The politics of the left-oriented Occupy Wall Street (OWS) movement, like that of the right-oriented modern Tea Party movement, is not very well defined. But one of the things some of the OWS participants are calling for in their list of “demands” is an end to “corporate personhood.” In this they echo the views of left-libertarians who contend that state-chartered “corporations” are the source of grave social ills.1
Some of these issues were recently debated on the pages of Roderick Long’s blog, in the comments to his post “Double Standard.” Left-libertarians who oppose incorporation, and usually also “capitalism,” argue that firms derive some great benefit from the state by the privilege of incorporation. The standard leftist critique of the corporation is the “concession” theory outlined by Robert Hessen in his seminal study In Defense of the Corporation (see a key excerpt from pp. 18-21). They argue that the state grants to corporations three features: entity status, perpetual duration, and limited liability to shareholders, all of which are artificial and would not exist absent state intervention. Left-libertarians maintain that these privileges grant corporations more power than they otherwise would have, which distorts the market, nay, society in general. This gives rise to more “hierarchy” and “authoritarianism” than would prevail in what Hans-Hermann Hoppe calls a private law society, and indeed, to “exploitation” of the workers by the bourgeoisie.
The Alleged “Privileges” of Incorporation
Labor Theory of Value
There are several problems with the left-libertarian and leftist critiques of corporations. One is the acceptance of a Marxian-type labor theory of value—the idea that employers per se “steal” or exploit from workers the “social surplus product”—a discredited, hoary, unscientific view based on deeply flawed economics.
And as Hessen has pointed out, each of the three corporate features pointed to as a state-granted privilege—entity status, perpetual duration, and limited liability for shareholders—can be created purely by private contract. As for entity status (being able to represent the firm in lawsuits or for property ownership purposes, in the firm’s name) this is just a convenient legal fiction that could be created by means of trustees, or other contractual techniques (including agreements with private defense agencies, insurance companies, arbitral agencies, and the like). In any case, even stripped of this procedural convenience, firms could still organize themselves as joint stock companies or “corporations”.
Hessen also easily disposes of the myth that perpetual duration is a privilege granted by the state; this can be achieved easily by means of continuity agreements and the like.
The big objection to corporations is usually limited liability for shareholders. [Keep reading…]