LIMITED LIABILITY IN A MARKET ANARCHY

In fixedly insisting upon the restriction of the arbiter's role to the determination of "liability," Counselor Sandfort is continuing to impose upon this hypothetical a constraint which really would not tend to happen in real life.

The original question was how could liability be limited in an AnCap society.  And yes, it's highly likely that an arbiter would be asked to solve the problem rather than merely determine liability.  However, these involved parties -- coop, LOL, Bobby -- have all agreed to ask the arbiter solely about liability.  This is Sv. Sandfort's way of asking you, dear reader, where you think the liability lies.  He did NOT ask you to solve the problem; he only asked, Where is the liability and why?

Maybe once we sort out where the liability is and why, THEN we can go on to solve their problem for them?  I understand the impulse to solve the problem; it was my first reaction, too.  But it isn't the question, and there's really no way even to offer a solution until you've determined liability (or the lack of it).

Such an arbitration process would then leave the parties without resolution of just what compensation (if any) the successful plaintiff might be due.  Kinda half-baked, don'tcha think?

Why?  Maybe the grownups in the room want to work out their own solution, and it's only the question of liability they want someone else's opinion on.  Or do you want to require everyone to use only the solutions offered by arbiters?

Do you have the grace to say, oops, sorry, I misread the question?  Hey, I misread it myself, at first.

You made it plain that no one should be considered negligent except Bobby. The store was run according to common practice and did everything that would normally be expected of them. The farmers were not negligent in choosing coop management, who did everything normally considered appropriate. They had no reason to expect Bobby would have his single failure.

What Counselor Sandfort is after is an impervious "hold harmless" concept in the rules of an AnCap society. Dunno how that might be enforced. Denying the LOL restorative or compensatory damages on the basis of Counselor Sandfort's "Tough luck, lady; you saw the goddam sign!" approach is entirely too likely to result in a Molotov cocktail response.

Yes, but probably not from a little old lady whose injuries require $2 million to fix. And if she's currently broke, if all her money has been taken out of the bank to pay for medical costs, then she isn't likely to be much of a threat otherwise either. The only problem comes if she can get word out to wealthy or violent altruists before her communications get shut down.

Bye-bye farmers' co-op.

On the other hand, if they pay her a million dollars to give her half the medical care she needs, it's still bye-bye co-op.

In fixedly insisting upon the restriction of the arbiter's role to the determination of "liability," Counselor Sandfort is continuing to impose upon this hypothetical a constraint which really would not tend to happen in real life.

Sure, but it's his story and he gets to set it up however he likes. Maybe later I'll make my own story and ask him to arbitrate it, and he will tell me that my story is unrealistic and a hard case so it isn't worth answering.

In Escape From Terra, we've already seen one story arc in which the nuts and bolts of arbitration on Ceres have been demonstrated, and the arbiter in that case was focused not so much on "liability" as upon the proper compensation for damages done and how to get them out of the three miscreants culpable of the injuries inflicted.

Yes, but they did the liability first. It didn't take long because there was no question who was liable, and the plaintiffs chose not to sue for attempted murder but only for damage to their ship.

I suppose you could posit a hypothetical situation in which the parties on both sides agreed to an arbiter who rules on nothing except the determination of "liability," but that's really reaching way to hellangone up there to find something to yank out that would suit Counselor Sandfort's taste.

Sure, but that's what he did. We can discuss it on his terms but if we go farther then he won't play. No big deal, it's his topic after all, and he can tell his own story however he wants.

The original question was how could liability be limited in an AnCap society.  And yes, it's highly likely that an arbiter would be asked to solve the problem rather than merely determine liability.  However, these involved parties -- coop, LOL, Bobby -- have all agreed to ask the arbiter solely about liability.  This is Sv. Sandfort's way of asking you, dear reader, where you think the liability lies.

The trouble is, this is a bad example to decide whether a sign claiming that liability is limited is enough to limit liability.

The LOL doesn't get what she needs unless you decide that both the co-op and all the farmers are liable. So if you believe that the most important thing is to take care of the LOL, you'll declare them all liable. But a utilitarian wouldn't make that judgement. He'd think that bankrupting the coop and maybe 50 farmers is not a good deal to let an old woman live a few more years in comfort. Would a communist rule for the LOL? Probably not. By stipulation the coop did nothing wrong, so few people would rule for the LOL against the coop much less the farmers, even if they did not have a sign that claimed they were not responsible.

To test whether people believe in the limited liability sign, we would do better with a case where it's perfectly obvious in every way that the coop and the farmers should both be liable, except for the sign. If people agree that the sign overrides everything else then the sign provides limited liability.

As a possible example, maybe half the beef farmers are using chemicals that cut costs but which have bad effects on people who eat the beef. The farmers have heard about scientific studies that claim the harm, but they decide that it's junk science and consider cutting their costs more important. They do not tell anybody, but sell their beef through the coop. A lot of people get sick, and after months of careful expensive epidemiological work it is determined that they all bought beef at the coop, and testing shows the chemicals in some of the beef. A whole lot of people want to sue. A thousand people have had an average of $3000 each in medical costs plus some of them have lost time from work etc.

But the farmers argue that everybody saw the sign. They bought beef at the coop, standing on coop property, so they can sue only the coop and not any of the farmers.

Does the limited liability sign work to limit liability in this case?

This is not my sort of subject but I'll jump in with a couple questions and comments.

Question, what if the Bobby the clerk had been the one to get hurt?

Question, what if one of the farmers had fallen?

Comment, liability implies a mistake or deliberate action. If neither exists there can be no liability. So if it could not have been helped, if it had happened in the time it took Bobby to fetch a mop, no liability.

Easy to confuse with admission of liability but me, I'd pay the old broad's doctor bills, within reason, just to be seen as a nice guy in the community. I, myself, see it as a sound business practice.

The original question was how could liability be limited in an AnCap society.  And yes, it's highly likely that an arbiter would be asked to solve the problem rather than merely determine liability.  However, these involved parties -- coop, LOL, Bobby -- have all agreed to ask the arbiter solely about liability.  This is Sv. Sandfort's way of asking you, dear reader, where you think the liability lies.  He did NOT ask you to solve the problem; he only asked, Where is the liability and why?

Maybe once we sort out where the liability is and why, THEN we can go on to solve their problem for them?  I understand the impulse to solve the problem; it was my first reaction, too.  But it isn't the question, and there's really no way even to offer a solution until you've determined liability (or the lack of it).

Essentially, Counselor Sandfort has used an "Enter at Your Own Risk!" admonition to give the farmers participating in his hypothetical co-op a "hold harmless" escape clause, the notice defining to their customers the extent of the compensation for which they have decided to make themselves liable should a tortious act - intentional or negligent - take place on their property as the result of actions undertaken by themselves or their hired agents.

As I'd said, it's a "Tough luck, lady!" way of dismissing a customer's demand for restitution or compensation for damages suffered because of the co-op operators' direct or indirect failings in the discharge of their responsibilities to their customers.

As arbiter, I'd have to ask: "Would Bobby be doing anything in that co-op which might have resulted in this little old lady's injury?"

The answer, almost certainly, is "No."  Bobby was working as an employee of the co-op, a hired hand, performing tasks dictated by the management, most of whom are themselves co-op employees. Ultimately, the responsibility - the "liability" - for whatever happens in the co-op as the result of action on the part of the co-op's agents has to rest upon the co-op owners, who set purpose and policy and procedure.  As Counselor Sandfort so contemptuously snarked, respondeat superior.

There can be some distribution of "liability" in the sense that Bobby and his manager(s) and even the injured customer might be determined to hold some responsibility for contributory negligence, and this may be said to reduce the "liability" of the co-op owners. That's one of the reasons why an arbiter to whom this case is brought for no purpose other than to rule on Counselor Sandfort's "liability" fixation subject has to know a helluva lot more about the purposes, policy, and procedures under which Bobby - the co-op employee - was working when he had the accident that precipitated the customer's slip-and-fall.

Counselor Sandfort wants much (if not most) of the "liability" for the injuries sustained by the customer to be accorded the customer herself.  She was notified, before she walked into the co-op, that the operators of this place of business were by summary ukase limiting their "liability" for damages to the extent stipulated by Counselor Sandfort, and if anybody wanted to contest that assertion, they're screwed.

Might we call this the "Nyaah-Nyaah-N'-Nyah-Nyah!" defense?

So what the hell need is there for anybody reading Counselor Sandfort's hypothetical to say how that reader might allocate "liability" were he (or she) to have the case brought before him as an arbiter?

Unless he's able to deal the cards from a stacked deck, Counselor Sandfort doesn't want the game to be played.

Maybe the grownups in the room want to work out their own solution, and it's only the question of liability they want someone else's opinion on.  Or do you want to require everyone to use only the solutions offered by arbiters?

Do you have the grace to say, oops, sorry, I misread the question?  Hey, I misread it myself, at first.

Because the "liability" determination has to take into consideration the concepts of contributory negligence, "chain of command" (respondeat superior), and intentional tort (among other things), an arbiter's decision to let the co-op owners off the hook - which is what Counselor Sandfort is angling for in his quest for "limited liability in an AnCap society," without the privileges and immunities accorded by government thugs - is an unlikely outcome.

Moreover, as I'd observed, were that to be the case, the owners of the co-op would find themselves with a public reputation so damned bad that they lose custom.  In fact, some other person - not at the request of the injured little old lady but out of his own rage - might well burn the co-op down, particularly if he thought he could get away with it.

The farmers could go broke just trying to mount 24-hour guard on the place.

The kind of "Tough luck, lady!" attitude toward the co-op's visitors embodied in Counselor Sandfort's "Enter at Your Own Risk!" notice would tend to alienate customers and vendors alike. Given other options, people might prefer to take their money someplace other than Counselor Sandfort's unwelcoming "Screw You, Buddy!" farmers' co-operative.

All other things being equal, the provision of liability insurance offers a better solution, with customers paying the "built in" cost of that business expense to have both the surety of restorative compensation should they suffer some inadvertent injury and a less adversarial relationship with the proprietors when they visit.

By aggregating expertise on the subject of "liability," the insurance carriers not only help the co-op owners with the establishment of procedures to achieve usual-and-customary standards of risk mitigation but also participate in arbitration, when and if such becomes necessary.

Essentially, Counselor Sandfort has used an "Enter at Your Own Risk!" admonition to give the farmers participating in his hypothetical co-op a "hold harmless" escape clause, the notice defining to their customers the extent of the compensation for which they have decided to make themselves liable should a tortious act - intentional or negligent - take place on their property as the result of actions undertaken by themselves or their hired agents.

Yes. And I believe this is not necessary -- if the farmers are not in fact negligent then a reasonable arbiter will not hold them liable.

Further it is not sufficient in general. The coop owns trucks that can have accidents. If a coop truck driver is responsible for $2 million in damages, does it mean anything if the coop has a sign on the truck saying they will only pay up to $10,000? Sov. Sandfort says anybody can declare any liability limit they like, and expect it to stick?

As arbiter, I'd have to ask: "Would Bobby be doing anything in that co-op which might have resulted in this little old lady's injury?"

Sandy's story says that Bobby did not clean up the mess immediately. If he had cleaned it up sooner then that particular accident would not have happened.

The answer, almost certainly, is "No."  Bobby was working as an employee of the co-op, a hired hand, performing tasks dictated by the management, most of whom are themselves co-op employees. Ultimately, the responsibility - the "liability" - for whatever happens in the co-op as the result of action on the part of the co-op's agents has to rest upon the co-op owners, who set purpose and policy and procedure.

As I understood the story, the coop had held classes which Bobby attended, that taught him to clean up spills immediately. He did not follow the rules to the letter. Therefore he was liable and the coop was not. You might make an argument that the coop was somehow liable in spite of doing everything they could think of to prevent such accidents, but I can't imagine an argument that the individual farmers were liable.

If the farmers were clearly not liable, I don't see that this story tells us how well the limited liability sign worked to prevent them being held liable.

There can be some distribution of "liability" in the sense that Bobby and his manager(s) and even the injured customer might be determined to hold some responsibility for contributory negligence, and this may be said to reduce the "liability" of the co-op owners.

The parties to the dispute agreed that the LOL was not responsible at all, and that Bobby did not follow coop rules. He had taken customer safety classes, so he knew the rules.

"+ There was no contributory negligence on the part of the LOL

+ Bobby was negligent

+ No other store employee were liable

+ This is the first act of negligence committed by Bobby

+ Bobby had a positive background check

+ Bobby and all employees were given customer safety classes

+ The Co-op had never had any customer accident before"

What else could the coop have done to reduce this sort of thing?

1. They could try to do stocking when the store is closed, or if they do not close at times when a minimum number of customers are present.

2. They could have gates to keep customers out of problem areas. (Today I stopped by Home Depot and they had the place I wanted to go gated off to keep me from getting hurt while they did stuff with forklifts.)

3. They could arrange for home deliveries. The more customers that do not enter the store, the fewer customers that get hurt in the store. If a delivery contractor hurts a customer, that's between him and the customer unless there was something wrong with the shipment itself. Home deliveries might be popular, especially with LOLs.

4. There may be ways to reduce spillage in the first place. In Ceres gravity it might be cheap enough to package everything so it can withstand falls, or at least be contained. Less dangerous and easier cleanup. Even a small extra cost to prevent rare accidents may seem excessive, but customers may like to prevent accidents at home too....

5. Try to schedule truck deliveries when traffic is minimal, etc. There are lots of accidents to avoid, not just the one that happened.

But just because there may be further things the company could do to prevent accidents that are not yet common practice, is not enough excuse to say they are liable for the accident that did happen.

Counselor Sandfort wants much (if not most) of the "liability" for the injuries sustained by the customer to be accorded the customer herself.  She was notified, before she walked into the co-op, that the operators of this place of business were by summary ukase limiting their "liability" for damages to the extent stipulated by Counselor Sandfort, and if anybody wanted to contest that assertion, they're screwed.

It's an interesting concept with lots of ramifications. Suppose that you sign a contract and in the fine print it says "Party A reserves the right not to be bound by any of the terms of this contract, but Party B is bound by all of them no matter what". They refuse to deliver any services whatsoever but argue that you must pay full price for the duration of the contract, for the services they do not deliver. Clearly, you should not have signed that contract.

Say a morose-looking man is sitting at a bar, and there is a small placard on the bar beside him that says "Sandy Sandfort refuses to accept any legal consequences for anything that happens if you approach him and say hello". Tucci says hello, and Sandy shoots Tucci in the head. Afterward Tucci cannot tell anyone whether he read the sign. Is Sandy liable for anything?

Unless he's able to deal the cards from a stacked deck, Counselor Sandfort doesn't want the game to be played.

It's his game and his deck. If you want a different game, start your own.

Moreover, as I'd observed, were that to be the case, the owners of the co-op would find themselves with a public reputation so damned bad that they lose custom.  In fact, some other person - not at the request of the injured little old lady but out of his own rage - might well burn the co-op down, particularly if he thought he could get away with it.

It's a bad situation. It's bad for them if they are judged liable. It's still bad for them if they are not judged liable. There has been an accident that the coop cannot make right. Maybe the best thing for them would be to be found not liable, to dissolve the corporation, and start over fresh with a new corporation. But this accident could happen to anybody, and another could happen to the new coop.

The kind of "Tough luck, lady!" attitude toward the co-op's visitors embodied in Counselor Sandfort's "Enter at Your Own Risk!" notice would tend to alienate customers and vendors alike. Given other options, people might prefer to take their money someplace other than Counselor Sandfort's unwelcoming "Screw You, Buddy!" farmers' co-operative.

It depends on the customs of the place. Maybe all the businesses do it this way. Maybe it doesn't look like a great selling point not to do it this way. Business owners might think, "People mostly assume they won't have an accident. If I advertise that I have unlimited liability, will that mostly get me new customers who want to have an "accident" and hold me liable?".

All other things being equal, the provision of liability insurance offers a better solution, with customers paying the "built in" cost of that business expense to have both the surety of restorative compensation should they suffer some inadvertent injury and a less adversarial relationship with the proprietors when they visit.

It depends. The insurance company gets a fixed income to accept unlimited risk? The businesses they insure have little reason to obsessively prevent accidents, because those have become somebody else's problem? Let's say the coop has gone 10 years with only one $2 million accident. Would that say a fair price for insurance should be somewhere around $200,000/year? Does that seem steep for a business that's worth $1 million? Is the insurance company required to open its books to its customers? Insurance is inherently a winner-take-all business, because other-things-equal the biggest company has the most predictable cash flow. If they raise your rates should you shop around to get a price from the other giant insurance companies?

Capitalist insurance is a snare and a delusion. Others probably are too.

Question, what if the Bobby the clerk had been the one to get hurt?

Complicated. If they just fire him and leave him to rot, it's bad for morale. Unless he was unpopular or known to be clumsy. If he sues them it will be hard for him to get another job, but then if he's badly disabled it will be hard for him to get another job anyway. It makes sense for them to pay his medical expenses if they can, but if it's too much then there's no good solution.

Question, what if one of the farmers had fallen?

Everybody would have been sorry for him. They would probably chip in to help him out, at least some. If he sued the coop and/or other farmers they would be outraged at him. Don't even go there.

Comment, liability implies a mistake or deliberate action. If neither exists there can be no liability. So if it could not have been helped, if it had happened in the time it took Bobby to fetch a mop, no liability.

"A little old lady (LOL) shopper slips on some liquid spilled on the floor by Bobby, a stocker, employed by the  employees, who then didn't bother to clean it up."

The implication is that he could have cleaned it up before she slipped, but he had not yet cleaned it up. If she had slipped on it before he could have cleaned it up then it would not be his fault for not cleaning it up. But he might have done something else wrong. If he didn't do anything wrong, how come he spilled liquid on the floor in the first place? Surely he was taught how to do his job without spilling liquid on the floor.

Easy to confuse with admission of liability but me, I'd pay the old broad's doctor bills, within reason, just to be seen as a nice guy in the community. I, myself, see it as a sound business practice.

She needs twice as much as the coop has. You could give her a token gift, but you plain don't have what she needs.

You made it plain that no one should be considered negligent except Bobby.

Nope, never said such a thing. This is why it would be very difficult for you to become a lawyer (or logician for that matter). You are not a critical reader. I think I know what statement lead you to this erroneous conclusion, but your inference is simply not supported by the very clear words I used. What is critical here is the farmers/owners liable for the LOL's injuries.

I am not trying to pick on you. As I have said is that you have an agile and creative mind. Now, you just have to work on parsing the English language and not drawing unsupported conclusions. I strongly suggest you review what I wrote, and look for anything I said that would lead to the conclusion that I "made it plain that no one should be considered negligent except Bobby" (emphasis added). If you find that I have made it plain, quote my plain words that support the idea that neither the Coop nor the farmers automatically have no liability.

Independent of the question whether they can limit liability by saying so...

The scenario was designed to test the question of liability, as you have finally seen. If you want to create a reasonable scenario (i.e., one that  could realistically arise in the real world) about limits on compensation, knock yourself out. You can even use this scenario. However, it would be polite to first make a ruling as to who is liable and tell us why.

What Counselor Sandfort is after is an impervious "hold harmless" concept in the rules of an AnCap society. Dunno how that might be enforced. Denying the LOL restorative or compensatory damages on the basis of Counselor Sandfort's "Tough luck, lady; you saw the goddam sign!" approach is entirely too likely to result in a Molotov cocktail response.

Of course that is a totally erroneous misstatement of my words. It is my opinion, for what it is worth, that the Co-op would clearly be liable to LOL (as would Bobby). I really am surprised that all of this is not obvious to some of you.

BTW, please do not call me "Counselor Sandfort." I have asked you to call me "Sandy" to your "Tucci78." If you prefer the use of the honorific, "Dr. Tucci78," I would accept either "Writer Sandy" or "Dr. Sandy." I have agreed to call your what you specified, "Tucci78." Please reciprocate. Thank you in advance for your cooperation.

Maybe once we sort out where the liability is and why, THEN we can go on to solve their problem for them?  I understand the impulse to solve the problem; it was my first reaction, too.  But it isn't the question, and there's really no way even to offer a solution until you've determined liability (or the lack of it). (Emphasis added)

Bravo! Mellyrn gets it. Why is it so difficult for some of you to see the obvious? Read her words again. The scenario is really this simple, "there's really no way even to offer a solution until you've determined liability", duh!

You made it plain that no one should be considered negligent except Bobby.

Nope, never said such a thing. This is why it would be very difficult for you to become a lawyer (or logician for that matter).

I am a logician. I did not say that you said no one should be considered negligent except Bobby. I said that you made it plain.

Here is my reasoning, which you might disagree with.

+ Bobby was negligent

This is been agreed by everyone including Bobby.

+ This is the first act of negligence committed by Bobby

+ Bobby had a positive background check

+ Bobby and all employees were given customer safety classes

+ The Co-op had never had any customer accident before

The coop has done everything that could be reasonably expected of them to prevent accidents. They had no reason to think Bobby would be negligent -- they had no evidence he had ever been negligent before. They taught him what to do, and he did not do it. What more could they be expected to do?

+ A little old lady (LOL) shopper slips on some liquid spilled on the floor by Bobby, a stocker, employed by the  employees, who then didn't bother to clean it up.

You did not state that the customer safety classes taught Bobby to immediately clean up spills. But it was a customer safety class, and if it did teach Bobby to immediately clean up spills, and if he had immediately cleaned up this one, the LOL would not have had the particular accident she did. If she had slipped before he could have cleaned it up then you would not say that he didn't bother to clean it up.

Obviously, I think there is sufficient information to make an appropriate assessment of liability.

So either you think we already know enough to know whether the coop was negligent, or the coop's liability does not depend on whether the coop was negligent.

If you believe you have given us enough to decide whether the coop was negligent, then I say that means the coop was not negligent. They showed Bobby how to do things to minimise accidents. Bobby failed to follow instructions leading to an accident. They had no reason to think Bobby would fail this way. Not negligent.

However, it's still possible you feel the coop was liable even if they did nothing wrong. If they are liable either way, then there is no need to decide whether they were negligent and you could say that the data you have provided does not show whether they were negligent or not.

But I say you would not try to trick us this way. You would not talk about the safety classes etc while hiding that the safety classes did not actually teach safety. So I say you made it plain that the coop was not negligent.

I think I know what statement lead you to this erroneous conclusion, but your inference is simply not supported by the very clear words I used. What is critical here is the farmers/owners liable for the LOL's injuries.

I think perhaps you left out something, perhaps some bit of traditional legal background that you supposed we would have.

If you find that I have made it plain, quote my plain words that support the idea that neither the Coop nor the farmers automatically have no liability.

I didn't say they have no liability. I said that they were not negligent. If they get liability only through negligence, then they have no liability, but we have not established whether that's true in your mind.

Independent of the question whether they can limit liability by saying so...

However, it would be polite to first make a ruling as to who is liable and tell us why.

I did that in the comment you just replied to.

What Counselor Sandfort is after is an impervious "hold harmless" concept in the rules of an AnCap society. Dunno how that might be enforced. Denying the LOL restorative or compensatory damages on the basis of Counselor Sandfort's "Tough luck, lady; you saw the goddam sign!" approach is entirely too likely to result in a Molotov cocktail response.

Of course that is a totally erroneous misstatement of my words. It is my opinion, for what it is worth, that the Co-op would clearly be liable to LOL (as would Bobby). I really am surprised that all of this is not obvious to some of you.

BTW, please do not call me "Counselor Sandfort." I have asked you to call me "Sandy" to your "Tucci78." If you prefer the use of the honorific, "Dr. Tucci78," I would accept either "Writer Sandy" or "Dr. Sandy." I have agreed to call your what you specified, "Tucci78." Please reciprocate. Thank you in advance for your cooperation.

Hm. You begin with the assertion that it is possible for "limited liability" - in the manner we today, in the Western polities, define the expression - to be effected in an AnCap society (a "MARKET ANARCHY") by way of the "hold harmless" notice posted outside the "Semper Fi, Mac!" farmers' co-operative, and now you're saying that you, Sandy, opine "that the Co-op would clearly be liable to [the] LOL (as would Bobby)."

So was there ever a point here, "Or are we just jerking off?"

(With all due deference to the good Reverend Johnson of Rock Ridge.)

It depends. The insurance company gets a fixed income to accept unlimited risk? The businesses they insure have little reason to obsessively prevent accidents, because those have become somebody else's problem? Let's say the coop has gone 10 years with only one $2 million accident. Would that say a fair price for insurance should be somewhere around $200,000/year? Does that seem steep for a business that's worth $1 million? Is the insurance company required to open its books to its customers? Insurance is inherently a winner-take-all business, because other-things-equal the biggest company has the most predictable cash flow. If they raise your rates should you shop around to get a price from the other giant insurance companies?

Capitalist insurance is a snare and a delusion. Others probably are too.

Tsk. If we go back four and five thousand years, we find insurance measures being developed in ancient China and in Babylon long before the concept of "capitalism" was even imagined. You're on the Internet.  Even "Wiki-bloody-pedia" gives supported information on the history of insurance.

The way I had it described to me some time ago, one way in which the modern concept of insurance came to be developed was in classic Greece, where merchants learned over the years that perhaps one cargo ship in ten would not return to its home port from its voyaging.

Even after allowing for known factors like season and distance to be traveled, soundness of the ships' hulls and rigging, quality of captains and crews, there was a predictable loss rate. It was just not possible to predict which ship was not going to come back.

So to keep themselves from being knocked out of business by one particular loss, the ships' owners and the merchants putting their goods aboard these ships decided to join in a risk pool, kicking in some percentage of the replacement value of their stuff so that when a ship was lost, some compensation could be paid from the pool to help the owner and the merchants recoup some of their losses.

This pooling of risk gave the participants cause to assess the knowable factors carefully.  A battered, leaky old cargo ship? The owner might not be admitted to the risk pool, or he'd have to put a greater percentage of the value of his ship and cargo into the pool in order to cover the higher risk that his particular ship would fail to come home again. A well-founded ship with an experienced captain? Might be judged as more of a "sure thing," with less of a risk assessment.

In a division-of-labor economy, people who become skilled and effective at inspecting ships, evaluating officers and crews, and otherwise assessing risk would become professional insurance people. The risk pools they manage keep their participants from going bust more effectively than others do.

"Better to deal with Agathon of Corinth or that shifty-looking little guy from Rhodes; they've both got good reputations. The fancy fella who set up in Pireaus last season? He couldn't tell you whether or not that washtub over there will hold water!"

Insurance companies in a market not deliberately distorted by politicians and the priorities of government have got to become experts at the assessment of risk.

In The Moon is a Harsh Mistress, Heinlein put it this way, in a scene where Manny is being interviewed on Earth just after the Loonies had overthrown the Warden and declared their independence:

One man demanded to know why, since we paid no taxes, we colonists thought we had a right to run things our own way? After all, those colonies had been established by Federated Nations - by some of them. It had been terribly expensive. Earth had paid all bills - and now you colonists enjoy benefits and pay not one dime of taxes. Was that fair?

I wanted to tell him to blow it. But Prof had again made me take a tranquilizer and had required me to swot that endless list of answers to trick questions. "Lets take that one at a time," I said. "First, what is it you want us to pay taxes for? Tell me what I get and perhaps I'll buy it. No, put it this way. Do you pay taxes?"

"Certainly I do! And so should you."

"And what do you get for your taxes?"

"Huh? Taxes pay for government."

I said, "Excuse me, I'm ignorant. I've lived my whole life in Luna, I don't know much about your government. Can you feed it to me in small pieces? What do you get for your money?"

They all got interested and anything this aggressive little choom missed, others supplied. I kept a list. When they stopped, I read it back:

"Free hospitals - aren't any in Luna. Medical insurance - we have that but apparently not what you mean by it. If a person wants insurance, he goes to a bookie and works out a bet. You can hedge anything, for a price. I don't hedge my health, I'm healthy. Or was till I came here."

In essence, real "Capitalist insurance" is more like placing a bet with an insurer (doesn't matter if it's a big company or a "friendly society" or just one guy) that whatever you're insuring against will happen to you. He's betting that it won't, and if he's any good as a bookie, he sets the odds of the bet so that you and everybody else will wind up paying enough into the risk pool that it more than compensates for the pay-outs to those people in the pool who win their bets.

With life insurance, you "win" by dying.

You got something against bookies?

A lot of people get sick, and after months of careful expensive epidemiological work it is determined that they all bought beef at the coop, and testing shows the chemicals in some of the beef. A whole lot of people want to sue. A thousand people have had an average of $3000 each in medical costs plus some of them have lost time from work etc.

But the farmers argue that everybody saw the sign. They bought beef at the coop, standing on coop property, so they can sue only the coop and not any of the farmers.

Does the limited liability sign work to limit liability in this case?

What does the sign say?  Does it say  "If our meat makes you sick, not our problem"

If that is what the sign says, does not matter if people thinks it validly limits liability, no one is going to shop there.

A lot of people get sick, and after months of careful expensive epidemiological work it is determined that they all bought beef at the coop, and testing shows the chemicals in some of the beef. A whole lot of people want to sue. A thousand people have had an average of $3000 each in medical costs plus some of them have lost time from work etc.

But the farmers argue that everybody saw the sign. They bought beef at the coop, standing on coop property, so they can sue only the coop and not any of the farmers.

Does the limited liability sign work to limit liability in this case?

What does the sign say?  Does it say  "If our meat makes you sick, not our problem"

If that is what the sign says, does not matter if people thinks it validly limits liability, no one is going to shop there.

The sign says you can only sue the coop and not any of the owners.

The coop sold contaminated beef without knowing it, beef that was contaminated by owners. Can you only recover money from the coop and not from the farmers who actually did the deed?

Does limited liability mean that the owners are not liable for what they do when it is in fact them doing it?