From: Steve Davies (Steve365@btinternet.com)
Date: Fri Sep 12 2003 - 11:36:45 MDT
> Randall Randall wrote:
>
> > ...
> > Well, limited liability is a State-enforced distortion of
> > the market, rather than something inherent in the market.
> > I agree that limited liability should be abolished.
> >
Charles Hixson said
> Be quite careful here. The basic distortion is that the corporation is
> granted the rights of a person, without simultaneous having the limits
> or obligations of a person.
Exactly right IMO. Limited liability can arise (and has) through the
mechanisms of contract, without any resort to legislation. The problems
arise when this is combined by legislation with 'perpetual succession', so
making corporations immortal individuals which have powers actual
individuals do not have (such as owning shares in other 'legal persons').
Historically there were two kinds of corporate business, one had limited
liability but no perpetual succession (i.e. a limited lifespan) the other
had perpetual succession but full liability. Modern company legislation
combines the two.
> Limited Liability Corporations legitimately shield their investors from
> many liabilities for the actions in corporations that the investors
> theoretically have partial ownership in, but over which they actually
> neither have either reasonable control or detailed knowledge. But I
> know of no ground for shielding the executives of the corporation from
> liability, as seems to be common practice.
<snip account of the Monsanto case>
Again, I agree. This is not a new problem. See the remarks Adam Smith makes
about this or the very prescient comments of Herbert Spencer in his essay
"Railway Morals and Railway Policy". (Spencer opposed the 1858 Companies Act
BTW).
Steve Davies
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