A brief history of the corporation
June 27, 2011 2:01 PM Subscribe
The human world, like physics, can be reduced to four fundamental forces: culture, politics, war and business.
You lost me there.
posted by Ironmouth at 2:11 PM on June 27, 2011 [3 favorites]
You lost me there.
posted by Ironmouth at 2:11 PM on June 27, 2011 [3 favorites]
Non-business corporations predate 1600 -- towns and cities were incorporated, allowing them to own property like a real body. I actually a study a weird civic/business hybrid corporation, founded in 1663 - it was founded out of a private company, but took on decidedly unprofitable responsibilities in maintaining drainage works. But it was still this weird "person non-person".
posted by jb at 2:14 PM on June 27, 2011
posted by jb at 2:14 PM on June 27, 2011
He lost me at "1772 [was] the apogee of power for the corporation as a business construct."
Wishin' don't make stuff true.
posted by lodurr at 2:17 PM on June 27, 2011
Wishin' don't make stuff true.
posted by lodurr at 2:17 PM on June 27, 2011
::rifling through OED, scanning page with finger:: "brief?"
posted by obscurator at 2:18 PM on June 27, 2011 [2 favorites]
posted by obscurator at 2:18 PM on June 27, 2011 [2 favorites]
Horselover, right, but are culture and politics really distinct forces -- or is one an epiphenomenon of the other?
posted by lodurr at 2:18 PM on June 27, 2011 [1 favorite]
posted by lodurr at 2:18 PM on June 27, 2011 [1 favorite]
But more broadly, I think we’ll see some formal changes in the legal concept of corporation that basically reinvent it so drastically, they won’t look anything like traditional corporations, and will deserve new labels. Among the key innovations I expect is changes in intellectual property rights in employment contracts, dethroning of “shareholder value” and perhaps most important, some attacks on the foundational notion of “limited liability.” If these changes happen, we’ll be looking at fundamentally new beasts. Mammals vs. reptiles.
Seriously, where does he get this stuff? Why will limited liability go away? Seriously, more than any one thing, it allows for economic risk taking that helps us. If an inventor takes a chance, and pays someone to produce 30,000 widgets and it fails, he's out his investment, not his house and everything he owns. Without limited liability, everyone who owns shares in a company will be out everything.
As for value investing, he's mixing apples and oranges. Of course "shareholder value" will always be at the center of the corporation. The problem has been with the idea that value to the owner is in current resale price. That assumes all shareholders are the same, or that the market can't price long-term management of a corporation positively. That's just ridiculous. Was CALPERS really helped by the terrible, short term management of companies it invested in? No.
Best to get back to long-term, prudent management, where shareholders get dividends, pieces of the profit to pay them back for their investment. The idea that all of a corporation's money has to be sunk into continuing investments, stock buy-backs or way out there executive compensation is long overdue to get changed.
posted by Ironmouth at 2:22 PM on June 27, 2011
Seriously, where does he get this stuff? Why will limited liability go away? Seriously, more than any one thing, it allows for economic risk taking that helps us. If an inventor takes a chance, and pays someone to produce 30,000 widgets and it fails, he's out his investment, not his house and everything he owns. Without limited liability, everyone who owns shares in a company will be out everything.
As for value investing, he's mixing apples and oranges. Of course "shareholder value" will always be at the center of the corporation. The problem has been with the idea that value to the owner is in current resale price. That assumes all shareholders are the same, or that the market can't price long-term management of a corporation positively. That's just ridiculous. Was CALPERS really helped by the terrible, short term management of companies it invested in? No.
Best to get back to long-term, prudent management, where shareholders get dividends, pieces of the profit to pay them back for their investment. The idea that all of a corporation's money has to be sunk into continuing investments, stock buy-backs or way out there executive compensation is long overdue to get changed.
posted by Ironmouth at 2:22 PM on June 27, 2011
> You lost me there.
Gravity
Electromagnetism
Weak Interaction (or Weak Nuclear Force)
Strong Interaction (or Strong Nuclear Force)
posted by Horselover Phattie at 5:16 PM on June 27 [+] [!]
Sorry, my point was that simplistic bullshit like that doesn't even begin to tell us anything about the world. The human world is not physics, and talk like his is crazy.
He spends no time really talking about what a corporation is, on a legal basis. Because that is why it is designed the way it is. The rest is all business processes which could work for any entity.
posted by Ironmouth at 2:25 PM on June 27, 2011 [1 favorite]
Gravity
Electromagnetism
Weak Interaction (or Weak Nuclear Force)
Strong Interaction (or Strong Nuclear Force)
posted by Horselover Phattie at 5:16 PM on June 27 [+] [!]
Sorry, my point was that simplistic bullshit like that doesn't even begin to tell us anything about the world. The human world is not physics, and talk like his is crazy.
He spends no time really talking about what a corporation is, on a legal basis. Because that is why it is designed the way it is. The rest is all business processes which could work for any entity.
posted by Ironmouth at 2:25 PM on June 27, 2011 [1 favorite]
Proportion of economic life organized by corporate forms (pure speculation)
Oh, this is going to be good.
posted by Orange Pamplemousse at 2:26 PM on June 27, 2011
Oh, this is going to be good.
posted by Orange Pamplemousse at 2:26 PM on June 27, 2011
Non-business corporations predate 1600 -- towns and cities were incorporated, allowing them to own property like a real body. I actually a study a weird civic/business hybrid corporation, founded in 1663 - it was founded out of a private company, but took on decidedly unprofitable responsibilities in maintaining drainage works. But it was still this weird "person non-person".
Let's be clear on personhood too. It is a legal construct allowing a corporation to enter into contracts and to sue and be sued regarding enforcement of those contracts and the conduct of its agents in terms of torts. Without it, a corporation couldn't even sell you a hamburger, because it would lack the legal ability to enter into any contract. Nor could you sue it if there was a razor blade in there. It helps the consumer, not hurts it.
The only reason people are pissed off about it is because of backward US campaign finance law, which today's decision shows, needs to be corrected by a constitutional amendment.
posted by Ironmouth at 2:27 PM on June 27, 2011 [1 favorite]
Let's be clear on personhood too. It is a legal construct allowing a corporation to enter into contracts and to sue and be sued regarding enforcement of those contracts and the conduct of its agents in terms of torts. Without it, a corporation couldn't even sell you a hamburger, because it would lack the legal ability to enter into any contract. Nor could you sue it if there was a razor blade in there. It helps the consumer, not hurts it.
The only reason people are pissed off about it is because of backward US campaign finance law, which today's decision shows, needs to be corrected by a constitutional amendment.
posted by Ironmouth at 2:27 PM on June 27, 2011 [1 favorite]
Let's be clear on personhood too. It is a legal construct allowing a corporation to enter into contracts and to sue and be sued regarding enforcement of those contracts and the conduct of its agents in terms of torts. Without it, a corporation couldn't even sell you a hamburger, because it would lack the legal ability to enter into any contract. Nor could you sue it if there was a razor blade in there. It helps the consumer, not hurts it.
Abso-fucking-lutely. Corporations as a legal entity have nothing to do with any of the things they are accused of. All of the "badness" that people like to blame corporations for is simply the bad acts of selfish/shortsighted/corrupt people.
posted by gjc at 2:34 PM on June 27, 2011 [2 favorites]
Abso-fucking-lutely. Corporations as a legal entity have nothing to do with any of the things they are accused of. All of the "badness" that people like to blame corporations for is simply the bad acts of selfish/shortsighted/corrupt people.
posted by gjc at 2:34 PM on June 27, 2011 [2 favorites]
The only reason people are pissed off about it is because of backward US campaign finance law...
No. I'm pissed off about it because I think that corporate personhood -- as it has been expressed in U.S. law -- has consolidated economic and managerial power in the hands of a small number of individuals, to the detriment of the Republic. I'm pissed off about it because existing corporations have hollowed out the rules and laws restricting anti-competitive behavior, thereby protecting themselves from the threat of innovation from the outside. I'm pissed off about it because I see corporations collecting rents at all levels of the economy, making it even more difficult for small businesses to enter and compete.
posted by gauche at 2:37 PM on June 27, 2011 [2 favorites]
No. I'm pissed off about it because I think that corporate personhood -- as it has been expressed in U.S. law -- has consolidated economic and managerial power in the hands of a small number of individuals, to the detriment of the Republic. I'm pissed off about it because existing corporations have hollowed out the rules and laws restricting anti-competitive behavior, thereby protecting themselves from the threat of innovation from the outside. I'm pissed off about it because I see corporations collecting rents at all levels of the economy, making it even more difficult for small businesses to enter and compete.
posted by gauche at 2:37 PM on June 27, 2011 [2 favorites]
The primary effect of steam was not that it helped colonize a new land, but that it started the colonization of time. First, social time was colonized. The anarchy of time zones across the vast expanse of America was first tamed by the railroads for the narrow purpose of maintaining train schedules, but ultimately, the tools that served to coordinate train schedules: the mechanical clock and time zones, served to colonize human minds.
...What?
posted by Orange Pamplemousse at 2:42 PM on June 27, 2011 [1 favorite]
...What?
posted by Orange Pamplemousse at 2:42 PM on June 27, 2011 [1 favorite]
No. I'm pissed off about it because I think that corporate personhood -- as it has been expressed in U.S. law -- has consolidated economic and managerial power in the hands of a small number of individuals, to the detriment of the Republic.
How has corporate personhood consolidated economic and managerial power in the hands of a small number of individuals to the detriment of the Republic. Which laws and decisions are you talking about, specifically?
I'm pissed off about it because existing corporations have hollowed out the rules and laws restricting anti-competitive behavior, thereby protecting themselves from the threat of innovation from the outside.
How have corporations done this? We have done this, with our votes. I agree that anti-trust enforcement has to be stepped up.
posted by Ironmouth at 2:45 PM on June 27, 2011
How has corporate personhood consolidated economic and managerial power in the hands of a small number of individuals to the detriment of the Republic. Which laws and decisions are you talking about, specifically?
I'm pissed off about it because existing corporations have hollowed out the rules and laws restricting anti-competitive behavior, thereby protecting themselves from the threat of innovation from the outside.
How have corporations done this? We have done this, with our votes. I agree that anti-trust enforcement has to be stepped up.
posted by Ironmouth at 2:45 PM on June 27, 2011
The primary effect of steam was not that it helped colonize a new land, but that it started the colonization of time. First, social time was colonized. The anarchy of time zones across the vast expanse of America was first tamed by the railroads for the narrow purpose of maintaining train schedules, but ultimately, the tools that served to coordinate train schedules: the mechanical clock and time zones, served to colonize human minds.
This guy read my old professor's book, Stephen Kern, The Culture of Time and Space: 1880-1918.
posted by Ironmouth at 2:49 PM on June 27, 2011 [1 favorite]
This guy read my old professor's book, Stephen Kern, The Culture of Time and Space: 1880-1918.
posted by Ironmouth at 2:49 PM on June 27, 2011 [1 favorite]
How has corporate personhood consolidated economic and managerial power in the hands of a small number of individuals to the detriment of the Republic. Which laws and decisions are you talking about, specifically?
Take it back to the original thread, or take it to MeTa.
posted by Orange Pamplemousse at 2:49 PM on June 27, 2011
Take it back to the original thread, or take it to MeTa.
posted by Orange Pamplemousse at 2:49 PM on June 27, 2011
How has corporate personhood consolidated economic and managerial power in the hands of a small number of individuals to the detriment of the Republic. Which laws and decisions are you talking about, specifically?
Take it back to the original thread, or take it to MeTa.
I'm responding to your point in this thread. I don't understand why you can't respond here. We are discussing things other than campaign finance reform here.
posted by Ironmouth at 3:16 PM on June 27, 2011
Take it back to the original thread, or take it to MeTa.
I'm responding to your point in this thread. I don't understand why you can't respond here. We are discussing things other than campaign finance reform here.
posted by Ironmouth at 3:16 PM on June 27, 2011
Let's be clear on personhood too. It is a legal construct allowing a corporation to enter into contracts and to sue and be sued regarding enforcement of those contracts and the conduct of its agents in terms of torts. Without it, a corporation couldn't even sell you a hamburger, because it would lack the legal ability to enter into any contract. Nor could you sue it if there was a razor blade in there. It helps the consumer, not hurts it.
Well, to be totally clear, the right to sue and be sued and the right to enter into contracts are only some of the many facets of corporate personhood. If corporate personhood was limited to those specific outcomes then I don't think most people would object to the concept. But, the legal construct has been extended a lot, to areas that a lot of people see as overstepping the bounds of what a corporation should be allowed to do.
posted by roquetuen at 3:19 PM on June 27, 2011
Well, to be totally clear, the right to sue and be sued and the right to enter into contracts are only some of the many facets of corporate personhood. If corporate personhood was limited to those specific outcomes then I don't think most people would object to the concept. But, the legal construct has been extended a lot, to areas that a lot of people see as overstepping the bounds of what a corporation should be allowed to do.
posted by roquetuen at 3:19 PM on June 27, 2011
Haven't read the essay yet but I TypeAheadFinded for "necromancy" and there's no match. So I'm a bit skeptical about how thorough this is going to be.
posted by BeerFilter at 3:26 PM on June 27, 2011 [2 favorites]
posted by BeerFilter at 3:26 PM on June 27, 2011 [2 favorites]
Ironmouth, although you haven't said anything I disagree with in this thread, it is true that you're wandering pretty far afield of "talking about the link".
Personally I haven't quite finished the article but I'm not sure how I'll be able to find its thesis convincing. Even if I accept the idea that the human world is governed by four forces that are broadly analogous to concepts in physics, and that technological change is more important than anything else, I'm still unconvinced by his argument that business is most important because it's "closest" to technology. The hypotheticals that he uses to argue for this position are extremely underwhelming, including the statement that you could swap generals, politicians, and artists from different time periods and expect them to function in any way whatsoever. Shit, you'd have a hard time swapping artists, generals, and politicians between present day America and present day China, even ignoring the language barrier.
The most fundamental problem with the article is that he's pretty much arguing everything by saying "it seems to me that". There's not really a whole lot of evidence.
posted by kavasa at 3:27 PM on June 27, 2011 [1 favorite]
Personally I haven't quite finished the article but I'm not sure how I'll be able to find its thesis convincing. Even if I accept the idea that the human world is governed by four forces that are broadly analogous to concepts in physics, and that technological change is more important than anything else, I'm still unconvinced by his argument that business is most important because it's "closest" to technology. The hypotheticals that he uses to argue for this position are extremely underwhelming, including the statement that you could swap generals, politicians, and artists from different time periods and expect them to function in any way whatsoever. Shit, you'd have a hard time swapping artists, generals, and politicians between present day America and present day China, even ignoring the language barrier.
The most fundamental problem with the article is that he's pretty much arguing everything by saying "it seems to me that". There's not really a whole lot of evidence.
posted by kavasa at 3:27 PM on June 27, 2011 [1 favorite]
He lost me at "1772 [was] the apogee of power for the corporation as a business construct."
Wishin' don't make stuff true.
Haven't read the article, but I'm guessing this is a reference to the peak of the power of the European mercantile trade companies, which aside from their vast monopolies over trade in certain commodities in certain countries, at that time were in some cases the defacto government in some colonies - such as the British East India Company in India, or the Dutch East India Company, which owned large parts of South East Asia before going bankrupt, only after which ownership of their territory passed to the Dutch Government.
We're not quite to the point where the Halliburtons of the world can formally and legally maintain their own armed forces and enter into treaties with sovereign governments, though for all effective purposes we might as well be.
posted by Hello, I'm David McGahan at 3:35 PM on June 27, 2011 [2 favorites]
Wishin' don't make stuff true.
Haven't read the article, but I'm guessing this is a reference to the peak of the power of the European mercantile trade companies, which aside from their vast monopolies over trade in certain commodities in certain countries, at that time were in some cases the defacto government in some colonies - such as the British East India Company in India, or the Dutch East India Company, which owned large parts of South East Asia before going bankrupt, only after which ownership of their territory passed to the Dutch Government.
We're not quite to the point where the Halliburtons of the world can formally and legally maintain their own armed forces and enter into treaties with sovereign governments, though for all effective purposes we might as well be.
posted by Hello, I'm David McGahan at 3:35 PM on June 27, 2011 [2 favorites]
The human world, like physics, can be reduced to four fundamental forces: culture, politics, war and business.
You forgot the most powerful force of all, fucking.
posted by nathancaswell at 4:16 PM on June 27, 2011 [2 favorites]
You forgot the most powerful force of all, fucking.
posted by nathancaswell at 4:16 PM on June 27, 2011 [2 favorites]
Don't forget Hudson Bay Company, now known by its new brand Canada (tm).
In terms of fraction of the world's power under the control of a handful of corporations, we're way better off today than we were in 1800.
posted by miyabo at 6:03 PM on June 27, 2011 [1 favorite]
In terms of fraction of the world's power under the control of a handful of corporations, we're way better off today than we were in 1800.
posted by miyabo at 6:03 PM on June 27, 2011 [1 favorite]
But, the legal construct has been extended a lot, to areas that a lot of people see as overstepping the bounds of what a corporation should be allowed to do.
What areas?
posted by Ironmouth at 7:09 PM on June 27, 2011 [1 favorite]
What areas?
posted by Ironmouth at 7:09 PM on June 27, 2011 [1 favorite]
Read it all. Ironic that the writer talked about attention peaks, looking at the comments.
posted by Silo004 at 9:39 PM on June 27, 2011
posted by Silo004 at 9:39 PM on June 27, 2011
All of the "badness" that people like to blame corporations for is simply the bad acts of selfish/shortsighted/corrupt people.
In the sense that corporations are virtual, certainly, obviously. In that same sense, a corporation is nothing more than a front to keep bad people from going to jail and/or paying their bills.
posted by Twang at 11:02 PM on June 27, 2011
In the sense that corporations are virtual, certainly, obviously. In that same sense, a corporation is nothing more than a front to keep bad people from going to jail and/or paying their bills.
posted by Twang at 11:02 PM on June 27, 2011
I don't mean to be a dickmouth and burst into my own thread but having read the fucking article, I take three things:
OP is positing a framework to extract meaning; and not a bible to live your life under.
The most significant thing a corporation did for itself is make a washing machine not a micro chip.
Once we all realise the difference between a washing machine and micro chip we can flag and move on.
posted by Samuel Farrow at 11:31 PM on June 27, 2011
OP is positing a framework to extract meaning; and not a bible to live your life under.
The most significant thing a corporation did for itself is make a washing machine not a micro chip.
Once we all realise the difference between a washing machine and micro chip we can flag and move on.
posted by Samuel Farrow at 11:31 PM on June 27, 2011
A much briefer version of this article would go something like -
Modern History: cash moves everything around me
posted by Hello, I'm David McGahan at 11:58 PM on June 27, 2011
Modern History: cash moves everything around me
posted by Hello, I'm David McGahan at 11:58 PM on June 27, 2011
Of course "shareholder value" will always be at the center of the corporation.
Nonsense. It hasn't been in the past, and there's no reason to believe it will be so forever.
posted by rodgerd at 12:12 AM on June 28, 2011 [1 favorite]
Nonsense. It hasn't been in the past, and there's no reason to believe it will be so forever.
posted by rodgerd at 12:12 AM on June 28, 2011 [1 favorite]
but I'm guessing this is a reference to the peak of the power of the European mercantile trade companies...
Well you have a point there. Though on second read, I'm still having trouble parsing the "as a business construct" part. Certainly there were corporations in the past that had more political power than any contemporary corporation*, but as a business construct, I think they're arguably more highly developed than they've ever been, and show no signs of decline.
That said, there are a hell of a lot more large corporations in the world (even proportionally) than there were, then, and they have much broader range of influence, so the net degree of social control is at least equal if not much, much greater to what it was then.
--
*This was just about the only thing I liked about the 2nd and 3rd Pirates... movie: that the Company owned the marines and told the governor what to do. In a freakishly anachronistic flick, that was the only period-accurate element.
posted by lodurr at 4:56 AM on June 28, 2011
Well you have a point there. Though on second read, I'm still having trouble parsing the "as a business construct" part. Certainly there were corporations in the past that had more political power than any contemporary corporation*, but as a business construct, I think they're arguably more highly developed than they've ever been, and show no signs of decline.
That said, there are a hell of a lot more large corporations in the world (even proportionally) than there were, then, and they have much broader range of influence, so the net degree of social control is at least equal if not much, much greater to what it was then.
--
*This was just about the only thing I liked about the 2nd and 3rd Pirates... movie: that the Company owned the marines and told the governor what to do. In a freakishly anachronistic flick, that was the only period-accurate element.
posted by lodurr at 4:56 AM on June 28, 2011
Why will limited liability go away? Seriously, more than any one thing, it allows for economic risk taking that helps us.
No, it allows for risk taking that can either help or hurt us. Limited liability is neither a positive or negative intrinsically--that's why it has to be carefully regulated. We don't normally grant limited personal liability for a reason: it has potentially harmful consequences.
Risk taking in itself is just an outcome neutral behavior: stupid risk taking leads to stupid outcomes, smart risk taking can but doesn't necessarily lead to good outcomes (hence, it's still called "risk taking"). So it's not risk taking we need to incentivize. It's smart, careful risk-taking we need to incentivize--not just "risk taking" in the abstract.
Risk taking certainly didn't help us when the securities crash came down.
Excessive risk taking in the financial markets (and faulty risk mitigation strategies that in effect only compounded risk in the worst-case scenarios) is literally what caused the economic collapse. If we don't take at least that modest lesson from all this mess, there's no hope.
posted by saulgoodman at 6:54 AM on June 28, 2011
No, it allows for risk taking that can either help or hurt us. Limited liability is neither a positive or negative intrinsically--that's why it has to be carefully regulated. We don't normally grant limited personal liability for a reason: it has potentially harmful consequences.
Risk taking in itself is just an outcome neutral behavior: stupid risk taking leads to stupid outcomes, smart risk taking can but doesn't necessarily lead to good outcomes (hence, it's still called "risk taking"). So it's not risk taking we need to incentivize. It's smart, careful risk-taking we need to incentivize--not just "risk taking" in the abstract.
Risk taking certainly didn't help us when the securities crash came down.
Excessive risk taking in the financial markets (and faulty risk mitigation strategies that in effect only compounded risk in the worst-case scenarios) is literally what caused the economic collapse. If we don't take at least that modest lesson from all this mess, there's no hope.
posted by saulgoodman at 6:54 AM on June 28, 2011
The primary effect of steam was not that it helped colonize a new land, but that it started the colonization of time. First, social time was colonized. The anarchy of time zones across the vast expanse of America was first tamed by the railroads for the narrow purpose of maintaining train schedules, but ultimately, the tools that served to coordinate train schedules: the mechanical clock and time zones, served to colonize human minds.
This guy read my old professor's book, Stephen Kern, The Culture of Time and Space: 1880-1918.
And/or he read Lewis Mumford on the role of clocks in changing our conception of time: "For Mumford, 'The clock, not the steam-engine, is the key machine of the modern industrial age.' Mumford notes that the clock changes our perception of time as quantity."
Thanks for this post. This is a fine essay, an extremely intelligent interpretation of historical data. I'm not sure I buy his argument about Peak Attention, but it sure is thought-provoking.
posted by ibmcginty at 7:33 AM on June 28, 2011
This guy read my old professor's book, Stephen Kern, The Culture of Time and Space: 1880-1918.
And/or he read Lewis Mumford on the role of clocks in changing our conception of time: "For Mumford, 'The clock, not the steam-engine, is the key machine of the modern industrial age.' Mumford notes that the clock changes our perception of time as quantity."
Thanks for this post. This is a fine essay, an extremely intelligent interpretation of historical data. I'm not sure I buy his argument about Peak Attention, but it sure is thought-provoking.
posted by ibmcginty at 7:33 AM on June 28, 2011
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posted by Eideteker at 2:11 PM on June 27, 2011 [1 favorite]