The modern libertarian movement has at least two branches: emphasis on personal liberty, and emphasis on the liberty of players in the economic market place. These two philosophies are in practice hostile to each other. Their rhetoric is similar. Citizens and voters, even active advocates, might not recognize the distinction – until some libertarian party has the misfortune to win elections on a large scale. But in any attempt to actually govern, they and we would learn otherwise. Any libertarian party, which attempts to embrace both philosophies, is a house divided against itself.
A coherent libertarian platform, one capable of governing, must undo a tragic error of judicial legislation, dating to the 19th century. Prior to oral argument of Santa Clara County v. Southern Pacific Railroad Company, Supreme Court Justice Morrison Remick Waite pronounced that “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of opinion that it does.” The court reporter therefore entered into the record of the Court's findings that “The defendant Corporations are persons within the intent of the clause in section 1 of the Fourteen Amendment to the Constitution of the United States, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws.” It is time to recognize that a corporation is NOT a person. A corporation is NOT entitled to “constitutional rights.” The individuals who invest in a corporation are entitled to individual rights AS investors, but the corporation itself is not.
In fact, corporations are creatures of government. There is nothing “natural” about a corporation. Just as Americans have always been jealous of the usurpation of power by our governments, we must be equally vigilant against the usurpation of power by corporations, and for exactly the same reasons. To the extent that we, as the sovereigns of our nation, authorize our governments to charter corporations, we should be equally insistent that the government keep its creature on a short leash, under tight regulation and supervision. That corporation is best which governs least. (Corporations should not govern at all.)
There are practical reasons why it makes sense to allow corporations to exist. The original concept is the “limited liability corporation.” That means, if you invest in General Motors stock, and General Motors goes bankrupt, the most you stand to lose is the value of your stock. If General Motors were a partnership, you and all your assets would be on the line for the debts of General Motors. Your savings, your house, your car, could all be seized to pay the company’s debts. That is true of unincorporated small businesses: if Mr. Jones owns a corner grocery store, and the store goes into debt, Mr. Jones is personally liable for the debts of the store. This is why doctors and lawyers asked for laws allowing them to organize their businesses as professional corporations.
Corporations allow for large sums of capital to be put together, to invest in large projects like trans-continental railroads, or manufacturing plants covering several acres. A handful of individual investors, even rich ones, can’t really put all that together. It is not possible to have “small local airlines” offering service all over the world. But the corporation, like the government, is merely our servant. We must never allow either to become our master.
The problem is that a corporation can grow to possess billions of dollars in assets, employ hundreds of thousands, or even millions, of employees, and dominate the economy of whole cities, states, even nations. It can take on a life of its own, independent of what is good for the people or the community. Then, when free citizens of a democratic republic try to reign in this monster, the managers and directors of the corporation claim “but we are a person, with RIGHTS. You can’t trample on our RIGHTS. Nonsense.
When is the last time we added to the constitution of any state, or of the United States, a provision providing for a “congressional representatives’ bill of rights”? How about a “bureaucrats’ bill of rights”? Do OUR public servants have a “reasonable expectation of privacy” in the conduct of OUR public business? There is no reason that the conduct of corporate business should be any less transparent, or any less subject to restraint, than the conduct of government business. We the people have rights. Government and corporations do not have rights.
Legally, limited liability must be created by law. If there is not specific legislation, authorizing the existence of a limited liability corporation, then there is no limited liability. Every business would be a partnership. In the early decades of the USA, state legislatures passed a separate bill individually authorizing any corporation the state chose to authorize. Later, standard laws provided for a standard process of incorporation.
Corporations exist by government fiat, subject to a government-issued license, with power and authority derived directly from special government favor. Why should we, the people, acting through our elected government, grant this special consideration to any or all corporations? Only if, and only to the extent, that there is some public purpose or benefit to doing so. In fact, there is economic benefit; our economy does produce more efficiently all kinds of things we want, by allowing corporations to exist. Millions of citizens do have individual opportunities to invest, that we would never have through partnerships writ large. But, we have every right to subordinate this creature of government to the public good, and to demand a healthy respect for the rights of individual citizens over the needs and desires of the corporation we suffer to exist.
Human beings are endowed by our Creator with certain inalienable rights. To secure these rights, government derive their just powers from the consent of the governed. IF they provide sufficient benefit to the sovereign people, corporations are suffered to exist, subject to government license. Corporations do not enjoy rights. If we get that straight, then a libertarian program begins to make sense. But if there is one area where extensive government regulation makes sense, it is to severely restrict the natural tendency of corporations, like governments, to exceed their legitimate powers. Why should it be government that regulates corporations? Because, corporations are too big for any other power to do so. Just try to have a “citizens’ committee” push a multi-billion dollar corporation around!
A good rule of thumb, for a free enterprise system that values individual liberty, is that the bigger a corporation becomes, the more essential its product is, the more regulated it will be. No bureaucracy needed to regulate Alexander Graham Bell’s lab work to develop the telephone. He was entitled to the benefits of a patent on his work. But once it became essential to have a phone, once a large corporation owned transcontinental networks (which required government regulation to acquire rights of way), AT&T had to be tightly regulated. We don’t need little Suzy to get a business license to set up a lemonade stand in the front yard on hot summer’s day. But we do need peanuts from Georgia, made into peanut butter in Chicago, then sold in Seattle, to be inspected. Likewise, Kerr-McGee oil company must be tightly regulated for the health and safety of all its neighbors, employees, and customers. No corporation should be allowed to exist on any other basis. Rights are for people.
