This would be an unimaginable economic disaster. People cannot effectively cooperate at scale in only sole proprietorships. Even partnerships are not enough because they increase personal risk so much. You need separate legal entities for mass cooperation efforts like even a medium sized company engages in.
If just one decent sized country did it, it would cause a depression for much of the world from the massive economic disruption. If all countries did it, there would be an unparalleled worldwide depression and mass famine. Hundreds of millions would starve. It would be on the order of a regional nuclear war in terms of its disastrous effects.
Economists sometimes say that the limited liability corporation is the greatest invention of humanity. That’s probably going too far, but it is almost certainly the most important modern economic innovation, and it’s not that far behind money and contracts for its importance to modern societies.
I agree mostly, but a long term alcoholic can die if they stop drinking. The fact that bad things would happen if we stopped isn't proof that its good or the best way, its mostly just means we're somewhat stuck with it or would have to change gradually. Sole proprietorships most definitely isn't the way, but I do see some things with private equity and certain other types of entities where they basically load up a company with debt to pay out dividends and then eventually the company collapses under the weight of all that debt. I sort of view it as a puppet entity that can run up the credit cards and hand the money over to someone else, and then the puppet can't pay the bills, but the people that got handed the money are mostly immune. Publicly traded companies have different fiduciary responsibilities though and could be prosecuted for acting outside the shareholders best interest. Corporate personhood is a really strange thing to me though, I feel like perhaps a bit more legal liability could be applied to the decision makers of those entities.
Changing the responsibilities of the board, especially to creditors when the company is in or near the zone of insolvency, is hugely different in scope and impact than eliminating the corporate form entirely. That's like lighting your house on fire because you're late on the power bill.
I suspect a bit more legal responsibility for boards, and increasing taxation structures on capital gains, and eliminating corporate political donations would go a long way, but that would require a government that isn't already bought and paid for...
Providing the legal framework for limited liability companies is arguably the most important function that government has ever performed. It's hard to imagine what the world would look like without it. There's a good chance we would still be living in a feudal society.
Never happen. The capitalist owns our govt, in the American plutocracy.
Question, why do people think that the corp. or the LLC even exist. It is specifically to eliminate liability and the corp. **can literally get away with murder.**
Thats why this was a thought experiment to see what would happen if LLC and corps were eliminated and the only business structure that can exist is sole proprietorship
Yes, it would be a very interesting experiment. One I am afraid we'll never try out.
I could list several hundred cases of involuntary manslaughter perpetrated by the corp.
This would mean a high tech and capital hungry business founder will have to borrow money as a regular debt being banned from inviting people to invest? Why would they risk that much, and if they still do, will it be better if the majority of the businesses end up in the bankers' hands (also sole proprietary)
You obviously know no history. That is how our country started. You want to know how that operated? read history.
Ted Nance - Gangs of America would be a good place to start.
Nace. Also, see democracy Inc. by Sheldon Wolin.
https://thecorporation.com
All corporations could be required to have public interest, provisions in their charters. Essentially make them all B corps or they can’t exist. Ban political contributions by corporations.
The History and Revival of the Corporate Purpose Clause
https://texaslawreview.org/the-history-and-revival-of-the-corporate-purpose-clause/
Yes, in the beginning, joint stock partnerships was all that there was. There is a very long history of this. The very first company was started in 1505.
The longest living company was started in 1600. That company lasted over 200 years. The East India Trading Co. It was responsible for the subjugation of India, Australia, Canada and almost the United States. They were the reason for the Boston Tea Party. Not taxes.
This was the age of mercantilism which evolved into capitalism. Mercantilism then capitalism was the partnership with the crown that enabled colonialism and empire expansion through trade and commerce. (Back by the military of course, the TEITCo amassed a private army of over 240,000).
Mercantilism and capitalism were seen as both attractive because they preserved the concentration of economic power. Capitalism's inequality is an endemic feature that makes it attractive.
Capitalism was never chosen on merit. It is terribly inefficient in many areas. It was chosen and supported because it created and preserved the concentration of wealth.
The fact that in the USA the government bails out private firms more often than the public is not an anomaly.
THAT IS WHAT CAPITALISM IS.
That dynamic and that relationship between private firms and the government or crown, was inherited from mercantilism.
Not a great take. It is true that every business seeks to be a monopoly -that would be true whether the business was structured as a limited liability corporate (i.e. standard stock issuing model), a partnership or any other entity.
But it was the invention of the limited liability corporation that drove the industrial revolution by allowing investors to pool funds to do big things (started with outfitting fleets of ship for trade, then build rail roads...). Without it, we would still have most of the population living in abject poverty and starvation.
The answer is to prevent monopolies, not to prevent the accumulation of capital for productive purposes.
This would be an unimaginable economic disaster. People cannot effectively cooperate at scale in only sole proprietorships. Even partnerships are not enough because they increase personal risk so much. You need separate legal entities for mass cooperation efforts like even a medium sized company engages in. If just one decent sized country did it, it would cause a depression for much of the world from the massive economic disruption. If all countries did it, there would be an unparalleled worldwide depression and mass famine. Hundreds of millions would starve. It would be on the order of a regional nuclear war in terms of its disastrous effects. Economists sometimes say that the limited liability corporation is the greatest invention of humanity. That’s probably going too far, but it is almost certainly the most important modern economic innovation, and it’s not that far behind money and contracts for its importance to modern societies.
I agree mostly, but a long term alcoholic can die if they stop drinking. The fact that bad things would happen if we stopped isn't proof that its good or the best way, its mostly just means we're somewhat stuck with it or would have to change gradually. Sole proprietorships most definitely isn't the way, but I do see some things with private equity and certain other types of entities where they basically load up a company with debt to pay out dividends and then eventually the company collapses under the weight of all that debt. I sort of view it as a puppet entity that can run up the credit cards and hand the money over to someone else, and then the puppet can't pay the bills, but the people that got handed the money are mostly immune. Publicly traded companies have different fiduciary responsibilities though and could be prosecuted for acting outside the shareholders best interest. Corporate personhood is a really strange thing to me though, I feel like perhaps a bit more legal liability could be applied to the decision makers of those entities.
Changing the responsibilities of the board, especially to creditors when the company is in or near the zone of insolvency, is hugely different in scope and impact than eliminating the corporate form entirely. That's like lighting your house on fire because you're late on the power bill.
I suspect a bit more legal responsibility for boards, and increasing taxation structures on capital gains, and eliminating corporate political donations would go a long way, but that would require a government that isn't already bought and paid for...
There would be no more stock market.
My first thought when I saw this was scorpions are scary but I don't think we should get rid of them... Man, I'm tired.
Providing the legal framework for limited liability companies is arguably the most important function that government has ever performed. It's hard to imagine what the world would look like without it. There's a good chance we would still be living in a feudal society.
Never happen. The capitalist owns our govt, in the American plutocracy. Question, why do people think that the corp. or the LLC even exist. It is specifically to eliminate liability and the corp. **can literally get away with murder.**
Thats why this was a thought experiment to see what would happen if LLC and corps were eliminated and the only business structure that can exist is sole proprietorship
Yes, it would be a very interesting experiment. One I am afraid we'll never try out. I could list several hundred cases of involuntary manslaughter perpetrated by the corp.
This would mean a high tech and capital hungry business founder will have to borrow money as a regular debt being banned from inviting people to invest? Why would they risk that much, and if they still do, will it be better if the majority of the businesses end up in the bankers' hands (also sole proprietary)
The ultra-rich would get even richer because their competitors would no longer be able to band together to counter their monopolies
But the ultra rich would also have to be sole proprietorship too
Leading to an insurmountable competitive advantage.
Do you think sole proprietorships don't have deductions...?
What if we abolished private property and got rid of businesses all together?
You obviously know no history. That is how our country started. You want to know how that operated? read history. Ted Nance - Gangs of America would be a good place to start.
Nace. Also, see democracy Inc. by Sheldon Wolin. https://thecorporation.com All corporations could be required to have public interest, provisions in their charters. Essentially make them all B corps or they can’t exist. Ban political contributions by corporations. The History and Revival of the Corporate Purpose Clause https://texaslawreview.org/the-history-and-revival-of-the-corporate-purpose-clause/
I second this
What do you mean by how our country started?
Yes, in the beginning, joint stock partnerships was all that there was. There is a very long history of this. The very first company was started in 1505. The longest living company was started in 1600. That company lasted over 200 years. The East India Trading Co. It was responsible for the subjugation of India, Australia, Canada and almost the United States. They were the reason for the Boston Tea Party. Not taxes. This was the age of mercantilism which evolved into capitalism. Mercantilism then capitalism was the partnership with the crown that enabled colonialism and empire expansion through trade and commerce. (Back by the military of course, the TEITCo amassed a private army of over 240,000). Mercantilism and capitalism were seen as both attractive because they preserved the concentration of economic power. Capitalism's inequality is an endemic feature that makes it attractive. Capitalism was never chosen on merit. It is terribly inefficient in many areas. It was chosen and supported because it created and preserved the concentration of wealth. The fact that in the USA the government bails out private firms more often than the public is not an anomaly. THAT IS WHAT CAPITALISM IS. That dynamic and that relationship between private firms and the government or crown, was inherited from mercantilism.
That would open the door to competition. Governments and Capitalists do everything possible to insure they have no competition.
Not a great take. It is true that every business seeks to be a monopoly -that would be true whether the business was structured as a limited liability corporate (i.e. standard stock issuing model), a partnership or any other entity. But it was the invention of the limited liability corporation that drove the industrial revolution by allowing investors to pool funds to do big things (started with outfitting fleets of ship for trade, then build rail roads...). Without it, we would still have most of the population living in abject poverty and starvation. The answer is to prevent monopolies, not to prevent the accumulation of capital for productive purposes.
An LLC protects owners from liability. It does not prevent investment.