October 31, 2004

Corporate Charters?

As happens in groups of smart, philosophical types who like political science, libertarians often discuss corporations. Most are not very interested in the discussion but come down pro; a vocal minority is anti-corporate charter. I am pro for the reasons in the thread linked and the post to follow. I think this is an interesting subject, so I'm poaching it from where I wrote it on the FSP board.

I have no interest in removing corporate charters and protections, and neither do most people to the right of Chomsky or less than anarchist in beliefs. I think a charter recognizes a pre-existing entity: a group, a government, a business, an army, whatever. Groups exist in the state of nature, under anarchical conditions, and they deserve to have civil protections under government. Welfare and subsidies are one thing, as well as tariffs, but recognizing the existence of the corporation is fine and good in my eyes. That's the philosophical point of view.

[They do not exist in the way a person exists, however, since there is no such thing as 'society' or a club that you can talk to, kill or rape. They exist in the state of nature but only due to social conditions; the intercourse of humanity (hee hee, Chris said intercourse!) brings about corporations and clubs. Since they are not humans, they have no natural rights - which are rights stemming from the condition of the universe or the state of merely existing, dependent on no person, contract or government. They are, however, clearly social creatures and deserve civic rights -rights stemming from government- to recognize that fact. So while they do exist in the state of nature, and thus I do not view them as wholly artifical creations because they have a reasonable basis without any central organization, I do not view them as having the same rights that human beings have, natural rights. For the purpose of applying law and legislation, the difference is almost never important.]

My nuts and bolts policy point of view is that calling charters 'welfare' and eliminating them would be very difficult to implement in theory (somebody has to own those Wal-Marts, and in essence you took away legal recognition of a pre-existing corporate person, so who gets it?). I also think it's a real threat to the economy, to the access to consumer goods for the state populace, and the ability to get jobs.

Furthermore, you can't revoke corporate charter protections without running afoul of the Supreme Court, which has protected the rights of corporate persons for well over a century. You'd have to win this case. Frankly, I don't like the idea and so I'm certainly not interested in pushing it to the SCOTUS in order to make it legal.


I'm with most of the country and most libertarians I've met in that I think corporations should be legally recognized. State governments, the federal government, foreign government, cabinet-level departments, federal agencies, PACs/527s, clubs/societies and business partnerships would all still be recognized, it seems silly to me to quibble over the club because it's supposed to be bigger and make more money than all the other types of groups that people organize into.

In another way, corporations are merely for-profit versions of governments: groups of individuals clustered together with a common goal, but the whole of the group is not owned by any one person and exists separately from any single member. Perhaps more accurately, corporations and governments are two different categories of clubs. A government seeks to enforce the rule of natural law and protect liberty (in THEORY, at least) and to monitor the legitimate use of force (so sayeth Weber). A corporation is a club that seeks to make money.

Now, if one member, even the leader, leaves a club of any sort then the club does not necessarily cease to exist. It's created by the grouping of individuals but it's not dependent on them. Therefore, philosophically, it seems to me to be perfectly good and right to recognize clubs as separate from individuals.

I'd have to be an anarchist to philosophically justify eliminating corporations, since the federal government and state governments are declaring those rights and granting club status to 527s and non-profits in their jurisdiction.

I'd have to be a communist to justify it economically, since if I were a communist I'd be flippin' nuts anyway and any stupid idea that came into my head to screw a) the rich, b) businesses, c) the industrial-technological system, or d) the US would probably pass my commie threshhold for acceptance.

Politically, it's easy as hell to justify since it would be:
- very difficult to sell (even aside from corporations' influence, nobody believes this besides the Greens)
- very unconstitutional (according to the SCOTUS, at least)
- very agonizing to administer (who gets the stuff from the corporate persons we just erased?)
- and very disruptive for the economy and the citizenry as goods [would become] much more expensive (goodbye economy of scale) and the international economy tanked

Plus, if we did eliminate corporate charters, it's very possible that only those already uber-wealthy would be able to take over their place. Since they would own these businesses, the end result is that a very tiny percentage of people would suddenly have massive wealth because we BANNED the easiest method for regular people to group together and compete with them. That's not an automatic side-effect, but it is a very likely outcome since the risk would be too great for anybody else to really compete. This outcome would be ironic, since most of the people who support the move are anti-wealth and almost all dislike concentration of power and money in the hands of business.

I view it overall as somewhat provincial and primitive (I hesitate to say backwards, but I do view socialism itself as backwards and anti-innovation in most forms) to start eliminating corporate charters. Like backwoods people who hate the change and development that corporations bring and don't mind less access to luxury items and low-cost goods because they're already living very simple lifestyles. It seems especially silly since it only eliminates protections for the groups that make a lot of money. Low-level partnerships, non-profits, 527s and so forth are all exempted and surprise, they're not making money.

You have to be basically an anarchist or a communist to get into that area - or trying to appease one of the two.


But I will say that the corporations are engaged in a system of handouts and welfare with the state that we have to eliminate. It's a multi-faceted assistance program.

The state gives them direct subsidies, usually as pork barrel and sometimes as post-development, special-exemption patents.

The state gives them direct protections by punishing foreign opponents, usually as tariffs but sometimes as anti-dumping laws and import quotas.

The state gives them decreased competition by taxing and regulating small businesses to the point where entry into a market is inhibited more greatly for small businesses than large ones, thanks to economies of scale.

Ultimately, I think we have to free up trade, cut out the welfare, standardize all patents so that single products rarely (if ever) get special exemptions - especially after introducing it to market and as the deadline approaches - and we need to strongly scale back the taxes and regulations on small businesses (and loosen up minimum wage laws for part-time and teenage workers) so that they can compete on a fairer playing field with the big boys.

I believe in corporate charters, but that's just a 'recognizing reality' type thing. Not a compromise, but a matter of fact, 'clubs and groups exist separate[ly] from their leaders' issue. That doesn't mean I think corporations get to extort all sorts of hideous protections and subsidies from the government that taxpayers fund and [end] up hiking prices on taxpayers in the end anyway.


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