Group Corporations

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The single most fundamental impact from all of these new capabilities may be felt in connection with the way in which we form the middle tier of the social fabric — organized, persistent, collaborating (non–governmental) groups.”


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From an article on the political role of the Group, that contains a reflection on the role of a new kind of Group Law, and the need for Group Corporations:


Beth Simone Noveck:

"What are the legal models to engender the creation of a wide array of collective actors?

One possibility is that the market will self–organize the necessary means for groups. Technology can implement the contractual arrangements within a group, backed up by group bank accounts and insurance, creating the infrastructure for groups to act and wield power. But just as the market depends on the state to create the statutory framework that regularizes corporate actors, democracy may benefit from the incorporation of groups. Especially in a world of private and privatized communications platforms, where constitutional protections do not necessarily apply, we need a way to safeguard the rights of groups to associate, own assets, make decisions — and to protect against malevolent groups. Giving rights to groups is easier when we can identity the groups. And, if we want to impose conditions for the legitimate work of groups, we also need a guiding framework. We need a way to safeguard the rights of groups to associate, own assets, make decisions — and to protect against malevolent groups.

This will require recognizing new forms of collective legal personhood. As David Johnson writes:

The single most fundamental impact from all of these new capabilities may be felt in connection with the way in which we form the middle tier of the social fabric — organized, persistent, collaborating (non–governmental) groups.”

He suggests the “creation of new forms of organizations — including complex, stable institutions that ultimately may demand and deserve legal personhood”.

We can imagine a framework statute, which recognizes the external existence of self–constituting groups. The law would accord rights to such groups to allow them to own assets and make binding decisions. While technology, to an extent, will provide the means for groups to control assets and make decisions, we need to explore in much greater detail what the group corporation might look like. We need more experience and experimentation with emergent and self–organizing groups to define that legal framework definitively, but, at least initially, we can imagine baseline conditions that might apply.

First, those groups that secure a member’s right to exit and safeguard other member rights, such as rights of free expression and association within the group would be eligible. Second, the group corporation that the law defers to is one that is self–governing. In other words, it makes decisions that directly affect itself and not those outside the group. Of course, there is no such thing as pure autarky; there are always some external effects. But we can imagine a requirement that reintroduces some degree, not of representativeness, but of direct impact. The group cannot have as its purpose to harm individuals or groups. Third, it must maintain transparency in exchange for which the law recognizes its rights to own and dispose of assets and make decisions with binding authority. The group — no matter how short–lived or how constituted (e.g. a Meetup) — can own a bank account.

The legal framework ought to be flexible enough to accommodate a wide variety of purposes. There is no need to impose a single corporate form a priori and risk reifying the nature of group life especially when the technology is still evolving. Unlike in the business corporations context where we have an incentive to limit the number of corporate forms, to enhance the ability of groups to make decisions over an ever increasing array of complex subject matter, we want to have groups proliferate. Business corporations assume an extended life for the corporation. But these democratic corporations need to exist only long enough to accomplish their purpose. That may require an extended life or it may only need to subsist for a moment or a day. This group corporate status need not apply to the group as a whole or for the duration of the group but could apply to decisions or output of the group that the groups desires to have regarded as binding and legitimate. Again, because the new group corporation would be something easy to enter into without significant transaction costs (imagine an online registry), it need not have the same formalities at every level as the traditional business or municipal corporation. In fact, I imagine the forming of a new corporation to require only a series of clicks to establish. We trust people to make binding contracts in one click. Why not make it simple and easy to make a group in two? We trust people to make binding contracts in one click. Why not make it simple and easy to make a group in two?

Not all groups would need to become group corporations. While most groups can self–regulate, where groups need to ensure that their decisions can become binding and legitimate law and enjoy authority, they would become “group corporations.” The law would recognize decisions made by the group that affect the members of that group. But the group would be free to engage in decision–making as it chose, congruent with the values of its members. Groups could connect with other groups in larger scale corporations, which could be formed for a longer or a shorter period, depending on the task to be accomplished. Technology in every age creates the conditions and the boundaries for collective action. Cyberspace is no different.

We are just at the beginning of the conversation about the future of groups. There is no doubt that soon technology for groups — or visual and social software — will become mainstream and part of the familiar fabric of cyberspace. That cyberspace will look more and more like a videogame and less like the text–based Web we know today. And that evolution toward more visual screens will likely have a positive impact on social relationships online, allowing people, not only to play, but also to work together. Technology in every age creates the conditions and the boundaries for collective action. Cyberspace is no different. But with a decade of experience with cyberspace and the challenges of cyberlaw behind us, we can begin to address how the law should respond to the changing nature of cyberspace and to its potential impact on democracy. We know that law is often a blunt and awkward instrument, especially when applied retrospectively, for encouraging positive and democratic uses of technology. Corporate law, which establishes a statutory framework for social order and action, suggests a possible avenue forward for recognizing the rights of groups and the legitimacy of their decisions while circumscribing the malevolent influences of bad groups." (http://www.firstmonday.org/issues/issue10_11/noveck/)