A note on austro-libertarianism and the limited-liability corporation
| Abstract | A limited-liability corporation is an artificial (“legal”) person whose liability is limited to the assets “owned” by the corporation. This means that the real or natural persons (if there are any) who own the corporation are not liable for the consequences of corporate actions or events originating within the property “owned” by the corporation. Thus, while the limited-liability corporation itself is fully liable (i.e., to the full extent of its assets) for such actions and occurrences, its human owners (if there are any) are not liable at all. Admittedly, they run a risk of losing all that they have invested in the corporation, but nothing more. This risk may be called an economic liability but it is not a liability in the relevant juridical sense: debtors cannot turn to the owners of the corporation to ask or compel them to pay its debts—it does not matter whether these debts are consequences of the corporation’s contractual obligations (wages, rents, purchases, loans, etc.) or consequences of harmful actions or events (explosions, flooding, contaminations, etc.) caused by the corporation or its property to third parties. Thus, we have the problem of the standing of the limited-liability corporation in view of the principles of Austro-libertarianism: the limited-liability corporation is a fully liable artificial person that shields any natural persons who are its owners from any liability. This is a problem because we cannot have it both ways. Either the limited-liability corporation is an autonomous (“self-owning”) person in its own right and then no objection can be made to it, as, despite its name, it is fully liable; or it is something owned by natural persons and then these owners must, like all other owners, be held fully liable for what they do (or command or permit others to do) with their property as well as for the consequences of events that originate within their property. Now, from an Austro-libertarian point of view—which, as I understand it, is committed to a realist philosophy and therefore akin to a natural law position1—it does not make sense to say that an artificial person can be an autonomous person in its own right.. | |||||||||
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