Riffing on my previous post about how ‘usury’ has been seen across the centuries, it’s also with noting that the limited liability corporation is also a very recent invention.
Before about 1600 Corporations legitimised by the state were non-profit making trusts, charities and trade associations. Indeed, it was specifically forbidden for these early corporations to seek to or to actually make a profit; an individual cobbler could make a profit but the corporation set up as a trade association of all cobblers was forbidden from making a profit.
The East India Company was set up in 1600 as a trade association of individual traders operating in India. Again individual traders could make a profit but the East India Company itself was forbidden from making a profit. However, between 1600 and 1720 in order to gain access to the capital of non-traders, the members of the East India Company took deliberate and illegal action to transform themselves into the world’s first Joint Stock Company.
The success of the East India Company in gaining access to the wealth of non-trading ‘shareholders’ led to the formation of various other illegal commercial corporations, and in 1711 the South Sea Company was formed on the model of the East India Company. The difference was that the South Sea Company had been created primarily to make money out of the buying and selling of shares in the company – rather than actually trading in the south seas. Eventually this became apparent and the world’s first stock-market crash occurred when the South Sea Bubble burst.
So many people lost so much money in the South Sea Bubble that the UK government outlawed the speculative buying and selling of shares and only people actively involved in the company as traders or managers could buy shares in a company. This remained the case until 1825 when the trading of shares was legalised. in 1844 the Joint Stock Companies Act allowed companies to self-register rather than needing to be approved by government and it wasn’t until 1855 that the legal concept of ‘limited liability’ was created by act of parliament.
All this is important because it means that the system now called, Capitalism, was deliberately created less than 150 years. This surely fatally undermines the narrative that capitalism is somehow the natural state of humanity and always has been.
It is probably true that men have always traded with each other through a voluntary process of mutually beneficial exchange, but capitalism is not synonymous with trade. There is nothing natural about capitalism, nothing in human nature that leads inexorably towards capitalism. On the contrary capitalism rests on a number of legal constructs that have been illegal or morally subscribed throughout most of human history: 1./ that companies can be owned by people not active in the company 2./ That the ownership of the company can be transferred through the buying and selling of shares 3./ That the speculative buying and selling of shares in itself is a legitimate way to make profit 4./ That the money to buy and sell shares can be borrowed at interest (usury).
Up until the 1820’s even the rich and powerful regarded it as self-evident that these 4 pre-conditions were disastrous for humanity and had to be outlawed and yet today we are constantly told that ‘there is no alternative’ to neoliberal capitalism. Just shows you the power of a convincing lie if enough powerful people repeat it often enough
You can find much more about all of this in the Corporate Watch publication Corporate Law & Structures, which clearly shows that capitalism is a legal construct that was deliberately created by the rich and the powerful and is only 150 yrs old.