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What Companies Are For

• neonate 7y ago
  http://archive.is/E0yrs http://archive.is/E0yrs
• Ididntdothis 7y ago
  That's not a bad article. A lot of people seem to confuse capitalism with competitive markets. Competitive markets gave us most progress and innovation whereas pure capitalism gives monopolies and stagnation.
  • cameronbrown 7y ago
    Disagree. A competitive market cannot really exist without profit motive. We can have capitalism without monopolies and global corporatism, it just requires a little regulation. I'm not saying profit motive is the only thing that drives corporations, but it's like breathing is to living creatures.
    • Ididntdothis 7y ago
      I think we are saying the same thing. The profit motive is fine but it's not sufficient. Competition is needed.
      • cameronbrown 7y ago
        What I'm saying is capitalism and competition go hand in hand. If they don't then that's a flaw with regulations (see: American health care).
  • jpkiser 7y ago
    Many "pure capitalists" would argue that you only achieve competitive capitalism through "pure capitalism." The idea applies a cynical view to human nature but is interesting none the less. The idea can be boiled down to one simple point; everything can be bought for the right price. If there is a governing body that has the power to regulate any and every business then it only follows that the biggest of those businesses have every resource and incentive to guide regulation to enforce their monopolies. We may think about these as backroom deals between senators and lobbyists but I'd argue that you actively participate in such deals by just sitting in front of your TV or surfing the web. In America the biggest governing body is voters.
    • whatshisface 7y ago
      Pure capitalism would have no institutions in place to stop society from switching to another government type in the aftermath of a successful campaign.
• scotty79 7y ago
  As I understand the companies have one superpower. If they do wrong thigs they can die without killing their employees and destroing their equipment. This one thing is their secret strength and that's where the strength of capitalist economy comes from. Any mechanism that prevents companies from dying or makes their deaths more destructive than it needs to be makes the whole system weaker and less valuable to humanity.
  • rathel 7y ago
    This puts a twist on "corporations are people" - that they can die or be killed ;)
  • awinder 7y ago
    I would say the superpower is even greater. If you’re a mom and pop business, you can die — we will protect you so that like, your children’s children’s children aren’t still paying your debts. And if you’re a small or mid cap company you can also die but the timelines are a little different. Large cap companies I think house a unique placement because they shouldn’t regularly be going to 0, and some level of backstopping may be strategically necessary. I think the reason for making that “design tradeoff” if you will, is that in return you gain a wider spectrum on investment risk tolerances that makes the market stronger. And there’s also great utility in the real-world consequences, I think the auto bailout proved you could make a good investment for the taxpayer, for workers, and for the shareholders. The real world is a different place from the textbook so anything dogmatic sets off alarm bells for me that we are maybe leaving money on the table out of a sense of a form of religiosity.
• dfilppi 7y ago
  Interesting that liberty is irrelevant. It's only shopping whatever system produces the most prosperity for certain voting blocks. Just the framing of the discussion signals dark times ahead.
  • hwillis 7y ago
    Property is theft.
    • tengbretson 7y ago
      The concept of theft is predicated on the existence of property.
      • rexpop 7y ago
        Bingo.
      • hwillis 7y ago
        Yes, that is almost verbatim what Marx said: "'theft' as a forcible violation of property presupposes the existence of property." So to put it more clearly: Proudhon was clear that his opposition to property did not extend to exclusive possession of labor-made wealth. Proudhon was describing the fact that people do not start out on an equal footing and are subject to power imbalances throughout their lives. Whether you accept the obvious fact that economic exploitation is a real thing (monopolies all the way to gunboat diplomacy) or just the historical fact that wealth is inherited, property is clearly not distributed in any ethically reasonable way. People are robbed of an equal footing from the start, which robs them of their ability to empower themselves, which robs them of liberty. Proudhon was an anarchist and libertarian- both things I disagree with personally, but it's absolutely bizarre that his ideas are controversial in the modern day. They're concise, obvious, and fit in well with the common canon.
      • primroot 7y ago
        The concept of property is predicated on the existence of government, and we've just completed the circle. "Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security. He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate continually held up to chastise it. The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government. Where there is no property, or at least none that exceeds the value of two or three days labour, civil government is not so necessary. Civil government supposes a certain subordination. But as the necessity of civil government gradually grows up with the acquisition of valuable property, so the principal causes which naturally introduce subordination gradually grow up with the growth of that valuable property. " (Emphasis mine) http://www.econlib.org/library/Smith/smWN20.html http://www.econlib.org/library/Smith/smWN20.html
• chiefalchemist 7y ago
  But how much of the economy can be truly competitive? I mean, from autos to laundry detergent there seems to be very mature products and little room for innovation. The result is either compete on price (that has limits) or assume a sense of parity and coast (in a way where you don't muck it up). I'm not claiming all is discovered. We've reached the end of history. That's foolish. But for a fair amount of the economy competition/innovation is simply not possible.
  • gpresot 7y ago
    I would disagree. Conditions keep changing. keeping to the sectors you mentioned. Tesla and electric cars are clearly examples of innovation that was favoured by external elements (e.g growing concerns for climate / environment, increase of pollution in urban areas). In laundry detergents (and also personal care) , the big companies are racing to acquire small brands that were faster than them to go to market with more natural cleaning products (less chemicals, no parabens, traceable / sustainable ingredients...). Large Consumer Goods (P&G, Nestle...) companies are facing a backlash by consumers that are shifting to more local / smaller companies. This is more difficult in the automotive industry (there are some massive investment in assets that are simply impossible for companies that are not well funded). EDIT: I can not think of one segment where there are less products today than there were 30 years ago. Even when companies become fewer, they don't stop expanding and innovating the portfolio. The penalty for doing so would be either some competitor selling the same for less or selling something better.
    • NeedMoreTea 7y ago
      The problem with many of the consumer brands, particularly cleaning and laundry, is the sheer amount of pointless innovation. Convincing a generation that liquid soap is better than a simple bar, despite being vastly more wasteful in both product and packaging. Same for laundry in working to replace a cardboard box full of powder with all sorts of tablets, sachets and gels in plastic boxes. Or new recipes that replace original ingredients with super cheap palm oil or HFCS - sold for the same price. It's endless, and brands have burnt 95% of their former goodwill by being too damn clever for their own good. Unless consumers are, in aggregate, entirely idiotic, buying up dozens of small brands won't pay off as they hope. We've had decades of large companies buying up brand and niche leaders and completely ruining the product in just a year or two. Leaves them cynically trading on the name only and damn near profiteering. Surely people are wising up to this finally? Success of discounters like Aldi and Lidl against major brands says they are.
• hliyan 7y ago
  Oddly enough, I was just in the process of writing the following in an adjoining window for a blog post: "The modern business corporation is not just an investment vehicle, but is also an integral part of civilization. We spend as much has half our waking hours working within these organizations, tend to find purpose in them and make many of our social relationships through them, so it is not incorrect to consider them social institutions, not unlike school or marriage. As such, corporations are best structured and operated with the wellbeing of all involved stakeholders. One can think of a corporation as being built on three pillars: the investors, the employees and the customers, with employees as the conduit that connect investors and customers. Contrary to the theory of shareholder value maximization, sole focus on the investor does not, on the long run, lead to good outcomes for the investor."
  • akitzmiller 7y ago
    Really well said. If you think of it as a --social-- capital enterprise, every part of the chain can benefit. Like other social entanglements, though, there is a need to break them up from time to time.
  • crawfordcomeaux 7y ago
    If the stakeholders don't include the environment, it's still possible to justify polluting as long as it's not in the backyard of stakeholders. To me, any corporation considering stakeholders to be anything less than all living beings is a myopic & potentially dangerous organization. It also won't be prepared to take on extraterrestrial customers without making a major cultural shift, should aliens ever present the opportunity.
    • crawfordcomeaux 7y ago
      Every good (ie. efficient) regulator of a system must model that system. Corporations are poor regulators of the environment because they do not model the environment. These slow-moving AI aren't being designed with the environment as part of their model and we're seeing the impact of this all over the world.
  • 7y ago
• caseysoftware 7y ago
  As I've noted elsewhere: Private corporations acting in quasi-government ways is risky at best and terrifying at worst. While some of the checks & balances in civil+legal society have been broken, many are still there and there are repercussions when they're broken. A corporation doesn't have the same mechanisms - public rules (aka laws), processes, appeals, accountability, etc, etc - built in and there's limited recourse when their definition of "right" and others' conflicts. Based on this new assumed role, it's begging for more government regulation. And unfortunately, it makes sense for governments to say "as you take a more active role in society, you need more public oversight."
  • seibelj 7y ago
    And once a corporation takes on the roles of government, it naturally needs to be protected from competition lest the essential government functions it provides get threatened. We shouldn’t be demanding more from our corporations, we should be demanding less. Companies should produce goods and services at the highest quality for the lowest price, and let free citizens choose between them - and if the goods for sale are subpar - let the same free citizens start their own competitor. History is a never ending see-saw, and we are now sawing back towards protectionism, big government, and less freedoms for the individual. At the very least it will once more teach painful lessons to a new generation that doesn’t remember the past.
    • harimau777 7y ago
      Do you think it would be fair to say that corporate capitalism has also taught us painful lessons that we forgot from the past?
      • TaylorAlexander 7y ago
        Its a perfectly reasonable question. HN is so harsh on people who question capitalism. And corporate capitalism in particular is well deserving of criticism.
    • numakerg 7y ago
• jnordwick 7y ago
  Matt Levine's take (sorry Matt for the long excerpt): https://www.bloomberg.com/opinion/articles/2019-08-19/we-looks-out-for-our-selves https://www.bloomberg.com/opinion/articles/2019-08-19/we-loo... The managers and the board, in this version of the corporation, are the only ones representing all of the constituencies, so they are the only ones qualified to evaluate their own performance. If an activist shareholder comes in and says “we should replace the board because performance is bad,” the board and the CEO can respond “no you are just saying that as a greedy shareholder and we shouldn’t listen to you.” Another way to put it is that the corporation really does have to serve many different stakeholders, but in practice most disputes over corporate governance are not between shareholders and employees or shareholders and polluted watersheds, but between shareholders and managers. And these disputes tend to follow a stereotyped pattern in which disgruntled shareholders say “the stock price is low” and the managers say “ah but in the long term it will be high.” Because—on the agency-cost view—it is just harder to measure the long term (since it hasn’t happened yet), so you can’t hold the managers to it. Similarly, if managers can respond “ah but the stock price is low because we are serving other constituencies,” that gives them another argument against the shareholders. ... So when an association of big public-company CEOs gets together and declares that corporations should serve the community, take care of the environment, and be responsible to employees and customers, not just shareholders, that might be because the CEOs have thought it over and decided that employees and the environment are getting a raw deal, but it is also possible that the CEOs have thought it over and decided that shareholders are annoying.
• rcurry 7y ago
  I’m not sure if I’m about to get laughed out of here, but what do folks think of something like the Uniform Code of Military Justice being required for executives of publicly traded corporations - not literally the UCMJ, but I mean a separate legal system that is designed to ensure more accountability for executives of these large businesses?
  • eberkund 7y ago
    I've never considered that to be honest. Why do you think a separate legal system is necessary? What additional laws would these executives be subject too that say an employee or executive of a small private business not have to comply with?
    • rcurry 7y ago
      I’m just sketching around here, but maybe you give up certain rights in return for being a high level decision maker at a large company. For instance you’re the CEO of a big oil and gas firm, but you don’t get to lawyer up and hide behind the fifth amendment when there’s an oil spill... people are willing to submit to an alternate legal system in return for veteran’s benefits, I’m sure they’d be willing to do it in return for the opportunity to make millions as the CEO of a big publicly traded company.
      • lostdog 7y ago
        Just being able to hold people individually responsible for their decisions could be enough. Did you decide that your company should poison a dozen people? You're a criminal and should be charged as such in court.
  • 0xDEFC0DE 7y ago
    It’s not going to go over well. Many people believe there’s different enforcement of the law for rich and poor. I expect it will promptly backfire when you actually introduce something like that unless executives suddenly get a reputation for being poor people. You would need to build a ton of trust and everyone will watch it closely for clickbait fuel. Even if this somehow cracks down harder on execs than the current system, it could also be seen as a separate track to justice for rich people.
• polytronic 7y ago
  Hahaha, right! Because 'Democracy' created corporate giants that laws do not apply to. Like BP's gulf oil spill that got away with what it would spend in toilet paper in a year. Or perhaps the financial institutions (aka 'the markets') that rip-off entire nations and cause holocausts so that their share-holders can enjoy a million dollar an hour relaxing pool dive in a private pedophilic island! F@ck it, let's skip straight to the point. It's a global emperor god king we need to save us from ourselves, ain't it?
  • wilg 7y ago
    What are you talking about?
    • polytronic 7y ago
      Here in Greece we 'competitionized' state working cleaning ladies! Trust me we know how its done and some of us know damn well the grand scheme of things. U puppies keep on dreaming about progress and evolution under the present state of things. Have a little patience and keep your eyes open. You'll know soon enough what I mean. PS @YC I ain't politically correct so u can downgrade my score all u want. Honestly I though u would better than -3
• majewsky 7y ago
  The part about dynamism echoes a thought that I had earlier today. As far as I can tell, socialism as an economic system largely failed [1] because of a lack of dynamism. Because everything is state-owned, everything is "too big to fail" and all management structures petrify. It doesn't have the same regenerative properties that exist in all living and evolving systems, the controlled killing of old parts of the system without killing the entire system that in capitalism is provided by competition on the free market. The question is: Is there any socialist theory that provides a solution to this lack of dynamism? I'm asking not necessarily because I want socialism, but because pure free-market capitalism has some obvious flaws when it comes to natural monopolies and the pricing of externalities, so I'd like to know if there is a better system that doesn't devolve into the real-world socialism we've already seen. [1] I'm not disputing that socialist regimes did horrendous things to their subjects, but I'm focusing on the economic perspective here.
  • bo1024 7y ago
    Markets and free competition don't have to be synonymous with capitalism (private ownership of economic resources). I think that's a historical accident. The recent book "radical markets" has examples, such as common ownership self-assessed tax (cost) where nobody owns any private property, each person rents everything they use from society, rates are set by competitive market mechanisms, and rent is redistributed. Just one extreme example.
• throwaway18468 7y ago
  They are needed for feudalism to function without raising awareness of the serfs. Corporations are government arms, throwaway proxies. They extract the power from the serfs and transfer it to the ruling class. Government: Please kindly pay taxes with these papers that we print. Serf: Where do I get those papers? Government: Participate in involuntary servi... in economy. Maybe trade something to a... corporation. Let us know if they don't treat you fairly. <gently kisses in the forehead>