Should corporations have expiration dates?*

    One of the worst features of corporations is their sheer lack of accountability: its owners are not accountable for any financial losses the company might incur.  When you buy stocks, you gamble with your money, freely giving it away in the hope and expectation that the company will generate (and distribute) enough income to issue positive dividends.  But it is only a hope, because if the corporation goes bankrupt, you loose all of your investment. Those are the rules of the game, as they currently stand, and has some similarities to the concept of ‘moral hazard’, wherein individuals are not held accountable at all for the consequences for their actions.

    This feature is both the key virtue and vice of the ‘corporation’ as a legal entity.  Seeing themselves ‘free’ to ‘do anything’, they are allowed to take bold moves, to experiment to innovation, to create new technologies which did not exist before. If the investment does not pay off—and most technology start ups tend to fail, all that happens is that its founders wasted a few years of their lives trying to ‘change the world’.  However, the flip side of the coin, is that corporations become lazy big fat hogs, living off of guaranteed incomes. Not only is there no innovation, but they actually hamper and interfere with others who might stand to be potential rivals.  The best example is the automobile industry in the United States.  For long years, GM, Ford, and others made only superficial innovations to their vehicles, confusing ‘color’ and ‘bodywork’ for true innovation.  If that were not all, they are vehement opponents to one of the most innovative car companies of the 21st century: Elon Musk’s Tesla Motors.  Tesla can potentially revolutionise the entire automobile industry with its battery based cars.  As with any revolution, not all consequences are beneficial to every actor in a community.[1]

    Corporations grow tremendously in size as a result, and begin to unduly influence the political processes of any nations they interact with or operate in.  This is a well known feature, the most recent being that of ‘Citizen United’, reducing all campaign contribution limits. The notion that a corporation should be treated as a ‘person’, i.e. as mentioned by Mitt Romney during the last presidential campaign, is another example.  Here is Puerto Rico, the stench of corporate funding taints almost every piece of legislation that is passed in one way or another; some of the most substantive measures tends to have corporate fingerprints all over them.  The notion that an old jail should be turned into a facility for biomedical research has "pharmaceutical industry influence" written all over it.  And this is just one but of many examples. (Fortunately, in spite of all their financial resources, they are not always successful.)

    Yet, when it comes to proposing ‘solutions’ to these problems, these have not been effective, or well incorporated.  

    Justice Lewis Brandeis at one time proposed that the US government limit the size of corporations, recognizing that the modern corporation had grown into a behemoth. This notion was never adopted because, for some instances, size is important and appropriate. Maybe.  The old notion of a communist state regulating the production in a society, has been shown to actually be rather detrimental to a nations economic well-being. The best case for this is the absence of the computer revolution in the old USSR.  Although Russian geeks might be some of the best computer scientists and mathematicians that exist at the moment, the computer revolution could never have taken off given the absence of state sanctioned private initiative that could be personally coordinated, as well demonstrated by Manuel Castells.

    In some cases, other policies have been successfully implemented, as the regulatory bodies established under the Teddy Roosevelt’s Progressivist movement.  Corporations need oversight bodies made up of experts, the belief was held at the time. Overall, they have worked to some degree, as the case of the EPA or the FDA, and problems which previously existed no longer do. (We have food labels identifying a foods chemical and nutritional components, for example. When this was first proposed by Rexford Tugwell during the FDR administration, this was attacked as a ‘communist conspiracy’ and an 'undue burden' on corporations.)   

    Yet the limitations of this schema have been well established. Regulatory bodies tend to be bought out by the very industries they regulate, and it extremely common in the areas where a very great deal of money is made—specifically the pharmaceutical and the telecommunications industries.  The vast amounts of funds they make generally means that they tend to have the oversight bodies ‘in their pockets’; with so much money, it is easy to tempt or threaten any man or politician. And possibly even to kill, as was the case of the suspicious death of the judge who first opened the court case against AT&T int he 1970s.  There is something about the human brain that leads individuals in positions of enormous power to believe themselves to be gods—all powerful and eternal, and hence with the 'right' to do as they please with the lives of others, 'bestowing' and 'removing' life.

    Although I have not done a systematic survey of solutions proposed to 'remedy' this particular problem, it does seem odd that I have never seen the suggestion of a ‘time limit’ to a corporate entity—say of 30 years.  Why should, after all, a corporation be allowed to ‘eternally live’ until they expire or go bankrupt?  (If corporations are 'people' as alleged by Mitt Romney, then they should have a limited allotment of years; as humans, they too should be 'mortal'.) The ability to run a corporation is a gift that is given by society, rather than a ‘right’.  Hence, our laws respecting these enormous institutions should be commensurate to their actual nature and social status.

    It might be counter argued that corporations do not in fact ‘live forever’.  While this might be the case when you look at corporate history during the twentieth century, this trend might no longer be true when we consider new copyright laws which were made specifically for the Walt Disney Corporation and their patent/trademark over “Mickey Mouse”. (Who doesn’t love Mickey Mouse?).  So, again, we see the noxious influence of corporations in the laws that govern a political body.  Copyright, first established by Thomas Jefferson to provide a limited monopoly to a creator for 14 years, has been extended throughout the 20th century to over 100 years.  100 years! Although the initial idea was to provide an incentive to a creator, a guarantee that he would benefit from his intellectual efforts, the extension of copyright is akin to the increasing encroachment of corporate benefits in the public realm. It is absurd and unreasonable, leading to 'corporate rents' rather than 'corporate innovation'. (In the tech world, these are known as 'patent trolls'.)

    Just as in the case of copyright, which need to be drastically curtailed, so with the ‘chronological term limits’ of a corporation.  Again, turning to the past provides good insights and suggestions. The first corporations in the United States were not eternal entities, but were granted for individuals for particular time-defined projects: the contractions of a bridge, the building of a road etc.  This allowed funds from a wide diversity of sources to be collected, in order to finish the project, but once the project had been completed, the corporate entity was disbanded.  

    Time limits or ‘expiration dates’ should be established for corporations, so that their leaders do not presume themselves to be the new god-kings of the postmodern era.

NOTES

    1.  The use of battery-powered cars drastically reduces the complexity of the motor—you no longer have the traditional engine with carburettors, pistons, spark plugs, etc. This in turn means that the demand for mechanics and the entire secondary industry trailing the car industry (auto parts as Autozone, etc), would be drastically reduced.