Capitalism (6th)

More on Corporations

I keep waiting for the day when a corporate president expresses shame for a corporate transgression against the public or the environment.  The statement would go something like this:

‘ On behalf of my company,its management, and its shareholders, I wish to express our grief concerning injuries suffered by people living downstream from our factory, along the Green River.  We are ashamed to admit that, over the years, our poisonous wastes have found  their way into the river, putting the community in peril.  We will do anything to relieve the suffering we have caused.  We are also concerned that safe storage for such potent chemicals now seems impossible, and so henceforth we will only use our facilities for safer forms of manufacturing.  Under no circumstances will we give thought to abandoning the community or its workers. ‘  

No such statement has ever been made, nor ever will be made by a publicly held corporation in America, for several reasons.

No corporate manager could ever place community welfare above corporate interest.  An individual executive might personally wish to do so, but to make this sort of admission would subject the company, and the individual, to legal action by local, state, and federal authorities, as well as to damage suits by victims.

It could also open management to lawsuits from its own shareholders.

U. S. corporation law holds that management of publicly held companies must act primarily in the economic interests of shareholders.  If not, management can be sued by shareholders and firings would surely occur.  So managers are legally obliged to ignore community welfare (e.g., worker health and satisfaction, and environmental concerns) if those needs interfere with profitability.  And corporate managers must also deny that corporate acts have negative impact of any kind, if that impact might translate into costly damage suits that hinder profits.

Though corporations may enjoy many ‘human’ rights, they have not been required to abide by human responsibilities.

The most basic rule of corporate operation it that it must produce income, and (except for that special category of non-profit corporations) must show a profit over time.

Among publicly held companies there is another basic rule:  It must expand and grow, since growth is the standard by which the stock market judges a company.

All other values are secondary: the welfare of the community, the happiness of workers, the health of the planet, and even the general prosperity.


The above quotations, while unflattering, aren’t meant to be condemnatory of free-market capitalism.

My stance in this series of posts (Capitalism 1st – 6th) is that we can do capitalism better by determinedly eliminating its more glaring flaws, one of which is discussed above.

It seems reasonable to require that private profit be pursued within a matrix of government policy, law and regulation designed to stabilize or improve the quality of life for all persons, as well as preserving local and planetary environment.

All quotations from: Mander, Jerry—In The Absence Of the Sacred ISBN 0-87156-509-9

Disclosures:  I have neither formal training in law nor a financial interest in any book cited anywhere on my blog.

 

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