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Reality check...

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  • Reality check...

    I found this worth reading. Any thoughts ?





    Companies want rights without responsibility
    By Dan Plesch
    Published: August 23 2004 21:14 | Last updated: August 23 2004 21:14


    Companies seem invincible these days and they are trying to obtain even greater power. US companies have gradually come to be treated as legal individuals entitled to more and more of the rights of a person. They now even argue that the right of free speech entitles them to say what they like about their products, a point put to the US Supreme Court last year.



    But the corporate person is a one-dimensional being that has the rights of a person but none of the responsibilities. Under limited liability company law, the owners - shareholders - cannot be made legally accountable, however outrageous the actions of the company they own.

    This absurd state of affairs has crept up on us, as if an over-indulged child has taken more and more liberties until it is entirely out of control. Everyone wants the child to do well, no boundaries are set, and before you know it the family is at its beck and call. Usually, a few home truths, some clear rules laid down and a few tantrums are enough to restore some balance. The same approach should be used with companies.

    The home truths that the owners and directors of companies have forgotten are that power must come with responsibility and that, in a free society, all are equal before the law. Present company law violates both these principles. Limited liability means that the power of a company's owners is not matched by any responsibility because the law puts them beyond the reach of their fellow citizens. This immunity provides shareholders with the greatest regulatory protection granted to one section of society by the state. The owners of companies used to be content to enjoy their privilege in a society where others had the right to publicly-owned industries and services, strong trade unions and government regulation to protect consumers, the environment and the public health from business. Nowadays, companies are bent on removing the regulated protections of all sections of society except their own.

    In the US, pressure groups for the corporate interest such as the Federalist Society argue that government regulations and agencies are against the fundamentals of the US constitution. In the name of the free market, they are stripping away all forms of public protection such as environmental regulations and independent scientific advice. They also argue that the wealthy owe nothing to the rest of society and that the poor should not be encouraged to remain in poverty by being given handouts. This “gimme! gimme!� approach assumes a natural right to unrestricted acquisition for shareholders and the denial of such rights to everyone else.

    It is time to end the delusion that limited liability is a natural good. Allowing shareholders to be immune from the law violates everyone else's human right to be treated equally before the law. Enshrined in the American Declaration of Independence and in human rights declarations and laws ever since, equality before the law is a fundamental tenet of a free society. The way to make companies and their owners behave is to reform or abolish limited liability. Free-market advocates confronted with the flaws in their arguments usually show disbelief and reply: “You just don't understand, stupid - without limited liability people won't invest and the whole economy will collapse.� Yet limited liability was only widely adopted in the industrialised world around 1900 and in California only in the 1930s, not at the beginning of the industrial revolution. Mixed and protected economies, from Germany to South Korea, have developed successfully without shareholder domination. The US and the international economies will get along nicely without it.

    A common-sense approach would be to replace limited liability with proportional liability supported by liability insurance. Under proportional liability, as used in early 20th-century California, major investors would carry a substantial risk while mutual fundholders and the like would have infinitesimal liability. For all shareholders, an insurance market would be developed. It is strange that while insurance is compulsory when we take a car on the road, we do not need it when we send a company out into the market.

    The discussion on limited liability is just beginning. It may seem strange to us to regard limited liability as a state-regulated special interest protection and a human rights violation. But it is the truth. And it is the truth that will empower the next phase of the movement for corporate responsibility.

    The writer is the author of �The Beauty Queen's Guide to World Peace: Money, Power and Mayhem in the Twenty-First Century’ (Politico's) www.danplesch.net

    Yours,

    Dan Plesch
    http://www.danplesch.net/

    Pre-order or Buy my latest titles in Europe:
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  • #2
    I have long suspected that limited liability was exactly what it is described as here: nothing more than a huge incentive/method for companies to continue growing their corruption.

    Unfortunately, I'm not an economist, so I was always beaten down by the "without limited liability people won't invest and the whole economy will collapse" argument. Thanks for giving me some ammo, Mike! :)
    "Wounds are all I'm made of. Did I hear you say that this is victory?"
    --Michael Moorcock, Veteran of the Psychic Wars

    Comment


    • #3
      For another view of the matter read The White Monkey by John Galsworthy, the first book in the second trilogy of the saga, whre Soames Forsyth, realising the company he's on the board of doesn't have limited liability, and faces ruin, because he's the only board member with any money. I find that particular book pretty interesting for the light it casts on business in the early 20s and now. At once not very different and
      very different....

      Pre-order or Buy my latest titles in Europe:
      The Whispering Swarm: Book One of the Sanctuary of the White Friars - The Laughter of Carthage - Byzantium Endures - London Peculiar and Other Nonfiction
      Doctor Who: The Coming of the Terraphiles - Kizuna: Fiction for Japan - Modem Times 2.0 - The Sunday Books - The Sundered Worlds


      Pre-order or Buy my latest titles in the USA:
      The Laughter of Carthage - Byzantium Endures - London Peculiar and Other Nonfiction - The Sunday Books - Doctor Who: The Coming of the Terraphiles
      Kizuna: Fiction for Japan - The Sundered Worlds - The Winds of Limbo - Modem Times 2.0 - Elric: Swords and Roses

      Comment


      • #4
        This does assume that shareholders are in charge of the company in a way that makes them culpible... I own stock in my 401K and I have no idea what the heck those companies are up to... should I be held accountable if they do something wrong?

        Comment


        • #5
          I believe we're talking about Board Members, Kitsune, not shareholders. Shareholders have no control over what a company does, as you said, so of course they can't be held liable for what the company does. Board Members, CEOs, etc. -- these are the people who need to be held accountable for the actions of their companies and are the people protected by limited liability.

          Look at Ken Lay. If you worked for ENRON, that 401K you just mentioned would be nonexistant now. Do you think Lay deserves any protection from the law for having a part in stealing all those employees' retirement funds?
          "Wounds are all I'm made of. Did I hear you say that this is victory?"
          --Michael Moorcock, Veteran of the Psychic Wars

          Comment


          • #6
            The Corporation

            The Corporation. I recently saw this documentary and can recommend it.
            The question was posed that if a Corporation is legaly a person, then what kind of person is it. Traits were analysed and a criminal psychologist was brought in who concluded that corporations matched the classic profile of a psychopath.

            http://www.imdb.com/title/tt0379225/

            Plot Summary for
            Corporation, The (2003)

            Since the late 18th century American legal decision that the business corporation organizational model is legally a person, it has become a dominant economic, political and social force around the globe. This film takes an in-depth psychological examination of the organization model through various case studies. What the study illustrates is that in the its behaviour, this type of "person" typically acts like a dangerously destructive psychopath without conscience. Furthermore, we see the profound threat this psychopath has for our world and our future, but also how the people with courage, intelligence and determination can do to stop it.

            Summary written by Kenneth Chisholm ([email protected])
            Right now I'm seeing the principle of limited liability as carte blanche for corporations to expand their already deeply-destructive choke hold on all aspects of our lives and the health of our world.

            It may seem strange to us to regard limited liability as a state-regulated special interest protection and a human rights violation. But it is the truth. And it is the truth that will empower the next phase of the movement for corporate responsibility.

            Comment


            • #7
              Yep.
              Of course, in The White Monkey, all they had to do was to call in the accountants to take a good look at the book (though it took a whistle blower to alert Soames)....
              Sadly, while I suspect most Republicans want a return to sound business, they don't seem ready to rock their own boat yet. My guess is that the cracks in that party are going to reveal some interesting changes. I
              suspect they'll be for the better.
              (But what do I know ? :) )

              Pre-order or Buy my latest titles in Europe:
              The Whispering Swarm: Book One of the Sanctuary of the White Friars - The Laughter of Carthage - Byzantium Endures - London Peculiar and Other Nonfiction
              Doctor Who: The Coming of the Terraphiles - Kizuna: Fiction for Japan - Modem Times 2.0 - The Sunday Books - The Sundered Worlds


              Pre-order or Buy my latest titles in the USA:
              The Laughter of Carthage - Byzantium Endures - London Peculiar and Other Nonfiction - The Sunday Books - Doctor Who: The Coming of the Terraphiles
              Kizuna: Fiction for Japan - The Sundered Worlds - The Winds of Limbo - Modem Times 2.0 - Elric: Swords and Roses

              Comment


              • #8
                In William Gibson's "New Rose Hotel" (collected in Burning Chrome) one of the characters says that if an alien race was to study Earth they would come to the conclusion that the Multinational Corporation is the most highly evolved species of the planet.

                The whole globalisation debate is about these questions, I think. It's bizarre, though, that the fact that when companies become more of global entities (not sure if this is the right word) it's called "globalisation", but when people want to extend this process to social institutions (governments, workers' unions, etc) they are said to be "anti-globalisation". It's sad, I think.
                You can't spell "politically correct" without "correct".

                Comment


                • #9
                  The corporate methodology for political control is also largely without negative consequence to them, namely,

                  Democratic politicians may have to make public all their current interests and involvements in companies or corporate bodies whilst they are politicians, but don't once they are private citizens again.

                  Thus a body wishing to influence political policy can promise a position of influence and/or money to a politician and deliver when the level of accountancy drops away, post political career.

                  Failing that, they can always move somewhere where the laws of political accountability vary significantly from the practice.

                  However - the limited liability issue is not as clear cut as you think. As a small company director myself, let me give you an scenario about the insurance coverage issue.

                  A geotechnical company run by a friend of mine have seen their insurance go up from 3% of their annual turnover to 35% in three years. The company have never made a claim and are widely lauded for their proffessional consultancy product. In short - insurance companies issue their product based on perceived risk - to cover themselves. The knockback effect of the lifting of limited liability would be that the directors of insurance providers would want to cover themselves much more - meaning much higher premiums and a lower threshold at which they refuse cover to certain types of business. This would all make the risks of personal liability far greater to individuals and the number of startup businesses would greatly shrink.

                  In my experience, its startups and small to medium enterprises that are the most socially and personally responsible. In their slow demise because of such a scenario the big boys would undoubtedly take up the slack by creating further departments to cover those markets.

                  In other words I think that you would be handing further market control and therefore social and political power to the unaccountable eschelons of corporate power - who, being big enough to underwrite themselves would effectively be cushioned from the negative financial aspects of their continued abuses.

                  I think the ramifications (without VERY well thought out counterbalancing regulations) are very much more complicated than at first seems evident.

                  Comment


                  • #10
                    There has been a fundamental philosophical shift in Western Civilization. Though the left and right claim to offer alternative world views and social systems, philosophically they don't differ much. Both embrace scientism, authoritarianism, ideology, values-based ethics, relativism and realpolitik. Over the last fifty years there has been a fundamental shift from an English to a Continental view and procedure in philosophy.

                    Postmodern (Continental)

                    Hobbes
                    Rousseau
                    Hegel
                    Marx
                    Neitzsche
                    Episcopal
                    Orthodox
                    Neocon
                    Neolib
                    Romantic
                    Fundamentalist
                    Nihlism
                    Values-based ethics
                    Culture-based ethics


                    Modern (English/American trad.)
                    Locke
                    Jefferson
                    Presbyterian/Late-Calvinist
                    Neoclassic
                    Liberal
                    Natural Rights
                    Byron/Mary Shelley/Peacock
                    Browning/Hawthorne/Melville/Orwell
                    Philosophy-based ethics
                    TR/FDR


                    Locke/Jefferson/New Light Puritans argue the purpose of government and political power is to protect our natural rights to life, liberty, property, the fruits of our labor (which Locke explains is our property), happiness, free speech, free thought, and so on. This concept implies that government is responsible to protect people from dangerous products, dangerous drugs, unfair pricing, unreasonable taxation, invasion, and to insure that our air, water, food, living and working consditions, and so on are also protected. A government's ability to protect our rights is the test of its legitimacy. A government that fails to protect our rights can be disolved, through violence if necesary. That's the Declaration of Independence.

                    But it gets a little scary. The Right to Bear Arms in the Constitution is a provision that gives the public an instrument to insure that power is indeed invested in the people. In the abstract, we are responsible to protect the Constitution, and to protect ourselves from radical federalists, tyrants and invaders. Hopefully, we can do so through legislative or judical processes. But what happens when these processes fail? Do we respond directly, for example, to Ken Ley or Halliburton if through their actions they jepordize our property, our lives, our liberty, our happiness? And, if Halliburton and the Ken Ley's of the world are confronted by a people who are resolved to defend their rights, how do you think such entities might respond? And, in anticpating the "Lockean Nexus", what steps might such entities take to prevent an outbreak of Lockean thinking? They would want to educate people away from Lockean thinking. The erasure of Lockean thinking is and has been the project of the Left and the Right. The erasure of Lockean thinking is the postmodern project.

                    Now go read your Locke. And remember: Locke is enagged in a philosophical project. He is not doing science. The Two Treatises of Government is a work of imagination and logic. The Essay on Human Understanding is a tentative and speculative meditation only. It is necessary to properly weight Locke's work in order to understand his emphasis. Locke's most important work is the Letter on Toleration, then comes the Two Treatises of Government. The Essay is simply an experimental digression.

                    Together we can defeat the postmodernists and save the Revolution.

                    Comment


                    • #11
                      I'm going to get in trouble by explcitly excepting Carter's post, simply becuase it is well thought out but only points in a given direction, it doesn't make an argument for that direction.

                      In reading this thread, it is apparent that there are about 20 different issues being combined and, sorry to say, confused here.

                      The original quote DOES lump shareholders in, and in a real sense, shareholders are merely a funding source. If you make them liable, for example, for funding a company that commits some transgression - of which the shareholder had no knowledge or ability to alter or prevent, then you will, truly kill the stockmarket, since the risk will be much greater, and stock price is after all a reflection of the risk-adjusted current and future earnings of that company.

                      What happens if the shareholder role goes away? I say you have three possible outcomes: one, companies simply get so small and so focused that there are no national or multinational corporations, which would end our economic world as we know it. Imports/exports would reduce dramatically, quality levels of goods would decrease - or costs, as they are inversely proportional, would increase. Two, the government would own the companies, which has been done before (USSR) to failure. Three, the only people that could own the companies would be mega-millionaires, which basically means you are making the current "crony capitalism" problems the law of the land.

                      Second, there is distinct confusion between the corporation itelf and the persons that comprise that corporation. Few if any corporations have a structure that allows one person, autonomously and without the knowledge of any other person in the company, to act irresponsibly or illegally without some personal liability. What is being discussed above blurs that irreparably. You cannot say "the corporation should or should not have free speech rights" without coupling the liability of those rights to the holder. You wioan't protect anyone if you give the corporation the right of free speech and make a managing director responsible for the consequences. First, there would be no managing director, and second, who is going to pay the damages? Some mid-level manager on $48,000 a year? Don't spend it all in one place...

                      What has to happen is the separation of givernment and commerce in the compliance sector. Sure there has to be interaction and agreement on fiscal policy and international investment policy, and general economic policy, but when it comes to oversight (I am thinking SEC, EPA, IRS, etc) there has to be segregation. There has to be. Ideally this is what the tri-umvirate system is supposed to support, and I think it can work, if there are limitations on lobbying and campaign contributions. The right for citizens to sue government agencies that don't enforce the laws of the land. Do you think if FERC could have been sued over it's handling of the California energy crisis, the findings that the generators engaged in supply reductions ON PURPOSE would have taken so long to come out? I think not...

                      Comment


                      • #12
                        I am a capitalist- but I support well regulated capitalism. If businesses have rights, they damn sure have responsibilties and those should be legally enforced.

                        dlackey

                        Comment


                        • #13
                          Reagan/Thatcher deregulation had some positive effects (better US beer, v. important) but what we're witnessing is that deregulation without sufficient checks and balances, I agree. How we arrive at those checks and balances is surely the fundamental issue of this and other debates ?

                          Pre-order or Buy my latest titles in Europe:
                          The Whispering Swarm: Book One of the Sanctuary of the White Friars - The Laughter of Carthage - Byzantium Endures - London Peculiar and Other Nonfiction
                          Doctor Who: The Coming of the Terraphiles - Kizuna: Fiction for Japan - Modem Times 2.0 - The Sunday Books - The Sundered Worlds


                          Pre-order or Buy my latest titles in the USA:
                          The Laughter of Carthage - Byzantium Endures - London Peculiar and Other Nonfiction - The Sunday Books - Doctor Who: The Coming of the Terraphiles
                          Kizuna: Fiction for Japan - The Sundered Worlds - The Winds of Limbo - Modem Times 2.0 - Elric: Swords and Roses

                          Comment


                          • #14
                            Sorry to jump in late and disrupt things...

                            I'm not saying I disagree with Carter's sentiments, but I just had to put in my two (postmodern) cents on his post.

                            The one exception I'll take to Carter's semi-attack on postmodern thought is that the cultural condition of postmodernity is inextricably linked with that thinking. In other words, postmodern thought explains a postmodern world, so defeating the postmodernists can't be only about changing thinking. I also realize, of course, this whole argument gets much more complicated, given the relationship between culture, cognition, and social action.

                            Comment


                            • #15
                              Originally posted by Michael Moorcock
                              How we arrive at those checks and balances is surely the fundamental issue of this and other debates ?

                              Direct response: The problem is, how do you prepare people to participate in the negotiation of those checks and balances? If the politicans are bought out by the producers, then the consumers have no recourse; indeed, in time the consumers won't even know checks and balances are an option.

                              Simple response: Do we act? Do we let someone else enforce these checks and balances?

                              Academic response: The fundamental issue remains a philosophical shift in culture from Locke to the continent. We have become sheep. Alan Bloom's The Closing of the American Mind details the thesis. A Clockwork Orange and Farenhiet 451 underscore further dynamics of the problem.

                              Meditation: It took a depression, a World War and a patrician who "betrayed his class" to cultivate a middle class in this country that was equipped to negotiate those checks and balances. It lasted about fifty years. Now we have_________.

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