Not all capitalism needs to be hypercapitalism
The CEO of a major business has called for a shift from profits to well-being as the goal of capitalism, and is considering a business model in which his hardware stores rent items rather than selling them. This is an example of aiming at things that are better than growth.
The first comment points out the fatal flaw. Such a move is basically impossible for a public company, who have as their primary legal obligation the requirement to make profit for their shareholders. Of course, it is quite possible to have capitalism without this requirement (as was the case for much of the early life of corporations), but unless this issue is addressed, then all the good intentions of CEOs and consumers will be thwarted.
And that law is unlikely to change anytime soon while corporations are themselves able to throw around so much political weight. Democracy only works when people are in charge - and corporations are not persons.
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12 comments:
Corporate ownership doesn't necessarily preclude acting for reasons other than shareholder profit (although it is certainly geared that way!). I was very interested to talk with the CEO of a public company a few years ago, who was intent on trying to achieve some public good through, even at the risk of limiting profits. He took this seriously enough that when they went public, the shareholder statement included the 'warning' that the board would deliberately preference social benefits over shareholder profit - potential stakeholders could only come on board if they signed off!
(www.dennisbakke.com or his book 'Joy at work' for those interested)
This had lots of issues, as you might imagine, but it is great to see people thinking creatively about how systems can be developed for purposes other than maximising profit and minimising risk - something the corporate world could use a lot more of.
Well, that is an excellent thing and thanks for bringing it to our attention. I like his top ten list. Very provocative. And I see he is motivated and shaped by scriptural convictions.
Nonetheless, there is a difference between limiting profit and seeking other things before profit (i.e. there is a difference between profit maximisation at all costs and profit still being a sine qua non of business).
Furthermore, in a public company, such an endeavour relies on the goodwill of shareholders, who could very easily vote the CEO out to be replaced with someone who will maximise profits. That is, the CEO has no tenure to ensure a change like this is seen through to its conclusion. When you speak of shareholders having to "sign off" on the corporate philosophy of the CEO, was there any legal obligation involved in this?
So I don't deny that it is possible (or admirable) for occasional individuals or small rebellions to swim against the stream, just that the current is extremely strong. For example, here is an interesting discussion of the situation in Australian law, which emphasises that company directors and employees have to act for the good of the company, i.e. the shareholders, and any acts of good citizenship or generosity can only be justified through reference to the interests of the shareholders. In the absence of any other guiding principles, this nearly always comes down to being interpreted as the profits of the shareholders.
So I'm not criticising Dennis Bakke for trying to start a revolution, simply noting that it is indeed a revolution that he is trying to start.
Rebekah Phillips and Sylvia Rowley argue that nudges are a waste of time. Although they are talking about consumerist habits not being transformed by "nudges" when they are within a whole system encouraging the opposite, I think the same applies to this discussion about capitalism.
I think what Justin says is very relevant. The responsibility of the Board and CEO is to act in the interests of the shareholders. What this interest is depends on the articles of incorporation. This is why you can have non-profit companies. The problem with public companies is that they operate within a culture in which their shareholders expect them to maximise profilts - that's why the shareholders have bought shares. It's made more complex by the fact that many of the largest shareholders are other companies and financial institutions, not individuals, so there's no-one you can really ask. The whole thing has generated its own momentum and changing direction is like turning an oil tanker.
Yes, that is a helpful way of putting it.
Bank of America paid no federal income tax in 2010. Indeed, 2/3rds of US companies paid no federal income tax.
I'm sure it is a coincidence that BoA spent $2.2 million on campaign donations last year (that's before we count lobbyists).
Common Dreams: "Plutocracy and democracy don't mix. Plutocracy too long tolerated leaves democracy on the auction block, subject to the highest bidder. Socrates said to understand a thing, you must first name it. The name for what's happening to our political system is corruption - a deep, systemic corruption."
After Citizens United, conservative undisclosed donors spent $119.6 million to liberals’ $15.7 million.
More stats here.
PP: It's not all Citizens United. Tracing Dark Money.
Monbiot: A suggestion for campaign finance reform. The *only* money parties are allowed is a £50 membership fee per member, plus equal matching funding from the state. Forces them to reconnect. Keeps total donations under control. Prevents vested interests from calling the shots. Nice.
Esquire: The campaign to overturn Citizens United.
Guardian: Classical and neoclassical economics. Why the shift matters.
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