Our recall of the Frankenstein story might be that a young scientist created a freak who went beyond its creator’s control, turned into a criminal, and haunted him till he collapsed. However, the original storyline is much richer than that. Let me briefly review the ways in which corporations are analogous to Frankenstein’s creature:
- Both can grow out of control of the people who created them.
- Both have invested interests and also are in pursuit of interests of their own.
- The monster is able to threaten his creator because he holds things that his creator cares about: In the Frankenstein case, the interest might be the creator’s life, fame, or safety of his family and friends. In the corporate scenario, the interest can be returns for investment, control over the company, or something else.
- In feeding the monster’s desire, its creator ended up generating more nightmares for himself. Although at certain point he tried to end his relationship with the monster, the monster’s anger drove his creator into despair.
The monster is both a reflection of and an enlargement of the evil inherent in the human nature, the unethical greed, curiosity, ambition, cowardice, fear that we all have. Do not use that as an excuse though. Why ownership? Why privatization? Why capitalism? We all want to possess, to possess more with fewer interruptions. The idea of sharing is missing. The corporate form is just part of the deal, while the idea of refraining from possessing more than necessary is not.
Maybe this is a good starting point for us to think why corporate laws are structured in such a way to insulate shareholders and companies from their responsibilities arising from acting in a society. The separate legal personhood of a company facilitates liquidity through the market for shares, promotes stability in the resources available to the company, and more importantly, prescribes liability boundary to free investors from the consequences resulting from a bad investment. These functions are primarily financial or economic, so are the interests they serve.
