The Corporation Is a Socialistic Invention

There is solid historic proof that free-market capitalism is the greatest known engine for economic growth and social prosperity. But the usual portrayal of corporate founders and CEO’s as risk-taking drivers of free-market capitalism is bogus. Private owners and partners of business enterprises are, without question, risk-taking entrepreneurs in the true sense of the word. If their businesses tank, their creditors can lay claim to their personal assets—home, car, bank account—as well as to their physical plant, equipment and inventories. They stand to lose the proverbial shirt off their backs.

Corporations were invented to avoid such risks. Constituted as separate legal entities, their creditors and investors, should the enterprise go belly, cannot lay claim to the personal assets of their founders or CEO’s, no matter how inept or imprudent they might have been. So, in effect, they take no risks, and lose little except, perhaps, their jobs and professional reputation, which can be easily regained if they had cultivated the right connections, which is often the case. Not surprisingly, most business, gigantic, small and everything in between, tend to be incorporated. Free-market votaries who deem Socialism a dirty word, might considered that the low risk, government-protected corporations that rule the world today are, at bottom, Socialistic enterprises under a different name.

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