From: pcollac@pyrnova.mis.pyramid.com (Paul Collacchi)
Newsgroups: sci.econ
Subject: Re: Libertarians live in Virtual Reality
Date: 14 Aug 92 16:32:43 GMT
Reply-To: pcollac@pyrnova.mis.pyramid.com (Paul Collacchi)
Distribution: usa
Organization: Pyramid Technologies, Mt. View, California.

In article <1072@ncratl.AtlantaGA.NCR.COM>,
mwilson@ncratl.AtlantaGA.NCR.COM (Mark Wilson) writes:
|> 
|> Actually the snake oil salesman is a good example of the problems inherent
|> in any form of market, or market regulation.  He was a small time operator
|> who would hit once and then move on before the populace could wise up.
|> 
|> A large company could not get away with this because there will quickly be
|> no new markets to move to.
|> 
|> It was hard to catch the snake oil man because the warnings against him
|> could only move as fast as a man on horse could move.  Nowadays the warning
|> can go out to the whole nation in a matter of minutes.
|> 

The point that larger operators would be more vulnerable to feedback loops
disseminating info about their negative practices is well taken, but the
feedback mechanism is not complete or as perfect as it could be.

The end result of such feedback loops might be that the particular large
corporation in question goes bust, but to what extent will individuals --
stockholders, employees, management, customers -- the actors in the drama,  
to what extent will the individual and personal behaviours get corrected?

A corporation is nothing more than a legal mask worn by a bunch of human
beings.  MEGA Corp. might dissolve, but does that really mean that 
'correction', and in particular 'permanent correction' has taken place?
I think not, though some forms of intense, corrective individual revelation
might take place.  Participants will simply get on with their lives, and
probably go back to doing something similar to what they were doing before.

I have argued before in, "I like corporations, just not limited liability",
that either the ending of the corporate legal form (in favor of a partnership
form) or the creation of a 'permanent' stock, one which can and does assume
a negative value and can't simply be thrown away, would encourage more 
responsibility by creating a more perfect feedback loop in which the 
consequences of certain corporate behaviours are less easily run away from
and are more readily brought to bear upon those who have most power to 
influence decisions within the corporation.

I still believe with great conviction that a significant underlying 
historical motivation for the formation of a "corporation" was to
shield partipants from the full consequences of their actions, and that
it got 'snuck' into common law, before anyone could really figure out
what the long (long,long) term consequences might be.  There
was a time historically when it may have been appropriate to allow this
"distortion" of feedback in order to encourage large capitalization (
actually, another bogus understanding, but one thrown in to appease 
those who can't even begin to concieve of non-corporate living on 
planet Earth), but the cost is tremendous, and, in my opinion, the
'karma' of this distortion is showing up, hundreds of years later, as
bizarre forms of expensive litigation and damages, and bizarre forms
of government regulation.

Paul Collacchi