Corporations are driven by a necessity to privatize profits and externalize costs. In this article, Suresh Balraj highlights how the concept of limited liability further reduces the accountability of corporations to the consequences of their actions, and asks “how can we hold corporations accountable?”

The Myth of Limited Liability

By Suresh Balraj

Prof. Nicholas Murray, former president of Columbia University, might have been wrong when he said : “The limited-liability corporation is the greatest invention of modern times”; simply because, there is nothing original about limited liability at all. In fact, it wraps new language around a concept that is as old as ‘civilisation’ itself – that of enriching rulers at the expense of the majority of humans and their non-human communities.

The American anthropologist Stanley Diamond noted : “Civilisation originates in conquest abroad and repression at home”; certainly, he is not the only one to remark that the central goal and function of the State has been, from the very beginning, that of robbing the poor in order to feed the rich.

One of the founding fathers of the American constitution, James Madison, also insisted – in the 18th century – that the main goal of the political system should be to protect the minority (elites) against the majority.

Besides, the Godfather of economics, Adam Smith, wrote : “Civil government … is instituted for the defence of the rich against the poor or of those who have some property against those who have none at all”. But, including John Locke, who stated that the State has no other end other than the preservation of property, were all being rather modest. The reason being, the main function of the State actually goes even further; not only to just protect, but more importantly, to acquire more and more property for the opulent.

In other words, from the very beginning, the one and the only goal/objective has been the privatisation of profits and the externalisation of costs; and, the only question : how best to do this ?

Force is, of course, one way. For which, we need to probably ask the Africans, for example – more than 100 million dead during the slave trade alone; or, for that matter, the ‘American Indians’, who were decimated a dozen times over in the conquest of their homeland. Another very striking example of the times would be the scores of indigenous communities, across the globe, who continue to be both dispossessed and exterminated (as rapidly as those who came before them).

Or even better, would be to ask a present, modern day slave; for example, the e-coolies in ‘bondage’ in sweatshops and bodyshops – couched in technical jargons, such as, silicon valley, technopark, infopark, infocity, blue-chip, six-sigma and fortune 500/1000.
However, at the end of the day, force is expensive or economically unviable, at least in the long run. Therefore, it would be simply great, if you could convince the very victims to participate or co-operate in the process of their victimisation. Thus, in ancient times, those in power invoked the divine right of the feudal lords (kings) – trying to convince not only themselves, but particularly, those from whom they usurped both life and property; as a result, anyone who dares to oppose this divine intervention or Godly incarnation shall be subject to eternal condemnation.

Obviously, this was possible during the pseudo-religious era – the ‘dark’ ages. But, in today’s so called civilised world, this might seem to be pretty extreme. For example, if those in power said that Warren Anderson, the mass murderer of the victims of Union Carbide in Bhopal, India, in 1984 – the worst air pollution disaster in the history of humankind – should not be executed due to a divine mandate, it would then make a mockery of the rule of law.
So the powerful had come up with a different way to keep the victims of their misdemeanours from hurting them in retaliation.

And, for this reason, they somehow seem to have the uncanny knack of getting all of us to buy into the extraordinarily odd notion of limiting their liability (accountability) for the arson, looting and daylight robbery, including poisoning and murder, committed by them, by simply uttering the magical words : limited liability corporation. What is even worse is the fact that they’ve also somehow got us to believe that the very idea (of a limited liability corporation) is not only great, but something like that actually exists in real life. On the other hand, the eternal truth is that, the fictitious human imagination is no more than a black hole, a blind spot and, to say the least, a pipedream.

To this end, limited liability simply means that the owners – shareholders/stakeholders – are not liable, and therefore, cannot be held responsible or accountable, for the actions of their corporations. In other words, the so called investors are liable to lose only the money invested, and are in no way responsible for the genocide, ecocide and other heinous crimes committed by them or their corporations.

Above all, limited liability is not only about profits or amassing wealth (illegally); rather, it is about the institutionalisation and explicit acknowledgement of the fact that it is simply impossible to ‘create wealth’, without externalising the costs, thereby, paying the supreme price resulting in the complete annihilation of even life forms and whole habitats. The issue of energy being a classic example, at the core of the very survival of life on earth.
Limited liability has allowed several generations of corporate owners to socially, economically, culturally/psychologically and legally ignore the poisoning of the earth. Its function is not to guarantee that children are raised in an environment free of pollution, nor to respect the life and autonomy of indigenous communities, nor to protect the vocational and personal integrity of workers, nor to design safe modes of transportation, nor to support the millions of life forms on earth. It never has been and never will be.

Here, what is really important are not labels; because, no matter what language we use, poison is still poison, and death is still death. The modern military-industrial base is causing the greatest mass extinction in the history of the planet. What we are witnessing today is the simultaneity of unprecedented ‘riches’ on the one hand, and unthinkable or unimaginable deprivation and poverty on the other. A brutal form of insatiable hunger, where the more you consume or possess, the more desperate you become. What this means is that, those running the ‘show’ (corporations) just can’t help running amok, till they actually kill the host – although it is equally suicidal for the rich, as well as, the poor to destroy the ‘goose that lays the golden egg’, i.e., the natural world.

Suresh Balrah is an environmental anthropologist and social ecologist based in South India. He has been working in forestry, agriculture, and fisheries for several decades with a focus on community-based renewable management. He is a guardian for Deep Green Resistance.

How Can We Hold Corporations Accountable?

Editors note: As Suresh explains, the structure of law and of corporations makes them legally unassailable. Therefore, there are two primary methods to roll back corporate dominance: change the law, or break the law. Both methods present serious challenges. For more on how we can hold corporations accountable, we recommend you read the book Deep Green Resistance, which explores strategic resistance methods in detail.

Featured image by Gerard Van der luen, CC BY NC ND 2.0.