Many people will tell you that a company’s sole purpose is to “maximize returns to its owners.” As with most (if not all) fundamentalist approaches that attempt to reduce a complex reality, it eviscerates reality.
In North America a corporation is a creation of, and at least in theory is subject to the oversight of, we the people as expressed through our duly-elected representatives. It is created to maximize long-term benefit to all its stakeholders. Note that the US Constitution does not directly address corporations, partnerships or any other form of commercial operation. In the Preamble is the phrase “promote the general Welfare, with that last word referring not to a government-run program but rather to “Health, happiness, and good fortune; well-being,
(American Heritage Dictionary). Of course a strict constructionist might chose to read that phrase as permitting corporations to focus on maximizing the ‘good fortune’ of shareholders but the use of ‘general welfare’ suggests a broader reading.
A corporation’s stakeholders include all who potentially benefit (or suffer) from its activities; shareholders, management, other employees, suppliers and customers. But also citizens who never directly interact with the company. People who drive on the same roads the company’s vehicles or suppliers use, as one example. A company that doesn’t contribute its fair share to the cost of structural upkeep is mistreating everyone. A corporation that pays employees such a small wage that people who never shop there have to ‘pick up the tab’ for food assistance and other programmes their employees need to survive is harming the general welfare.
Management of publicly-traded stock companies have replaced maximizing long-term benefits to all stakeholders with a focus on short-term results that impact the company’s share price and their own remuneration. Additional pressure comes from the currently-promoted mythology of the “self-made man.”
No man is an island,
Entire of itself,
Every man is a piece of the continent,
A part of the main.
We must all hang together, or assuredly we shall all hang separately
It is necessary to remind our elected officials that corporations are not, and can never be, ‘people‘ in any sense of the word. They are creations of the State and must be reigned in if we have any hope of promoting the general Welfare. Once the ridiculous and erroneous SCOTUS decision (‘Citizens United’) has been overturned, it will be time to change how corporations are overseen and brought into line with the Constitutional requirement to promote the general Welfare.