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0 points_delirium15y ago0 comments

It might be worth noting that there's a decent amount of debate in free-market-capitalist circles over just how natural it is that these centralized entities emerge, versus how much they're encouraged/enabled by the government. A lot of the structure of the modern corporation is basically state-created: the limited-liability corporate status to begin with, the centralized form of management with a board of directors, etc.

If there was no built-in scaffolding of corporate status and corporate law, and it were just individuals operating in a free market forming whatever arrangements they want via private contract law, it's at least possible that large, centralized entities wouldn't emerge as easily or as frequently. From that perspective, the modern "sea of centralized entities" version of capitalism is itself centrally planned: the government decided that it'd be best if the economy were made up of a sea of centralized entities, and wrote the rules so that it happened.

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billswift15y ago

Companies exist because they reduce the transaction costs of getting things done relative to doing everythig with independent contractors for example (http://en.wikipedia.org/wiki/Transaction_cost).

The libertarian argument is about how much government regulation influences the size of companies, that is how large companies would be absent regulation, the vast majority of which impacts smaller companies more per dollar of income than it does larger one.

Limited-liability is a natural, almost inevitable, requirement for joint-stock companies, such as corporations, to exist. It does NOT limit criminal or tortious liability of the company; all it does is limit the financial liability of investors to what they have invested in that company, so if your retirement account bought stock in a company that went bankrupt, it is only out what it invested, it does not have to contribute toward paying off the company's secured debt.

wlievens15y ago

The libertarian argument (not sure from your post if you hold it) is pretty simplistic.

What kind of government regulation is keeping Microsoft at near-monopoly level? (if you disagree it's a monopoly, pretend we're a decade back in time)

jerf15y ago

Heh, one can only stuff so much in one comment.

At the limit, I still see some large stuff coming together unless you rip out the legal system well beyond what I think is optimal. My father works for Chrysler, and I have observed that even as they outsource everything they can, the remaining core is intrinsically huge, as there really has to be an entity that is finally responsible for the car. That means that entity has to have a huge testing component. That further means it needs to do its own design. It also really needs to be the one doing the manufacturing, too, even if that is only a "final assembly" step.

Structuring things so that this wouldn't be necessary anywhere in the economy is probably not currently practical. But ask me again in 20-30 years; technology is rapidly shifting from encouraging centralization to the opposite.

ahoyhere15y ago

This is an EXTREMELY interesting observation, since most people think "market" and think "corporations," when the corporation is a fairly new thing -- at least, when it wasn't blessed by the govt (e.g. East India Trading 'Company').

It's simple to take it for granted that it's natural, when instead, it's about as natural as bamboo entrained to grow in loops. Made of natural stuff... yes. In natural form... no.

I KNEW all those individual facts, but you know, I never put it together until you put it just so.

What have you been reading that shaped your views/thinking? I'd like to check it out.

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