The Mercantile Laws Commission of 1854 and the Political Economy of Limited Liability

It is widely agreed that the coming of limited liability in the Joint-Stock Companies Act of 1855 marked a revolutionary change. However, this change is hard to explain because it appeared to serve no particular interest. This article supports the lone alternative view of Jeffreys that limited liability was introduced in the interests of wealthy potential investors. It argues that the commission’s report was introduced in the interests of wealthy potential investors. It argues that the commission’s report presented parliament with competing analyses of limited liability from the perspectives of two very different theories of political economy: one which followed Adam Smith in arguing that unlimited liability was necessary to sustain a world fit for individual capitalists; and another which, anticipating Marx’s critique of Adam Smith, argued for limited liability to create a world fit for social capital.