I remember my college days in the early 1970s at a liberal California university when computers were continually portrayed as soulless monsters having no redeeming value. That was before the personal computer. Same functionality - same destructive potential as before, but now seen as friendly toward human advancement. It is all a matter of perspective - computers themselves are a tool, one that can be used for good or bad.
The corporation is impersonal by design. It is a structure designed to facilitate enterprise.
It does so: 1) by giving an enterprise perpetual existence;
2) by allowing investors to put up risk capital without having to risk their personal assets in the venture; 3) by separating management from ownership such that the operations of an enterprise can be flexibly handled; 4) by creating discrete units of ownership that can be used to create special incentives for founders, investors, employees and others; 5) by creating a vehicle for widespread public ownership of the enterprise.
Is this good or bad? It is all a matter of perspective.
Consider that, without the corporation, we could not have the modern startup. Try to gather a serious team together without being able to promise them limited liability should the venture fail. Try to raise funds for your sole proprietorship from strangers. Try to offer equity incentives to employees when all you have to work with is a family business or a partnering-type vehicle. You will not get far.
Robotic or not, a corporation is a legal tool that serves an important purpose. Yes, it can be used for good or for bad. Just as with the computer, it all depends on the people behind it.
a corporation is so much more than a legal tool because of the effects that emerge from it. a simple example is your number 3 - a description of the conflict of interest inherent in corporate structure (and the source of much controversy lately).
while a corporation is a collection of people if it is successful it buries every one of them, until the end of time. the behavior that emerges from the simple act of self-preservation over time is complex and very different from entity to entity (see evolution).
more personal, accountable structures do not require feudalism or regress. what they require is communications technology like that we are utilizing right now (and real names help).
Fascinating idea of having more personal, accountable structures - is there a write-up somewhere of what legal form these might take? Or are you talking about LLCs and the like? I have been doing startups for a long time now and cannot imagine them (nor most other forms of enterprise) without some form of limited liability vehicle.
Or is it the idea that communications technology will somehow transcend the form of the structure and lead to better results simply because people relate to one another differently?
I am asking this sincerely. I guess my imagination does not easily comprehend the potential alternatives. If you can give me some pointers to discussions on this, I would appreciate it.
I have often seen corporations criticized but have never heard of any formal structure along the lines you describe (again, unless you mean LLCs or the like).
fair enough q but the legal structure of organizing people is a reactionary force and well behind the changes taking place in society (for instance web businesses with distributed operations still need a shopkeepers style business permit in some jurisdictions - "the business has to be somewhere where do they get their mail?").
in the case of corporations and their modern alternatives tax-engineering is the driver more than the things we are talking about.
w/r/t liability the corporation is an extremely inefficient mechanism for the elimination (or lately society's assumption) of the liability. the underlying risk of the entity has no bearing on the price of this risk (a break even bomb factory pays less than a profitable pillow store). the increasing importance of director's insurance shows the market has a way of addressing this and may provide the harbinger (if not the "write-up") you seek.
I am referring to the risk that investors face of losing all their assets (beyond what they invested in a company) in case the company fails. I don't understand why people would put up money for investments in such cases. Are you saying that insurance would cover them?
Not to belabor this but the idea of investors being shielded from losses beyond their risk capital was what gave the corporation its huge expansion over the years. That is how public companies came to be formed, for example.
Still not understanding how investors would be motivated to invest in most companies without such protection.
its pretty simple, corporate ownership/government fiat isn't the only way to protect investors that aren't willing to assume risk. you've done a good job of deconstructing most of this now just look at the pieces and see they are separate.
The corporation is impersonal by design. It is a structure designed to facilitate enterprise.
It does so: 1) by giving an enterprise perpetual existence; 2) by allowing investors to put up risk capital without having to risk their personal assets in the venture; 3) by separating management from ownership such that the operations of an enterprise can be flexibly handled; 4) by creating discrete units of ownership that can be used to create special incentives for founders, investors, employees and others; 5) by creating a vehicle for widespread public ownership of the enterprise.
Is this good or bad? It is all a matter of perspective.
Consider that, without the corporation, we could not have the modern startup. Try to gather a serious team together without being able to promise them limited liability should the venture fail. Try to raise funds for your sole proprietorship from strangers. Try to offer equity incentives to employees when all you have to work with is a family business or a partnering-type vehicle. You will not get far.
Robotic or not, a corporation is a legal tool that serves an important purpose. Yes, it can be used for good or for bad. Just as with the computer, it all depends on the people behind it.