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Fun exploration of limited liability corporations, and of anarchist community, with “principled libertarian” Stephan Kinsella

February 20th, 2014 No comments

I haven’t been in communication with anti-IP stalwart and occasional sparring partner Stephan Kinsella for some time (I lost my appetite for his hostility), but I saw him recently on Facebook, where he had reposted a review he had done of the movie “Avatar”; as I had liked his review, I stopped by to say hello. [Note: my various #Avatar-related posts, from my blogging/commenting days at the Mises Institute, are here: https://tokyotom.freecapitalists.org/?s=avatar.]

What follows are his Facebook post and our ongoing dialog to date (some other persons also appear; cross-links after the name); stay tuned!

1. Kinsella (Feb 12 at 10:54 pm)

I confess, I am not the a very good movie reviewer. When I occasionally do one, they start looking dated within months. Anyway, I remember this one from 2009. I got tons of grief for it from fellow libertarians, e.g., if I recall, Michael Barnett.

http://www.lewrockwell.com/lrc-blog/avatar-is-great-and-libertarian/

2. TokyoTom (Feb 13 at 2:52 pm)

I didn’t give you any grief about it, Stephan – in fact I praised you for it – but then I’m a good statist, like you:
https://tokyotom.freecapitalists.org/2009/12/22/envirofacist-avatar-comments-quot-avatar-quot-resources-property-rights-corporations-government-enabled-theft/

3. Andy Katherman (Feb 13 at 11:51 pm)

Great movie review Stephan. I wrote something very similar back in 2010 on my blog (http://www.libertyforlaymen.com/…/natural-law-take-on…). Mind you, I was in my anarcho-libertarian “infancy” and more of a minarchist/Constitutionalist back then.

It’s funny James Cameron is probably more of a pinko-commie-ish-enviornmentalist than a libertarian, but I had the same reaction in that he actually presented a brilliant case for the necessity of property rights and lockean homesteading than pretty much any other movie that comes to mind… all the while doing it with great visual effects and a pretty decent plot!

4. TokyoTom (Feb 14 at 8:32 am)

Andy, Cameron wasn’t presenting a brilliant case for the necessity of property rights and lockean homesteading, but an allegory for the reality of corporate resource development around much of the world where native title is ignored, and a fantasy of natives fighting back. Of course it’s a more tangled reality, with governments frequently involved, wanting royalties, and arrogating rights to balance interests. BP and the Gulf of Mexico and the Kochs, Albertan oil sands and Keystone, for example.

5. Kinsella (Feb 14 at 8:43 am)

why add the word “corporate” Tom? What does that add to anything. There is nothing inherent in corporations that makes them more likely to violate rights. It’s just a form of business organization.

6. Andy Katherman (Feb 14 at 3:30 pm)

Disagree “TokyoTom”. I concede Cameron is probably an eco-nut of the “watermelon” variety (green on the outside, commie red on the inside) and has disdain for commerce, free markets, and “Capitalism” (properly understood)… and may not even care about property rights. But, the movie really is a terrific demonstration why property rights are a vital normative concept to reduce conflict over scarce resources. And, it also provided a case why aggression is Bad and why self-defense of homesteaded land/property/resources (Home Tree) is good and JUST. Yes, it is an allegory and it gets a bit weird at times (mystical-ish) but so what. It’s a frickin’ movie not a revisionist documentary. I still hold it is a great work of fiction and a mostly libertarian one at that.

7. Kinsella (February 15 at 12:32am)
Tom has long been a gadfly type. He supports all manner of unlibertarian proposals, but wants to fly the libertarian radical flag, and of course people like him start to feel uncomfortable so they start attacking anyone wiht principles. They basically become useless nihilists.

8. TokyoTom (February 17 at 12:01pm)

Stephan, that last comment is a very impressive demonstration of confused, unprincipled, unconstructive blatheration. It’s the kind of reflexive, self-satisfied hostility I expect to see of statists, but am a bit embarrassed to see from self-ascribed ‘anarchists’/libertarians. Nice show.

9. Kinsella (February 17 at 12:03pm)

apparently the existence of principled libertarians drives the pragmatists and minarchists and middle-of-the-roaders nuts.

10. TokyoTom (February 17 at 12:04pm)

Andy, thanks for the comment. Dunno why you feel the need to bash Cameron as a “watermelon” “eco-nut”, when he has made it clear in other contexts that he is standing up for the rights of native peoples.

The struggle he addressed in Avatar is still very much underway; see this from recent news? “To get the gold, they will have to kill every one of us”

11. TokyoTom (February 17 at 12:08pm)

Stephan suggests that “There is nothing inherent in corporations that makes them more likely to violate rights. It’s just a form of business organization.”

I imagine Stephan can likewise not see the moral hazard trainwrecks that have also been set in motion by governments insuring deposits, protecting the shareholders of listed companies, owning and developing resources, or in regulating on the basis of pollutions or public health and safety, either.

12. Kinsella (February 17 at 12:12pm)

Governments violate rights when they insure deposits. You see, Tom, that is what libertarians are against–aggression, rights violations. People who privately organize their business arrangements in a certain way do not inherently or necessarily do this. See, so it’s irrelevant whether there is a “moral hazard” or not. Libertarians are not opposed to “moral hazards.” We are opposed to aggression.

13. Kinsella (February 17 at 12:16pm)

And the state does not “protect shareholders.” I have explained this in depth already. http://www.stephankinsella.com/…/kol100-the-role-of…/

and http://www.stephankinsella.com/…/kol115-mises-canada…/

14. TokyoTom (February 17 at 12:26pm)

Stephan suggests that I am a “gadfly” “unlibertarian” who “attack[s] anyone wiht principles” and who is a “useless nihilist” whom he has “principled libertarians” (AKA, himself) has “drive[n] nuts.”

I think that, unfortunately, what we have here is Stephan demonstrating the roots of property lie not in principles, but in the reflexive, bristling defense of what people (individuals and groups) regard as valuable enough to defend.

Calm down, Stephan.

15. TokyoTom (February 17 at 12:52pm)

Stephan is the kind of Bootlegger-Baptist critic who himself is a vociferous Baptist who is uncomfortable looking at how Govt sets up the Bootleggers who are gaming the system.

In free, voluntary markets, there is no Get-Out-of-Personal-Liability-for-Harms-Caused-to-Others-Free Card.

Limited liability for shareholders is a state-granted favor that is demonstrably at the bottom of the dynamic of people forever running to a gamed “democratic” government to make Govt make its creations behave more nicely (with the regulations then serving to protect the big, to limit competition, and to fuel corruption and further govt capture). As soon as governments began creating corporate monopolies and/or limited liability cos, then then judges followed suit by rejecting strict defense of property in favor of a pollution-/corporation-favoring “balance” of equities that Block noted.

16. Kinsella (February 17 at 2:28pm)

I explained in detail in the talks and blog post linked, why this is wrong. There is no reason to assume passive shareholders ought to be liable for torts committed by others. In a private law society, there is no reason to think shareholders would be liable in the first place.

17. TokyoTom

Stephan consistently attacks arguments I don’t make. It must be because he is more principled than I am:
https://tokyotom.freecapitalists.org/?s=limited+liability+kinsella

18. Kinsella (February 17 at 2:51pm)

Tom, you just stated your view that state limited liability for shareholders is some kind privilege. that implies it is giving someone a limitation on liability that they otherwise would have in a free market. It’s not a privilege unless it changes the situation.

19. TokyoTom (February 17 at 2:56pm)

Stephan: “In a private law society, there is no reason to think shareholders would be liable in the first place.”

In a private law society, one finds ALWAYS individuals and associations of individuals who may negotiate liability caps with voluntary counterparties, but remain potentially personally liable up to the remainder of their personal assets for harms that their activities (and those of their agents) caused to others.

While the persons who actually directly caused harms would of course be liable, their principals would try to limit their own potential exposure by either closely managing their agents or making sure that others were independent contractors.

Stephan defends a state-created order where it is now extremely difficult, if not impossible, for us (and tort victims) to determine WHO in fact acted and is responsible for vast harms, such as those produced by BP, WVa’s “Freedom Industries”, TVA, TEPCO and the like. Instead, Stephan grotesquely calls polluting companies “victims”.

20. Dan Cotter (February 17 at 3:17pm)

Does anybody else find it strange when people write their comments as if they are speaking to an audience rather than just directly speaking to the person they’re conversating with?

21. TokyoTom (February 17 at 3:44pm)

Dan, I’ve been talking with Stephan Kinsella for several years – putting me a ten-foot-pole distance has too often been one of his penchants, because his principles mean I stink. We’ve had a bit of a hiatus, so when I visited here, you can see that I addressed him directly; he shifted to the third person here: https://www.facebook.com/nskin…/posts/10151972701413181….

22. Kinsella (February 17 at 9:22pm)

haha, are you really criticizing me for using third person…? come on dude.

23. Kinsella (February 17 at 9:25pm)

“remain potentially personally liable up to the remainder of their personal assets for harms that their activities (and those of their agents) caused to others.”

This is almost right. You are liable for harms (some types anyway) caused by your *actions*. (“activities” is intentionally vague)

But shareholders do not act to cause the harm caused by employees of the company they have stock in.

“While the persons who actually directly caused harms would of course be liable, their principals would try to limit their own potential exposure by either closely managing their agents or making sure that others were independent contractors.”

Calling shareholders “principals” is question-begging. They are passive. I have explained this. So have other that I linked to–e.g. rothbard and pilon and hessen.

“Stephan defends a state-created order where it is now extremely difficult, if not impossible, for us (and tort victims) to determine WHO in fact acted and is responsible for vast harms, such as those produced by BP, WVa’s “Freedom Industries”, TVA, TEPCO and the like. Instead, Stephan grotesquely calls polluting companies “victims”.”

How is this supposed to be an argument that shareholders are causally responsible for torts of employees? Everyone seems to simply assume this respondeat superior type vicarious liability.

24. TokyoTom (Feb 19 at 4:52pm)

“‘activities’ is intentionally vague”

This is intentionally hair-splitting obfuscation; one “acts” – we call what people do both “activities” and “actions”.

– “shareholders do not act to cause the harm caused by employees of the company they have stock in.”

It is not my premise that they always/necessarily do — though of course, sometimes shareholders may be actively involved in torts tied to the business activities conducted by the corporation they own shares of. When judges “pierce the corporate veil”, they essentially treat shareholders as principals/partners/sole proprietors.

– “Calling shareholders “principals” is question-begging. They are passive. I have explained this.”

Suggesting I was calling shareholders principals is either stupidity or a deliberate misreading; I was clearly referring to private law orders/contractual arrangements outside of corporations, not state-made corporations: https://www.facebook.com/nskin…/posts/10151972701413181… (PS–I really don’t like this attack style, but perhaps tit-for-tat is the best approach with anarchists who prefer to set examples of disrespect.)

But yes, of course now, within the state-made corporate form — and especially within listed companies, shareholders MAY be (but are NOT necessarily) “passive”. But this is itself quite problematic, though not my chief point.

– “How is this supposed to be an argument that shareholders are causally responsible for torts of employees? Everyone seems to simply assume this respondeat superior type vicarious liability.”

You attack arguments that I do not make. This is your style is your wont, Stephan — I find it wanting. I have NEVER argued that “shareholders are/should be causally responsible for torts of employees” or just “assumed respondeat superior type vicarious liability”.

Partners and sole proprietors were/are not deemed automatically responsible for torts committed by their employees, yet the risk and expense of potential lawsuits has always served to have them pay attention to risks that their employees and agents might harm others. An artificial state-made liability cap freed shareholders from downside risks, and incentivized blind eyes to practices that were costly to others.

It is clear that respondeat superior doctrine was expanded judicially and by law as firms left the realm of private businesses and became favored creatures of the state.

I am glad you are paying some attention to questions of individual responsibility, though of course you have NOT done so consistently, when you persisted in calling “BP” a “victim” and ignoring the corporate problem of discerning who it is who acts:

“It is one of the salient features of corporations that they confuse themselves and everyone else as to WHO, precisely, is responsible for their actions and the harms they cause others, and it is time for Austrians to examine such features closely. – See more at: More about “the biggest victim”, BP, and how we can help it end its “victimization”

Poor statists! If we close our eyes tightly enough, we can see clearly that Corporations are innocent VICTIMS, of governments that foist on them meaningless grants like limited liability & IP, and of malevolent, grasping citizens

Thanks for playing, and for your decent Avatar post.

25. Kinsella (Feb 20 at 2:24 am)

“It is not my premise that they always/necessarily do — though of course, sometimes shareholders may be actively involved in torts tied to the business activities conducted by the corporation they own shares of. When judges “pierce the corporate veil”, they essentially treat shareholders as principals/partners/sole proprietors.”

I am at a loss to identify the coherent libertarian principle you are trying to invoke. Who cares about the modern positive state law of ‘piercing the corporate veil,’ for example–what possible relevance has this for justice?

“Suggesting I was calling shareholders principals is either stupidity or a deliberate misreading;”

oh, i assure you, I am merely stupid, not dishonest.

–Wait.

“I was clearly referring to private law orders/contractual arrangements outside of corporations, not state-made corporations: ”

Wasn’t clear to me, kemosabe, but then I don’t have your IQ or whatever.

“Partners and sole proprietors were/are not deemed automatically responsible for torts committed by their employees, yet the risk and expense of potential lawsuits has always served to have them pay attention to risks that their employees and agents might harm others. An artificial state-made liability cap freed shareholders from downside risks, and incentivized blind eyes to practices that were costly to others. ”

What does this frenetic screed of incoherent babble have to do with libertarian principles? Answer: not much.

“It is clear that respondeat superior doctrine was expanded judicially and by law as firms left the realm of private businesses and became favored creatures of the state. ”

So… you are in favor of respondeat superior. well Rothbard, Pilon, Hessen and I are not. Congratulations on your glomming onto the state schema.

26. TokyoTom (Feb 20 at 5:35 pm)

You disappoint by never failing to disappoint, Stephan.

1. “I am at a loss to identify the coherent libertarian principle you are trying to invoke. Who cares about the modern positive state law of ‘piercing the corporate veil,’ for example–what possible relevance has this for justice?”

You are at a loss to understand the libertarian principle that a man — even a shareholder — might be called to account for his own acts? I agreed that shareholders should not be liable qua shareholders, and simply indicated that they might be liable based on their own actions. Corporate “veil piercing” is justified if based on a fact-finding that a shareholder directed a tortious act.

2. “Wasn’t clear to me, kemosabe, but then I don’t have your IQ or whatever.”

Real gentlemen don’t find admissions of error so difficult, and sneering, gratuitous contempt and off-handed offensiveness so easy. Whatever.

3. Me: “Partners and sole proprietors were/are not deemed automatically responsible for torts committed by their employees, yet the risk and expense of potential lawsuits has always served to have them pay attention to risks that their employees and agents might harm others. An artificial state-made liability cap freed shareholders from downside risks, and incentivized blind eyes to practices that were costly to others. ”

You: “What does this frenetic screed of incoherent babble have to do with libertarian principles? Answer: not much.”

Kindly demonstrate that this is both babble, and babble not related to libertarian principles. Austrians are keenly attuned to moral hazard, and I was describing what I perceive as dynamics, not a principled position on liability rules (though LvMI has published pieces calling for a prohibition on corporations in the banking sector). But if I recall correctly, you too have indicated that you oppose the state structuring of/stamp of approval on corporations.

Your own frothing has nothing to do with libertarian principles, and in fact demeans them.

4. Me: “It is clear that respondeat superior doctrine was expanded judicially and by law as firms left the realm of private businesses and became favored creatures of the state. ”

You: “So… you are in favor of respondeat superior. well Rothbard, Pilon, Hessen and I are not. Congratulations on your glomming onto the state schema.”

Congrats on another false and unjustifiable conclusion. Par for your course. Austrians Mises, Hayek, Rothbard, Block, Cordato etc. all describe what they discern of the dynamics of human action within institutional structures; please congratulate them too for glomming onto the state schema.

Ad hom is a shameful game, Stephan. It discredits your good work that you that you thrill to it so much.

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