The rise, fall and rise again of businesses
What's the purpose of a business? For a long time, the textbook answer to that question has been purely "to make as much money as possible for its shareholders". But business leaders – who often themselves get huge payouts from this model – are beginning to challenge this orthodoxy.
Or so it seems. The influential Business Roundtable association of top US business leaders, which includes CEOs of Apple, Boeing, Walmart and JP Morgan, made a landmark statement in August. They committed "to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders". Maximising profits, they said, would no longer be their primary goal.
For many, it was seen as an historic moment for business. Markets, however, greeted the news with a yawn. Both the Dow Jones and the S&P 500 in the US increased marginally on the day of the announcement.
[...] This brief history has us lurching back and forth between the ideas of shareholder versus stakeholder primacy that have waxed and waned over the decades. Are we doomed to pontificate on this endlessly?
As a way forward, I would advocate for a modest approach to end this interminable debate. A Hippocratic oath for corporations, based on seven principles:
1. Do no evil.
2. Pay taxes and adhere to laws and regulations.
3. Avoid interfering in politics.
4. Do not deny science.
5. Focus on core competencies and embrace competition.
6. If invested in the stakeholder model, ensure that stakeholders are represented in your governance structures.
7. If concerned about inequality, start at home.
This approach can help restore faith in corporations, protect their brands and reputation, and avoid accusations of hypocrisy, while focusing their attention on what they truly do best – producing goods or services. To paraphrase the writer Anand Giridharadas: "Avoid virtue signalling and virtuous side projects; do your day jobs more honourably."
And to quote Milton Friedman, business "should engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud".
What do you guys think ??
(Score: 1) by Ethanol-fueled on Friday October 11 2019, @11:59PM
Well, I suspected that Soylentnews stopped posting controversial stories on Friday and Saturday evenings, American time, because they didn't want them shitposted to death by drunken Americans.
But speaking of businesses serving their shareholders, PG&E (which sounds suspiciously a lot like AT&T) are now cutting power to Californians, turning the richest and most tolerant and progressive state into Venezuela. And now our local Sempra Energy is doing the same to us here down south. Apparently both of those are public companies which have a fiduciary duty to prioritize their shareholders. And also are suspiciously targeting right-leaning ruralists, disproportionately.
As a guy who likes ruralists and ham enthusiasts, I don't like it. But as a guy who does want to see liberal California continue to make itself the laughing-stock of the USA, I do.