Are Corporations Socialist?

Wandering about the web on a Sunday morning, pondering (well, trying to ponder – pondering is probably calmer than my current thought processes) Bill O’Reilly’s definition of what Occupy Wall Street is about

In other words, these folks want our stuff.

Throughout history, there have been human beings who did not want to compete in the marketplace. That sentiment drives a hatred of capitalism. The American economic system is a meritocracy. If you work hard and do well in your job, you usually will prosper providing you practice patience. If you don’t work hard and smart, you will be out on your keister — unless a union saves you.

Well, no.  We want a fair share of the increased American productivity over the last 30 years.  Most people in this country have worked hard and smart over that time, and very few of them – the top 1%, and, really, the top one-tenth of 1% – have gotten the gains. Do people really believe that every currently unemployed construction worker in the country was a lazy SOB who didn’t work hard – or is the implication that they are all stupid? Perhaps if they were smarter, they would have been hedge fund managers in the first place.  And, while it is relatively easy to move up and down in the middle class, it is very hard to move up out of the bottom 20%, and very unlikely that you will fall out of the top 20%.  Pick your parents well.

At any rate, I went to look up the definitions of “capitalism” and “socialism”.

Capitalism
1: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

Socialism
1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods

Collective caught my eye.
6: shared or assumed by all members of the group <collective responsibility>

Aha! A corporation is ownership by a group.  Must be socialist!

But then I looked up corporate
1a : formed into an association and endowed by law with the rights and liabilities of an individual : incorporated

All of which brought me back to something I have known for decades:  the key is responsibility.

An individual or collective of individuals – a sole proprietorship or a partnership – can be sued for something the business does and lose everything they own individually, and can be criminally convicted for the actions of their business.  Enter the corporation, which protects those individuals.

Stockholders in a corporation have limited liability. They can only lose their original investment.  They cannot be sued or arrested for anything the corporation does.

A group which jointly owns a business and has shared responsibility is a collective, and therefore that awful thing, socialist.  A group which jointly owns a business and is, by law, incorporated and therefore exempt from responsibility as individuals, is a corporation, and therefore, that wonderful thing, capitalist.

So we have a situation where a collective of individuals are responsible for the actions of the business. But the owners – stockholders – of a corporation are not responsible for the actions of the business, and the board and employees are only responsible for making a profit for the shareholders.

It is indeed a wonderful world in which people demand individual responsibility while praising a system where no-one is responsible and condemning a system where people are.

8 thoughts on “Are Corporations Socialist?

  1. It beggars belief, it really does. What I can’t see anymore is a clear way out of this mess. Once upon a time I had a firm conviction that socialism was the answer, but I find that the older I get and the more I know, the more I become aware of just how much I don’t know. Most of my former certainties seem to have drained away, which I suppose is rather sad. With growing populations and dwindling resources it seems to me that the division between the haves and have nots is likely to become ever more stark.

  2. This is one of the best discussions I’ve read making the fine line distinction as to why corporations are capitalist organizations despite their collective status. Your points are so relevant to the entire “corporations are people” nonsense that allows corporations to have undue influence on elections and the political process. I don’t know why I didn’t see it! You make i so clear, the key is responsibility.

    I’m sorry that I’ve been remiss in visiting before now. I’ve really appreciated your thoughtful comments on my blog. I’ve bookmarked your blog and I will add you to my blog list.

  3. Lisa, couldn’t locate you on Facebook. If you have an account, please send me a friend request. I posted a link to your blog on my FB wall and you received several positive comments and four of my friends also shared your link.

  4. Mark – thought I had posted this reply to your comment last week by email, but it hasn’t showed up.

    I’m not sure the form matters as much as enforceable accountability. Kings and barons, communist committees, democratic legislatures funded by unaccountable corporations – all run countries for the benefit of the few. Eventually the many realize this and there is a massive correction and it all starts over again. The smallest tribe will eventually get rid of a chief who doesn’t have the whole tribe in mind – or the tribe will collapse. A good system has safeguards built in so that changes aren’t catastrophic – you don’t have to resort to wars, assassination, or peasant revolts.

    Still, it does beggar belief that so many people in modern democracies are run by hate, envy, greed, and fear.

  5. Thanks Sheria, and Nance. Sheria, you’re in my little collection of blogs labelled “Inspiration” that keep me sane.

  6. Wow… funny how the entire article revolves around a subjective definition of the inclusion of one word, responsibility, in the dictionary entry. In point of fact, is an example of the definition, not the definition itself. It might as well of said or . The word “responsibility” has nothing to do with the definition. As further proof of reaching, the author is citing adjective definition 6. A look at noun definition 1 is much more broad and basically means “group”.

    You imply that boards, employees and executives are “are not responsible for the actions of the business”. Actually, they are. Boards, execs and employees can all be arrested and sued for their participation in any illegality.

    Furthermore, you’re incorrect in saying a shareholder cannot be sued or arrested. If a shareholder is involved in illegality, they can be sued or arrested. The protection is so they cannot be sued simply for being an investor. And why would you want investors who did nothing illegal, had no knowledge of illegality, and probably never even voted on anything, be the target of lawsuits and imprisonment? Maybe check your 401K and see how many of the companies you invest in were the target of lawsuits this year (frivolous or not). So you want every customer (even non-customer in some cases), to be able to sue you personally because of your 401K? Get real.

    For laughs, let’s take this level of lunacy to it’s logical conclusion…. let’s say we’re a socialist society and every citizen is a partial owner of every business. Is the authore advocating that I should have the right to personally sue each of the 330 million Americans that are now part owner of a company I have a problem with? Is she also arguing that each American should be subject to imprisonment because of actions the socialized business took?

    As you can see, railing against limited liability as a societal ill is kind of silly. Limited liability is what allows most people to participate in capitalism, even if they don’t see it as such. And if the author is such a big proponent of individual responsibility, why would you want to socialize anything under a government? Governments are less accountable than any corporation. Just look at their accounting!

  7. Socialism (large centralized government control of economy etc) doesn’t work. It’s been a spectacular failure everywhere it’s been employed since Marx and Engles described it formally in the middle 1800’s. It destroys wealth and the only thing shared equally in a Socialist State is the misery and poverty it creates. The Union of Soviet Socialist Republics …. Et al
    Horror… Free market capitalism creates wealth , destroys poverty. Regardless of the economic system you endorse , without a global effort to reduce the human population it really doesn’t much matter … It’s going to end very badly

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