Is 'Corporate Citizen' an Oxymoron?

theodp writes "Citing expert testimony from a recent House Science Subcommittee hearing on Globalizing Jobs and Technology, The Economic Populist challenges the conventional wisdom that maximizing profits should be a corporation's only responsibility, suggesting it's time for the US to align its corporations to the interests of the nation instead of vice versa. Harvard's Bruce Scott warns that today's global economy is much like the US in the later 19th century, when states competed for funds generated by corporations and thus raced to the bottom as they granted generous terms to unregulated firms. Sound familiar, Pennsylvania? How about you, Michigan?"

Corporate accountability equals fascism?

[MacDork]

Wow, that is a HUGE straw man [wikipedia.org] you have there.

I second that motion

[IvyKing]

One thing left out in TFA, was that the shareholders of corporations are given a huge subsidy in the form of their liability for the misdeeds of the corporation are limited to the value of the stock. The limitation on liability was granted so that the corporation would act in the Public Interest, Convenience or Necessity.

Another issue left out of TFA, was which stockholders interests are being represented by the board of directors? A stockholder who plans on holding the stock for the long term is going to have a very different idea of ideal corporate governance than a stockholder who wants to flip the shares as quickly as possible (e.g. Warren Buffett vs Carl Icahn).

Re:This is what happens without communism

[puppetman]

The Soviet Union was technically a state-capitalist society, where the government (AKA state) owned the means of production.

Re:But does breaking articles lead to real penalti

[LynnwoodRooster]

I know that action is taken quite often; here's a [wbai.org] few [findarticles.com] examples of such violations. Contrary to conventional wisdom, boards tend to draw the line at violating the articles of incorporation, as their own stakes - their own interests - live and die with the corporation. You'll usually see those guilty of such actions readily served up by the company - witness Ken Lay, the Rigas', and many others. The board will look for their own interests, and those usually align with the majority of the stockholders (since they're elected by the stockholders).

Re:Michigan's current problems...

[Koiu Lpoi]

The author of your linked article clearly has no idea what he's talking about. He called Michigan the "Wolverine State". Nobody calls it that. Nobody.

Enron perhaps not the best example

[zooblethorpe]

Interesting, thank you.

Contrary to conventional wisdom, boards tend to draw the line at violating the articles of incorporation, as their own stakes - their own interests - live and die with the corporation. You'll usually see those guilty of such actions readily served up by the company - witness Ken Lay, the Rigas', and many others.

I'm not familiar with the Rigas, but as far as Ken Lay is concerned, one could probably argue that the board didn't abandon him until it was far too late to do anything productive beyond throwing a scapegoat out the door. The kinds of power supply shell games that Enron's teams had dreamed up are patent fraud just in common sense terms, let alone the various definitions for exactly why and how what they did was illegal. I must surmise either that the board was wholly ignorant, and therefore something close to criminally negligent regarding proper corporate governance, or that the board had at least some idea of what was going on, and was copacetic, and therefore complicit, until the law came calling. Either way, Enron doesn't appear to be a good example for how corporate articles are supposed to govern company behaviour and inform the board of directors' and other management decisions, inasmuch as the company was taken down not for violating its own articles, but rather for widespread and highly disruptive fraud. Then again, perhaps I'm missing a salient point?

Cheers,

Re:This is what happens without communism

[Russ Nelson]

Any sufficiently large corporation is indistinguishable from government.

A government has a monopoly on violence. No corporation can have a monopoly on violence without becoming a government, in which case it isn't a corporation anymore. What you're saying is definitionally wrong.