Original Intent of the Corporation
The modern corporation began in 1600 during a period of zero-sum mercantilism to make a profit from buying and selling commodities. It was the British East India Company.
If we consider common human needs, the origin would be that corporations are a collective of finances and people to improve the community. From prehistoric times, there is evidence that within a community one group did the hunting while another group gathered the firewood.
Only collectives can fly airlines, build freeways, broadcast television, and raise children. That is, the people, or their representative government, can see a social need and licensed the corporate group to operate to meet the need. The corporation is granted some liability protection and must meet some legal requirements. The corporation only exists because society, government, and business people have defined it and legally permitted it.
Some people may fall into thinking that corporations know best how to run our systems because it is their specialized business. The risk is that the corporate form that has come to us today is obligated to maximize profit, minimize wages, and limit product durability.
The corporation that is easy to love and that will be here in several decades is one that maximizes consumer survival, All products have only manageable “co-products” and no negative impacts from “by-products,” for example.
A recent comment
Even some of our contemporaries are only halfway there. They call it “woke capitalism” when they realize that corporations could benefit society. They are to be forgiven because they are coming out of a historical period of abusive corporations.
The ethos “that a company’s purpose is to not only enrich shareholders by maximizing profit but also benefit the lives of its customers, employees, and communities it serves … is relatively new,” (Edited comment from Allison Morrow, “Woke Capitalism”, CNN Business Nightcap (online), 2022-01-18)
My response to Allison Morrow
I have lived these last 80 years to learn some things and experience some embarrassment for things I didn’t learn. The Golden Rule is usually given a nod as a good idea to appease ethicists, and then we go on to serve Greed.
You offer that corporate behavior for the benefit of the populace is a new concept. I suggest you consider the opposite – companies exist primarily to benefit the lives of their customers, employees, and communities.
We will let someone build an ice cream store in our neighborhood because we want access to ice cream. It has a license as long as it provides access to ice cream. Stores exist to serve, not to sell a paper cup of milk and sugar and tell us it is ice cream because it maximizes their profit.
Consider that people long ago saw a need in their community that could only be met by a collective of resources. The community gave an incentive to organizers by creating laws to protect them from assault from the community for minor mistakes and gave the incentive of authorizing them, in consideration for their contribution to the community, to keep a share of the surplus revenue collected as compensation for their participation in our community. In other words, the corporation was created to serve the community.
In the Supreme Court of Michigan, in 1919, in the case of Dodge Motor versus Henry Ford, the judge declared that the primary purpose of a corporation is to maximize profit. Consider the long term, more than whether Mr. Ford should offer higher wages to his employees so they could afford to buy an automobile. It was a bad judicial decision that has taken away a living wage from many of us and left corporations to fight over money without regard to workers who are their backbone. This is not just difficult for society; it is anti-social; it is destructive.
Witness “B Corporations.” They are nothing new, just a return to the root of a collective that provides services to the people who authorized it (established its existence) when an individual cannot do something themselves. Corporation law was established by the electorate-empowered legislature (in our local democracy) for the good of the electorate. In my limited exposure to social anthropology, the governed people were persuaded to grant such authorization by the promise of a socially beneficial product, not a parasitic redistribution of wealth.
We have corporations because they are a benefit to the people who authorized them, not to benefit the corporation itself. By letting corporations target profitability, we have created an animal that will eat itself up and will take essential services with it. The community must outlast corporate cannibalism or firmly regulate it. Underregulated, it has become a pyramid with a peak that is nearly out of reach. We are not too late, although we are late enough that it will be painful to live through the correction.
- Long will live corporations that grow, harvest, transport, market, and provide us food while improving resources so they can do it again.
- Long will live corporations that consider 100 market cycles as intermediate-term planning. The “intermediate-term” is your definition of your children’s lifetime.
- Long will live corporations that provide healthcare, water, power, waste removal, and electronic transmissions for us without appropriating our wealth till we can’t afford them.
- Long will live corporations that don’t use by-product accounting but use co-product accounting.
- Long will live the corporation that speaks up on behalf of its members to improve their working conditions including the support of a living wage.
- And happier they all will be.
Other mechanisms that benefit the people by the application of the collective pooling principle are:
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insurance to cover a calculable risk of catastrophic loss,
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humane employee working conditions where the corporate collective may be tempted to abuse employees, and
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healthcare to benefit the individual and to protect the community from communicable disease.
When we have a government responsible to the people, we have a collective vehicle to administer great things for every investor, consumer, worker, and child. That gives everyone the opportunity to thrive.
Politically Speaking
No one person can make a society thrive, and we do not serve just one person.
The government only succeeds with the consent of the people. If we let our consent be taken from us, we will lose everything.
In a dictatorship, we let the leader decide; in a democracy, we speak up.
In a dictatorship, we are cowards; in a democracy, we vote.
