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This is no perversion of capitalism. Companies have only one responsibility: to increase profits to the shareholders. All other responsibilities have to be leg

This is no perversion of capitalism. Companies have only one responsibility: to increase profits to the shareholders. All other responsibilities have to be legally enforced; stuff like worker safety, food safety, minimum wage, 8-hour workday, no child labour etcetera. These are all things companies will gladly ignore if it profits them. Minimum wage in this case, through a loophole of payback.

Stratoscope 4y ago
Of course a corporation has responsibilities to its shareholders. But increasing profit never has to be the only responsibility. https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co... (https://archive.vn/ARcc3 https://archive.vn/ARcc3) > Corporations Don’t Have to Maximize Profits > There is a common belief that corporate directors have a legal duty to maximize corporate profits and “shareholder value” — even if this means skirting ethical rules, damaging the environment or harming employees. But this belief is utterly false. To quote the U.S. Supreme Court opinion in the recent Hobby Lobby case: “Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.” You will find many more citations with a search like this: https://www.google.com/search?q=is+a+corporation+obligated+to+maximize+profit https://www.google.com/search?q=is+a+corporation+obligated+t... I personally know executives in food manufacturing/preparation companies, both public and private, who gladly pay close attention to worker safety, food safety, and all the things you say a company would do only if forced by law. They do it because they know it's the right thing to do. And it helps them recruit and retain employees, and keep their customers happy and coming back for more. Their shareholders support them in this and would complain very loudly if the company ever put pure profit above all other goals. And they definitely don't view the line workers as resources to be exploited. They view them as their colleagues.
b112 4y ago
Companies have only one responsibility: to increase profits to the shareholders. Yes, and those companies exist in a society, and long term planning is vital for long term profits, and that is 100% sensible and correct operating procedure. Treating employees poorly can effect the ability to hire, and retain good people. It can effect consumers' desire to buy your products. It can result in unions, and the passing of laws, and therefore red tape. So even if you have a dim view, re corporate responsibility, it matters not, for that role has larger scope than "profit this second". And beyond this? All corporate decisions are made by people, and those people have every right to make moral decisions.
astrange 4y ago
Corporations do not have to maximize profits. They don’t even have to do what shareholders want most of the time, insofar as shareholders don’t care enough to enforce it.
- tomhoward 4y ago
  Indeed. The actual fiduciary duty of company directors is to serve the interests of the company, not shareholders/profits. This allows plenty of scope to make considerations like long-term reputation and employee satisfaction/loyalty/welfare high priorities, even at the expense of profits.
  - anticensor 4y ago
    Certain types of companies in Sweden are actually legally obligated to put profits before shareholders (Sweden considers co-ops and commandites not-for-profits though). Even in those, there is a lot of freedom of movement in how to conduct the business (assuming they do not codify that too in their charter).
  - chrisan 4y ago
    It depends on the company and if they follow shareholder primacy.
    - tomhoward 4y ago
      Not really. The law is clear that the duty is to the company. I know "shareholder primacy" is a talking point around Milton Friedman's philosophy, but as contemporary tech companies demonstrate, it's a false argument. Almost all the major tech companies of the past 20+ years have focused on long-term growth, not short-term profits/returns to shareholders. Amazon doesn't record profits and ploughs all surpluses back into the company for long-term growth. Steve Jobs ignored profits/shareholder returns for many years in order to focus on long-term health/growth of Apple. Reputation/welfare issues for employees (and now "ESG", for better or worse) has been a huge issue that all the top companies have had to make a priority (though as this article demonstrates, there are areas where the issue of employee welfare/fairness has not been heeded). There's plenty of scope for further discussion about these points, but the key point remains: shareholder primacy is not law and not the focus of company directors' fiduciary duty, regardless of what people claim in self-serving arguments from various points of the ideological spectrum.
otikik 4y ago
> Companies have only one responsibility: to increase profits to the shareholders. I question that initial premise.
bell-cot 4y ago
One of my stock answers to this simplistic "capitalist absolutist" thesis is to repeat it...but from the PoV of, say, the Human Society. Few absolutist capitalists want to hear that they, their companies, their wealth, their shareholders, etc. are mere tools - which Human Society can use in pursuit of its own responsibilities...or quietly "dispose of", if Society finds them to be more trouble than they are worth.
tgv 4y ago
I think you're getting downvoted because you seem to endorse the most parasitic form of capitalism. First off: it's not a company's responsibility to increase shareholder profit. It very much depends on the view of the people involved. But you're completely right when you think that greedy people can push in that direction and that a legal framework is the only way to keep that in check and make sure companies pay their dues to society. Social democracy still seems the only way to strike a proper balance between exploitation and lack of incentive.

Stratoscope 4y ago

Of course a corporation has responsibilities to its shareholders. But increasing profit never has to be the only responsibility. https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co... (https://archive.vn/ARcc3 https://archive.vn/ARcc3) > Corporations Don’t Have to Maximize Profits > There is a common belief that corporate directors have a legal duty to maximize corporate profits and “shareholder value” — even if this means skirting ethical rules, damaging the environment or harming employees. But this belief is utterly false. To quote the U.S. Supreme Court opinion in the recent Hobby Lobby case: “Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.” You will find many more citations with a search like this: https://www.google.com/search?q=is+a+corporation+obligated+to+maximize+profit https://www.google.com/search?q=is+a+corporation+obligated+t... I personally know executives in food manufacturing/preparation companies, both public and private, who gladly pay close attention to worker safety, food safety, and all the things you say a company would do only if forced by law. They do it because they know it's the right thing to do. And it helps them recruit and retain employees, and keep their customers happy and coming back for more. Their shareholders support them in this and would complain very loudly if the company ever put pure profit above all other goals. And they definitely don't view the line workers as resources to be exploited. They view them as their colleagues.

b112 4y ago

Companies have only one responsibility: to increase profits to the shareholders. Yes, and those companies exist in a society, and long term planning is vital for long term profits, and that is 100% sensible and correct operating procedure. Treating employees poorly can effect the ability to hire, and retain good people. It can effect consumers' desire to buy your products. It can result in unions, and the passing of laws, and therefore red tape. So even if you have a dim view, re corporate responsibility, it matters not, for that role has larger scope than "profit this second". And beyond this? All corporate decisions are made by people, and those people have every right to make moral decisions.

astrange 4y ago

Corporations do not have to maximize profits. They don’t even have to do what shareholders want most of the time, insofar as shareholders don’t care enough to enforce it.

tomhoward 4y ago
Indeed. The actual fiduciary duty of company directors is to serve the interests of the company, not shareholders/profits. This allows plenty of scope to make considerations like long-term reputation and employee satisfaction/loyalty/welfare high priorities, even at the expense of profits.
- anticensor 4y ago
  Certain types of companies in Sweden are actually legally obligated to put profits before shareholders (Sweden considers co-ops and commandites not-for-profits though). Even in those, there is a lot of freedom of movement in how to conduct the business (assuming they do not codify that too in their charter).
- chrisan 4y ago
  It depends on the company and if they follow shareholder primacy.
  - tomhoward 4y ago
    Not really. The law is clear that the duty is to the company. I know "shareholder primacy" is a talking point around Milton Friedman's philosophy, but as contemporary tech companies demonstrate, it's a false argument. Almost all the major tech companies of the past 20+ years have focused on long-term growth, not short-term profits/returns to shareholders. Amazon doesn't record profits and ploughs all surpluses back into the company for long-term growth. Steve Jobs ignored profits/shareholder returns for many years in order to focus on long-term health/growth of Apple. Reputation/welfare issues for employees (and now "ESG", for better or worse) has been a huge issue that all the top companies have had to make a priority (though as this article demonstrates, there are areas where the issue of employee welfare/fairness has not been heeded). There's plenty of scope for further discussion about these points, but the key point remains: shareholder primacy is not law and not the focus of company directors' fiduciary duty, regardless of what people claim in self-serving arguments from various points of the ideological spectrum.

otikik 4y ago

> Companies have only one responsibility: to increase profits to the shareholders. I question that initial premise.

bell-cot 4y ago

One of my stock answers to this simplistic "capitalist absolutist" thesis is to repeat it...but from the PoV of, say, the Human Society. Few absolutist capitalists want to hear that they, their companies, their wealth, their shareholders, etc. are mere tools - which Human Society can use in pursuit of its own responsibilities...or quietly "dispose of", if Society finds them to be more trouble than they are worth.

tgv 4y ago

I think you're getting downvoted because you seem to endorse the most parasitic form of capitalism. First off: it's not a company's responsibility to increase shareholder profit. It very much depends on the view of the people involved. But you're completely right when you think that greedy people can push in that direction and that a legal framework is the only way to keep that in check and make sure companies pay their dues to society. Social democracy still seems the only way to strike a proper balance between exploitation and lack of incentive.