Corporate Business

From capitalistManifesto

Of the world´s 100 largest economies, 51 of them are corporations, not countries. The wealthiest 700 corporations own over 80% of the world’s wealth and the entire economic system is structured to allow large corporations to continue to grow and concentrate more and more wealth into fewer and fewer hands. In 2011, the list of the Fortune 500 companies was the world’s second-largest combined economy only surpassed by the U.S. economy.

Defining corruption as the exercise of public power for private, selfish ends, many theorists have argued that individuals can be corrupt even if their actions are legal.


Corporations are granted the rights of personhood, in a legal sense. Problem is, they're not required to live up to the same standards of responsibility.

A person (a real person that is) whose only concern or interest is for his or her continued economic profit would be considered a psychopath. People are supposed to show care and concern and compassion as well. The economic rules that govern our global economy, however, demand corporations to follow only one mandate: maximize returns and shareholder profit. There's nothing inherently evil about corporate business. Evil outcomes are entirely a fact of corporations doing what they are supposed to do: organize human ingenuity at scale to maximize profit for the stockholders.


And what may be worse, corporations are potentially immortal (i.e. if they don't go bankrupt or get swallowed up by another corporation). Corporations are economic feudalism of wealth and power in an age of internationalized digital capital.

Corporate wealth is often phantom wealth. "Phantom wealth also includes financial assets created by debt pyramids by which financial institutions engage in complex trading and lending schemes using fictitious or overvalued assets as collateral for loans in order to feed and inflate asset bubbles to create more phantom collateral to support more borrowing to further feed the bubble."

International trade policy "is a project being carried out by elites for elites, with little consideration for the interests of ordinary people” - Larry Summers, economist



The business-oriented Cato Institute is also calling for “an end to crony capitalism that costs taxpayers $100 billion year and consumers hundreds of billions more in higher prices.” The massive Big Business phenomenon of share buybacks—some $3.4 trillion over the last 10 years—has been denounced by such stalwarts of capitalism as Harvard Business Review (“stock price manipulation”), The Economist (“an addiction to corporate cocaine”) and Reuters (“corporate self-cannibilization”).

Healthcare is a classic example. U.S. healthcare costs 18% of GDP, compared to 12% in the next-highest cost countries, France, Sweden and Switzerland, 11% in Germany and Canada, 10% in Japan and 9% in Britain and Australia. Effectively, the U.S. government pays as much for healthcare as Britain’s state-run system, then private American citizens pay the same amount all over again. The U.S. population gets nothing extra in terms of health outcomes for all this expenditure. Indeed, basic U.S. indicators of healthcare results, such as life expectancy, are distinctly mediocre by rich-world standards. In effect, the American taxpayer is paying for healthcare directly and paying again, via taxation, as the industry is subsidized by American government. This dynamic plays out in other countries too.


Big Business likes to talk about the good jobs it provides but the reality is that median salaries in the U.S. have been flat for several decades. This is not because of a failure of workers to become more productive. The truth is that there were gains in productivity but they did not go to workers. Gains that flowed from workers’ improvements in productivity mostly flowed to the organizations and their shareholders, including the executives who received sizable stock-based compensation. Hourly compensation for workers remained practically flat.



"The only legitimate reason for government to issue a corporate charter extending special privileges favoring a particular enterprise is to serve a clearly defined public purpose. That purpose should be clearly stated in the corporate charter and be subject to periodic review." - David Korten

The economic problem with shareholder value theory is therefore that it simply doesn’t work, even on its own narrow terms. A singular focus on maximizing shareholder value as reflected in the stock price ends up destroying real shareholder value. It leads to behaviors that are counter-productive to the health of the organization.

The moral problem with shareholder value theory is that it seeks to legitimize institutionalized selfishness. It encourages managers, boards of directors, shareholders and institutional investors to look after their own interests at the expense of everyone else. Should we be surprised when ugly economic, financial and moral consequences ensue, on a vast economy-wide scale?

See also Crony Capitalism: Unhealthy Relations Between Business and Government from the Committee for Economic Development.


Although there are numerous instances of healthy public-private partnerships, the unhealthy interaction between large government and private interests, when coupled with costly election campaigns and the increased influence of lobbying, has exerted an important toll on the U.S. economy. This has occurred along the following lines:

  • It arguably has impeded fundamental economic reforms, which could in principle yield equity and efficiency gains.
  • It has reduced the overall degree of competitiveness of the economy by favoring insiders over outsiders.
  • It has resulted in the costly introduction of subsidies or tax breaks that benefit vested interests at the expense of the general public.
  • It has encouraged rent-seeking rather than economically productive behavior.
  • If left unchecked, crony capitalism will continue to sap vitality from the economy. It also will continue to undermine public support for apitalism. This adds urgency to the task of finding solutions to the rise of crony capitalism.

Remedies must touch all parts of this vicious cycle of economic cost and public disillusionment by restoring prosperity and ensuring opportunity is spread across all of society and not ringfenced by a few neo-feudal CEOs.


Corporate public corruption flows from a tragic tension: between directors’ or officers’ obligation to the corporation’s health, and their ability to increase profitability by increasing corporate power. There is ample evidence that massive corporations, even those perceived as leaders in CSR, invest heavily in public relations to reduce their tax burden. They do not bribe, but they extract wealth from the public through tax cuts; on a net level, they add more corruption than they reduce.

One approach locates the institutional flaw in corporate law and corporate obligations, arguing that officers and directors should be ethically free to pursue the public good even when it directly conflicts with corporate goals. In the Aristotelian framework, one might call this the aristocratic approach: the goal is to free corporate CEOs to be aristocrats instead of oligarchs. We should be troubled by the vision they present: unaccountable corporate actors independently choosing that which is best for the country, and quite possibly the world.

Moreover, systems of aristocracy are notoriously weak, and tend toward corruption themselves. Freedom plus exhortation does not always mean virtue. The occasional multinational will resist the temptation to reduce its own taxes or deregulate its industry, but that is hardly a prospect to rely on. As Madison famously wrote in Federalist Paper No. 51: “If angels were to govern men, neither external nor internal controls on government would be necessary.”

The problem is not with the existence of the corporation, or with corporate law. More free and open markets would lead to less corruption. The problem is with concentrated power: a handful of actors who are sui generis; so large and powerful they can bend public power. The modern anticorruption movement chooses not to address these large actors, using formalism or legalism as an excuse, at all of our peril.


There is an overall principle here, and it should be pretty obvious. Once an economic system has moved away from a free market, usually through legislation drafted by panicky and economically illiterate leftists given license by a war or an economic crisis, it creates crony capitalists. These benefit from the new restrictions and build businesses optimized for the restrictions that the laws and regulations have introduced.

Confronting rentier capitalism and fashioning firms for which social responsibility is more than a marketing ploy requires nothing less than re-writing corporate law. To recognise the scale of the undertaking, it helps to return to the moment in history when tradable shares weaponised capitalism, and to ask ourselves: Are we ready to correct that “error”?

The moment occurred on September 24, 1599. In a timbered building off Moorgate Fields, not far from where Shakespeare was struggling to complete Hamlet, a new type of company was founded. Its ownership of the new firm, called the East India Company, was sliced into tiny pieces to be bought and sold freely.

Tradable shares allowed private corporations to become larger and more powerful than states. Liberalism’s fatal hypocrisy was to celebrate the virtuous neighborhood butchers, bakers, and brewers in order to defend the worst enemies of free markets: the East India Companies that know no community, respect no moral sentiments, fix prices, gobble up competitors, corrupt governments and make a mockery of freedom.

Then, toward the end of the 19th century, as the first networked mega-companies – including Edison, General Electric, and Bell – were formed, the genie released by marketable shares went a step further. Because neither banks nor investors had enough money to plough into the networked mega-firms, the mega-bank emerged in the form of a global cartel of banks and shadowy funds, each with its own shareholders.

Unprecedented new debt was thus created to transfer value to the present, in the hope of profiting sufficiently to repay the future. Mega-finance, mega-equity, mega-pension funds, and mega-financial crises were the logical outcome. The crashes of 1929 and 2008, the unstoppable rise of Big Tech, and all the other ingredients of today’s discontent with capitalism, became inescapable.

In this system, calls for a gentler capitalism are mere fads – especially in the post-2008 reality, which confirmed the total control over society by mega-firms and mega-banks. Unless we are willing to ban tradable shares, first introduced in 1599, we will make no appreciable difference to the distribution of wealth and power today. To imagine what transcending capitalism might mean in practice requires rethinking the ownership of corporations.

Imagine that shares resemble electoral votes, which can be neither bought nor sold. Like students who receive a library card upon registration, new staff receive a single share granting a single vote to be cast in all-shareholder ballots deciding every matter of the corporation – from management and planning issues to the distribution of net revenues and bonuses.

Suddenly, the profit-wage distinction makes no sense and corporations are cut down to size, boosting market competition. When a baby is born, the central bank automatically grants her or him a trust fund (or personal capital account) that is periodically topped up with a universal basic dividend. When the child becomes a teenager, the central bank throws in a free checking account.

Workers move freely from company to company, carrying with them their trust-fund capital, which they may lend to the company they work in or to others. Because there are no equities to turbocharge with massive fictitious capital, finance becomes delightfully boring — and stable. States drop all personal and sales taxes, instead taxing only corporate revenues, land, and activities detrimental to the commons.

Europeans and Americans have "...a greater readiness to fathom the end of the world than to imagine life after capitalism." - Slavoj Žižek