[copaceticmind]

I understand the sentiment that corporations are state sanctioned organizations, but I feel it important that you understand the role of corporations without the state.

Corporations are granted a charter from the government, but without this they would still exist, if not in name then definitely in concept. Do away with the legal mumbo jumbo, and you're left with a business owned by one or more people. "Corporations" will not exist without the state, but you will not do away with people's ability to associate this way.

In fact, your idea of a business in which all employees are equal shareholders is a corporation where all employees, and no one else, own one share. It is because of this that I disagree with Joben's statement that these sorts of corporations are inefficient. This may be true in practice, but certainly not in principle. If it can work for hundreds of people not associated with the company in any other way than owning stock then it can certainly work for those with the direct relationship of employment. I even knew of a company not far from where I live in the US that was just like this, owned by all employees (though I'm not sure if it was equal ownership). To the best of my knowledge the business was very successful until an unfortunate fire burned the whole thing to ground. I don't think they ever recovered, but surely this isn't because of who owned it.

[SecretSquirrel]

A gigantic part of incorporation is the granting by the state to corporate officers protection from prosecution for malfeasance and wrongful acts by the corporation.

This cannot happen in a free market

[copaceticmind]

A gigantic part of incorporation is the granting by the state to corporate officers protection from prosecution for malfeasance and wrongful acts by the corporation.

This is very true, but only to a certain extent. If I were to be sole stock owner and CEO of my own corporation it would be very difficult to wriggle my way out of legal responsibility for something "my corporation" (in reality, me) might have done wrong. Even in the case of the debt accrued by a corporation (something any and all owners are completely absolved of), it would be very difficult to get a bank to lend to a corporation with little to no credit without a clause assigning responsibility to some individual in case of default.

This cannot happen in a free market

I agree with this to the fullest extent. No matter the good intention of protections provided for those willing to take risks (and its sole purpose is to mitigate risk) it is wrong to say that responsibility stops at a fictional "curtain" placed between the bunch of papers in a filing cabinet that makes a corporation and the individuals turning the knobs behind it.

[JohnRawls]

Libertarians think that all compensation can be reached through courts. Well news flash - Nope , the size of compensation is impossibly hard to measure usually because not all compensation are centered around monetary damage. Moral damages , environmental damages are one of the 'retardedly hard to measure types of damages' so go figure.

Basically i would like to say that it is usually better to prevent damages from hapening at all instead of court procedures.... But libertarians will disagree.

[lubbockjoe]

Corporate Personhood
... when papers called articles of incorporation are submitted to governments in America (and most other nations of the world) ... [a] type of new "person" is brought forth into the nation (and most countries of the world). Just like a human, that new person gets a government-assigned number. (In the United States, instead of a Social Security number, it's called a Federal Employer Identification Number, or EIN.)
Under our current agreements, the new corporate person is instantly endowed with many of the rights and protections of personhood. It's neither male nor female, doesn't breathe or eat, can't be enslaved, can't give birth, can live forever, doesn't fear prison, and can't be executed if found guilty of misdoings. It can cut off parts of itself and turn them into new "persons," can change its identity in a day, and can have simultaneous residence in many different nations. It is not a human but a creation of humans. Nonetheless, the new corporation gets many of the constitutional protections America's Founders gave humans in the Bill of Rights to protect them against governments or other potential oppressors.

[copaceticmind]

Basically i would like to say that it is usually better to prevent damages from hapening at all instead of court procedures

Prevention is always the most efficient way to handle anything that could come up unexpectedly - accidents, fires, catastrophes, sickness, etc. This is the reason insurance exists - to prevent the sudden financial responsibility of such an event. Insurance is also much cheaper if the policy holder does more to prevent the thing being insured against.

If those calling the shots were completely responsible for their actions they would do more to prevent any damages that might result from those actions. Allowing the full effect of consequences on those responsible is the best way to promote positive behavior and discourage negative behavior. I believe this is what anarchy is all about.

[Melodramatic]

Fuck yeah, I own this thread bitches



I agree with you copaceticmind, on all points in this thread.

If it can work for hundreds of people not associated with the company in any other way than owning stock then it can certainly work for those with the direct relationship of employment.

Indeed it can. An involved management (or one chosen by an involved crowd) can only do good for efficiency, not to mention reducing the gap between working well and make it look like you are working well for your boss...

I even knew of a company not far from where I live in the US that was just like this, owned by all employees (though I'm not sure if it was equal ownership). To the best of my knowledge the business was very successfu

Government usually find ways to discourage these, the primary one being preventing them form rising at all by preserving the gaps between the workers and the capitalists, using monopolies (I can link to some great explanations of these if you wish).

until an unfortunate fire burned the whole thing to ground. I don't think they ever recovered, but surely this isn't because of who owned it.

Am I paranoid enough to suggest that being more than a coincidence?

[copaceticmind]

Government usually find ways to discourage these, the primary one being preventing them form rising at all by preserving the gaps between the workers and the capitalists...

I do believe the government encourages the existence of workers, but I tend to believe that this is an unfortunate and unintended side-effect of public education. The richer kids get to go to private schools that know how to give a true financial education. This is why the rich tend to be children of the rich, but this isn't necessarily true. Anyone with enough motivation to do so can gain the same education.

There's also the unfortunate actions of the US Federal Reserve which intentionally manipulates the money market to ensure wage rates are stable. Any signs of "wage inflation" (which is really just workers getting paid more money) the Fed steps in to "correct to problem."

... using monopolies (I can link to some great explanations of these if you wish).

I initially disagree for reasons I'll get into later, so yes, I would love some explanations of how this works.

Am I paranoid enough to suggest that being more than a coincidence?

Certainly not. For one thing the business was well established and had been running for a very long time. For another they had a huge store of flammable substances. And I doubt anyone would be so disdainful because of the owners also being employees.

[Melodramatic]

I would love some explanations of how this works

The state uses four major monopolies to hurt the workers, and enforce exploitation, according to the writings of Benjamin Tucker. These are the land monopoly, patents, tariffs and most importantly the money monopoly. To the first I have already given explanations, the second and third are clearly unwanted so I will not explain them here but the fourth is well worth mentioning.

The idea is that by controlling the banks the government artificially maintains a high interest rate. in the industrial world, this essentially preserves the inequalities of the past. Without government intervention, interest rates in the banks would steadily fall to a zero because the bank owners invest very little labor in order to give loans. so by the normal functions of supply and demand (given the essentially limitless supply) the market price will fall to the real price (the amount of revenue needed to make the job of banking worthwhile) which is effectively zero.

You might ask what does this have to do with wage labor... well the answer is simple, I'll start with an the example that Kman brought to explain why wage labor will exist, in another thread. I will make a chewing gum making machine, and offer people to work for me for a steady wage. They will get a larger wage than they would making the gum without the machine and I would get the full product which is even higher, both parties are happy. but with free banking the worker would not just settle for a higher wage, he would be able to demand the full product himself. how?

Look at it this way, the machine itself is nothing more than a loan. I loans the worker the machine for a cut of his labor. But given the existence of a zero interest loan my offer will become null. Why should he use my machine for an infinite interest when he can take zero interest loan and buy one for himself today?

Certainly not. For one thing the business was well established and had been running for a very long time. For another they had a huge store of flammable substances.

of course I was just kidding...

And I doubt anyone would be so disdainful because of the owners also being employees.

You'd be surprised. when a democracy is built are the neighbor oligarchies not worried?

[copaceticmind]

Being one who studies economics (just as a hobby), I have to inform you there is only one possible way that the common interest rate on money loans will be zero - force. In fact, in medieval times the Catholic Church made it illegal to charge interest on loans, and today, it is illegal in certain cultures (Muslim, I think).

First, the idea that they would be reduced to zero is based on the cost-of-production theory of value which anyone with a foundational knowledge of basic economics should be able to tell you is absolutely asinine. The cost of production affects the price that producers are willing to charge, but has absolutely no bearing on how much consumers are willing to pay for that good. Prices are set based on supply AND demand. Only the idiotic, ignorant, or those who think they're intelligent enough to come up with some fancy formulas to create exceptions to (or refute altogether) basic laws of economics, will disagree with this. (If you would like to debate this further, I'll be more than happy to discuss it in another thread.)

The value of loaned money comes in the form of time. The reason people are willing to pay $100 just to borrow $1000 for the next year is because they would rather have $1000 today rather than $1100 next year.

Second, even if the cost-of-production theory of value were completely valid, the cost-of-production of loaned money would never be zero. In fact, the costs would increase if interest rates were zero all across the board. As long as there are people lending money to others there will always be those who don't pay it back. Money lent which is not returned is an expense just like any other. If interest rates were zero there would be more people would get loans meaning more people would default, increasing the expense of unpaid loans. This would necessitate an increase of the interest rate in order to compensate for the extra expense.

You will find that in the market of money lending, interest rates reflect the amount of risk involved with lending the money. The less likely a person is to pay the loan back, the higher the interest rate. In your example, if it is unlikely the prospective chewing gum producer will pay back the loan required to get a chewing gum machine, then he will have a hard time getting the loan in the first place (especially if the lender isn't charging interest in order to mitigate the high risk of default). If he is unable to qualify for a loan then he will be unable to obtain any capital to start any business. He is then left with only his current capital and means of production to start a business. Those with none will have to resort to the only capital every man possesses - labor.

[Melodramatic]

The cost of production affects the price that producers are willing to charge, but has absolutely no bearing on how much consumers are willing to pay for that good.

If people are willing to pay for a good more than its production price than another seller can obviously offer it at a lower price and profit. this situation is called a demand higher than supply. But supply is not static, unless artificially preserved, and will increase to fit demand in a speed based on scarcity and other variables, causing the price, that will forever variate in a free market, to continuously deviate towered the equilibrium, the cost of production.

Not that complicated, If I understood it. Regarding the rest of your post I will have to disappoint. I feel that my economic understanding of banking, and specifically the effects of free banking, is sadly insufficient.If I understand more I will let you know.

[copaceticmind]

The equilibrium between the price producers are willing to sell at and the price consumers are willing to buy at IS NOT the cost of production. The cost of production is simply the lowest price at which any producers could provide a good without a loss. Sometimes, the equilibrium is lower than the cost of production. If this were to happen market-wide then the good would not be produced by anyone at all.

Perhaps an analogy is in order (I love analogies). Any business providing a good at the cost of production is the same as a person working at the cost of living. If you were only making enough money at your job to just get by with the basics in life, would this not be a good incentive to switch careers? Businesses, just like individuals, try to make as much money as they feel comfortable with. Any business owner stuck with making just enough to get by will switch to a different type of business.

[Melodramatic]

The equilibrium between the price producers are willing to sell at and the price consumers are willing to buy at IS NOT the cost of production.

No, but it deviates towards it. differences happen due to many reasons, but supply and demand are eternal.

The cost of production is simply the lowest price at which any producers could provide a good without a loss.

Indeed, and given the rules of supply and demand the market has no reason to stay above this price or below it for long. if it is above it than another supplier will always rise to offer the good in a lower price. supply always reaches demand, in a period depending on scarcity. if it below than suppliers will not benefit form the transactions and will lose interest in preforming it, this is most likely the result of a predicted demand lower than the real demand in a free market.

If you were only making enough money at your job to just get by with the basics in life, would this not be a good incentive to switch careers?

All careers are subject to this law. You will receive the value of your labor in all of them. You do have an interest to work where the demand is higher than the supply, but if it was that easy to do than the benefit of such would be very small as you will be not the only one to do so and the price will quickly deviate back towards the cost of production. The only real way to "profit" in the capitalist sense is to innovate, giving yourself a, perhaps short-lived, edge on the competition.


(of course you can always exploit other workers or use monopoly, but that's already moving into a statist market).

Any business owner stuck with making just enough to get by will switch to a different type of business.

where he will make just as much.

[copaceticmind]

I spent some time reconciling the differences in our perspectives and pondering how I can get some points across.

Yes, in the long run profits do trend downward in markets where perfect competition exists.

No, this does not mean that in an economy where every market is in perfect competition everyone makes the same amount of money. Do you agree with this statement?

[eugenekop]

I don't understand why so many libertarians think that corporations will disappear or even be different under a libertarian system. I am pretty sure they will most likely be the same. Of course it won't be the government that will register them, but those who start the corporations will draw contracts with the shareholders and employees just the way such contracts today are implicit under corporation laws.

[Melodramatic]

Yes, in the long run profits do trend downward in markets where perfect competition exists.

Not necessarily downwards, but towards the price of production. as said the market price can be below this amount.

No, this does not mean that in an economy where every market is in perfect competition everyone makes the same amount of money.

Of course, but large income gaps aren't supposed to exist in the long term as priced do deviate towards the price of production and the amount of labor a man can expand is not unlimited. In the long run the greatest variable effecting a price of an item is its cost of production and the greatest variable of a mans wealth is his labor. the labor theory of value never claimed prices to be fixed, but to deviate towards the cost of production rather than things such as utility. Utility is just a cause for demand, still making the creation of more useful items a goal for producers but not what detriments their price of the long term.

The labor theory of value is often misunderstood. it simply doesn't treat supply as a fixed variable. It does imply that workers will not accept wage labor for long, as it tends to shift the money towards managing positions who invest much less labor. Rather than fighting over wages eternally to a point in which they make more than their managers, something inconceivable in the corporate economy, I find it more rational that they would make their own companies which they will rule democratically.