History Lesson: The Corporation, Part 1 of 3
The public corporation is under attack in America today. The regulatory burden is ever increasing: boards and CEOs are constantly harassed over wide-ranging issues from CEO pay to options "backdating," and the media continues to portray corporate America as a cesspool of corruption. The expenses and risks of being a public corporation are now so great that an unprecedented number of companies are choosing to "go private."
In this course, Dr. Brook discusses the history and economics behind the rise of the modern corporation, explaining how this form of business organization made possible new heights of wealth creation. He explains why the corporation, despite its productive virtues, has been attacked as illegitimate and immoral since its inception. Finally, he discusses the popular paradigm of "corporate social responsibility" and contrasts it with the proper corporate goal of shareholder wealth maximization.
This course was recorded at the 2007 Objectivist Summer Conference
in Telluride, CO.
Jul 06, 2007
Objectivist Conference Presentations
The attacks on "Big Business" - the main talking points: CEO pay, the "Imperial" CEO, corporate democracy.
The current regulatory environment - Sarbanes Oxley (SOX). The subjectivity of interpreting regulation.
The universality of the attacks on corporations. Ralph Nader as a primary figure, who introduced the idea of corporate democracy.
- Corporate Power in America (1973) by Ralph Nader
- Taming the Giant Corporation (1976) by Ralph Nader
- The Consumer and Corporate Accountability (1973) edited by Ralph Nader
Examples of hatred of the corporate form from liberals, conservatives, and libertarians. There are real issues -how did we get to this point?
Background on the phenomenal productivity and gradual destruction of the corporation
Q: How does the US stock market compare to other countries? DOW vs Nikkei
Q: What factors account for American market success? Is it an apples-to-apples comparison?
Q: What does GDP represent?
Defining corporations - what makes them unique as compared to self-proprietorships and partnerships? Limited liability.
Q: Isn't it the case that even in an LLC or Inc. someone can be required to assume personal liability?
Q: Limited liability decreases shareholder risk, but doesn't it increase lender risk?
Limited liability and torts
Q: Is control the key issue in limited liability vs. means? How is shareholders providing cash different from someone who supplied the gun in a crime.
Q: Is there a significant difference between corporations and other forms in terms of taxation?
Q: differentiation between criminal and limited liability for a corporation?
Corporations as separate legal entities - the "fictitious person" concept
The rights of corporations - do corporations get special rights, or lose rights?
Ownership and control of corporations - is it reasonable that shareholders/owners are separated from control of the corporation?
How did we get here - why are there so many corporations? Why are some so large?
Q: What about public vs. private corporations?
Q: How does bankruptcy work and is it legitimate? Chapter 11 reorganization.
The history of corporations and the idea of orporations as government creations: 16th century Britain and early 19th century USA
A new chapter: in 1836 the corporate form begins to change
Q: What started the changes in corporate legal structure in the US in 1836?
A summary of the attacks against corporations, and the answers to those charges
Q: What is the government’s proper role in creating the legal structure of corporations? Should the government stay out of it entirely?
Q: Do companies have the right to create their own legal structure?