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There has been some controversy lately over the rights of corporations (freedom of speech, etc.). From an Objectivist perspective, what--if any--are the rights of corporations? Do they simply share the individual rights of their shareholders, or since they are technically legal creations, should they have fewer rights than human beings?

asked Sep 21 '10 at 12:38

ryankrause's gravatar image

ryankrause ♦

edited Jan 17 '11 at 07:37

Greg%20Perkins's gravatar image

Greg Perkins ♦♦


Leaving aside the issue of their current legal status and dealing with principles, corporations are nothing more than means by which individuals get together and pool resources to make a single integrated system of resources to achieve one common objective. The rights of the corporation are whatever the rights possessed by the individual as they choose to delegate to it, and are of equal validity as any individual rights for that reason.

In regards to limited liability, the principle itself is sound but the law surrounding it today is wrong. The law today says corporations really are separate entities with legal personhood, which law is then used to pretend that incorporation is only a government privilege and that corporations are obliged to serve government ends. The law as it stands then leads to a variety of injustices, which have themselves lead to further bad adjustments to already bad law (another example of controls breeding controls).

If the law were written properly limited liability would be legally recognised for what it actually is: a derivative property right and which gives the superficial appearance of the corporation being a separate entity for the purposes of issuing stock, borrowing money, and similar financial activities. Everything valid about limited liability can be traced back to individuals' rights to property and freedom of contract, including other derivatives such as the right to freedom of principal-and-agent agreements. Proper law relating to limited liability would just recognise that people would use these same types of contractual arrangements again and again, so would integrate the practice into a few concepts (the corporation and a few variants) and develop an integrated body of law to match. That law would also then not let bad people perpetrate the fraudulent behaviour that law imparting legal-personhood to corporations shields them to do.

answered Sep 21 '10 at 20:41

JJMcVey's gravatar image

JJMcVey ♦

Several issues here, one to consider: limited liability cannot be viewed as a state-created right of a corporation, as appears to be implied above. If it were, then shareholders would be able to discriminate against creditors to their benefit. But clearly, this is not so; creditors cannot, and regularly are not, compelled to accept limited liability arrangements when doing business with a corporation. Often, "limited liability" is an illusion as creditors will, in fact, require personal guarantees for debt.

(Nov 19 '10 at 11:56) bildanielson bildanielson's gravatar image

Since it is people who have rights, and since nothing but the initiation of force can legitimately limit or remove them, corporations have rights, including the right, contractually, to limit liability, and the right to free speech. This is true because corporations are property, and there can be no legitimate prohibition on the use of one's property to exercise one's rights.

There is nothing to a corporation but contracts.

Corporations are people acting together (or, sometimes, a corporation is an individual in corporate form--like a physician in a solo professional corporation)--acting to form a contract (the sale of goods or services) with customers in wholly specific, defined ways. Corporate property and corporate employees are the property (the contracted-for efforts of the employees are also property) of the corporation's owners.

The registration of the corporate documents legalize the details of relationship between the corporation and the customer. This is true, and just, whether the customers have read the terms of incorporation or not. The corporation must make it known that it is and acts as a corporation, and in doing that, it fulfills its legal obligations to inform the customer that such legal definitions and limitations exist and apply.

Limited liability is built into the corporation for its face value (to limit liability.) The justification of upholding and enforcing that limited liability lies in its being the sole, explicit, and public agreement between the customer and the people behind the corporation. It has the same standing that a contract drafted between the corporation and the customer in a face-to-face interview would have.

As being a mutually-agreed-on provision, the limitations on liability that are built into corporations are not logically open to being evaluated as fair or unfair, just or unjust. Mutual agreement, consenting adults, caveat emptor.

Few of us read the fine print. That leaves us trusting our assumptions about what we are agreeing to when we deal with legal entities. Then, when things go wrong, "we" learn from the authors of that fine print what we are actually due, as distinct from what we had assumed were the corporation's obligations and responsibilities, including how deep its pockets are.

The emotional attacks which so publicly follow that denouement, in dramatic cases, shift the focus from the individual who made a legal contract with this particular corporation--an issue not open to debate--to the "legitimacy" of making such contracts at all, in the interest of protecting the unthinking, pragmatic, or careless individual from the results of his own behavior. What is actually no more than buyer's remorse, then becomes an attack on corporations per se.

But, since corporations are just property under contract, an attack on corporate "rights" is an attack on individual rights; the furor over limited liability is anger at there being any limit to others' claims on your wealth; and the opposition to corporate free speech is outright opposition to living by one's mind.

answered Jan 17 '11 at 22:21

Mindy%20Newton's gravatar image

Mindy Newton ♦

edited Jan 19 '11 at 19:59

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Asked: Sep 21 '10 at 12:38

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Last updated: Jan 19 '11 at 19:59