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Algorithmic Entities

95 Washington University Law Review (Forthcoming).

UCLA School of Law, Law-Econ Research Paper No. 17-09

76 Pages Posted: 18 Apr 2017  

Lynn M. LoPucki

University of California, Los Angeles (UCLA) - School of Law

Date Written: April 17, 2017

Abstract

In an article published in the Northwestern University Law Review in 2014, Professor Shawn Bayern demonstrated that anyone can confer legal personhood on an autonomous computer algorithm merely by putting it in control of a limited liability company. Bayern’s demonstration coincided with the development of “autonomous” online businesses that operate independently of their human owners — accepting payments in online currencies and performing the off-line aspects of their businesses by contracting with human agents. At about the same time, leading technologists Elon Musk, Bill Gates, and Stephen Hawking said that they regard human-level artificial intelligence as an existential threat to the human race.

This Article argues that algorithmic entities — legal entities that have no human controllers — greatly exacerbate the threat of artificial intelligence. Algorithmic entities are likely to prosper first and most in criminal, terrorist, and other anti-social activities because that is where they have their greatest comparative advantage over human-controlled entities. Control of legal entities will contribute to algorithms’ prosperity by providing them with identities that will enable them to accumulate wealth and participate in commerce.

Four aspects of corporate law make the human race vulnerable to the threat of algorithmic entities. First, algorithms can lawfully have exclusive control of not just American LLC’s but also a large majority of the entity forms in most countries. Second, entities can change regulatory regimes quickly and easily through migration. Third, governments — particularly in the United States — lack the ability to determine who controls entities they charter and so cannot determine which have non-human controllers. Lastly, corporate charter competition, combined with ease of entity migration, makes it virtually impossible for any government to regulate algorithmic control of entities.

Keywords: corporations, charter competition, internal affairs doctrine, business associations, artificial intelligence, entity migration, reincorporation, beneficial owners, terrorism, corporate disclosure, autonomous entities, algorithms, regulatory competition, financial action task force

Suggested Citation

LoPucki, Lynn M., Algorithmic Entities (April 17, 2017). 95 Washington University Law Review (Forthcoming).; UCLA School of Law, Law-Econ Research Paper No. 17-09. Available at SSRN: https://ssrn.com/abstract=2954173

Lynn M. LoPucki (Contact Author)

University of California, Los Angeles (UCLA) - School of Law ( email )

385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States
(310) 794-5722 (Phone)

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