Apropos of yesteryday's post — Unlimited liability? The very idea! and my comment on Clark Stooksbury's blog — I should note that Clark responded to my query:

The point I'm making about [limited liability] and Libertarians is that it is an intervention in the marketplace that Libs never seem to criticize or even acknowledge as such.

Maybe. I've heard it talked about. But, granted, not much. My main question is: isn't unlimited liability, too, an intervention into the marketplace? That is, any theory of (and practice of assigning) liability is precontractual. It is not in itself a market activity. Unlimited liability strikes me as impractical. So why even bother with it.

I should note that what I am defining as unlimited liability is not the same thing as strict liability. Or, at least I don't think they are the same! Currently, one can hold people in a corporation for their acts under strict liability. But you cannot hold shareholders responsible to the degree that you can take all their wealth in a lawsuit, if, say, a corporate office or employee does something that might justify a tort, or an action against breach of contract. Or even a crime.

Strict liability, as I understand it, is a theory of legal responsibility that limits the idea of negligence.

Limited liability for corporations limits the extent of responsibility for investors in a business. It does not limit (as far as I know) the corporate liability itself — the corporations assets are always up for grabs in a lawsuit against it — or the employees. I could be wrong about the latter.

Hey: I could be wrong about all this. It has been nearly thirty years since I read Epstein's book on strict liability, and it was tough slogging at the time! And limited liability in a corporate context? I haven't even read the Wikipedia entry on it! (Hmmm. Maybe I should.)

Is a parent's liability for his or her child's actions a related issue? It strikes me that the older a child gets, limitations on the liability of a parent for an offspring's acts is utterly legitimate, considering that growing up is a process of gradual emancipation.

Investing in a company is an awful lot like investing in a child. You hope to get some returns, but the people who take the money become the ones most responsible for using those funds.

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