Ken Jacobson: Whose Corporations? Our Corporations!

Yves Smith reposts Ken Jacobson: Whose Corporations? Our Corporations! An argument is made that corporations are not about profits, but:

Historically, corporations were understood to be responsible to a complex web of constituencies, including employees, communities, society at large, suppliers, and shareholders. But in the era of deregulation, the interests of shareholders began to trump all the others. How can we get corporations to recognize their responsibilities beyond this narrow focus? It begins in remembering that the philosophy of putting shareholder profits over all else is a matter of ideology which is not grounded in American law or tradition. In fact, it is no more than a dangerous fad.

Emphasis Mine

The obvious answer is public ownership under Socialism. Ownership is critical in controlling the production in a society. Private ownership means the private objectives of the rich are pursued. When these objectives diverge from that of the society at large, then we get the problems we currently see.

Jacobson says that the conception of profit maximization is a recent fad, and:

This narrow conception of corporate purpose has become predominant only in recent decades, however, and it flies in the face of a longer tradition in modern America that regards the responsibilities of a corporation as extending far beyond its shareholders. Owen D. Young, twice chairman of General Electric (1922-’40, 1942-’45) and 1930 Time magazine Man of the Year, told an audience at Harvard Business School in 1927 that the purpose of a corporation was to provide a good life in both material and cultural terms not only to its owners but also to its employees, and thereby to serve the larger goals of the nation

Emphasis Mine

This view seems to conveniently ignore the gilded age of the robber barons that existed up to the start of the second World War. The end of the nineteenth century and the beginning of the twentieth century was a time of great economic crises and bitter battles. This was when troops (public and private) turned their guns upon the workers in the mines of Colorado, factories of Detroit and Chicargo, and elsewhere.

The success of the Russian Revolution challenged the supremency of the Capitalists. This challenge was met with the furour of Fascism or the comforts of the Welfare State. Corporations became part of this Welfare State in order to ensure their survival in a Capitalist society.

The need for this survival declined as the threat of a Communist revolution in the West receded as the 1970's and 1980's saw the start of the neo-Liberal onslaught against the Welfare State. It was no longer necessary to buy the workers off as the workers suffered defeat after defeat.

Jacobson concludes that:

An important step toward countering their influence can come in refusing to accept the legitimacy of shareholder primacy. Up to now, this fad has had the power to neutralize opposition in part because it has obscured the tool needed to challenge it: a clear understanding of the economic realities. For this reason, we must learn what contributions all stakeholders – not just the shareholders, but all the others as well – make to the corporation, and the extent of the risks and rewards those contributions truly entail. We must learn about the interrelation of business and government in all its complexity, going far beyond the headlines about taxes and regulation to discover who needs whom for what, and who does what for whom. And we must learn what rights corporations legitimately hold, what privileges they enjoy, and what duties they are obliged to carry out.

Emphasis Mine

Again I say that public ownership is the only way to align the productive capacities of corporations with the needs of the society at large. The next question is how align the decision making bodies responsive the needs of the public at large.