced by reductionism... The idea is that you could understand the world, all of nature, by examining smaller and smaller pieces of it. When assembled, the small pieces would explain the whole' (John Holland). Based upon that definition, I accept the label. It is better than being wrong. What really are we fighting about? David Shemano
Re: Corporations/Side Issue
Paul, for some reason, your messages come to the list with the wrong date, throwing them down lower in my inbox. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
Re: Corporations
Justin writes: This discussion is getting a bit off the rails. Corporations are not legal fictions -- they are legally created entities, no more or less real than contracts. It is a strange species of methodological individualism to deny that they really exist merely because they are constituted out of indiviuals and their relations. What in the social world isn't? They are as real as nations and classes and races and governments and courts, etc. I always thought that corporations were legal fictions. Legal fictions are legally created entities aren't they? They may be more than this but they certainly are not less. The problem is not claiming that corporations are legal fictions but in claiming that as such they are not some separate entity but a shorthand way of referring to interlocking contracts between individuals the very point that you seem to be making. However your point has nothing to do with corporations not being legal fictions. What Gene and others object to is two things, I think: not the legal device for limiting liability, but the fact that some corporations have vast wealth and power that distorts democracy and gives too much influence to a small number of people, and a legal system that treats these entities as if they were individual persons due the legal rights (like free speech) that are properaly accorded to individuals. In most societies, even market societies, the latter is not true -- corporations are not persons, as far as I knwo, under British law (any Brits out there who can correct me?), and anyway the Brits don't have a First Amendment. But surely it is essential to treat corporations as having at least some of the rights of individuals. Are you going to deny corporations the right to own property, sign contracts, pay taxes, sue and be sued, all capacities of individuals? Whether or not there is some special legal recognition of corporations as persons any legal system will surely want to give corporations rights such as these.. And whether or not there is some separate legal definition of corporate personhood, ordinary people are going to talk of corporations on analogy with individuals and rightly so because there are definite similarities. The analogy may be pushed too far and be inappropriate but that is another issue. Of course for corporations to be persons under the law, the law must say that they are. But this is true of individuals too. There was a time when women werent persons and slaves were not either as far as their legal status was concerned. To be an individual person does not entail being a legal person. Cheers, Ken Hanly
Re: Corporations
David: Who said limited liability was limited to torts? The corporate forms protects its investors against all liabilities -- contractual, tort, property, civil rights and other statutory -- even criminal to a point, bankruptcy, etc. Moreover it is not treue that the only argument has been reference to limited liability vs. torts or anything else. A number of folks, Ian and myself include, have emphasized that the corporation is a creature of law that has real social efficacy like any other social groups. The contract is also a creature of law, and like the corporate form depends on that social entity the state, which not reducible to the behavior of the individuals in it. The corporate form, created by operation of law, is a different thing from the contract: It depends on the forbearance of the state in going after the shareholderholders for the debts of the corporation, something that the law does not permit the parties to contract around. (OK, you and I agree that we are not liable for debts to anyone else. Good luck making that one stick, fella!) I don't know why you bring up strict liability -- liability without fault. That exists in some cases as a matter of operation of the law. But it is sort of anomalous. Anyway, there is nothing inherent about any law -- positive law, enacted, common, constitutional, administrative whatever. It's all a social product of the state imposed of policy reasons or because of political influence or corruption or whatever. You may be right about the effect of abolishing the corporate form -- a big shift to debt-based financing. However, there are presumably reasons based in part on efficiency and lowerted transactions costs for equity based financing. There is no point in pretending these are the same or equivalent. I am not a defender come what may of the corporate form, but I am not an uncritical enemy of it either. It really depends on how it plays out. Big capitalist corporations mainly suvk, but I suspect thay is because they are capitalist rather than because they are corporate. Pro-planning Marxists used to cite the predominance of the corporate form as evidence that there was no necessary connection between ownership and good management -- an argument I still think is valid. Maybe the recent problems with corporate governance have undermined their confidence. . . . jks --- David B. Shemano [EMAIL PROTECTED] wrote: So many things to say. The only argument offered why the corporation is more than a sum of contracts is limited tort liability. But as I said, that assumes that there is some inherent LAW that says the principal employer should be strictly liable for the torts of the agent, and that is simply not the case. Respondeat superior is a state imposed liability imposed for policy reasons. I am very surprised that members of this list would act as if there is an objective Platonic law and limited liability is a deviation from that law. Second, I think the argument that limited liability is the primary benefit of the corporation is simply incorrect. If limited liability were removed from corporations, there would be a massive shift from equity financing to debt financing. In other words, investors will call themselves creditors and not shareholders. The line between equity and subordinated debt is very close, but the courts have no problem calling one equity and one debt. Are you going to take the position that creditors should be strictly responsible for the tortious acts of their borrowers (assuming they do not control the acts of the borrower)? However, corporations would continue because of transaction cost advantages over partnerships and joint ventures. Jim Devine's insistence that limited liability permits shareholders to ignore external costs is simply not realistic. It ignores that the corporation remains liability for its tortious conduct, and shareholders care about their investments. To the extent that the corporation itself is not responsible for externalities, that is a different issue entirely unrelated to limited liability. I have been accused of being reductionist. According to dictionary.com, reductionsist means: An attempt or tendency to explain a complex set of facts, entities, phenomena, or structures by another, simpler set: 'for the last 400 years science has advanced by reductionism... The idea is that you could understand the world, all of nature, by examining smaller and smaller pieces of it. When assembled, the small pieces would explain the whole' (John Holland). Based upon that definition, I accept the label. It is better than being wrong. What really are we fighting about? David Shemano __ Do you Yahoo!? Yahoo! Mail - More reliable, more storage, less spam http://mail.yahoo.com
Re: Corporations
I always thought that corporations were legal fictions. Legal fictions are legally created entities aren't they? They may be more than this but they certainly are not less. Fictions suggests they are not real. Here is an example of a legal fiction: The notion that that in suing a state official acting in his official capacity you are not really suing the state, which is forbidden under the 1th Amendment as interpreted by the S.Ct. I ran into this problem today. I am trying to process through my new firm's conflicts check process -- to make sure we are not representing and suing the same people -- two pro bono habeas corpus cases in which I represented convicted murderers. The nominal defendant is the prison warden. My secretary reported back that they had to do conflicts checks on the warden. I said, that can't be right. The warden doesn't care; we are really suing the state of Illinois. It and not the warden is the real party in interest. Anyway, corporations are not fictions. They are are real as many people. Imdividuals, I mean. Sure, corps have some of the powers of persons -- contracting, property ownership, suing and being sued, etc. That did not make them persons any more than the fact that I have some of Michael Jordan;s powers (a very few) makes me a basketball player. But I am not speaking of metaphysucal personhood, only of legal personhood. It was a big jump when the S.Ct said that corps were persons under the 14th Amendment, no point in pretending otherwise, even if the other things were true of them. The question of whether corps are fictions is diffewrent from whether they a reducible to interlocking series of contracts,a nd more interesting. The later view is legally an obvious error. The former is potentially an interesting metaphysical error. You are right of course that the law can fail to recognize classes of individual as (full) persons in a legal sense, and has done so. May still, as in denying gays the right to marry in most states. I am not sure what your point is here, though. jks The problem is not claiming that corporations are legal fictions but in claiming that as such they are not some separate entity but a shorthand way of referring to interlocking contracts between individuals the very point that you seem to be making. However your point has nothing to do with corporations not being legal fictions. . . . But surely it is essential to treat corporations as having at least some of the rights of individuals. Are you going to deny corporations the right to own property, sign contracts, pay taxes, sue and be sued, all capacities of individuals? Whether or not there is some special legal recognition of corporations as persons any legal system will surely want to give corporations rights such as these.. . . . Of course for corporations to be persons under the law, the law must say that they are. But this is true of individuals too. There was a time when women werent persons and slaves were not either as far as their legal status was concerned. To be an individual person does not entail being a legal person. Cheers, Ken Hanly __ Do you Yahoo!? Yahoo! Mail - More reliable, more storage, less spam http://mail.yahoo.com
Re: Corporations
[A few months ago Business Week ran an article asserting that South Korea had the biggest anti-corporate social movement of any country in the world. Given the recent upheaval there and the issues raised in the thread, I thought pen-ler's might find the following link on corporate governance in Korea and the global connections interesting. The current scandal[s] there raise serious issues for the strengths/limitations of the Poulantzasian/Milibandian theories of the State/Capital nexus] http://mba.tuck.dartmouth.edu/pdf/2002-1-0033.pdf Parliament votes to impeach president Justin McCurry in Tokyo Saturday March 13, 2004 The Guardian Roh Moo-hyun yesterday became the first South Korean president to be impeached, plunging the country into uncertainty weeks before parliamentary elections. Amid chaotic scenes, 193 members of the 273-seat national assembly - more than the two-thirds majority required - voted to support the impeachment bill after the president was accused of unfairly attempting to influence the outcome of the April polls. Mr Roh will be suspended and replaced by the prime minister, Goh Kun, while the constitutional court decides whether to accept the vote, a process that could take up to six months. If it does, South Korea will have to hold new presidential elections. Assembly members, who have a reputation for boisterousness, exchanged shoves, yelled and wept during the historic vote. We won a victory, said Choe Byung-yul, leader of the Grand National party, one of the sponsors of the bill. But today is not a happy day because the president elected by the people had to be impeached. Mr Roh's supporters were incensed. This is the day our nation's democracy died, said a statement by the Uri party, whose 47 MPs say they will resign. It was Mr Roh's support for the Uri party that prompted his opponents to begin impeachment proceedings. The president, who is required by law to remain impartial in elections, had called for an overwhelming show of support for the party. The impeachment bill claimed his credibility had been shattered by a series of political funding scandals involving his aides in the run-up to the December 2002 presidential election. It also charged him with failing to revive the Korean economy, which grew by just 2.9% last year, compared with 6.3% in 2002. Mr Roh, a strong-willed former democracy activist who made his name as a human rights lawyer, refused to apologise, saying the impeachment bill was politically motivated revenge for his unexpected election victory over the Grand National party candidate, Lee Hoi-chang. Mr Roh relented early yesterday and apologised for the political crisis, but opponent said it did not go far enough. After he took refuge at his presidential Blue House residence, his office said it hoped the constitutional court would make a quick decision to minimise confusion in state affairs. His temporary replacement's first task will be to reassure the rest of the world that Mr Roh's absence has not created a political vacuum at a crucial time for the economy and as South Korea and its allies attempt to resolve fears surrounding North Korea's nuclear weapons programme. South Korea's financial markets were left reeling, with the Kospi benchmark stock index falling 5.5% before recovering to close 2.4 % down. The won fell by 1% against the dollar. The interim president, whose new powers include responsibility for South Korea's 650,000-strong military, vowed to keep the country stable. The people feel unease because the impeachment bill was passed at a time when the economy faces difficulties, he said, adding that the government had to do all it could to ensure that the country's international credibility will not be damaged.
Re: corporations/More Side Issue
I am not sure if this is a _side issue_ Justin. As you may have noticed, I do not use _scare quotes_ this time since I use quotes most of the time, but not always, to _highlight_ things. I don't think there is any need to put scare quotes around contracts in a market socialist society. A contract is just a legally enforceable promise, and any market society, maybe any modern society, will have a legal system and a set of rules for contract law. Despite that I am more of an anarchist at heart who despises rules and hierarchies of any kind, I recognize that, whether market or not, in any society in which we will live in the near future, there will be a legal system and a set of rules for contracts. After all, every human relation is based on some sort of a contract whether it is our relationship with our lovers, children, parents, siblings, friends and the like. Just that most these (unsigned) contracts are enforceable not by law but by love and we can always opt out provided that we choose to give up on love. I have a question about this: The general idea about is that in their economic activities, worker-cooperators will act as if they were profit-maximizers, but the fact that labor is not a cost gives them a different set of incentives from capitalist firms that are explored in the books and papers above. In the absence of labor as a cost in production, how are the profits defined? Best, Sabri
Re: corporations/More Side Issue
Sabri Oncu wrote: After all, every human relation is based on some sort of a contract whether it is our relationship with our lovers, children, parents, siblings, friends and the like. Just that most these (unsigned) contracts are enforceable not by law but by love and we can always opt out provided that we choose to give up on love. Why not simply say that human relationships are bound by love. After all, contracts are always conditional, whereas love is not. Joanna
Re: Corporations
Dave Shemano writes: What is a corporation, but an interlocking series of contracts between real persons? Is this a different David Shemano, who I thought was a lawyer of some sort? Corporations have _limited liability_ which means that that after a certain point (the amount of capital invested by the stock-holders) the state has declared that the costs of corporate malfeasance, accidents, etc. shall be absorbed by the taxpayers. Jim
Re: Corporations
On Thursday, March 11, 2004 at 16:06:17 (-0800) David B. Shemano writes: Michael Perelman writes: I wish you well with your liberty. You are a real person. I do not feel that E-M is a real person, but an illigitate creation of state. You wish me well with my liberty, but what about my liberty to enter into a series of contracts with other real persons, and calling those interlocking series of contracts a corporation? What is a corporation, but an interlocking series of contracts between real persons? Something that is created and safeguarded by the state --- the elephant in the corner you neglect to mention. Bill
Re: Corporations
- Original Message - From: David B. Shemano [EMAIL PROTECTED] You wish me well with my liberty, but what about my liberty to enter into a series of contracts with other real persons, and calling those interlocking series of contracts a corporation? What is a corporation, but an interlocking series of contracts between real persons? David B. Shemano === An institution where state sanctioned authoritarian behavior is allowed to flourish and undermine democratic norms. Ian
Re: Corporations
David B. Shemano wrote: You wish me well with my liberty, but what about my liberty to enter into a series of contracts with other real persons, and calling those interlocking series of contracts a corporation? What is a corporation, but an interlocking series of contracts between real persons? An institution with legal rights and substantial economic and political power, far larger than the sum of your contracts. How many Wal-Mart workers, for example, appreciate the firm's extensive DC lobbying operation, which tries to beat down wage and hour legislation, or its relentless cheapening of labor in its Chinese suppliers, or its rampant sex discrimination? Doug
Re: Corporations
James Devine writes: Is this a different David Shemano, who I thought was a lawyer of some sort? Corporations have _limited liability_ which means that that after a certain point (the amount of capital invested by the stock-holders) the state has declared that the costs of corporate malfeasance, accidents, etc. shall be absorbed by the taxpayers. Jim Let's be clear about this. The corporate form provides no unfair protection against contractual liability, because the other party is aware of the corporate form and can either bargain for a personal guarantee or not enter into the contract. With respect to tortious liability, the corporate form provides no protection for individuals who commit torts. The only protection the corporate form provides is a modification to the doctrine of respondeat superior (the employer is liable for the acts of the employee who commits an act in the scope of the employment). In other words, while the corporation's assets are liable for the acts of the employee, the shareholder's personal assets are not responsible for the torts committed by an employee, unless the shareholder himsef committed a tort or the shareholder did not respect the corporate form (alter-ego). As a practical matter, the limited liability is only an issue if the corporation is rendered insolvent and insurance is exhausted. Philosophically, the issue is the appropriateness of applying the doctrine of respondeat superior to shareholders. You can characterize limited liability as state imposed, but you also characterize respondeat superior as state imposed as well. There is no inherent reason why a shareholder who owns 10 shares of Exxon should lose his house because Joseph Hazelwood got drunk. Ultimately, the decision is a policy choice over which reasonable minds can differ. David Shemano
Re: Corporations
This interlocking series of contracts has the right of free speech? I think the series of responses Shemano gives in this thread is sillier than neo-classical micro. He describes a total phantasy world, just as the micro theorists do. But the world both try to hide is terribly real. This stuff is much worse than people have been asked to leave the list over. Disgusting stuff. I'd say beneath contempt, but I don't know what is lower. Gene Coyle I wish you well with your liberty. You are a real person. I do not feel that E-M is a real person, but an illigitate creation of state. You wish me well with my liberty, but what about my liberty to enter into a series of contracts with other real persons, and calling those interlocking series of contracts a "corporation?" What is a corporation, but an interlocking series of contracts between real persons? David B. Shemano
Re: Corporations
- Original Message - From: Eugene Coyle [EMAIL PROTECTED] This interlocking series of contracts has the right of free speech? I think the series of responses Shemano gives in this thread is sillier than neo-classical micro. He describes a total phantasy world, just as the micro theorists do. But the world both try to hide is terribly real. This stuff is much worse than people have been asked to leave the list over. Disgusting stuff. I'd say beneath contempt, but I don't know what is lower. Gene Coyle === I'd say the legal world he describes is all too real and we must learn to think about it a lot harder than we've done. Contractarianism is very powerful ideology; contract law is the performative core of capitalism. Legal fiction is an oxymoron. Ian
Re: Corporations
Eugene Coyle writes: This interlocking series of contracts has the right of free speech?I think the series of responses Shemano gives in this thread is sillier than neo-classical micro. He describes a total phantasy world, just as the micro theorists do. But the world both try to hide is terribly real.This stuff is much worse than people have been asked to leave the list over. Disgusting stuff. I'd say beneath contempt, but I don't know what is lower. I have never seen a corporation speak. I have seen real people speak on behalf of corporations. Why do you believe that those people do not have a right to speak? What is that word Marxists like to use to describe unreal objects that people think arereal? Fetish? You see a bogeyman called a "corporation." You are fetishing the corporation. I see tens, hundreds, thousands of contracts between real people intended to actualize a real end. The entity is an acknowledged legal fiction that minimizes transaction costs. That is all. "Exxon" is simply a shorthand way to describe thousands of real people acting in a united way, and the corporate form provides an expedient way of organizing those real people. What disgusts you? What is beneath contempt? What is the fantasy? David Shemano
Re: Corporations
- Original Message - From: David B. Shemano [EMAIL PROTECTED] What is that word Marxists like to use to describe unreal objects that people think are real? Fetish? You see a bogeyman called a corporation. You are fetishing the corporation. I see tens, hundreds, thousands of contracts between real people intended to actualize a real end. The entity is an acknowledged legal fiction that minimizes transaction costs. That is all. Exxon is simply a shorthand way to describe thousands of real people acting in a united way, and the corporate form provides an expedient way of organizing those real people. ...What is the fantasy? David Shemano = Ontological-methodological individualism... Ian
Re: Corporations
But then with respect to coporations contracts are themselves often between what are persons only qua legal fictions, or between them and individuals rather than anything that could be explained in terms of contracts between individual persons. I have no idea what you mean when you say that a legal fiction is an oxymoron. Surely the point of the term is that corporations are not persons as you and I are persons. Even Bush would not consider a union of Mary Kay and Revlon cosmetics some sort of lesbian marriage. Well I cant be sure of that! I took Eugene to be concerned about the extent to which David was identifying the essential nature of the corporation with some set of interlocking contracts between individuals. But surely over and above any such set of interlocking contracts there are also sets of contracts between individuals and the corporation and between the corporation and other corporate entities that are essential to understanding the nature of the corporation and its obligations and rights. Cheers, Ken Hanly - Original Message - From: Eubulides [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Thursday, March 11, 2004 7:37 PM Subject: Re: Corporations - Original Message - From: Eugene Coyle [EMAIL PROTECTED] This interlocking series of contracts has the right of free speech? I think the series of responses Shemano gives in this thread is sillier than neo-classical micro. He describes a total phantasy world, just as the micro theorists do. But the world both try to hide is terribly real. This stuff is much worse than people have been asked to leave the list over. Disgusting stuff. I'd say beneath contempt, but I don't know what is lower. Gene Coyle === I'd say the legal world he describes is all too real and we must learn to think about it a lot harder than we've done. Contractarianism is very powerful ideology; contract law is the performative core of capitalism. Legal fiction is an oxymoron. Ian
Re: Corporations
- Original Message - From: k hanly [EMAIL PROTECTED] But then with respect to coporations contracts are themselves often between what are persons only qua legal fictions, or between them and individuals rather than anything that could be explained in terms of contracts between individual persons. I have no idea what you mean when you say that a legal fiction is an oxymoron. === I mean the law *makes* it -the corporation- real, with real causal powers in the political economy. The law is not a representation of a set of contractual relations prior to it, that is, it's not primarily a descriptive endeavor, but a performative one. John Austin [the 20th cent. guy How to do Things with Words] and John Searle are great on that issue. Ian
Re: Corporations
Corporations don't speak but that does not mean they don't have the right of free speech. Officials (i.e.) real persons sign contracts on behalf of corporations too . Does that mean corporations cannot sign contracts or have rights and obligations flowing from having signed contracts. Note too that a person cannot speak on behalf of a corporation qua an individual but only qua individual authorised to do so by the corporation. It is not in the persons capacity as a "real" individual that the person can sign a contract for a corporation only as a real individual authorised to do so by the structures of the legal fiction. There is no way that you can reduce this to some sort of shorthand for talking about contracts between individuals. Why anyone would even want to try I find truly baffling. Maybe they have some sort of fear of mulitiplying entities beyond necessity. I dont expect to kick any corporate shins, or use DNA testing to absolve them when accused of horrendous crimes but there is nothing unreal about corporations as entities. To consider corporations as something over and above sets of contracts between individuals is not fetishism. Unless you are committed to some weird form of reductive individualism it would seem to be common sense realism. CHeers, Ken Hanly - Original Message - From: David B. Shemano To: [EMAIL PROTECTED] Sent: Thursday, March 11, 2004 7:58 PM Subject: Re: Corporations Eugene Coyle writes: This interlocking series of contracts has the right of free speech?I think the series of responses Shemano gives in this thread is sillier than neo-classical micro. He describes a total phantasy world, just as the micro theorists do. But the world both try to hide is terribly real.This stuff is much worse than people have been asked to leave the list over. Disgusting stuff. I'd say beneath contempt, but I don't know what is lower. I have never seen a corporation speak. I have seen real people speak on behalf of corporations. Why do you believe that those people do not have a right to speak? What is that word Marxists like to use to describe unreal objects that people think arereal? Fetish? You see a bogeyman called a "corporation." You are fetishing the corporation. I see tens, hundreds, thousands of contracts between real people intended to actualize a real end. The entity is an acknowledged legal fiction that minimizes transaction costs. That is all. "Exxon" is simply a shorthand way to describe thousands of real people acting in a united way, and the corporate form provides an expedient way of organizing those real people. What disgusts you? What is beneath contempt? What is the fantasy? David Shemano
Re: Corporations
David B. Shemano wrote: You see a bogeyman called a corporation. You are fetishing the corporation. I see tens, hundreds, thousands of contracts between real people intended to actualize a real end. So, when I, avoiding immiseration, get a job to work in a corporation, I am entering in a contract over which I have any control? I can bargain for my wage? I can bargain for my vacation? I can bargain for the conditions under which I work? I can decide what I'm going to work on and what the result of my work is going to be used for? The entity is an acknowledged legal fiction that minimizes transaction costs. That is all. Exxon is simply a shorthand way to describe thousands of real people acting in a united way, and the corporate form provides an expedient way of organizing those real people. Yes, an expedient way of organizing real people for the benfit of whom? What disgusts you? What is beneath contempt? What is the fantasy? The fantasy is yours. The disgust is mine. Joanna
Re: Corporations
This discussion is getting a bit off the rails. Corporations are not legal fictions -- they are legally created entities, no more or less real than contracts. It is a strange species of methodological individualism to deny that they really exist merely because they are constituted out of indiviuals and their relations. What in the social world isn't? They are as real as nations and classes and races and governments and courts, etc. But at the same time they are not evil per se. It is secondary to describe them as an arrangement that minimizes transaction costs. They do that, but that does not disctinguish them from partnerships or companies or any sort of enterprise that arranges its activities outside the market world of contarcts. (Which is part of the reason, actually, why it is an error to reduce corporations to sets of contracts!) Primarily corporations are an arrangement for limiting liability, so that the creditors can't reach the shareholders' assets beyond their investment in the corporation. That is an OK purpose, granting the Okayness of a market economy and a legal sytem that creates creates like creditors. Some here will deny that that is OK, of course, but I don't. What Gene and others object to is two things, I think: not the legal device for limiting liability, but the fact that some corporations have vast wealth and power that distorts democracy and gives too much influence to a small number of people, and a legal system that treats these entities as if they were individual persons due the legal rights (like free speech) that are properaly accorded to individuals. In most societies, even market societies, the latter is not true -- corporations are not persons, as far as I knwo, under British law (any Brits out there who can correct me?), and anyway the Brits don't have a First Amendment. Moreover one could imagibe a market society where, for eaxmple, the corporations did not have undemocratic power and wealth, and where the workers managed them themselves. Such corporations would be far less problematic than the largest ones we have -- including some of my clients. jks --- David B. Shemano [EMAIL PROTECTED] wrote: Eugene Coyle writes: This interlocking series of contracts has the right of free speech? I think the series of responses Shemano gives in this thread is sillier than neo-classical micro. He describes a total phantasy world, just as the micro theorists do. But the world both try to hide is terribly real. This stuff is much worse than people have been asked to leave the list over. Disgusting stuff. I'd say beneath contempt, but I don't know what is lower. I have never seen a corporation speak. I have seen real people speak on behalf of corporations. Why do you believe that those people do not have a right to speak? What is that word Marxists like to use to describe unreal objects that people think are real? Fetish? You see a bogeyman called a corporation. You are fetishing the corporation. I see tens, hundreds, thousands of contracts between real people intended to actualize a real end. The entity is an acknowledged legal fiction that minimizes transaction costs. That is all. Exxon is simply a shorthand way to describe thousands of real people acting in a united way, and the corporate form provides an expedient way of organizing those real people. What disgusts you? What is beneath contempt? What is the fantasy? David Shemano __ Do you Yahoo!? Yahoo! Search - Find what youre looking for faster http://search.yahoo.com
Re: Corporations
Gene, I don't think you need to be rude to David. I think that David has participated for some time -- always with good humor. I disagree with him but I still enjoy what he writes from time to time. As for contempt -- I have contempt for Exxon-Mobil. I hardly believe that some grunt working for minimum wage at the corp. has the same interpretation of his/her role as David suggests. On Thu, Mar 11, 2004 at 05:35:10PM -0800, Eugene Coyle wrote: This interlocking series of contracts has the right of free speech? I think the series of responses Shemano gives in this thread is sillier than neo-classical micro. He describes a total phantasy world, just as the micro theorists do. But the world both try to hide is terribly real. This stuff is much worse than people have been asked to leave the list over. Disgusting stuff. I'd say beneath contempt, but I don't know what is lower. Gene Coyle I wish you well with your liberty. You are a real person. I do not feel that E-M is a real person, but an illigitate creation of state. You wish me well with my liberty, but what about my liberty to enter into a series of contracts with other real persons, and calling those interlocking series of contracts a corporation? What is a corporation, but an interlocking series of contracts between real persons? David B. Shemano -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
Re: corporations
Justin: Moreover one could imagine a market society where, for example, the corporations did not have undemocratic power and wealth, and where the workers managed them themselves. This is an interesting point. I have never been against optimizing objective functions, assuming that objectives can reasonably be mathematized. Here is a question Justin: What may be some objectives of workers managed corporations in the market society you imagine? Put differently, what kind of contracts such corporations and the persons that embody them will have to sign in this market society? Of course, before such a society is constructed we may never know what these contracts will exactly look like but what do you expect them to look like, approximately, that is? Best, Sabri
Re: Corporations
--- andie nachgeborenen [EMAIL PROTECTED] wrote: Moreover one could imagibe a market society where, for eaxmple, the corporations did not have undemocratic power and wealth, and where the workers managed them themselves. Such corporations would be far less problematic than the largest ones we have -- including some of my clients. jks I agree, it would be much better, if workers ran and managed the the firms in which they exploited themselves for surplus value. Honestly though, hasn't the history of creating such entities, like say Mondragon or the Amana Colony or the kibbutz movement and all the utopian socialist movements of the past-- co:operatives included--proven that they always morph into the undemocratic, totalitarian corporate structures which we see ruling us today? In other words, hasn't wage-labour always resulted in the developement of capitalist social relations? Sincerely, Mike B) = Beers fall into two broad categories: Those that are produced by top-fermenting yeasts (ales) and those that are made with bottom-fermenting yeasts (lagers). http://profiles.yahoo.com/swillsqueal __ Do you Yahoo!? Yahoo! Search - Find what youre looking for faster http://search.yahoo.com
Re: Corporations
--- joanna bujes [EMAIL PROTECTED] wrote: David B. Shemano wrote: So, when I, avoiding immiseration, get a job to work in a corporation, I am entering in a contract over which I have any control? I can bargain for my wage? I can bargain for my vacation? I can bargain for the conditions under which I work? I can decide what I'm going to work on and what the result of my work is going to be used for? The entity is an acknowledged legal fiction that minimizes transaction costs. That is all. Exxon is simply a shorthand way to describe thousands of real people acting in a united way, and the corporate form provides an expedient way of organizing those real people. Yes, an expedient way of organizing real people for the benfit of whom? Exactly Joanna...cui bono? The ever perplexing question in class society. Solid, Mike B) = Beers fall into two broad categories: Those that are produced by top-fermenting yeasts (ales) and those that are made with bottom-fermenting yeasts (lagers). http://profiles.yahoo.com/swillsqueal __ Do you Yahoo!? Yahoo! Search - Find what youre looking for faster http://search.yahoo.com
RE: Corporations Pay no Taxes: Robert McIntyre in the NYT
And here's the full report: http://www.ctj.org/itep/corp00pr.htm mbs http://www.nytimes.com/2000/10/20/business/20TAX.html -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Corporations Pay no Taxes: Robert McIntyre in the NYT
what's wrong with the theory of tax incidence that says that when they are officially "paying" the tax, the corporations are really shifting the tax to consumers or to workers (rather than the stockholders)? It seems to me that the only exception to the corporations' ability to do this kind of shifting is when they own depletable resources (and capture scarcity rents). But aren't there special tax breaks for corporations that own depletable resources? Also, if the tax law _changes_, it's quite possible that it catches many corporations by surprise (since it's usually so complicated), so that they are unable to pass the tax totally onto workers and consumers until they learn how to do it. But most tax changes seem to lower the official corporate tax burden, not raise it. Is McIntyre's research drawing our attention away from what's important? At 09:48 PM 10/19/00 -0700, you wrote: http://www.nytimes.com/2000/10/20/business/20TAX.html -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED] Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
RE: Re: Corporations Pay no Taxes: Robert McIntyre in the NYT
JD: what's wrong with the theory of tax incidence that says that when they are officially "paying" the tax, the corporations are really shifting the tax to consumers or to workers (rather than the stockholders)? It seems to me that the only exception to the corporations' ability to do this kind of shifting is when they own depletable resources (and capture scarcity rents). [mbs] Insofar as capital is immobile, it has to eat the tax. Immobile doesn't just mean some hunk of equipment whose cost of relocation is prohibitive. It means mobile capital that must be fixed inside the U.S. to perform its functions, such as serving customers in physical proximity to it. If you believe capital is perfectly mobile, like the conservatives do, then there is no point in a corporate income tax. JD: But aren't there special tax breaks for corporations that own depletable resources? mbs: yes. JD: Also, if the tax law _changes_, it's quite possible that it catches many corporations by surprise (since it's usually so complicated), so that they are unable to pass the tax totally onto workers and consumers until they learn how to do it. But most tax changes seem to lower the official corporate tax burden, not raise it. [mbs] not likely. Corporations have a well articulated apparatus in D.C. to monitor changes in tax law. They are better situated to comprehend the complexity than anyone else. Often as not, they are the authors of such complexity, not the victims, except when one sector gores another. JD; Is McIntyre's research drawing our attention away from what's important? Findings like his have played a major political role in promoting positive tax reform. Hopefully the left will have enough brains to make use of his report. mbs
