Tuesday, October 20, 2009

The Corporation: excerpt 2

individuals who make decisions for corporations are not free to do what they personally believe is right - they must do what will externalize costs and promote sufficient growth to provide a decent return on investment - if corporate decision-makers make decisions contrary to these narrowly, and legally, defined corporate goals, they can be sued by shareholders for breach of fiduciary trust - suppose Dow Chemical, or DuPont, decided to use a significant portion of its assets to reverse environmental damage - how long would it be before they found themselves in court for breach of fiduciary trust? - these corporations are chartered to pump out chemicals profitably; legally, that is about all they can do.

a corporation's narrow financial purposes strictly limit the range of decisions possible within corporate culture - the legal framework of the corporation strongly favors decisions that foster short-term gain over decisions that protect public trust resources upon which humanity depends for sustenance, such as the oceans or the atmosphere -- finally, and this is the most important aspect of the corporation, individual investors and managers are legally protected from liability for the corporation's actions - indeed, limiting individual liability was the purpose for which the corporation was invented - furthermore, as a matter of U.S. law, since 1886 corporations have been accorded many of the rights and Constitutional protections of an individual, without the responsibilities of an individual [3] - in addition, of course, modern corporations have perpetual life, and can accumulate assets and influence on a scale that no individual could ever hope to acquire - many international corporations have annual budgets larger than the annual budgets of many developing nations.

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