LGE. Legal Entities
... How can participants in an economic piston (EPI) group together to do business. How can the state establish these entities via rule of law (LAW) so that they can use money (MNY) to function.
Society has found it convenient for citizens to be able to group together to form groups that have legal rights and that can collect and distribute money. How will we handle this.
The state has allowed its citizens to group themselves into many different types of legal entities:
- Sole Proprietorship
- Limited Liability Companies
- Joint Stock Companies
This trend started when investors wanted to take large amounts of risk, like sending small wooden ships halfway around the world to bring back exotic products for profit. These individual investors were not willing to take on all the risk involved in the operation. They were fine risking some of their fortune on the venture, but were not willing to risk their entire fortune and livelihood if something were to go wrong. This resulted in the forming of the first Limited Liability Charters.
We will speak to the efficacy of this choice in the chapter on Limited Risk.
The original charters were for limited lengths of time. They ended and either had to be renewed or expire. We no longer have this restriction and as we have spoken of in other chapters, 'immortality' without maintenance is not a natural feature. It leads to concentrated power and abuse of that power. We must do what we can to neutralize the power of this artificial construction.
For now we will grant that our system of money should allow for legal entities. Our system will allow anyone, to create a legal entity account in the system for any reason. The underlying rules of who owns the account will be handled by rule of law.
The forming of corporations generally results in the production of artificial capital. The distribution and concentration of this artificial capital can lead to income imbalances if not controlled.
It could be possible to add a layer that allows a group of citizen accounts to submit cash to an account in exchange for common-voting stock in the account, but this system may be outside the scope of our project.
One key distinction is that although legal entity accounts will look like regular accounts, they will be different. We would like to propose that Legal Entity accounts not have the right to private payment and dispersal. We may want to support the exchange of funds that are undiscovered for a time period but then unlock in case there are sensitive issues at hand, but those should be determined by rule of law. Legal Entities are not citizens should not be allowed to hide activity from the general public. They are given protected rights and should be held accountable.
Allow for the creation of legal entity accounts, but do not give them the same rights as citizen accounts.
Legal Entities can be held accountable by citizens (CTZ). They should be marked for death at some time in the future (KIL). They should move from concepts of limited liability to limited risk (LMR). They should be encouraged to enrich labor (LBR). Legal entities should be barred from Privacy and Private Dispersal (PRI).