Thoughts on Limited Liability

I ran across this today and it made me recall something that drifts into my consciousness from time: the fact that government grants of limited liability are a thoroughly bad thing.

In the legal sense corporations are people. That concept has to go. Humanness must be imbued with the sacred. Sufficient regard for individuals will only return when humans can no longer increase their material wealth by hiding behind a government provided shield of immunity for the harm done by their hirelings.

There are plenty of pictures of the victims of the Bhopal tragedy. Nothing will ever focus the minds of owners of stock on the risks the managers of their companies take until those owners, themselves, are exposed to more than just the potential loss of money when “mistakes” are made. And don’t say that big things will cease to be done under such conditions. Capitol holders will invest. Money will be made.

No person or body of persons possesses the right to confer upon any other a shield against liability for the harm he or it might do to others. The notion that I can provide the money (the material cause of a thing) and then be held guiltless for any potential harm its mature form (its final cause) might do is ludicrous.

The thing would not exist without my money. The entrepreneur, the manager and the workers could not cause any good or ill without having got the fuel, as it were, from me. Certainly, as long as I own a part of it I am partially responsible for it: I provide part of the fuel.

I know the argument that limited liability is necessary in order to attract capitol for large projects, that living standards would be far lower otherwise. I don’t think so. I think that limited liability creates recklessness and a less thoughtful investor class.

I do not know how to delve deeply into this subject. But the author, Vinay Gupta, is thinking along similar lines.

The time has come for this.

Thoughts on Limited Liability

One of the persistent threads running through environmentalism is the notion of "Corporate Responsibility." I've been thinking through some of the issues involving how corporations are formed and how the nature of the corporation affects how the economy assesses and handles risk and I'd like to present an idea for comment and examination.

The seed of the idea is that the limited liability corporation is a government subsidy to risky investments and as such may be partly what drives the reckless attitude of corporations towards the environment. Read on for more details.

So, please follow my chain of thought and see where it leads:

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