Incorporation

Mark Kleiman has a good post up on a new book by Eric Lotke. The title is 2044 and is, it appears (I haven’t read it yet) inspired by George Orwell’s 1984. In the more recent book, the story is not of the overwhelming power of government, but rather of the government/corporation complex.

This concern of the growing power and influence of corporate culture is a concern of mine too. It seems to me that we are making a serious error in our treatment of the institution of incorporation. It is looked upon as some sort of natural state, in which the power and influence that can be held by an incorporated entity is theirs by right. However, that is not the case. Incorporation is a status created by governments. To treat it then as a right results in an entity with all the potential for abuse that government may have, but with none of the checks and balances that may obtain with a government.

I also include here a comment I left attached to that post.

Part of the problem here is the seemingly universal tendency to treat incorporation as some sort of natural state of doing business, rather than an institution created by government. Incorporation is a government created institution in which some of the risk of running your business is shared by the community at large. It is an extremely valuable service provided by the government, it is not some natural state of affairs, that is yours by right. Given that it is valuable, it is only right and proper, and is in no way and infringement upon the freedom of the incorporated entity, that the value be traded for something of equal value. The most straightforward way to curb the abuse of incorporation is to require something of comparable value in return, rather than giving it away, with no obligation on the part of the recipient. The libertarian (at least the simplistic ones as identified by Brian) erroneously believe that limiting the use of this property or requiring payment is an infringement upon the liberties of the recipient. Nothing could be further from the truth. Such restrictions are no more than the restrictions that are an normal part of any ordinary trade. One can take the benefit, and pay the price, or pass up on the benefit and save the price. Having the government create this enormously valuable property, on the other hand, and then giving it away with no obligation of the part of the recipient is the infringement upon the liberty of all those not so richly favored.