Liability, shmiability: the sequel

In a previous post, I inquired into the arguments for and against limited liability laws. One of the things that bothered me about the criticisms of these laws was the claim that stockholders should be held liable for the misdeeds of the company. Unless the potential gains on these stocks were extremely high, I don't think many investors would want to risk losing assets above and beyond that which they already designated for investing purposes. Still, though, it does seem somewhat odd to allow special legal exemptions just so large corporations can exist.

I'm reminded of this question after coming across a persuasive article by Bob Murphy, "Limited Liability Corporations in a Free Society." Murphy argues that corporations would still "have the option of issuing (limited liability) stocks and bonds to raise capital, but such actions would in no way limit the ethical and legal obligations of the founding members." Employees of the corporations "can sign contracts ... in which the "corporation" pledges to assume full liability for any damages caused by the [employees] while ... on the job." The only stipulation Murphy makes is that ultimately, someone - some human person, and not a legally created pseudo-person - must be held accountable at the end of the day, if the assets of the corporation are not enough to cover its debts. [As an aside, this makes me wonder what Murphy's views on bankruptcy laws are.]

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Pretty sure Murphy opposes

Pretty sure Murphy opposes bankruptcy.

"The only stipulation Murphy

"The only stipulation Murphy makes is that ultimately, someone - some human person, and not a legally created pseudo-person - must be held accountable at the end of the day, if the assets of the corporation are not enough to cover its debts."

Couldn't savvy whitel collar criminals hire some homeless schmo to take the rap for them if necessary?

Good point. I wonder what

Good point. I wonder what kind of stipulations, if any, Murphy would add in order to prevent that kind of thing from happening.

the problem is, obviously,

the problem is, obviously, that these "free exchanges" aren't made on equal footing. This is a complicated issue, but suffice it to say that if corporations weren't granted limited liability by the gov't, but were able to write it away via contracts, not much meaningful would change.