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You're a free marketer who's against the limited liability corporation? That's a combination I've never encountered before. Start a business, risk losing your house.



It's not that uncommon among the people who defend free markets (as opposed to the ones who pretend to support it for their own benefits). E.g. Rothbard opposed it, saying that you could have limited liability as a clause in contracts, which could be negotiated (that also implies that you would be fully liable to third-parties you harm, since there's no contract).


It would turn that around and say that people who pretend to defend free markets support limited liability companies as a pragmatic solution, while people who pretend to support free markets, but want to have the social cred of rebelling against the existing system, make a big deal about the theoretical problems of limited liability.

In practice, a corporation by far is most likely to owe money to its creditors, and not random third parties. In this case, all limited liability does is create a default contract (and rule out alternatives) in which the creditors cannot go after the investors, but can seize the company if it stops repaying its debt.


I have never seen someone making a big deal about the theoretical problems of limited liability, so I wouldn't know. Rothbard in particular only mentions it - in a single paragraph of one of his books - because he's trying to show that corporations don't need the State to exist, not because he's railing against it specifically.




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