I already specified the majority of the “other business arrangements”, namely sole proprietorships and partnerships. The government-created differences between corporate and non-corporate businesses are primarily that (1) non-corporate businesses are subject to less intrusive government oversight, and (2) corporations receive enhanced protections from lawsuits, compared to individuals and unincorporated businesses.

And since when is arbitration or enforcement of contracts a “privilege”? According to Ayn Rand, it is a core function of limited government. I agree that individuals and businesses should pay for the cost of such arbitration, when necessary, but such payments should be based on objective criteria regarding the nature of the contract and the cost to the government, not on whether one or more of the contesting parties is “incorporated” or not.

Am I aware that the primary reason people incorporate their business ventures is to protect their personal assets from lawsuits against the company? Yes I am. This is one of the main features of the pervasive double standard that exists between government’s treatment of corporations and its treatment of non-corporate entities. It’s one of the main reasons why bad actors are able to thrive within a corporate setting – they run less risk of being held personally accountable for their misdeeds. I’m not saying that this type of asset protection is necessarily a bad thing. All I am saying is that, to the extent that owners of corporations are legally protected from personal liability, the exact same legal protection should also apply to owners of unincorporated firms. And the owners of unincorporated firms should pay exactly the same amount for government arbitration, should the need arise.

I used the term “modern” corporation to differentiate it from the original historical definition that you presented in an earlier post: “In the beginning, corporations were solely government instruments by which political appointees were granted special dispensations to pursue a quasi-governmental policy.”

Corporations are not necessarily “slaves” to the government by definition, but they aren’t far removed from that predicament since government creates them and defines their attributes.

My central argument, that unincorporated business entities deserve to have the same protection as incorporated ones, is simply another way of saying that governments should not discriminate among the different types of business entities – or any other voluntary groups – in matters pertaining to protection of individual rights. As the article I referenced states:

“Any activities that are legally and morally legitimate for corporations should be equally legitimate for all other private, voluntary groups of people. Conversely, activities that violate the rights of others should be prohibited to all such groups. When it comes to legal rights and responsibilities, a free society should not treat corporations any differently from the way it treats any other privately organized groups, such as labor unions, religious and charitable organizations, foundations, and political parties.

“This leads to a further conclusion that some will consider radical: There is no need or justification for ‘corporation’ as a legal concept at all. An unincorporated business should have exactly the same standing under the law as an incorporated business in matters such as taxation, liability, reporting requirements, and recognition of contracts. Aside from protecting the rights of third parties, governments should have no say regarding any firm’s form of organization, purpose, or method of operation. Legal protections extended to corporations should be equally available to all other groups.

“Such a set of reforms, if applied consistently, would have far-reaching effects. It would do away with any reason to treat corporations as privileged legal entities. It would remove the need for a body of corporate law, separate from individual and contract law. It would render irrelevant the legal fiction of corporate personhood, along with the torturous logic needed to justify such a concept. It would create a more level playing field between people and corporations. It would bring more consistency and fairness to government policies regarding liability and secrecy. It would ensure that any legal protections given to corporate owners and agents would also extend to unincorporated individuals and groups. Taken together, these reforms would constitute a major step toward a freer economy.”

"The system itself is corrupt and morally offensive, in that it consists of a legally enforced double standard for corporations as opposed to other types of business arrangements."

First, is that the result of the existence of corporations or the perversions of government tyranny? You conflate them to be one and the same even though you admit to the notion of "other business arrangements." Specify what these "other business arrangements" represent so we can both make sure we're talking about the same thing in reality. In particular, please explain how they are different than corporations, because there are a wide range of corporate structures.

Second, the phrase "legally-enforced" by its very nature implies government involvement. To assert that there is some kind of one-sided arrangement which allows some (unincorporated businesses) to receive a privilege they don't pay for (arbitration on the same level as an incorporated business) is quite absurd.

"And contrary to your assertion, non-incorporated business entities, such as partnerships and sole proprietorships, certainly do have “sanctioned/legal avenues through which to pursue litigation.”

Are you aware that the primary reason people incorporate their business ventures is to protect their personal assets from lawsuits against the company? That separation is quite important. An unincorporated partnership or sole proprietorship has no such protection and lawsuits may be pursued against the individual's personal assets.

Additionally, if you are unincorporated and you want to take another individual or company to court, you also would have to file suit as an individual - not as a business entity. Any counter-suits would then be applied against your individual assets rather than any "corporate" assets. So in reality, an unincorporated "company" has no legal basis to sue except as an individual. It's a technicality, I agree, but in legal parlance a fairly significant one.

"The only difference across jurisdictions is the degree of that interference."

Jurisdiction is precisely the difference, yes. If you don't want the government to act as arbiter, you do have the choice to specify an alternative. I'm not trying to downplay the severity of government overreach, only to point out that the real problem is government overreach - not the process of incorporation. The fact that the government "overreaches" by its nature predefines a "proper" reach and involvement.

"The act of incorporating a business automatically gives government a “foot in the door” that allows increased oversight and regulation at the government’s whim."

While you take the argument to the extreme, there is a price attached to having the government participate as the arbiter. (It also facilitates the collection of taxes but that's another matter.) You are, of course, welcome to specify an alternative arbiter if you don't like the terms government provides. I am certainly open to a discussion on what represents "proper" government involvement in such terms.

Why qualify your argument to be "modern" corporations - as if there is some distinction between one corporation and another based on time (red herring)? That in and of itself is a definitional problem that I would like to hear some support for. The actual arguments you cite are that government has changed and become more intrusive in its restrictions and administrative burden (by some measures in size about $3 TRILLION per year) and I will readily agree. That is very different, however, than supporting the theory that corporations are necessarily slaves to the government by definition. You argued that unincorporated corporations deserved to have the same protection as incorporated ones so clearly you recognize that a corporation does not have to rely on a government to exist.

Further, I note that your arguments focus on government restrictions being applied to corporations. The error in logic is the fallacy of post hoc ergo propter hoc. I agree that government has overstepped its bounds in many ways - including the ones you list, but that doesn't invalidate the notion of a corporation per se. That's like saying that because some criminals use guns that guns are inherently evil. A corporation is a tool. Tools don't have morality in and of themselves. That comes from the people who utilize/misuse them.

Again, the only reason the corporation involves the government is as an arbiter in the case of disputes. By signing the contract, both parties agree to the jurisdiction of the arbitrator in resolving the dispute. Why? Because no contract is worth any more than the paper it is printed on without an enforcement mechanism which binds both parties to the arbitrative decisions of the third. But it should be noted, however, that the contract isn't between the government and either party, but between two parties with the government as a disinterested third party. Have actors in the government abrogated and suborned the proper role of the government regarding corporations? Certainly. That doesn't mean, however, that that proper role does not exist.

The system itself is corrupt and morally offensive, in that it consists of a legally enforced double standard for corporations as opposed to other types of business arrangements. Nothing in free-market theory, Objectivist or otherwise, requires the existence of such a double standard, or of an artificial "person" such as a corporation to facilitate this double standard.

And contrary to your assertion, non-incorporated business entities, such as partnerships and sole proprietorships, certainly do have “sanctioned/legal avenues through which to pursue litigation.”

There is no “conflation” here. As I said in response to another of your posts, government interference may certainly exist without corporations, but a corporation cannot exist without government interference. Corporations owe their very existence to government laws and regulations, and this fact makes it impossible for them to escape government interference. The only difference across jurisdictions is the degree of that interference. The act of incorporating a business automatically gives government a “foot in the door” that allows increased oversight and regulation at the government’s whim.

RE: “You start out by asserting that a corporation is more than a way to run a company but immediately switch to government interference. This is conflation. The one may exist without the other.”

This is not conflation. Government interference may certainly exist without an accompanying set of corporate entities, but the modern corporation cannot exist without government interference. Such interference is built into its DNA.

Consider: In order to incorporate, one must set up the corporation in a form and manner specified by a government agency that oversees such business arrangements. It typically must have a slate of officers and directors prescribed by the government, must hold meetings at specified intervals, must pay an annual fee to the government for the “privilege” of incorporation, and must adhere to government rules regarding permitted and prohibited activities. Any deviations from the government playbook may be met with fines or other penalties.

Corporations owe their very existence to government laws and regulations, and this fact makes it impossible for them to escape government interference. The only difference across jurisdictions is the degree of that interference. The act of incorporating a business automatically gives government a “foot in the door” that allows increased oversight and regulation at the government’s whim. Or as you put it, “the tyranny of government overreach”.

You start out by asserting that a corporation is more than a way to run a company but immediately switch to government interference. This is conflation. The one may exist without the other. I wholly agree that government in general has significantly overstepped its proper bounds in attempting to regulate to death industry and private enterprise. That does not mean, however, that the mere fact that a business owner has incorporated makes them either a party to such or an automatic victim. Again, blame must be assigned where it is due: the tyranny of government overreach.

“The competitive advantages conferred by government permit corporations to grow larger than they would in a free market, ‘crowding out’ other types of business organizations in the process."

An examination of the history of corporations in the United States - where the modern "corporate" model began - is instructive. For a detailed explanation, consult the Oxford History of the United States, volumes 3-4.

In the beginning, corporations were solely government instruments by which political appointees were granted special dispensations to pursue a quasi-governmental policy. The infamous East India Trading Company was one such charter. All of the original colonies in the United States were founded by royal charters granted to colonizers. Later on, the fledgling States chartered such organizations as a National Bank and several corporations (with distinct monopoly powers) to oversee canal and transportation construction projects. Many of these accomplished laudable ends despite being riddled with corruption, such as the railroad industry. Following the US Civil War, corporations began to take on a new flavor in that the States granting incorporation were doing so to draw businesses to those States and the businesses themselves had little or nothing to do with public works projects. Many businesses were trying to seek redress or otherwise protect themselves from government interference in the transferrance of ownership. (Yes, even back then government overreach was pervasive.) The 1880's in particular saw a huge boom in the number of incorporated businesses which largely accompanied the growing size of companies which was made possible by the automation of machines and steam-driven equipment.

For much of this time, incorporation was as it might be argued to be ideal: the fees for such were small and such provided some legal protections in the event of bankruptcy - which was rampant.

Then came the critical time of the Robber Barons and Railroad Tycoons. The Railroad Tycoons in particular thrived due to unwholesome agreements with the Federal Government which allowed them to effectively steal 1/2 of all land in the West and sell it to prospects at a markup which they kept. All in exchange for pushing the railroads west into undeveloped lands. When much of those lands remained undeveloped and the traffic to and from such was hardly enough to operate the railroads, the railroads shifted the cost burdens to the more populated sections of the country, raising prices on everyone despite the fact that their subsidies were more than capable of keeping them in business. Add to that corruption of the land surveyors and survey offices which were commonly run by railroad flunkies and there was no shortage of graft to go around. It even affected the Army where there were very lucrative posts being awarded to influencial generals in these areas.

The Robber Barons were part victims of their own success and those who took advantage of their corporate status to prey upon others. Rockefeller, Vanderbilt, and others were largely villified by actions taken by their successors who sought to entrench themselves by paying off Congressional overseers than continue to innovate. And when the truth of this graft came to light, those same congressmen tried to cover their own behinds by "cracking down" and passing the Sherman Antitrust Act which permitted them to break up those corporations - a law which is still very much in force and in use today.

Do I agree with you that the unholy alliance of business with government special interest is corruption? Absolutely. But the corporation is merely a tool - not the hand wielding it. Corporations are made up of people. And it is only people which make decisions. Just as it is illogical to blame the gun for violence done with it, it is misplaced to assign blame to the structure of a corporation rather than its managers.

There are two issues being conflated here. The first is the necessity of registering a corporation in order to apply for arbitrative protection via the government court system. Let us consider the following:

How does one enforce a contract? Both sides in a given contract stipulate and agree to an arbitration method and authorized arbiter which by default is the established governmental authorities. By default, then, you are including in that contract a third party - the government - which hasn't even been represented in the contractual negotiations and therefore may not even be aware that they have been conscripted into service. The registration of a corporation notifies the government 1) that the corporation exists, 2) the corporation intends to engage in activities in which future legal action may be arbitrated by the governmental court system, and 3) establishes necessary contact and other information to facilitate such arbitration. This is no different from a contract which relies upon "private" arbitration. Even if a non-governmentally-appointed arbiter is agreed upon in the contract, that arbiter must still agree to provide its services and will require a payment under its own terms for its services. In short, there's no way to shortcut the registration process - a corporation has no defense if wronged unless it may appeal to an arbiter which is willing to prosecute the case and seek remuneration. (Again, I cover this more extensively in a chapter in my book.)

Now does that amount to "non-existence" of a non-registered corporation. Yes and no. No in that that corporation can still conduct operations - all black markets operate on the extreme principle of non-government-sanctioned activity - but Yes in that neither the corporation nor its partners have sanctioned/legal avenues through which to pursue litigation.

The second issue being conflated is the potential for government abuse of the registration process in order to pervert free market enterprise - ostensibly in favor of government regulators. I wholly agree that government HAS unequivocably used its powers of regulation to infringe on what should be private contractual obligations and I oppose such actions, labelling them tyranny and corruption. But the misuse of a system does not mean that the system itself is corrupt or morally offensive.

A corporation is a lot more than “an organized way to run a company”. Government rules require corporations to submit to intrusive government oversight and regulation of their structure and permitted/prohibited activities. In exchange, government gives corporations a separate “personhood” and enhanced protection from financial risk relating to corporate negligence or misbehavior. This creates opportunities for less-than-honorable people to advance in the corporate hierarchy, by making it harder to hold them to account for their wrongful actions.

As the article I referenced ( https://libertyunbound.com/a-free-mar... ) points out, “The competitive advantages conferred by government permit corporations to grow larger than they would in a free market, ‘crowding out’ other types of business organizations in the process. Eventually we arrive at an economic landscape dominated by corporate executives and their regulators, at the expense of everyone else’s freedom.” We have arrived at that point now.

In a laissez-faire society, “aside from protecting the rights of third parties, governments should have no say regarding any firm’s form of organization, purpose, or method of operation.” A corporation should have the same rights and responsibilities as any other voluntarily organized group, no more and no less.

Blarman, I don’t know if you read the article I referenced ( https://libertyunbound.com/a-free-mar... ), but nowhere does the article state – nor do I believe – that “one should be able to take advantage of the protections of government without paying for that protection.”

The purpose of government is to protect individual rights. We are already paying for that protection, whether our business is incorporated or unincorporated. In a laissez-faire capitalist society, I believe Ayn Rand suggested that government could be partially funded through payment for government recognition – and if necessary, enforcement - of a valid contract. Such recognition would not require that one or more parties to that contract be a corporation.

The corporate registration process is far more than “an application for those very protections”. As the article I referenced points out, “Corporations are brought into existence by legislative permission. They can be snuffed out of existence just as easily through government revocation of their charters. This gives governments tremendous power to regulate corporations as they see fit, and encourages corporate decision makers to seek the ‘friendship’ of powerful government agencies and do their bidding. The result is a toxic blend of crony capitalism and a ‘mixed’ economy, within which the marketplace is anything but free.”

"All I am saying is that, to the extent that owners of corporations are legally protected from personal liability, the exact same legal protection should also apply to owners of a firm who have chosen, for whatever reason, not to incorporate."

While I understand the argument you are making, this becomes strictly a practical arrangement: the registration process is an application for those very protections! What you're arguing for is a lot like the problems with Obamacare - that people could choose not to have insurance until they suffer a severe hardship. Then when they experience that hardship they apply for - effectively - retroactive protection.

Now I'm not saying that I agree that the government should be picking winners and losers in the corporate space. I object to that 110%. But the basic premise of government is that those governed have to grant the governing body some amount of power - and resources - to maintain the peace. Otherwise everthing simply devolves into chaos and anarchy. I cover this in my book (if you're interested) when I explain the role of the arbiter. It is quite contradictory for an Objectivist to argue that one should be able to take advantage of the protections of government without paying for that protection.

Disagree. But that's because a corporation is nothing more than an organized way to run a company - nothing more. All the corporate documents do is set up the leadership structure for a company much like the Constitution sets up the structure of the Federal Government. It all comes down to the people who run said organization whether that be a corporation or a government. If you have honorable people in either, you will have an honorable entity and the inverse if not.

Trivia - did you know that originally in the United States, corporations were solely a creation of the government set up with government sanction to pursue large projects such as canal construction or railroads? They only became a popular tool of business in the late 1800's when you started getting companies which were too big for a single individual to run and then it became primarily a tool for orchestrating the transfer of power in these businesses. It has obviously evolved since then.

Agreed.

Let's leave it for now. Yes, the government should not even enter the field of business at all, let alone treating different businesses differently.

By the way, the 2008 financial crisis was caused by the Fed and other government agencies and Bill Clinton's policies, not by corporate executives.

Courts attribute personhood in a defined manner.

See: http://www.thesavvystreet.com/so-who-...

I’m an objectivist who is against the corporation as an entity. Get used to it.

I have based my opposition to the current corporate structure totally on Ayn Rand’s principles. My objections have nothing to do with any “libertarian misunderstanding”. I’m not opposed to “big business” or any size of business. I am opposed to government treating corporations differently from the way it treats any other business enterprise

The legal entity of a corporation IS a person in many respects. Dozens of U.S. Supreme Court decisions have said so. As I stated above, the law treats corporations in many contexts as if they were individual persons. Obviously (as you state) no court sends a corporation to jail. However, courts seldom send corrupt corporate executives to jail either, as evidenced by events following the 2008 financial crisis.

Rand wrote very explicitly in favor of big business at the time including correctly, and staunchly, defending Alcoa against the charge of "monopoly."
Even though, in her time, too, cronyism was alive and well.

The legal entity of a corporate is NOT a personhood. Obviously, no court sends a corporate to jail. When they do, they find the relevant executives responsible.

I have never encountered an objectivist who is against the corporation as an entity. It must be a libertarian misunderstanding.

Your argument applies to yourself also: “Rand was very smart. And bold. Had she held an opinion that you profess, she would have boldly declared it.” I do not find a single instance in which Ayn Rand wrote in favor of the idea that corporations should be legal “persons” or have many of such persons’ rights – or that governments should apply different standards to investors in corporations and investors in businesses that do not incorporate. As you say, “limited liability extends to all,” but the limits are very different for these two sets of investors. In a free and fair economy with a level playing field, they should be the same.

As a philosopher concerned with fundamental political and economic issues, Ayn Rand laid out the moral principles of a free economy, but did not go into exhaustive detail regarding how best to implement those principles. My contention is that the separate and unequal treatment of corporations (and other voluntary associations) under the law violates those principles in a fundamental way, and has contributed greatly to the widespread problems that plague our political and economic life today.

I am finding myself repeating the same things. Rand was very smart. And bold. Had she held an opinion that you profess, she would have boldly declared it.

The corporate veil is readily pierced by courts.

There is no faking. Limited liability extends to one and all, including individuals. Corporates have to say LLC or similar in other countries that announce their liability is limited.

If not for the limited liability corporation, the whole world would be far, far poorer.

You appear to be arguing from results, not principles. Plantations in the antebellum South were “big projects” that would not have been possible without slavery. This certainly doesn’t morally justify slavery. Likewise, the necessity of raising capital for “big projects” doesn’t justify special treatment of the voluntary financial contractual arrangements that are the basis of corporations. A contract is a contract, period.

Today, special rules exist for labor unions, religious and charitable organizations, foundations, and political parties, as well as corporations. In a free society, however, these special rules should not exist for these or any other private associations. According to the Objectivist ethics, people do not acquire new rights or responsibilities by forming or becoming members of voluntary groups. A corporation is a voluntary group.

I am not saying that investors should have unlimited liability for the actions of the firms they invest in. All I am saying is that, to the extent that owners of corporations are legally protected from personal liability, the exact same legal protection should also apply to owners of a firm who have chosen, for whatever reason, not to incorporate.

Corporations are 100% incompatible with Rand’s philosophy. Corporation law assigns different right and responsibilities to incorporated businesses vs. unincorporated businesses. As the article I referenced states: “An unincorporated business should have exactly the same standing under the law as an incorporated business in matters such as taxation, liability, reporting requirements, and recognition of contracts. Aside from protecting the rights of third parties, governments should have no say regarding any firm’s form of organization, purpose, or method of operation. Legal protections extended to corporations should be equally available to all other groups . . . any activities that are legally and morally legitimate for corporations should be equally legitimate for all other private, voluntary groups of people. Conversely, activities that violate the rights of others should be prohibited to all such groups. When it comes to legal rights and responsibilities, a free society should not treat corporations any differently from the way it treats any other privately organized groups, such as labor unions, religious and charitable organizations, foundations, and political parties.”

Furthermore, Rand has stated that “one must never attempt to fake reality in any manner.” Corporate “personhood” does exactly that, treating corporations in many contexts as if they were individual persons. But as the article points out, “A corporation, at its root, is simply a group of individuals who share an interlocking set of contractual relationships.” Nothing in free-market theory requires the existence of artificial legal constructs such as corporations.

Much of today’s corporate bad behavior has been facilitated by unscrupulous “business leaders” taking advantage of the legally-sanctioned “corporate veil” to provide cover for their misdeeds. We see the disastrous results all around us, in corporate-dominated industries such as banking, social media, mass media and health care. We cannot begin to achieve a free and fair marketplace unless we are willing to challenge the dominant role that corporations play in economic life today.

Great comment by Lucky: "Would you invest when creditors could take your other savings, your car, your house?"

"A managerial class not accountable to shareholders, the modern example here is virtue signalling- expensive and meaningless climate/carbon projects that managers would not do with their own money"

This, Lucky, is because capitalism is not allowed to work. The market for hostile takeovers should also be free. This is not a problem intrinsic to the nature of the corporation.

CBJ makes a good case but I go, on balance, to the benefits of having options like the corporate structure.

Maybe it is in Vinay's original article, but raising capital is a big problem without those corporate protections. In the past big projects could only be undertaken by the king, emperor, or the state in some form, or sometimes there was the alternative of dealing on trust and experience and with family only eg big Chinese conglomerates.

Then in England about the time of James I the corporation was invented, it enabled money to be raised for big projects such as trade and settlement in the new world. It became popular all over.

Consider your portfolio of stocks, you can lose all you have put in if the company goes bust. This is a risk you decide to take. Would you invest when creditors could take your other savings, your car, your house?
There are some very large projects with other structures such as joint-ventures, generally the participants are corporations but not always.

Investors, creditors and suppliers have options about where to invest or who to trade with.

As CBJ hints, there are legit problems with the way corp law has developed, a managerial class not accountable to shareholders, the modern example here is virtue signalling- expensive and meaningless climate/carbon projects that managers would not do with their own money; managers always get a cut even when owners and suppliers get nothing; obscure lines of ownership and control (like owners of vote machine companies). There should be ways to stop that sort of thing without losing the advantages of corporate structure.

I must add that "real" libertarians (Mises dot org) do not fall for the climate fraud.

It's a great thing that corporations are entities at law. There are no special privileges that flow from this. The problems of cronyism stem from the fact that fascism is introduced at the state level.

Limited liability is NOT a special privilege. It is in fact available to all individuals who declare themselves bankrupt to get free of lifelong debt.

This is because everyone's liability is limited to their assets.

The bundled assignability of corporations is a great invention, 100% compatible with Rand's philosophy. I have explained this all in the essay linked above.

In cases of corporate misconduct, courts do look at the individuals involved and hold them responsible.

Regulation is a different matter.
As "all" libertarians know? GG Online is for objectivism mainly. And several libertarian professors like Richard Ebeling recommend the greatness of Hessen's book on corporations.

Libertarianism is often brainless like that. Some, like Reason and Cato, are even anti-science and fall for the climate fraud, which conservatives and objectivists don't.

Hence I am not a libertarian.

See the whole explanation here as to why the corporation is a nexus of contracts and has nothing intrinsically wrong with it; governments make it so: https://www.thesavvystreet.com/is-the...

As "all" libertarians know? GG Online is for objectivism mainly. And several libertarian professors like Richard Ebeling recommend the greatness of Hessen's book on corporations.

Libertarianism is often brainless like that. Some, like Reason and Cato, are even anti-science and fall for the climate fraud, which conservatives and objectivists don't.

Hence I am not a libertarian.