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Date: | Fri Mar 31 17:18:52 2006 |
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> This is one theory of the corporation. There are
> others. It is incomplete
> because it does not define the boundaries of the
> corporation, i.e., which
> contracts are internal and which are external.
Actually, the Coase-Williamson approach has no trouble
with defining such boundaries, its just in the nature
of different contracts.
> It
> does not include the
> phenomenon of the corporation entering into
> contracts with other economic
> entities as if it were an individual. My question
> was about a collective acting
> as an individual. A legal fiction perhaps? But one
> that presents real
> theoretical difficulties for individualism.
The corporate veil is just a legal device for
assigning responsibly. It would make no sense to hold
a small shareholder in Union Carbide responsible for
Bopal. There are execs who should have been nailed for
that, but not stockholders who trusted them to make
the right decision. This is just an example of
extended division of labor. The fact that we call the
corp an individual does not create for it a will of
its own. Does a large sole proprietorship acquire a
will of its own by going public? Sam is right about
Olson.
"A corporation can have a collective intention which
is entirely
different from the individual intentions of its
components in
carrying out that intention and is not a mere
summation."
AN unitended consequence of the pusuit of individual
interests among many? I think Hayek has this covered
when he wrote about dispersed kowledge, uncertainty,
and learning- competition as a discovery procedure and
all that stuff. Hayek's theory does cover this stuff.
You might not like the way he covers it, but the idea
that individualism can say nothing about such things
is simply false.
Doug MacKenzie
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