Is It Time for Corporations to No Longer Exist?
Is It Time for Corporations to No Longer Exist?
Humanity's wellbeing might depend on it
“Come now, let us reason together.” — Isaiah 1:18
You may judge the collective character of a nation by its ability to have an open-minded, level-headed, reason-based conversation about any given topic.
The fact that most nations, and most individuals, cannot even fathom the possibility of the eradication of for-profit corporations tells you everything you need to know about the state of society.
But close-minded brains aside, the fact remains:
Adam Smith said capitalism is all about incentives.
Billionaire Warren Buffett’s business partner Charlie Munger said,
“Show me the incentives and I will show you the outcome.”
What does interest incentivize?
Compounding global debt peonage ($307 trillion and counting)
Which causes public debt, higher taxes, selling off public services, and inflating the money supply, which raises prices and destroys purchasing power.
What does for-profit land-lording incentivize?
House-hoarding.
Raising rents.
Constricting suppy.
Driving up house prices.
Which causes housing hardship for all and homelessness for millions.
So what does the existence of for-profit corporations incentivize?
What is the legal purpose of a corporation?
Corporations have a legal fiduciary obligation to maximize shareholder value.
They do this in two ways:
First, they do everything in their power to maximize prices.
This is obviously horrible for consumers.
Lots of genuine competition tends to drive prices down, so most corporations expend Herculean amounts of effort to buy or bankrupt their competition. Monopolization of a product category is the goal, because price maximization is the ultimate goal.
Second, corporations do everything in their power to minimize costs.
They’re incentivized to cut corners.
They’re incentivized to decrease quality.
They’re incentivized to fight against worker rights and benefits.
They’re incentivized to push the tax burden onto others.
And above all, they’re incentivized to suppress worker wages.
Sadly, wage suppression is a war that labor ALWAYS loses thanks to Ferdinand Lassalle’s Iron Law of Wages:
“Real wages — the purchasing power of income — always tend, in the long run, to move toward the minimum level necessary to sustain the life of the worker.”
This happens for several reasons:
When wages go up, more people apply for jobs and that competition enables corporations to drive wages down.
When population grows, more people apply for jobs and that competition enables corporations drive wages down (this the reason Western countries are seeing unsustainable immigration levels.)
As technology increases, corporations get rid of human employees, which lets them drive the wages of remaining jobs down.
And, of course, corporations can always raise prices!
A quick thought experiment:
If the minimum wage went up to $100/hour, would prices go up or down?
If everyone got a million-dollar pay raise, would prices go up or down?
Up!
Workers can’t outwork or out-earn a corrupt system where unaccountable corporations are allowed to simultaneously monopolize resources, suppress wages, and raises prices.
We are forever stuck in this cycle until we create a new system.
The myth of capitalist efficiency
If a corporate can maximize price and minimize costs, it can create a fat profit margin for its shareholders.
Economists call this Surplus Value.
When you own a stock, you’re passively receiving profit not from creating any new useable wealth from others, but simply by maximizing costs for consumers and minimizing pay for workers so you can make money off of them.
What’s ironic is that for all of capitalism’s talk about being efficient, shareholder profit costs the customer more, but doesn’t improve the product or service.
In other words:
Passive shareholder profit is the ultimate inefficiency!
We don’t need for-profit corporations
Remember, most of human civilization was built prior to the invention of the legal fiction know as the corporation.
And there are lots of non-exploitative business models that don’t have the legal fiduciary requirement of enriching parasite shareholders:
Sole proprietorships
Partnerships (couple cottage industries, family businesses, partnerships with others will complementary skillsets, co-operatives, etc)
Not-for-profits (everyone works for living wages and profits are given to those in need)
Charities (everyone works for living wages and no profit is created)
The Christian vision of commerce as defined by Martin Luther is the at-cost sharing God’s good gifts with one another. Saint Benedict said a Christian’s prices will almost always be lower than the market’s because Christians aren’t in business for the profit motive.
But one doesn’t need to be a disciple of Jesus to understand basic math — dividends and stock price appreciation incentivize shareholders to suppress wages, decrease quality, and increase prices in order to maximize profit margins so they can re-invest in compounding these awful outcomes.
It’s the exact opposite of what leads to widest-spread human wellbeing.
Maybe it’s time for for-profit corporations to no longer exist.
What do you think?
Hit reply and let me know.
Watch Jared A. Brock’s documentaries about slavery and trafficking and read his myth-busting biography about Jesus’s politics, economics, and philosophy.