> We invented corporations to help improve society
I think it's easy to say this, but I'm not sure the history of corporations bears this out. Technically, the first corporations were colonial expeditionary forces (like the Dutch VOC) that were sent to Africa and the Caribbean to control various types of precious resources and we all know what happened there.
I guess it all depends on who "society" is in your statement, because someone has always has to lose in a corporate structure.
> Technically, the first corporations were colonial expeditionary forces (like the Dutch VOC) that were sent to Africa and the Caribbean
I don’t know the definitive origin, but one of Cæsar’s reforms in the Lex Julia was to require collegia be approved by the Senate (or Emperor) to be considered a legal body. The concept of corporations traces to at least then, almost certainly earlier, since corporate personhood is a logical result of the process of creating a legal system.
The novelty of the English and Dutch trading companies wasn’t their corporate personhood, but their distributed ownership as a joint-stock company.
Minor quibble - there is no single Lex Julia. Any law passed by Gaius Julius Caesar or his heir Gaius Julius Caesar would be called XYZ Lex Julia to distinguish it from previous and later legislation that happened to share the same name.
Sources - Caesar, Life of a Colossus and Augustus, First Emperor of Rome by Adrian Goldsworthy.
The VOC was established by the government because it didn’t like that there were many competing merchant companies. It wasn’t the first company, it was sort of the first public company.
Sure, I'm not trying to argue that VOC was the very first company. Companies of various types date back to the silk road. But large-scale corporations were largely conceptualized during mercantilism and their history is inextricably tied to colonialism, which can't be overlooked when people start saying things like "corporations were created to help society." They helped some people, but they also wiped out entire populations (see the Banda Islands).
I read a lengthy account of US Corporate history in graduate school (whose exact title eludes me at the moment). My impression is that in the US, there was a desire to tie transportation to broader physical markets, and include decreasing costs by owning the warehouse and distribution infrastructure. On the marketing end, a common brand name for a family of products was also owned by the corporation. An important early US example is the National Biscuit Company NABISCO. There were no US national food companies, as each market had the combination of brands, storage and distribution for the food product. The corporation held assets large enough to tie market regions together. It was not a small feat and was very much the Big Markets Tech of the time. Sears and Roebuck from Chicago form a different model, with non-perishable goods.
For international finance, early 20th century oil played a special role, not adequately described here.
As far as the parent comment about corporations "killing people" .. this is true but naive.. since the Romans and before, brutality was the norm, not the exception. Every educated person and most others knew about extreme forms of collective abuse, it had happened again and again. The very formation of civilization, including merchant and trade functions, was generally meant to be an improvement on past forms. Rarely, but with serious circumstance, some merchant company would rape and murder their way to fortune for a while. But karma is a bitch as they say, and those things did change. The tame history I cite above, was specifically aimed at making a better economic engine, for profit by ownership, which upon consideration was the chosen path.
As OP isn't forthcoming with their corporate history text, one of which I'm familiar and can recommend is Charles Perrow, Organizing America: wealth, power, and the origins of corporate capitalism. As a sociologist specialising in organisational behaviour and structures, Perrow brings a deep expertise and excellent scholarship to the field.
Assigned reading will frequently be listed on syllabi. Older versions can be found through the Wayback Machine, if posted online (and from the early 1990s through about a decade ago, many were, unfortunately, integrated school information systems have largely hidden these behind registration walls).
All that would not have been possible without the arrival of "modern" stock exchanges.
Also, their reorganization after each first generation of underhanded practices became recognized, otherwise attention could not have been as well diverted from the ability to leverage greed even more so than leverage the resources of the smaller investors.
>During the 17th century, stockbrokers were not allowed in the Royal Exchange due to their rude manners. They had to operate from other establishments in the vicinity, notably Jonathan's Coffee-House.
NYSE of course is where lots of the money ended up from the international slave trade, and not just from sales in North America.
Seems to me that's what allowed NYC to take the place of London as the world's financial center, since the UK frowned on slavery much eartier than the US.
Also early 20th century oil might have been the only thing with as good or better return than slavery had generated.
That's not correct. Corporations, particularly in the limited-liability sense of the term, are created by society, not people. The laws of a jurisdiction provide a carve-out for a fictional entity that gets special rules to protect the people who act as its brain. But that's different from those people creating it.
And to this end, the only reason to create a corporation is to make society better. If they're not, we have the ability to revoke their charters, and we should use that more.
> And to this end, the only reason to create a corporation is to make society better
I'm sorry but this is patently false, the reason to create a corporation is to capture profit.
Want to make society better? There are numerous non-profit and government organizations that broadly aim for this goal which do not turn a profit. The goal of a corporation is to sell goods or services, and hopefully those goods or services do in fact better society. However, this is far too often not the case to make the argument that corporations exist to improve society. Look at how much control corporations have over our society today, they're practically invincible and indemnifiable in our current culture because they're so much more insulated legally than individuals.
Perhaps I was unclear, but you get that you're lecturing me about what I just said, right? What you are describing is the goal for a person to apply to have a corporation created for them to manage. That's not the reason that society allows corporate charters to exist. Society need not allow a corporate charter to be established that does not benefit that society, and can revoke them should they not be achieving the goals of the society that grants them.
What is the average person’s interest in creating laws aroubd i corporation? Doesn’t it stand to reason that it’s the people creating businesses that would be the ones suggesting the laws that protect themselves from liability?
The fact that corporate charters are never revoked points to the laws being in the corporations favor, not the citizens’
Sorry, I didn't mean to imply that LLC / incorporation has no benefit to society, it plainly does. I was responding to the conjecture that it's society at large that writes the rules. I figure the stakeholders writing the laws are the people who have the most to gain.
They actually wanted a way to raise money for war effort to break free from the Spanish influence.
It was a massive public money raising campaign to build war ships, guns and hire mercenaries, all under the guise of "exploring exotic commercial opportunities overseas".
What I meant is their true motivation and intentions (war efforts) were different than what they made it appear with the VoC capital raising.
EDIT: in "The World's First Stock Exchange" [1], the author outlines this historical context of conflict between Netherlands and Spain, which spurred the VoC and - considered to be - the first stock market.
Yeah perhaps I should say I was thinking more about the limited liability form that got established sometime in the 1800s across a variety of western countries. The government orgs are a thing too, of course, but things that are that closely tied to government tend to have their own access to enforcement.
It's more that at one point during the industrial revolution, it became common that someone would make a private venture, incorporate it, and from there the law granted a number of modern considerations that we still live with. I'm thinking of limited liability and its effect on bankruptcy.
Also interesting that one of the examples given is using Intellectual Property to fiddle taxes. IP itself is another thing that is sold as "being done for the good of society" but if you trace the history, it was basically a way of handing out the King's total ownership of society to his friends, giving them a monopoly on salt or whatever, very similar to giving them a monopoly on trade with india.
I do think both (intellectual property and corporations) can actually be good for society if properly regulated, I just don't think that was the original intention, nor the current status quo and it won't naturally develop in that direction without concerted effort.
one of the firsts things they taught in law school was that the legal system wasn't just created to uphold "justice" but really to protect the wealthy and powerful
The first corporation depends of the definition used. If we are talking about joint-stock companies there were some form in China and in Europe before colonial expeditions to fund capital intensive enterprises like dams and mills (in the rare cases where it was not funded by the Lord/Abbey/State)
Like so
https://en.m.wikipedia.org/wiki/Bazacle_Milling_Company
OP probably also thought about other societies involved, like the Indonesians, who did not really benefit, quite the opposite, and with far more people.
Firsr corporations were basically groups of people killing, torturing and exploiting less advanced civilizations overseas. Over the time capitalism has developed towards more peaceful culture, not the other way around as people often imply.
I'm certainly not trying to imply that capitalism is more or less peaceful than it was in the 17th century, I guess the main point that I'm trying to make is that corporations exist to generate profit, they never really existed to improve society.
A lot of the shifts towards a more humane version of capitalism came through outside forces like organized labor (i.e. the 40 hour workweek, the establishment of child labor law, etc.). These were not things that corporations volunteered, it took lots of people threatening to stop the system in order to achieve many of the benefits we enjoy today. We'd still be working 7 days a week starting as small children if those outside forces didn't establish many of those fundamental changes for us.
I think it's easy to say this, but I'm not sure the history of corporations bears this out. Technically, the first corporations were colonial expeditionary forces (like the Dutch VOC) that were sent to Africa and the Caribbean to control various types of precious resources and we all know what happened there.
I guess it all depends on who "society" is in your statement, because someone has always has to lose in a corporate structure.