A Note About Corporations

Capitalists and Socialists debate over them, but which side are they really on? The labels we use don't make a lot of sense.

The debate over corporations tends to divide us into two camps: capitalists who want to protect corporate profit from interference from government, and socialists who want to protect individuals from the ravages of unlimited competition with big corporations. The left continually paints corporations in a negative light, blaming them for encouraging congressional corruption, spewing propaganda, carelessly ravaging the ecosystem, insider trading, financial fraud of all kinds, selling at a loss to undermine the competition, creating monopolies, and exploitation of the working class around the world. Of course, there are bad apples in every bunch, but large corporations are in a position to do much more damage than small partnerships and sole proprietors.

What is often lost in the debate is the fact that in a truly free market, corporations do not exist. The essence of the corporation is the limitation of liability to protect the shareholders. Without a government-issued charter, there would be no corporations. Of course, this is not always a bad thing, as the constant threat of lawsuits would keep companies small and reduce our access to as many products and services as we have today. Also, anyone with an IRA or a 401k could be hit hard by a lawsuit that they know nothing about. Investment would dry up and people would buy more liability insurance, which is itself a form of voluntary socialism (it spreads out the risk).

Also lost in the debate are how many socialists, in the act of interfering with the free market, creating artificial winners and losers, end up aiding corporations at the expense of smaller companies. Larger companies are better able to survive through a dry spell than smaller companies. Larger companies also tend to be more unionized and it has even been suggested that this is the true motivation of the socialists: to aid unions by aiding larger companies. The merger of state and corporate power is called corporatism, also known as fascism, which is a flavor of socialism.

The bailouts are probably the best example of why the right says we have too much socialism and the left says we have too much capitalism. They are both right!

It is hard to be against corporations without being aghainst government, and it is hard to be against government without being against corporations. The two go together. This is just one more reason why I say we are more alike than we think.

Remember, the labels we use don’t make a lot of sense.