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The purpose of a corporation is not “world utility optimisation” and decreasing the number of Netflix hours watched is good, actually.

by hcks 3y ago

tarboreus 3y ago
That kind of is the purpose of corporations. They're given special fictional person status because they're thought to be a net benefit for society. If they weren't, it wouldn't make sense to give them these privileges. The duty to maximize profit thing was made up in the '80s and is mostly not true except in cases of fraud or gross negligence. Agree about watching less Netflix, though.
- voisin 3y ago
  > They're given special fictional person status because they're thought to be a net benefit for society. Where did you possibly get this theory from? They were given personhood as a way of eliminating risk to shareholders so the cost of capital would come down and encourage business formation and capital efficiency. And the justification was “if they aren’t separate people with liability limited to share capital investment then mere investors not connected to the operations could be found liable to an unlimited extent, which is totally unjust”
  - galdosdi 3y ago
    The guy you replied to is literally just reciting the actual historical circumstances that lewd to governments permitting arbitrary corporations, a relatively recent development in the west over the last 400 years. Read up some history. Originally only the government could form a corporation by a special act of the king or later parliament or congress, as it was seen as such a powerful and special thing that couldn't just be handed out willy nilly. What you are reciting is merely modern ideology that supports the status quo. Forcing investors to take on liability is neither just not unjust, merely different ways of running societies, equally valid depending on your goals. After all nobody makes you invest, and in a society where you might be liable for your investment's actions you would be much more scrutinizing about your management's character before agreeing to involve yourself. Ventures would tend to be more personal and require more trust. That's the world we used to live in and that was just as valid and just. Read history.
    - voisin 3y ago
      As a trained (but not practicing) lawyer who focused my education on corporate and tax law, I have read history from the source either directly or indirectly in nearly every course I took. I have not, in any of my education, come across the notion that (as OP was responding to) corporations were allowed due to a belief they would increase the net utility of society (or specifically in this case, that decreased Netflix hours watched would be a net utility objective that would’ve been in the realm of things a corporation was initially intended to be formed for). The reasons for corporations to spread beyond royal charter to arbitrary creation by the general public had to do with lawsuit administration and limiting liability. Prior to corporations, partnerships were the primary form of organizing and when they were sued each partner had to be included separately which was cumbersome and many partners had nothing to do with the operations or activities that gave rise to the liability. The legislation which codified the above is credited with a massive increase in company formation and capital allocation in the 1800s. The presumption being that things that were once deemed too risky when there was unlimited liability were no longer as risky. None of what I’ve written here is “modern ideology” unless by modern you refer to the 1800s.
      - galdosdi 3y ago
        OK, then why was it that for so long a new joint stock company's creation required a charter from the monarch or parliament, etc, and not just anybody could get it (as today)? It was obviously seen as a valuable and scarce privilege, not a right. Choosing to bestow that privilege to anyone for any purpose they wish is a conscious tradeoff that our society makes, nothing natural about it. The upside as you keep mentioning is it's convenient to run the enterprise this way, allowing it to reach a larger scale. The downside to society is the risk that this greater power enables the creation of organizations that rival the state in power -- which is probably why originally, charters specified a limited purpose for the company. See https://en.wikipedia.org/wiki/Joint-stock_company https://en.wikipedia.org/wiki/Joint-stock_company
- autoexec 3y ago
  What we've been missing is the political will to revoke that status for companies who neglect their obligation to society. Today even those who are a net drain get a pass so long as a very small number of people are making money. Let's see the corporate death penalty get more use and people will start to remember that corporate personhood is a privilege, not a right.
jauntywundrkind 3y ago
You have accepted hook line & sinker the Chicago school's redefinition of the purpose of the corporation whole, as if it is the only truth. Before 47 years ago - before this marketing reinvention was introduced & subsequently took over - there was a more pro-social belief in what the corporate body was for. https://www.washingtonpost.com/business/economy/maximizing-shareholder-value-the-goal-that-changed-corporate-america/2013/08/26/26e9ca8e-ed74-11e2-9008-61e94a7ea20d_story.html https://www.washingtonpost.com/business/economy/maximizing-s...

The purpose of a corporation is not “world utility optimisation” and decreasing the number of Netflix hours watched is good, actually.

by hcks 3y ago

The purpose of a corporation is not “world utility optimisation” and decreasing the number of Netflix hours watched is good, actually.

tarboreus 3y ago

That kind of is the purpose of corporations. They're given special fictional person status because they're thought to be a net benefit for society. If they weren't, it wouldn't make sense to give them these privileges. The duty to maximize profit thing was made up in the '80s and is mostly not true except in cases of fraud or gross negligence. Agree about watching less Netflix, though.

voisin 3y ago
> They're given special fictional person status because they're thought to be a net benefit for society. Where did you possibly get this theory from? They were given personhood as a way of eliminating risk to shareholders so the cost of capital would come down and encourage business formation and capital efficiency. And the justification was “if they aren’t separate people with liability limited to share capital investment then mere investors not connected to the operations could be found liable to an unlimited extent, which is totally unjust”
- galdosdi 3y ago
  The guy you replied to is literally just reciting the actual historical circumstances that lewd to governments permitting arbitrary corporations, a relatively recent development in the west over the last 400 years. Read up some history. Originally only the government could form a corporation by a special act of the king or later parliament or congress, as it was seen as such a powerful and special thing that couldn't just be handed out willy nilly. What you are reciting is merely modern ideology that supports the status quo. Forcing investors to take on liability is neither just not unjust, merely different ways of running societies, equally valid depending on your goals. After all nobody makes you invest, and in a society where you might be liable for your investment's actions you would be much more scrutinizing about your management's character before agreeing to involve yourself. Ventures would tend to be more personal and require more trust. That's the world we used to live in and that was just as valid and just. Read history.
  - voisin 3y ago
    As a trained (but not practicing) lawyer who focused my education on corporate and tax law, I have read history from the source either directly or indirectly in nearly every course I took. I have not, in any of my education, come across the notion that (as OP was responding to) corporations were allowed due to a belief they would increase the net utility of society (or specifically in this case, that decreased Netflix hours watched would be a net utility objective that would’ve been in the realm of things a corporation was initially intended to be formed for). The reasons for corporations to spread beyond royal charter to arbitrary creation by the general public had to do with lawsuit administration and limiting liability. Prior to corporations, partnerships were the primary form of organizing and when they were sued each partner had to be included separately which was cumbersome and many partners had nothing to do with the operations or activities that gave rise to the liability. The legislation which codified the above is credited with a massive increase in company formation and capital allocation in the 1800s. The presumption being that things that were once deemed too risky when there was unlimited liability were no longer as risky. None of what I’ve written here is “modern ideology” unless by modern you refer to the 1800s.
    - galdosdi 3y ago
      OK, then why was it that for so long a new joint stock company's creation required a charter from the monarch or parliament, etc, and not just anybody could get it (as today)? It was obviously seen as a valuable and scarce privilege, not a right. Choosing to bestow that privilege to anyone for any purpose they wish is a conscious tradeoff that our society makes, nothing natural about it. The upside as you keep mentioning is it's convenient to run the enterprise this way, allowing it to reach a larger scale. The downside to society is the risk that this greater power enables the creation of organizations that rival the state in power -- which is probably why originally, charters specified a limited purpose for the company. See https://en.wikipedia.org/wiki/Joint-stock_company https://en.wikipedia.org/wiki/Joint-stock_company
autoexec 3y ago
What we've been missing is the political will to revoke that status for companies who neglect their obligation to society. Today even those who are a net drain get a pass so long as a very small number of people are making money. Let's see the corporate death penalty get more use and people will start to remember that corporate personhood is a privilege, not a right.

jauntywundrkind 3y ago

You have accepted hook line & sinker the Chicago school's redefinition of the purpose of the corporation whole, as if it is the only truth. Before 47 years ago - before this marketing reinvention was introduced & subsequently took over - there was a more pro-social belief in what the corporate body was for. https://www.washingtonpost.com/business/economy/maximizing-shareholder-value-the-goal-that-changed-corporate-america/2013/08/26/26e9ca8e-ed74-11e2-9008-61e94a7ea20d_story.html https://www.washingtonpost.com/business/economy/maximizing-s...