There seems to exist a rarely-stated assumption that somehow corporations are an essential element of a free-market economy, and that they benefit a nation's economy. However, I wonder if this is really true.
Here, I am speaking of the US form of a corporation which allows a small number of people to control capital contributed by a large number and also allows those same people to disavow responsibility for the debts and liabilities of the corporation.
In the Wealth of Nations, Adam Smith deprecated any kind of joint stock companies, writing that a man would be much more careless with other people's money than his own. By this logic one might see corporate law as a way for elites to exploit society parasitically and corporate law as a damage to the economy instead of a benefit.
Is there any theoretical validity to this kind of view?