{"id":221548,"date":"2010-01-24T07:35:18","date_gmt":"2010-01-24T12:35:18","guid":{"rendered":"http:\/\/knowledgeproblem.com\/?p=6301"},"modified":"2010-01-24T07:35:18","modified_gmt":"2010-01-24T12:35:18","slug":"the-founders-were-deeply-skeptical-of-corporations","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/221548","title":{"rendered":"The Founders were deeply skeptical of corporations"},"content":{"rendered":"
<\/p>\n

Michael Giberson<\/em><\/p>\n

Many keystrokes this week have been devoted to praising or damning the Supreme Court decision<\/a> in Citizens United v. Federal Election Commission.\u00a0 I’m inclined to agree with the praisers, but others are more competent to address the legal and political issues addressed by the court.\u00a0 I just want to pass along a useful bit of historical observation from Streetwise Professor<\/a>:<\/p>\n

\n

Stevens noted that the Founders were deeply skeptical of corporations. \u00a0Indeed so. Scalia noted that there are so many corporations them today. \u00a0Also true. \u00a0The interesting question is how we got from A (Stevens) to B (Scalia).The story is told in the North, Wallis and Weingast natural state book Violence and Social Orders<\/em><\/strong> I\u2019ve blogged about several times, mostly in the context of Russia. \u00a0The relevant chapter is primarily based on John Wallis\u2019s work. \u00a0The basic story is that hostility to corporations\u2013reflected very well in Adam Smith\u2019s Wealth of Nations<\/em>\u2013was due to the fact that historically, English corporations were created by the crown, and were essentially very profitable favors provided to the politically connected. \u00a0They were, in NWW terms, part of the \u201cclosed order\u201d of the natural state, in which access to certain contracting forms was limited to a select powerful few. \u00a0This animus towards corporations was inherited in the United States, but in the early years of the 19th century, state legislatures confronting issues associated with the financing of new infrastructure turned the corporate form into a prop of an open order system in which this contracting form was made available to all. \u00a0Rather than limit the right of incorporation to an elite, they made it available to everybody. \u00a0The system changed from one in which legislatures had to grant every incorporation, to one in which pretty much anybody could incorporate if they met a set of general, universally applicable requirements. \u00a0Hence, the proliferation of corporations.<\/p>\n

Thus, Stevens was historically right, but his inference was wrong. \u00a0The kind of corporation that Adam Smith and the Founders detested was a quite different from the modern corporation that developed in the 19th century. \u00a0The name was the same, but the entire conceptual and legal basis for corporations old and new were completely different. \u00a0Indeed, almost inversions of one another.<\/strong> Indeed, the transformation of the corporation from a creation of the closed order to an essential element of the emerging open order explains the empirical phenomenon that Scalia cited.<\/p>\n<\/blockquote>\n

I’ve been meaning to read the North, Wallis, and Weingast book since it was published, but haven’t yet secured a copy. Guess I ought to get to it.<\/p>\n

\"\"<\/a> \"\"<\/a> \"\"<\/a> \"\"<\/a> \"\"<\/a> \"\"<\/div>\n","protected":false},"excerpt":{"rendered":"

Michael Giberson Many keystrokes this week have been devoted to praising or damning the Supreme Court decision in Citizens United v. Federal Election Commission.\u00a0 I’m inclined to agree with the praisers, but others are more competent to address the legal and political issues addressed by the court.\u00a0 I just want to pass along a useful […]<\/p>\n","protected":false},"author":4109,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-221548","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/221548","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4109"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=221548"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/221548\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=221548"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=221548"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=221548"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}