Murray Rothbard: Corporations are free market

[albert h n]

http://www.dailypaul.com/111379/murray-rothbard-corporations-are-free-market

[Agrarian_Agorist]

While Mr. Rothbard pointed out a possibility for corporations to exists in the absence of an actual State, it is highly unlikely to work out in the real world as he theorized it.

It would be highly probable that if someone was injured or in someway harmed by such a corporation, and said corporation were to be taken to some kind of court system, the court may still rule against the supposed corporation beyond it's limited liability if it cannot be proven beyond a reasonable doubt that the injured individual knew that the company was a limited liability corporation.

One cannot make a claim like that of a limited liability corporation and then just assume everybody somehow miraculously knows about it; and therefore it becomes incumbent on the corporation itself to make known to all of its customers that it is of a limited liability sort of corporation -anything less would be unethical and potentially seen as a form of fraud.

Throughout history a limited liability corporation has never existed outside of the support of a government for its protection.  This closely resemble insurance; typical AnCaps claim that everybody will be using insurance -if a government ceased to exist- and such, however, insurance has never plaid a prominent role in life without the State forcing insurance on people.  If the States quite forcing people to buy auto insurance, then auto insurance would almost be destroyed as an industry; the same with health insurance.  Not all of homeowners have house insurance, just like not all people have life insurance; the same would be for all other insurances possibly even with less market share than home and life insurance.

[Seth King]

I think Rothbard does a good job to explain how "corporations" should exist in the free market, but corporations as they are now, as everybody understands them, are completely state institutions.

• They exist by permission of the state.
• The limited liability shortfall is backed up by the state(think BP oil spill. How many tax dollars were spent cleaning up that mess? In a free market, BP wouldn't have likely even been able to drill without a bond that covered a huge oil spill cleanup.)
• They fink out unlicensed competitors to the state.
• They get subsidies from the state.
• They pay the state protection money.
• They lobby the government for protectionist laws to squish competition.
• Historically, corporations were chartered by the government in order to do things, including facilitating trade, building bridges, etc. When their task was done, they were often disbanded. But then things eventually changed allowing them to exist in perpetuity.

I will say, however, that in the dailypaul link provided he mentioned that people don't believe the corporations should be allowed to exist. I wouldn't quite put it that way, because that implies that the government should put an end to the corporations. I don't believe that. As a non-voting political-atheist I take no position on what the criminal organization known as the state should or should not do.

But I do recognize a state entity when I see one.

http://www.thefreedictionary.com/corporation

cor·po·ra·tion  
n.
1. A body that is granted a charter recognizing it as a separate legal entity having its own rights, privileges, and liabilities distinct from those of its members.
2. Such a body created for purposes of government. Also called body corporate.
3. A group of people combined into or acting as one body.

In the first definition we can clearly see that a body that is granted a charter is granted by the government.
In the second definition we can also clearly see that corporations are government bodies.
The third definition is non-statist, but clearly none of the modern, legal corporations that exist now fit definition 3 but NOT definitions 1 or 2 as well. Only a corporation that fits definition 3, and only definition 3, is a free-market friendly corporation.

[MAM]

I stopped reading at the first paragraph, non of the things mentioned in that introduction apply to me or my stance.

[anarchoguitarist]

I tend to agree with Seth and Agrarian here.  It seems to me that in a anarchist society Limited Liability would only exist in the following situation:  "If a corporation took out a loan and the creditor agreed by contract that individual stock holders could not be held responsible to pay back the loan if the corporation went bankrupt."  Limited Liability would only apply to those who specifically agreed to it by contract.

What you guys think?

[MAM]

I tend to agree with Seth and Agrarian here.  It seems to me that in a anarchist society Limited Liability would only exist in the following situation:  "If a corporation took out a loan and the creditor agreed by contract that individual stock holders could not be held responsible to pay back the loan if the corporation went bankrupt."  Limited Liability would only apply to those who specifically agreed to it by contract.

What you guys think?

If people agree to it then it can be a thing I'm just not sure that it will be a thing. You know? I don't think it would be as common as it is today.

[anarchoguitarist]

If people agree to it then it can be a thing I'm just not sure that it will be a thing. You know? I don't think it would be as common as it is today.

I see what you mean.  The whole concept of Limited Liability may completely vanish in a free market.  Lenders might think that is too risky to agree to such terms and the practice may disappear completely.  Unfortunately we will never know as long as there is a violent monopoly forcing such practices on the marketplace.

[MAM]

If people agree to it then it can be a thing I'm just not sure that it will be a thing. You know? I don't think it would be as common as it is today.

I see what you mean.  The whole concept of Limited Liability may completely vanish in a free market.  Lenders might think that is too risky to agree to such terms and the practice may disappear completely.  Unfortunately we will never know as long as there is a violent monopoly forcing such practices on the marketplace.

Tis true. I'm curious would you invest in a limited liability corporation?

Assuming a non distorted market of course.

[anarchoguitarist]

Tis true. I'm curious would you invest in a limited liability corporation?

Assuming a non distorted market of course.

I would invest in a LLC.  However, I think I would be more hesitant to lend money to a LLC.  What about you?

[MAM]

Tis true. I'm curious would you invest in a limited liability corporation?

Assuming a non distorted market of course.

I would invest in a LLC.  However, I think I would be more hesitant to lend money to a LLC.  What about you?

I concur.

[albert h n]

1.You guy.... lending money to a LLC and investing in it is legally speaking the same thing.
If junior wants to start his own business and he borrows money from grandma and grandpa to buy a car or a truck to run a taxi service or a delivery service or something, it is a company.
If he now drives recklessly and kills somebody, he will be sued. Lets say for $1million
Under your system, they will sell the car and give the money to the victims family. That would be not enough so they will go after the partners/investors/lenders and sell grandma and grandpas house to get the $1M (and it makes no difference if you call them an investor or a shareholder or a partner)

Under a limited liability company the driver and the company will be sued and all assets and future earnings (including the original amount from grandma and grandpa) can be attached but none of their personal property.
The reckless driver of the car also has personal liability that has nothing to do with him being an employee of the corporation.  He can be fined or jailed fotr his personal part in the accident.

2.Your thinking contradicts your philosophy on corporations. You say shareholders and investors should not have limited liability protection. But you also say you would not lend money to a corporation but you would buy shares. By your logic you should ONLY lend money to a corporation (or otherwise decide not to invest in anything or lend money to anybody) because otherwise your house and your car can be attached in a lawsuit if an employee of the corporation causes an accident.
The logical conclusion of your thinking would shut down all stock markets across the world as well as all retirement funds. Who would buy shares or put money in a retirement fund if your personal assets and those of your family would be at risk?

#. Whether you or anybody else would invest in a LLC is irrelevant to the argument. You do not have the right (or the ability) to stop other human beings from writing contracts any way they like. The market will decide if people will buy the product or not.- not you, not me, not the state.

Companies have existed from before the Roman times. They usually are private contracts without the need for governments. After they became successful the governments want a piece of the pie.

[MAM]

Whether you or anybody else would invest in a LLC is irrelevant to the argument. You do not have the right (or the ability) to stop other human beings from writing contracts any way they like. The market will decide if people will buy the product or not.- not you, not me, not the state.

I don't think anyone here is arguing against this.