Wednesday, July 8, 2009

Corporation as individual

One of the odder corners of legal philosophy and business is the invention and treatment of the limited liability corporation. The idea is that rather than an individual acting directly, they can bundle their money together with other investors while at the same time limiting their responsibility to a simple dollar sign.

A corporation can't be liable for more than what it actually holds on hand, and nobody in particular is responsible for it - not the executive officer, not the board, it's something of a blank empty void that can't be put in jail and whose maximum financial penalties are sharply limited.

It's either very good or profoundly problematic. Good, in that it allows small investors to take a share in large ventures without being worried about negligence on the part of those with more share over running said ventures; problematic, in that action that would lead to severe penalties for an individual can go unpunished or underpunished with nobody in particular clearly responsible.

The most bizarre turn is that under law, corporations are treated in many cases like individuals. While I can be convinced that the benefits to the efficient allocation of capital are great enough to warrant the construction of such an entity, it remains very difficult for me to buy that this non-jailable entity, so difficult to hold accountable, deserves the same legal protections and fundamental rights as a human being.

Moreover, the sheer scale of a corporation and its anonymity makes it highly difficult to keep damage in perspective. If I were to shout "Fire!" in a crowded theater and caused a dozen people to be trampled to death and others injured, I could be put away for the rest of my natural life on multiple counts of manslaughter; for a large corporation, a dozen incidental deaths resulting from poorly-considered actions (such as failing to place a warning label "DO NOT MIX WITH ALCOHOL," or knowingly selling batteries with a tendency to burst into flame) barely even qualifies as a speed bump.

We're already not equal. I am far more accountable than the corporation is; I can incur penalties and responsibilities well beyond the current value of my bank account, I can be imprisoned... and the corporation simply exists to help people turn a buck. If it has a "motive" for exercising political influence, it is for the crass motive of its own bottom line; a corporation, not being an actual person, has no morality, no soul, no religious or political dispositions, no reason for any personal "rights" at all beyond that of being created and dissolved in a manner according to its legal liabilities and its charter - in that order.

A right to privacy? Kid me not. A strong motive to keep trade secrets, yes; a reason for wanting to obstruct investigation, sometimes; but a corporation has no personal affairs, not being a person. It cannot have a sex life or write poetry about how depressing its life is; it is simply a framework for handling responsibility for financial adventures that no single investor wishes to hold personally.

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