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Glasbeek, Harry. BA, LLB (Melbourne), JD (Chicago). Class Privilege: How Law Shelters Shareholders and Coddles Capitalism (2017). p. 168 Bottom.

  This is a good juncture at which to remind ourselves that the market's tenets of personal responsibility for one's choices, as idealized by Adam Smith, provide a major justification for an economic scheme of private ordering and wealth creation. The fundamental premise is that, as long as the market's basic principles reign, we can expect responsible and efficient behaviours. This bestows legitimacy on the search for private profits. It would evaporate if no persuasive reason could be offered as to why practising capitalists, simply by adopting a corporate guise, should not be subjected to the normal rules of the idealized market. A series of justifying reasons have had to be crafted.
  The first response is that, as a matter of law, the corporation is an individual, like a natural person. It is a legitimate participant in the market, just as human beings are. It follows that, if the corporation and its agents are

p. 108

held responsible for violations of market standards, the market's principles are being honoured. But this is a bootstrap argument. The reason any justification is required in the first place is that the corporation is understood to be an association. It is a collection of actual persons who should, if the market rules, be responsible for their choices as individuals.
  A second response, similar but more nuanced, has been proffered by libertarian economic scholars and policy-makers. The argument is that the personhood of the corporation doesn't matter after all. No matter what the law says, these scholars and policy-making elites contend, the corporation is just a convenience used by entrepreneurs associating with others like them to do their personal thing. The corporation is really a network of individuals who are associating with each other by contracting how they should combine their talents and resources, how to deploy them, and how they are to share out the profits, if any. That is, the corporation is not the market actor; rather, the individual contracting human beings are the real market participants.

I know what bootstrap signifies, but can't relate it to the emboldened phrase overhead.

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The first response is that, as a matter of law, the corporation is an individual, like a natural person. It is a legitimate participant in the market, just as human beings are. It follows that, if the corporation and its agents are held responsible for violations of market standards, the market's principles are being honoured. But this is a bootstrap argument. The reason any justification is required in the first place is that the corporation is understood to be an association. It is a collection of actual persons who should, if the market rules, be responsible for their choices as individuals.

The thrust of the argument is that the following view is false. Corporations are like persons, or (better) are corporate persons, legitimate participants in the market who can enter contracts, incur liabilities, and so on. If a corporation can be held responsible for violating market standards, then the market's principles are being applied equally to it, a corporate person, and to natural persons.

But, the rug-pull comes, this is to reify corporations, to treat them as entities in the social and legal world when they are actually no such thing. They are not like persons; they are not corporate persons : they just are collections of actual persons who can and should be held responsible for their choices as individuals. In other words a fallacy is going on : corporations are being likened to persons when in fact they are nothing but collections of actual persons. The relation between corporations and actual persons is not one of likeness or similarity but of identity. Just as there are no means by which you can pull yourself up by tugging on your own bootstraps, because the tugger is identical with the tuggged, so there is no means by which you can create a corporate person distinct from collections of actual persons because a corporate person is identical with a collection of actual persons.

This is plausible but wrong. A corporation could exist as a corporate person even if it had no members. It could be sued as a legal entity, its assets could be confiscated, even if all its staff had left the country and none had any legal connection with it. Such a corporation could not possibly be a 'collection of actual persons'.

More than that, and the real nub of the matter, is that there are cases where the actions of a corporation cannot be reduced to the actions of any 'collection of actual persons'. (The view that they can is called methodological individualism, which has many forms and applications.) Take the following situation. It may be that each of a certain collection of actual persons engage in work. This work causes harmful externalities of which none of them could be aware. Collectively, and unknowingly, they poison a river, say, as a by-product of their individual activities. They can by no reasonable criterion each be held responsible - culpable - for any part of the harmful externalities which collectively they cause but of which individually, ex hypothesi, they cannot know about.

However, the corporation they supposedly constitute can be held responsible - culpable - for the harmful externalities that have resulted from the actions of this collection of actual persons. If this is so, then something is true of the corporation which is not true of this collection of actual persons : it can be held culpable. If the corporation were just a collection of actual persons, this could not arise. The persons and the corporation would be identical - one and the same. But if they were identical, then something could not be true of one that is not true of the other. Since something is true of one that is not true of the other, the corporation and the collection of actual persons cannot be identical. And if this is so, the corporation cannot be reduced to the collection of actual persons.

The bootstrap has snapped.

  • You seem to have your first paragraph (not counting the initial quote) as a position that you claim Glasbeek is arguing are against, your second paragraph the position that you claim Glasbeek is making, and then everything after that your own position, but that could be a lot clearer. – Acccumulation Nov 28 '18 at 17:25
  • "It could be sued as a legal entity, its assets could be confiscated, even if all its staff had left the country and none had any legal connection with it. Such a corporation could not possibly be a 'collection of actual persons'." The second sentence follows from the first only if the "collection of actual persons" can only be its staff. But there are other candidates, such as stockholders, or society at large. – Acccumulation Nov 28 '18 at 17:28
  • "They can by no reasonable criterion each be held responsible - culpable - for any part of the harmful externalities which collectively they cause but of which individually, ex hypothesi, they cannot know about. However, the corporation they supposedly constitute can be held responsible" This is argument by assertion. "Imagine a situation where X is true. This shows that X is true". That's not much of an argument. – Acccumulation Nov 28 '18 at 17:28
  • @Accumulation. I do not recognise "Imagine a situation where X is true. This shows that X is true" as a representation of any part of my argument. There is so much to which you object that our differences cannot be settled here. I suggest you transfer to Chat. – Geoffrey Thomas Nov 28 '18 at 19:06
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I've been familiar with the term for a while, think I saw it in an encyclopedia a decade or so ago.

Pretty sure it's an argument that, when we accept the premises, our conclusion supports them, and in this sense the conclusion contains the assumptions. So that the likelihood of the argument's soundness is larger than the assumptions without the conclusion.

I get why this may arouse suspicion, but not why it would make the argument unsound, or at least less likely to be sound than the argument without the bootstrapping. Can't see why the bootstrapping would not add to the soundness of the argument, either, really, no-one is suggesting an infinite regress, and the world is messy. Perhaps the complaint is just that they are very seductive arguments. An example I just made up, probably crappy

My wife is probably in love with George.
I have seen my wife and George in an embrace.
Conclusion: my wife is having an affair with George. 

If they are having an affair then she's even more likely to be in love. The "bootstrapping argument" probably falls under some sort of circularity, but, famously, circularity can be virtuous. However overly-seductive.

Circular reasoning, also called begging the question or petitio principii , makes use of the conclusion to be proved as a premise, and hence renders the argument invalid. A circular definition explains the definiens in terms of the definiedum and renders the definition empty. Circularity in these cases is vicious... Not all circularities in argument or definition, however, are vicious. All deductions mean to derive the conclusion from the premises and hence the conclusion must have been implied in the premises. If the circle is large enough, and the argument or definition can still provide new knowledge, it is considered to be a virtuous circle.

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