Cory DoctorowFeb 20

"Capitalist realism" is the idea that the world's current economic and political arrangements are inevitable, and that any attempt to alter them is a) irrational; b) doomed; and c) dangerous. It's the ideology of Margaret Thatcher's maxim, "There is no alternative."

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If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2026/02/20/karioca-konzernrecht/#less-limited-liability

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Show threadCory DoctorowFeb 20

Obviously this is very convenient if you are a current beneficiary of the status quo. "There is no alternative" is a thought-stopping demand dressed up as an observation. It means, "Don't try and think of alternatives."

The thing is, alternatives *already exist* and work very well.

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Show threadCory DoctorowFeb 20

The Mondragon co-ops in Spain constitute a fully worked out, long-term stable economic alternative to traditional capitalist enterprises, employing more than 100,000 people and generating tangible, empirically measured benefits to workers, customers and the region:

https://en.wikipedia.org/wiki/Mondragon_Corporation

Proponents of capitalist realism will tell you that Mondragon doesn't count. Maybe it's just a one-off. Or maybe it's just not big enough.

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Mondragon Corporation - Wikipedia

Show threadCory DoctorowFeb 20

100,000 workers sounds like a lot, but Amazon has over 1.5m employees and untold numbers of misclassified contractors who are employees in everything but name (and legal rights).

This is some pretty transparent goalpost moving, but sure, let's stipulate that Mondragon doesn't prove that there are broadly applicable alternatives to the dominant capitalism of the mid-2020s. Are there other examples of "an alternative?"

There sure are.

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Show threadCory DoctorowFeb 20

Let's look at limited liability. Limited liability - the idea that a company's shareholders cannot be held liable for the company's misdeeds - is a bedrock of capitalist dogma. The story goes that until the advent of the "joint stock enterprise" (and its handmaiden, limited liability) there was no efficient way to do "capital formation" (raising money for a project or business).

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Show threadCory DoctorowFeb 20

Because of this, the only ambitious, capital-intensive projects were those that caught the fancy of a king, a Pope, or an aristocrat. But once limited liability appears on the scene, many people of modest means can jointly invest in a project without worrying about being bankrupted if it turns out that the people running it are crooks or bumblers.

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Show threadCory DoctorowFeb 20

That lets you, say, buy a single share of a company without having to keep daily tabs on the management's every action without worrying that if they go wrong, someone they've hurt will sue you for everything you've got.

Capital formation is a real thing, and limited liability unquestionably facilitates capital formation. There are plenty of good things in the world that exist because limited liability protections allowed everyday people to help bring them into existence.

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Show threadCory DoctorowFeb 20

This isn't just stuff that makes a lot of money for capitalism's true believers, it includes everything from the company that makes the printing presses that your favorite anarchist zine runs on to the mill that makes the alloys for the e-bike you use to get to a demonstration.

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Show threadCory Doctorow

This is where capitalist realism comes in. Capitalist realists will claim that there is no way to do capital formation for these beneficial goods without limited liability - and not just *any* limited liability, but *maximum* limited liability in which the "corporate veil" can never be pierced to assign culpability to any shareholder.

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Feb 20 at 2:58pmWeb
Show threadCory DoctorowFeb 20

The capitalist realist claim is that the corporate veil is like the skin of a balloon, and that any attempt to poke even the smallest hole in it will cause it to rupture and vanish.

But this just isn't true, and we can tell, because one of the largest economies in the world has operated with a perforated corporate veil for nearly a century, and that economy hasn't suffered from capital formation problems.

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Show threadCory DoctorowFeb 20

Quite the contrary, some of the world's largest (and most destructive) monopolies are headquartered in this country where the veil of limited liability is thoroughly perforated.

The country I'm talking about is Brazil, which has had *limited* limited liability since *1937*:

https://lpeproject.org/blog/when-workers-pierce-the-corporate-veil-brazils-forgotten-innovation/

As Mariana Pargendler writes for the *LPE Project*, Brazil put limits on limited liability to address a common pattern of corporate abuse.

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When Workers Pierce the Corporate Veil: Brazil’s Forgotten Innovation

In the early 20th century, foreign companies operating in Brazil would extract profits while using thinly capitalized subsidiaries to directly employ their workers. When things went wrong…

LPE Project
Show threadCory DoctorowFeb 20

Companies would set up in Brazil, incur a lot of liabilities (say, by poisoning the land, water and air, or by stealing from or maiming workers), and then, when the wheels of justice caught up with them, the companies would fold and re-establish themselves the next day under a new name.

Like I say, this happens all over the world. It's incredibly common, and even the pettiest of crooks know how to use this trick.

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Show threadCory DoctorowFeb 20

I know someone whose NYC apartment was flooded by the upstairs neighbor, who decided that they didn't need to worry about the fact that their toilet wouldn't stop running - for months, until the walls of the apartment downstairs dissolved in a slurry of black mold. The upstairs neighbor owned the apartment through an LLC, which they simply folded up and walked away from, while my friend was stuck with a giant bill and no one to sue.

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Show threadCory DoctorowFeb 20

The LLC is the scammer's best friend. In the UK, an anti-tax extremist invented a tax-evasion scam whereby landlords pretend that their empty commercial buildings are tax-exempt "snail farms" by scattering around some boxes with a few snails in them:

https://www.patreon.com/posts/149255928?collection=1941093

When this results in inevitable stonking fines and adverse judgments, the "snail farmers" duck liability by folding up their limited liability company after transferring its assets to a new LLC.

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Show threadCory DoctorowFeb 20

Capitalist realists will tell you that this is just the price of efficient capital formation. Without total, airtight limited liability - the sort that allows for this kind of obvious, petty ripoff - no one would be able to raise capital for *anything*.

Brazil begs to differ. In 1937, Brazil made parent companies liable for their subsidiaries' obligations, with a system of "joint and several liability" for LLCs.

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Show threadCory DoctorowFeb 20

This was expanded with 1943's Consolidation of Labor Laws, and it worked so well that the Brazilian legislature expanded it again in 2017.

Remember back in 2024, when Elon Musk defied a Brazilian court order about Twitter, only to have Brazil freeze *Starlink's* assets until Musk caved? That was the "joint and several" liability system:

https://www.nytimes.com/2024/09/13/world/americas/brazil-musk-x-starlink.html

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Brazilian Court Makes One Musk Company Pay Fines of Another

A Brazilian Supreme Court justice said that because Elon Musk controlled both X and Starlink, one company was responsible for the fines of the other.

The New York Times
Show threadCory DoctorowFeb 20

As Pargendler writes, Brazil's liability system "represented a distributive choice: prioritizing Brazilian workers’ ability to enforce their rights over foreign capital’s interest in minimizing costs through corporate structuring."

Pargendler (who teaches at Harvard Law) co-authored a paper with São Paulo Law's Olívia Pasqualeto analyzing the impact that Brazil's limited liability system had on capital formation and corporate conduct:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6105586

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Show threadCory DoctorowFeb 20

Unsurprisingly, they find that there has been a steady pressure to erode the joint and several system, but also that some countries (the US and France) have a "joint employer" doctrine that is a weak form of this. Portugal, meanwhile, adopted the Brazilian system, 70 years after Brazil - this transposition of law from a former colony to a former colonial power is apparently called "reverse convergence":

https://lpeproject.org/blog/heterodox-corporate-laws-in-the-global-south/

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Heterodox Corporate Laws in the Global South

In the face of increasing inequality, legal regimes in the Global North have started to grapple with the distributive consequences of corporate law. They would do well to look to the Global South…

LPE Project
Show threadCory DoctorowFeb 20

More countries in the global south have adopted regimes similar to Brazil's, like Venezuela and Chile. Other countries go further, like Mozambique and Angola. Somewhere in between are other Latin American countries like Peru and Uruguay, where these rules have entered practice through judicial rulings, not legislation.

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Show threadCory DoctorowFeb 20

The authors don't claim that perforating the corporate veil solves all the problems of exploitative, fraudulent or corrupt corporate conduct. Rather, they're challenging the capitalist realist doctrine that insists that this system couldn't possibly exist, and if it did, it would be a disaster.

A hundred years of Brazilian law, and Brazil's globe-spanning corporate giants, beg to differ.

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Show threadCory DoctorowFeb 20

Image:
Gage Skidmore (modified)
https://commons.wikimedia.org/wiki/File:Elon_Musk_(54349817783).jpg

CC BY-SA 2.0
https://creativecommons.org/licenses/by-sa/2.0/deed.en

eof/

File:Elon Musk (54349817783).jpg - Wikimedia Commons

Show threadEveryday.Human DerekFeb 20
@pluralistic
I think donna meadows worked on some modeling didn’t she?
Show threadLevkaFeb 22

@EVDHmn @pluralistic

"We live in capitalism. Its power seems inescapable. So did the divine right of kings. Any human power can be resisted and changed by human beings." -- Ursula K. Le Guin

Show threadEveryday.Human DerekFeb 22
@LevZadov @pluralistic
We live on earth. Capitalism is powerless if you don’t give it power. If you don’t treat people like things. If you don’t treat animals like things.
In the journey of Life, if you are fortunate has nothing to do with capitalism. Capitalism is dead, it’s Time to move to ecological economics. Collaboration and standing up and supporting each other and calling out the bullshit by our politicians and leaders.