Wednesday, April 13, 2011

Shut up, he explained

To "explain" is "To make plain, manifest, or intelligible; to clear of obscurity; to expound; to unfold and illustrate the meaning of; as, to explain a chapter of the Bible."

So when Akiva writes (at The Libertarian Standard) the following ...

As Stephan Kinsella has explained, corporations are nothing more than a series of contracts enabling a large number of people to work together toward common goals.

... I'd be remiss in my duty to the English language if I didn't point out that the phrase "has re-defined them" makes more sense than the phrase "has explained" in that sentence.

"[A] series of contracts enabling large number of people to work together toward common goals" could describe any number of kinds of groups (including large partnerships structured as joint stock companies).

The defining characteristic of a "corporation," absent which any explanation thereof is necessarily reduced to pure hooey, is that the state treats it under law as a "person" unto itself, with an identity independent of that "large number of [contracting] people." The purpose of establishing this independent identity by state fiat ("charter") is to insulate the "large number of [contracting] people" from any liabilities which might arise from actions actually taken by those people or their agents, by allowing them to ascribe said actions to the "corporation."

Kinsella does make a strong argument against "vicarious liability," holding that corporate agents rather than the corporation, or the corporation's stockholders, are completely responsible for their actions. But re-defining "corporation" from its actual meaning to "a series of contracts enabling large number of people to work together toward common goals" isn't a valid shortcut to that conclusion, any more than re-defining "capitalism" from its historical meaning ("a mixed, state-regulated industrial economy") magically makes it shorthand for "the free market."

All of the above would have gone into comments over at the Standard, but instead of either allowing open commenting or installing one of the several available comment packages that are becoming widely-adopted standards, they want site-specific registration ... which just bugs me, so I'm not doing it. Besides, posting it here gives me an excuse to link to them.

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