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> By definition, the legal obligation of a business company is to maximize its profits, preferably while not getting caught breaking any laws. That is the legal

> By definition, the legal obligation of a business company is to maximize its profits, preferably while not getting caught breaking any laws. That is the legally enforced and encoded definition of what capitalism must do. [citation needed]. There is no law that I can think of that forces me, as a business owner to maximize my profits nor does any law prescribe the golden path for achieving said maximum. Generally speaking my business can incur losses as long as I find people willing to pay the money - either through loans, donations, whatever other means. I'm free to run my company as I wish as long as I get the majority of shareholders to agree. There is one caveats that applies: If I run out of money, my company goes bankrupt. If I willfully or negligently damage the company by e.g. performing illegal acts and thus damage the property of other shareholders I might be liable. Paying decent wages certainly does not fall into this category. Capitalism does not require companies to become bad actors. It certainly provides a lot of incentives to do so, but it's still the actors decision. Blaming any "legally enforced and encoded definition" is blame shifting.

tomp 13y ago
Generally speaking, most of the biggest and most profitable businesses don't have a single owner, but are instead traded on stock markets. People who own the shares are not people who run the company. The managers, people who run the company, have an obligation to maximize the profits (in US, and probably UK), otherwise the shareholders can sue them for loosing their money, even if they did the morally right thing. In Germany, however, profit maximization is not the only goal, but businesses can consider other stakeholders as well (employees, community, environment, ...)
- Xylakant 13y ago
  > The managers, people who run the company, have an obligation to maximize the profits (in US, and probably UK), otherwise the shareholders can sue them for loosing their money, even if they did the morally right thing. Nope. You certainly got it wrong. See the linked posts from https://news.ycombinator.com/item?id=7129788 https://news.ycombinator.com/item?id=7129788. One of the potential source for that confusion might be that directors decisions can be challenged on the presumption that they are wasteful, but you'd have to prove that paying a decent wage is wasteful which is a very hard hurdle to overcome. Bad faith may be another option - but that's a different story. Being traded on the stock market provides a lot of incentive to maximize profits since more profitable companies trade better - but it's not a legal requirement.
  - garfelnagel 13y ago
    Those who ignore history etc etc. go back to the 70's and 80's and you will find investor lawsuits over boards being financially negligent with investor money. That is one of the reasons we find ourselves in this mess today.

tomp 13y ago

Generally speaking, most of the biggest and most profitable businesses don't have a single owner, but are instead traded on stock markets. People who own the shares are not people who run the company. The managers, people who run the company, have an obligation to maximize the profits (in US, and probably UK), otherwise the shareholders can sue them for loosing their money, even if they did the morally right thing. In Germany, however, profit maximization is not the only goal, but businesses can consider other stakeholders as well (employees, community, environment, ...)

Xylakant 13y ago
> The managers, people who run the company, have an obligation to maximize the profits (in US, and probably UK), otherwise the shareholders can sue them for loosing their money, even if they did the morally right thing. Nope. You certainly got it wrong. See the linked posts from https://news.ycombinator.com/item?id=7129788 https://news.ycombinator.com/item?id=7129788. One of the potential source for that confusion might be that directors decisions can be challenged on the presumption that they are wasteful, but you'd have to prove that paying a decent wage is wasteful which is a very hard hurdle to overcome. Bad faith may be another option - but that's a different story. Being traded on the stock market provides a lot of incentive to maximize profits since more profitable companies trade better - but it's not a legal requirement.
- garfelnagel 13y ago
  Those who ignore history etc etc. go back to the 70's and 80's and you will find investor lawsuits over boards being financially negligent with investor money. That is one of the reasons we find ourselves in this mess today.