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Limited liability refers to the privilege that firms gain when they are sanctioned by the State. This privilege is characterized as the owners (shareholders) of
by pitaj 8y ago
Limited liability refers to the privilege that firms gain when they are sanctioned by the State. This privilege is characterized as the owners (shareholders) of the corporation not being liable for the actions of the corporation.
This is a creation of the state. Without LL, destructive corporate actions could result in suits against the shareholders or at least the operators of the company. Shareholders would like to limit the risk they take, so they would be likely to pressure firms to act more carefully. With LL, firms can take whatever risk they want, and the only consequences stockholders see is if the stock price of the company falls.
- VikingCoder 8y ago...and the other point? That yes, there are natural monopolies: Warlords. Curious about your thoughts on that?
- pitaj 8y agoMy views on the warlords question mostly follow this article: https://mises.org/library/wouldnt-warlords-take-over https://mises.org/library/wouldnt-warlords-take-over In addition to that, the idea that a state arises to prevent warlords is fantasy. In reality, warlords evolve to become the state as they legitimize their position as rulers.
- VikingCoder 8y agoIf you're interested in Dialog, I'd be glad. That article is awful. Truly terrible. But it's not worth my time pulling it apart, if you're not interested in genuine Dialog. Let me know.