If corporate law at times seems to approximate the way true liability, as determined in an objective court of law, is assigned, that isn't a justification for all the injustice, unfairness and distortions of the free market that come with it.
If your point is that government shouldn't create the fictitious entity, the corporation, even if the law wouldn't effectively change any type of behavior by individuals working together in companies, then that makes sense. Good point.
But then you talk about the injustice, unfairness, and distortiions that come with corporations, and that confuses me. Can you give me an example of injustice, unfairness, and distortions created by corporate law?
First businesses are suckered into incorporating in order to enjoy special privileges like immunity from personal liability that, while under some circumstances is justified, is more often than not, an injustice. Once a business sells its soul to the state, it becomes subject to a whole new set of laws, regulations, fees and corporate taxes. ( At first the corporate tax rate is another lure for businesses that consider it a tax shelter, as corporate income tax rates are lower than individual rates; the owners can "leave their money in the business", paying themselves a minimal salery, but eventually, if the business is successful and starts paying larger salaries or dividends, it becomes double taxation.)
If the corporation decides to go public, ( Ordinary businesses are denied this basic right, giving corporations an unfair advantage in the capital markets and making it easy for corporations to gobble up small businesses.)then it becomes subject to a virtual nightmare of insane bureaucratic regulations that prevent businesses from being run efficiently and helps to drive them and their jobs out of the country.
Corporate regulations also have the effect of driving the smaller corporations, less able to afford an extensive legal and regulatory compliance department, into merging into larger and more politically powerful entities that can lobby for protectionism, local, state and federal government contracts, abuse of eminent domain, public bailouts, subsidies and other corporate welfare schemes.