Chapter 2: Theory of the Firm and the Law

The key innovation of capitalist society in the last 200 years is the limited liability companies and ready credit. These changes have unlocked the innovation and trading capacities of nations and first began in New York in the early 1800s before being fully embraced by the then world’s superpower, Britain, in the mid-1850s and quickly spreading around the world.

Almost all peoples across the planet now enjoy deeply personal relationships with companies who supply employment, goods and services to every corner of the globe.

The idea that shareholders should be the last resort for creditors’ compensation has survived notwithstanding significant economic crises such as the Great Depression in the 1930s (which was in part responsible for the rise of fascism, communism and world war all within living memory) and yet despite these setbacks there is still no sign of this mode of economic organisation disappearing