Creating Prosperity in a ZIP Code

  3 Needed Reforms

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Developing Issues


Carl E. Person
225 E. 36th St. Suite 3A
New York NY 10016-3664
Tel. No. - 212-307-4444
Fax No. - 212-307-0247
Email Address:

Consider Reinstating Limits on the Life of Corporations and Require Liquidation, and Distribution to Creditors and Shareholders, When Corporation Reaches a Certain Size

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Corporations have not always existed. They were created to provide protection to shareholders so that shareholders would not be liable to the debts of the corporation. When corporations were first being organized, under state statutes, corporations were required to terminate their business operations at the end of a stated number of years, and their assets then used to pay any outstanding debts with the remainder being distributed to shareholders. Later, corporations were allowed to form to conduct business activities "in perpetuity", with the result that corporations now are able to operate for hundreds of years, unlike human business competitors who have a useful business life of about 20 to 30 years in any one business. The result of this difference is that corporations tend to keep growing and human businesses (even if incorporated) tend to go out of business after a run of anywhere from 0 to 30 years. This difference in life between human business and impersonal multinational corporate business has resulted in business practices that enable the large corporations to push the smaller, human-based businesses out of business.

Adam Smith said that "Corporate danger number one [was] the quest for unlimited life". He argued in favor of limited life corporations. See discussion at Ch. 2, The Emperor's Nightingale, by Robert A. J. Monks. The ebook is available at The Emperor's Nightingale, by Monks, an eBook

The cure for this seems to be (i) to limit corporations to a maximum number of years (such as 40 or 50 years), after which the corporation should be required to sell off its assets, pay its debts, and distribute the rest as a cash distribution to its shareholders; and (ii) if a corporation prior to such 40- to 50-year period should reach a certain size or market share (both to be determined in the enabling state legislation) the corporation should be required to liquidate its business activities for cash, pay its debts, and distribute the rest to shareholders.

In this way, society will be able to curtail the massive, wide-ranging abuses attributable to corporate size, and allow competing corporations their own opportunity to grow, become number one, and be liquidated in the same way. In this way, human-based businesses will have a better ability to compete on a more level playing field.

Email This Proposal to Gov't Officials, Chamber of Comm., Trade Assoc., Small Businesses, Other Interested Persons