Corporate transparency

Jeff Bone jbone@jump.net
Tue, 08 Jan 2002 16:32:15 -0600


"Adam L. Beberg" wrote:

> I've been reading this thread with some confusion.
>
> If you had full transparency why would you even need to concept of a
> corporation anyway? The main reason to have a corp is to hide things.

No, the main reason to have a corporation is to have (a) a vehicle into which
investors can pool investment in pursuit of ROI while at the same time
distributing risk, and (b) a mechanism for limiting the liability to a given
investor.  These things as existential purposes for corporations are orthogonal
to any notion of transparency / opacity / need or desire to hide anything.  The
corporate structure exists to incent and enable investment;  without those two
things (ability to share risk at the expense of distributing upside pro-rata,
limited liability) many kinds of investments and investment are less attractive
to those with capital to invest.  .:, w/o corporations, capitalism as we know
it --- the kind of innovation-encouraging capitalism that has made us the
economic torchbearer for the world --- doesn't work.  IMO, those corps (at
least the private ones) also have to be opaque to make it work.

> Now, I'm not saying corps arent critical, because most people probably
> wouldn't take any kind of risk at all without this mechanism in place. It's
> the grease that capitalism runs on. Which is why you only see sole
> proprietorships and partnerships in safe and boring types of business.

You got it! :-)

Now, a cryptoanarcholibertarian with a bias for contracts and a distrust of
granting organizations any sort of legal status whatsoever ;-) may have *other*
problems with the notion of a corporation, but I think it's pretty safe to
assert that they are an essential feature of the mechanism through which
current capitalism operates and which by induction is essential to the kind of
technological progress and innovation that we've been enjoying over the last
few decades.

jb