1307 True News - Corporations, a video
Corporations, people and bodies...
March 20, 2009 - Freedomain Radio - Stefan Molyneux
10:26
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| Time | Text |
|---|---|
| Corporations are legal fictions designed to maximize gains and shield owners from losses, which means keeping profits while shifting losses to others, largely creditors, employees and customers. | |
| Corporations first existed in ancient Rome and India, The oldest commercial corporation in the world, the Soder-Koparberg mining community in Fallon, Sweden, obtained a charter from King Magnus Eriksson in 1347. | |
| Pictured here. | |
| No, wait, sorry. | |
| Here. Many European nations chartered corporations to prey on colonial people and resources, such as the Dutch East India Company or the Hudson's Bay Company. | |
| In general, it seems wise to be skeptical, to say the least, of legal fictions first created by ancient Roman slave owners, medieval kings, and high-caste Dark Ages Indian potentates. | |
| So, what is a corporation? | |
| The modern corporation has five general characteristics. | |
| 1. Delegated management. | |
| In other words, control of the company is placed in the hands of a board of directors. | |
| 2. Limited liability of the shareholders, so that if the company becomes insolvent, they only owe the money that they subscribed for in shares. | |
| 3. Investor ownership. | |
| In other words, ownership by shareholders. | |
| 4. The separate legal personality of the corporation, the right to sue and be sued in its own name. | |
| 5. Transferable shares, usually on a listed exchange such as the London Stock Exchange, the New York Stock Exchange, or Euronext in Paris. | |
| Of these, only limited liability and transferable shares really matter. | |
| Charities can delegate management and have separate legal personalities. | |
| In 1917, Joseph Davis wrote, quote, A corporation is a group of individuals authorized by law to act as a unit. | |
| In other words, corporations are state-enforced unions for the rich. | |
| And just like all state-enforced entities, they profit the minority by preying on the majority. | |
| Corporations are not creations of the free market and voluntary contract. | |
| But rather are singular and exclusive powers granted to particular individuals by the state. | |
| So, why do governments create corporations? | |
| And why do corporations support governments? | |
| Another way of asking this is, how do corporations protect and enrich the political and economic elites? | |
| To start with, states created corporations in order to attract business owners and investors by offering to shield them from the inevitable risks of entrepreneurship. | |
| In the case of chartered corporate colonialism, the benefits to business owners are clear. | |
| Individuals are granted the legal right to privatize profits while socializing financial risks and the enormous costs of enforcing monopolies. | |
| No company can afford to pay for its own army to protect a monopoly, and so it relies upon the state's power of taxation and violence to enforce such exclusivity. | |
| Citizens are also less likely to rebel against taxes they cannot see, which always benefits the political class. | |
| Externalizing the costs of enforcing a monopoly, paying a portion of enormous profits to the state, while eliminating the possibility of personal losses, creates a massive net gain for the economic elites. | |
| In addition, by separating ownership from management, corporations promote speculation. | |
| Since buying and selling stocks does not expose individuals to corporate indebtedness or illegality. | |
| This allows corporate owners to profit in the short run from excessive infusions of speculative capital. | |
| In the modern world, corporations are granted exclusive legal powers, state-protected patents and copyrights, massive infusions of capital through stop-loss speculation, soft or hard monopolies through tariffs, taxes and import bans, and corporate owners are personally shielded from losses that might arise from corruption or incompetence. | |
| And what do they pay in return for these predatory privileges? | |
| Corporate taxation and corporate sponsorship and support of politicians. | |
| Corporate taxation is not primarily paid by corporate owners who make most of their money through stock options and other forms of capital gains, but rather is paid by employees through reduced wages. | |
| Since it's hard to miss what you never received, this remains a deliciously hidden tax. | |
| Also, limiting or taxing imports in order to support domestic monopolization increases the price of consumer goods and services, another hidden tax largely on the lower and middle classes. | |
| Corporate limitations on liability also promote wild fluctuations in the stock market, which creates bad signals for employee training. | |
| Remember the tech boom? | |
| Periodic unemployment, uncertainty, fear, and backstabbing. | |
| As well as generalized corporate sleaziness as executives chase the immediate heroin of stock profits rather than the slow nutrition of building real and sustained value. | |
| Like all government-created entities, corporations as legal fictions are inherently immoral. | |
| Because they are created and enforced by the monopolistic and violent power of the state. | |
| Could such entities exist in a truly free society? | |
| Perhaps, but we know for certain that business owners who accept personal liability for their losses will be far more diligent about preserving the value of their businesses. | |
| And those who create contracts that limit their losses will face an equivalent loss of confidence from customers, investors, and employees as a whole. | |
| My own software business grew the fastest and created the most value when I was personally signing loan guarantees. | |
| There's no point blaming corporate owners for growing fat at the public trough any more than blaming a man for cashing in a state lottery ticket. | |
| Imagining that people will act otherwise, given the system, is a utopian fantasy. | |
| The problem, always and forever, is the initiation of violence that is the essence of statism. | |
| Violence is an unjust, immoral and utterly destructive way to solve complex social and economic challenges. | |
| As long as we continue to succumb to the fantasy that violence can lead to virtue, we will forever be mere prey to those we hand the guns to. | |
| The government is the only agency that enables the privatization of profit and the socialization of risks and costs. | |
| The ultimate and most profitable expression of this is war. | |
| The costs of war are borne by citizens and gold and blood. | |
| The profits of war are collected by individuals. | |
| The word corporation derives from corpus, the Latin word for body, or a body of people. |
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