USpolitics

In the wake of recent events a widespread disgust with the behavior of corporations has been in the spotlight. Why do companies act? Mostly 'for the shareholders.' This is why Twitter is no more, why openAI is an empty husk, and possibly why our planet is headed towards a climate disaster.

Note this Ferengi-esque drive to profit is entrenched in our model of a corporation: It's entire purpose is profit. When we think of a corporation acting in the interest of it's shareholders we only think of actions that result in profit in dividends or stock prices.

Why is this the only way corporations act in the interest of shareholders? Because shareholders, owners, only take financial risk when owning a corporation. Owners are inherently protected from the consequences of corporate actions.

Corporations commit crime. It happens, and it is difficult to pin down who is ultimately responsible for these crimes. Sometimes it is an employee who truly is responsible, but sometimes the company itself created the conditions requiring employees to break the law and sometimes the company decides the penalty is worth the profit.

Imagine how the balance of competing interests would change if instead of treating owners as disinterested observers, responsibility for all corporate actions was evenly divided by ownership stake. Fines, asset seizure, court orders, prison sentences, felon status all trickling up to those ultimately responsible: owners. The best interest of shareholders would no longer be limited to maximizing profit, but also minimizing prosecution risk.

This would not stop bad actors entirely, but would remove one of the evolutionary pressures that selects for their success.