I'd been paying attention to the thread upon which this subject began to be discussed, and had posted there just a bit before I'd noticed that Counselor Scuttling Weasel had made this effort to offer his brilliant suggestion about how limited liability might work in an AnCap society.
Might as well transplant it over here.
The more I give it thought, the more convinced I've become that limited liability would not be possible in an AnCap society. The conditions required to make such a "legal fiction" work - the evasion of responsibility for injuries inadvertently inflicted upon other people - simply cannot exist in the absence of a government.
People in the Belt would have to act at all times and in all ways with a great sense of consequence. With the unimpaired authority to act must come the unabated responsibility to deal with adverse eventualities resulting from those actions.
I think you're right in principle. But when people use language they almost never use it in exactly the same way, and trying to pin down definitions only compounds the problem. Mutual understanding is often more poetic than otherwise.
In any field of human endeavor, technical language - contemptuously dismissed as "jargon" - is developed in order to reduce such confusion (and to foreclose shyster duplicity) by increasing specificity and precision. This helps to mitigate the errors of interpretation.
Effort invested in "
trying to pin down definitions" is, in fact,
precisely what's required to solve the problem.
So, the purpose that encourages people to support limited liability laws is that they want not to be held responsible for things they actually are not responsible for. Say you are a minor partner in a business. You live in San Francisco. A low-paid employee of the corporation in Washington DC makes a mistake that injures thousands of people. And the lawyers sue *you* for everything you've got. We don't want that.
There could be methods that tend to prevent that sort of travesty, without government force. Those methods could be called "limited liability".
Nope. There
must be a government - a "standing army" ready to intervene with aggressive violence in human affairs - operating to provide any "
limited liability" in the sense where we're using the expression here.
Were a collective enterprise - that Mordor-on-the-Potomac "
business" in which the San Francisco resident is invested - to cause harm to someone in its proximal area of operations, what we're speaking about is an arguable
violation of individual rights perpetrated (whether deliberately or inadvertently) by the agents of the business.
The concept of "limited liability" is nothing more than the intervention of government thugs to prevent the enforcement of the injured parties' rights.
In an AnCap society, "no government" means "no limited liability." No way, no how, no matter what the guy in San Francisco (or anybody else) might want.
You could be completely correct, and still Sandy could have a point claiming that liability is not always completely unlimited.
I expect that whatever you do *yourself*, you will be completely liable for. You can't divide yourself up into ten corporations and hire yourself by one corporation at a time so that whatever you do cannot lose more than 10% of your net worth.
But you are not always completely liable for what your employees do without your permission. And you are not always completely liable for the details of what people do as side effects while fulfilling contracts for you. Etc.
No, I'm pretty well convinced that Sandy is wrong, both because he hadn't really thought this issue through and because he's now obstinately refusing to admit that he's trying to build his argument on a foundation with the tensile strength of an aerogel.
Anybody who has ever employed people understands the concept of "chain of command" liability, even if he's never been sued for some error or malefaction committed by one of his employees. There are always questions that need to be settled about responsibility both direct (was the damage done while the subordinate was following procedures and implementing policies that
you had ordained?) and indirect (was your employee being supervised to within a "reasonable" degree in order to prevent misadventure?), but if you
own the business - even just a piece of it - it's your responsibility.
That's why even limited liability companies issuing common and preferred stock have stockholders' meetings which not only have to vet major policy decisions but also provide for the election of directors who are supposed to embody the everyday exercise of the
owning stockholders' responsibility to supervise the
employees managing the business.
Unlike Sandy, who's been weaseling about how "limited liability" might be secured in an AnCap society (it ain't gonna happen, folks), I know of one way in which it
should be possible for a business enterprise to gain capitalization from the fat cats and the small fry alike without vesting ownership responsibilities in those who provide the valuta. It's got plenty of precedent.
Remember, buying stock in a corporation makes you a part
owner of that corporation, and to the extent that your share of that company is a fraction of the corporation's liabilities (as well as its assets), you are - or you sure as hell ought to be - responsible for what your employees do or fail to do, acting as your agents.
Such businesses, however, routinely take out loans, some formally secured by stipulated assets, some unsecured. The issue of corporate bonds is nothing more than floating a loan, with the promise to pay at a certain rate of interest during a specified period. The secondary market value of such bonds tends to depend upon the perception of the issuing company's relative reliability as a payor. "Good" companies' bonds sell at a premium. Corporations perceived as unreliable or declining in their market performance have their outstanding instruments of debt discounted in this secondary market, and when they come again before the public to take out subsequent loans, they either have to offer higher rates of interest or they're diddled.
Instead of you "buying a piece of the action" in becoming a stockholder, you either lend directly to the owners of the enterprise by purchasing a bond (in whole or in part) from them, or you take part in the loan indirectly, by way of the secondary market.
You do
not get to make decisions as a part-owner of the business, but you also don't have to worry about being dispossessed of your personal property to compensate somebody injured by one of the enterprise's employees.
Your liability in case of an adverse outcome is limited to what you've lent the business, when and if the owners of the business default on those loans.
Because "limited liability" is impossible in an AnCap society, I tend to go along with writer L. Neil Smith, who has observed that a libertarian sociopolitical system would be the first genuinely
adult society in the history of the human race.
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To continue in light of Counselor Weasel's self-satisfied excuse for a solution....
In a market anarchy, any group-action (business or otherwise) entity can limit its liability. In fact, any individual can limit his/her liability in the same way and to the same extent.
How is that possible? Easy, you simply declare it! Well, maybe not simply, but certainly easily.
Shorn of hypothetical exemplification, that's it.
As in "that's
all of it." All there is.
In effect, what Counselor Weasel is proposing is the restoration of explicit and implicit contract as opposed to what has been so perniciously subsumed by tort in America's judicial system over the past half-century and more.
Counselor Weasel is saying that when a customer walks onto the premises of the farmers' co-op, he's entering into a contractual relationship with the owners to the effect that there's no way to claim compensation for injuries inflicted (no matter how grievous) beyond the limits set by the owners in posting the notice mentioned by Counselor Weasel.
How this works if one of the co-op's trucks (remember the trucks?) runs through a crowd of people, killing and maiming, we can all wonder about. Counselor Weasel doesn't seem to have considered this.
Maybe he thinks that prominent signs on the trucks declaring some variation on Counselor Weasel's hold harmless declaration (
"The Farmer Direct to You Co-op hereby puts you on notice that by entering these premises, you accept that any judgment arising from a accident in the store will be limited to the assets of the Co-op and that the individual shareholders of the Co-op may not be held individually liable") will suffice.
Yeah, sure.
The objective of the Zero Aggression Principle (ZAP) is the preservation of individual rights in the course of human interaction. So how are the rights of negligently or willfully injured parties preserved under the scheme of "limited liability" proposed by Counselor Weasel?
Jeez, we got them
(*Crickets chirping*) again, don't we?