Corporate Socialism

The essence of Capitalism is that the investor bears the risks and reaps the rewards of his investment. The essence of the Corporation is limited liability. The government, in granting a corporate charter, effectively subsidizes investors by limiting their liability to their investment. If the corporation borrows a lot of money and loses it, the investors are only out what they put into the corporation, whereas if they had done the same as individuals, they would be liable for the whole debt.

In effect, the government has socialized risk and subsidized investment, and in that sense, the Corporation is an anti-capitalist device. If I recall correctly, Adam Smith didn't like them.

Comments

Popular posts from this blog

Anti-Libertarian: re-post

Uneasy Lies The Head

Book Review: Anaximander By Carlo Rovelli