We are taught that corporations, limited liability companies, are the natural legal innovation, created by the heroism of the free market. This is a lie.

They are not a “neutral” tool of trade or commerce. They are a weapon of wealth extraction designed to shield the rich from the consequences of their actions.

Limited liability is a massive state subsidy. This structure allows corporations to capitalise on a vast, publicly funded “understructure” — the legal systems, physical infrastructure, and an educated workforce — to generate wealth that is disproportionate to individual effort or contribution of the shareholders.

The central legal fakery of limited liability is the separation of ownership from responsibility. This allows the already wealthy to pool their resources to extract wealth while legally shielding their personal wealth from the consequences of those ventures and shifting the burden of corporate crime onto the public.

If you or I act recklessly, we lose everything.

If a shareholder’s company destroys a river, commits fraud, funds terrorism or steals wages, the personal wealth of the shareholders is legally untouchable.

This limited liability legal structure privatises the profits of extraction while pushing the risks onto the public and the environment.

The modern “limited liability company” was a specific legal invention by the modern State to de-risk imperialism.

The legal creation began with the British East India Company to extract wealth from colonies and kill millions of Bengalis without risking the personal fortunes of London elites.

The contemporary example is BP spilling 3 million barrels of oil in the Deepwater oil disaster. This catastrophe was a “corporate” failure, not the personal crime of its shareholders or executives.

The company structure created an abstraction, the fictional “legal personhood” of the corporation that depersonalises exploitation.

Today, it turns nations into “host economies” by establishing a parasitic relationship where the companies extract wealth through rent-seeking rather than contributing to local industrial development.

This is clearly evident in Australia, where foreign-owned mining giants extract our natural resources, shift the profits offshore to tax havens, and leave us with the environmental clean-up bill. Similarly, our major supermarkets, airlines, big banks, pharmaceuticals and health care (all majority-US owned) all shift profits offshore as dividends, related-party transfers or exorbitant executive bonuses.

Corporate legal personhood and limited liability allows corporations to treat the Global South (and Australia) as a casino where they can keep the winnings but walk away from the table if they lose.

Even the history of LLCs in Australia shows how the state, from the days of Governor Macquarie, absorbs the risks of the wealthy elites to ensure they can continue to make profits. The government had to create limited liability because capital went on “investment strike” without it.

We are the host; they are the parasite.

The solution is not just higher company taxes, making directors personally liable for corporate crimes, and abolishing the fictitious legal entity of limited liability. Even “the corporate death penalty” is not enough.

The legal personhood of corporations is a core legal mechanism that allows capitalist exploitation. It allows capital to act as a subject with rights (free speech, property) while real human beings are treated as objects. In effect, the law has been written to allow actual humans to be contracted into servitude to fake humans.

We need vast adoption of cooperatives, especially workers cooperatives, and the decommodification and public ownership of those parts of the economy necessary for life (housing, water, energy, the Internet, education).