Anonymous asked: What do you think about the corporate shareholder model, how the state intervenes in them (presumably) for the worse, and how a free market would change it (presumably) for the better? Would they even exist or be as prevalent as they are today or do you think some other model (syndicalism, Konkinian contractualism, something else) would emerge and become the new norm once people are given full economic freedom?
I dunno. Adam Smith gave arguments that corporations had a poor incentive structure and so would be driven out of business, but we now know that for a number of reasons corporations seem to work.
Smith’s argument was that since a shareholder had such a small share in the business they would be rationally ignorant in the running of the business and at shareholders’ meetings, so the managers would be free to mismanage the business.
However what Smith didn’t consider was takeovers. If a firm has a good product but is mismanaged and so share prices are low (because profits and dividends are low), a single wealthy capitalist could buy a majority of the shares, fire the managers and replace them with responsible ones to make a big profit. The threat of such takeovers keeps the CEOs and managers in line.
I certainly think that firms are made artificially large by state interventions, for example, consider how the state taxes transactions between firms but not within them, raising the natural economies of scale. Thought it’s not unheard of for intervention to make firms artificially small (e.g. trains in the UK, where regulations have prevented vertical integration and caused transactions costs to mushroom).