Common place limited liability for registered companies was a mid nineteenth century British creation. It arose as the railways helped fuel massive commercial expansion.
Those who created it had the concerns of the likes of Adam Smith ringing in their ears. They know that limited liability had moral hazard deeply and implicitly buried within it. If the right to not pay debts was granted to one group in society that was at cost to another. The obsession of early Companies Acts, and almost all accounting, was the protection of creditors from that abuse, with a secondary concern being the abuse of shareholders by an unrelated management.
Today if limited liability companies did not exist and someone thought them up I have no doubt they would not be allowed. They are very clearly organised arrangements that facilitate the abuse of the human rights of others.
And the abuse has expanded. Companies are used to abuse tax, markets, the law, democracy and to subvert the delivery of justice, amongst other abuses that they, the anonymity that they provide and lack of accountability that they facilitate enable.
They have also fuelled inequality. The low taxes that they pay and the ease with which they allow the concentration of control over the assets of others has clearly permitted the accumulation of wealth by a few. We see the evidence every day.
And yet it can still be argued that in some cases the original purpose of the company - which was the aggregation of capital for a worthwhile cause - still makes sense. But it contrasts heavily with the fact that the vast majority of companies have almost no capital at all now.
So what is the limited company for in the twenty first century? And do we need to rethink it from scratch?
That’s the question of the day.