I think in the US, national laws require corporations to maximize shareholder profits at all costs. It's disgusting, but Friedman economists still have the ear of Congress, so there's not much to be done about it.
this post was submitted on 10 Aug 2023
51 points (79.3% liked)
No Stupid Questions
35920 readers
1610 users here now
No such thing. Ask away!
!nostupidquestions is a community dedicated to being helpful and answering each others' questions on various topics.
The rules for posting and commenting, besides the rules defined here for lemmy.world, are as follows:
Rules (interactive)
Rule 1- All posts must be legitimate questions. All post titles must include a question.
All posts must be legitimate questions, and all post titles must include a question. Questions that are joke or trolling questions, memes, song lyrics as title, etc. are not allowed here. See Rule 6 for all exceptions.
Rule 2- Your question subject cannot be illegal or NSFW material.
Your question subject cannot be illegal or NSFW material. You will be warned first, banned second.
Rule 3- Do not seek mental, medical and professional help here.
Do not seek mental, medical and professional help here. Breaking this rule will not get you or your post removed, but it will put you at risk, and possibly in danger.
Rule 4- No self promotion or upvote-farming of any kind.
That's it.
Rule 5- No baiting or sealioning or promoting an agenda.
Questions which, instead of being of an innocuous nature, are specifically intended (based on reports and in the opinion of our crack moderation team) to bait users into ideological wars on charged political topics will be removed and the authors warned - or banned - depending on severity.
Rule 6- Regarding META posts and joke questions.
Provided it is about the community itself, you may post non-question posts using the [META] tag on your post title.
On fridays, you are allowed to post meme and troll questions, on the condition that it's in text format only, and conforms with our other rules. These posts MUST include the [NSQ Friday] tag in their title.
If you post a serious question on friday and are looking only for legitimate answers, then please include the [Serious] tag on your post. Irrelevant replies will then be removed by moderators.
Rule 7- You can't intentionally annoy, mock, or harass other members.
If you intentionally annoy, mock, harass, or discriminate against any individual member, you will be removed.
Likewise, if you are a member, sympathiser or a resemblant of a movement that is known to largely hate, mock, discriminate against, and/or want to take lives of a group of people, and you were provably vocal about your hate, then you will be banned on sight.
Rule 8- All comments should try to stay relevant to their parent content.
Rule 9- Reposts from other platforms are not allowed.
Let everyone have their own content.
Rule 10- Majority of bots aren't allowed to participate here.
Credits
Our breathtaking icon was bestowed upon us by @Cevilia!
The greatest banner of all time: by @TheOneWithTheHair!
founded 1 year ago
MODERATORS
Most business ethics stuff I’ve seen from the past 10-20 years directly rebukes stakeholder theory and the Friedman purist view of “profits are all that businesses should care about”.
Although… how many CEOs have read books on corporate ethics?
Business is not my specialty, but I do have the sense that the ethical viewpoint is shifting away from Friedman. Unfortunately, the law is not. Shareholder supremacy is still mandated in the US, by my understanding, and ethics be damned.
But the ethics arguments do get into that a bit. For example, if you want to maximize value for shareholders (note that is a distinct term from stakeholders), do you give employees more benefits? That encourages retention. Turnover is super fuckin expensive, so you can make the argument that higher pay and increased benefits add shareholder value.
Basically, it’s not such a black-and-white legal argument
Although everything you say is true, most businesses believe that it's better to hold on to that money, just in case they "need it more" than the people that make it for them.
There's business, and there's ethics.
Pick one.
It's not hard to run a business ethically. I own a business myself, and I know a number of small business owners that do the same. The problem is when you have shareholders, especially as a publicly trade corporation, then you're legally required to put shareholder demands above your personal operational philosophy.
It's possible to run a small, private business ethically.
Neo classical economics is a cult and this is a hill I'm willing to die on.
Can you elaborate? I'm interested to understand this better, both what neoclassical economics exactly is what characteristics make it a cult.
It's hard to summarise in a comment but I'll give it a go. I should also note that this is just my understanding and opinion so I encourage you to seek out more information and formulate your own views where possible.
Neo classical economics is the technical term I guess but you might be more familiar with a similar concept known as neoliberalism. As it's associated with Reagan and Thatcher it's also referred to as Reaganomics or Thatcherism. At the heart of neoliberal ideology is free market fundamentalism or the idea that unregulated, profit-motivated, markets are the best way to distribute resources. Doesn't matter what these resources are (health, food, housing, iPhones etc), neoliberalism tends to see things as products and not human rights. If you're in America this will sound pretty normal to you, but for us non-americans who have things like universal healthcare, it's a strange way to distribute a human right.
Another key part is this idea that when rich people get richer it benefits society because wealth trickles down (you may be familiar with the term 'trickle-down economics'). Therefore economies work best when those with the most capital (the rich) are left alone to do what they do best and government's role is essentially to facilitate this. There's a lot more to it than this and encompasses a range of issues.
Why do I think it's a cult? Because we have all the data now to show that trickle down economics is not a thing, that equality is getting worse, that people are suffering because their human rights are not being met. And yet we are still using this approach. Sure, this is a situation where the powerful don't want to give up power. But I also think the rich and their servants (governments) do actually on some level believe in the ideology. It's very much a church of capitalism. The pandemic rely illustrated this on such a visceral level.
Right there with you. I'd even go further and say that it's the application of lessons the rich learned from the failures of their ancestors in the Guilded Age. This time, they intend to keep workers in their place by any means necessary.
That’s not exactly true.
What is true is that the officers of the company have a duty to act in the best interest of the company, as they evaluate it. That might mean more pay hikes and stock grants. It might mean cost cutting and job losses while executives get bonuses. It might mean offshoring jobs or keeping them local. If the board disagrees with the leadership vision or execution, they can fire people. But there’s no law that governs what a ceo can or can’t do with regard to profit or success, as long as they can show they were acting in the best interest of the company. That’s not hard to do if they managed to not break other laws, like embezzlement.
For instance, if Musk answered to a board of directors at twitter, he would have been fired a while ago, but they couldn’t have him arrested for tanking the company.
But there’s no law that governs what a ceo can or can’t do with regard to profit or success, as long as they can show they were acting in the best interest of the company.
This may be technically true but it doesn't play out like that and can't due to structural reasons. The situation arose from Henry Ford paying his workers substantially above what was deemed necessary because he wanted the workers to become consumers, preferably Ford consumers, and the shareholders instead wanted the extra bit in those pay packets to go to them instead. The shareholders took Ford to court and won. Now shareholders for the most part aren't even people or small groups who can be persuaded by things like growing a healthy consumer base in the economy, they're various large funds trying to simply maximize the amount of money they generate independent of any thought about overall economic health.
Maybe not accounted, but certainly they could sue him.
I can see blatant disregard of the anti trust laws and big corps going monopolistic without any actual caps , idk when will it stop !
Depends which country, the countries laws and ruling party. In, most western countries capitalists do have alot of sway.
Yes. A rich persons assets are protected by law. Whilst your life is considered secondary at best. Laws are primarily written to protect assets of the rich. It’s always been that way. From the Roman senate to the US senate. They are/were all rich land owners. Land which they stole from the natives, and enslaved them. There is nothing strange about this. This is just how we do things as a species. So a better question would be. How do we break this destructive cycle that has plagued our (human) civilization since its inception?
The rich are allowed to borrow billions from banks just on a letter of understanding and no actual proof , they may later be rescued by govts as well if they fail , while the othet than 1% , are scutinised for a few hundred thousand dollar loan too !
One thing to keep in mind regarding the USA is that it's not a proper democracy (gerrymandering + indirect votes for president + money lobbies). That by itself skews the political game in favor of the rich and power holders.
I can speak for my country, Brazil, which also has lobbies for stuff that's bad for workers (temer and bozo's years immediately come to mind), like allowing companies to hire MEI (individual micro entrepreneur, basically a company of yourself) instead of "real workers", thus bypassing most labor related laws and taxes, which all become optional for the MEI to pay.
Bottom line is: people with fuckloads of money spend their money to ensure laws that help them keep said money are passed. Fucking workers is a side bonus for them, most of the time.
There are a couple of different ways of looking at this but I think either way the answer is yes.
Firstly, capitalism as an economic system requires a government of some sort to maintain it. If we accept this (and outside of a small minority of extreme right wing libertarians and anarchocapitalists, most of us do), then there's a fairly simple answer to your question: without a supportive government, there is no capitalism and therefore no capitalist interest. So, yes.
But I think the question you're asking is perhaps more like, 'Does the government make a deliberate effort to keep capitalists, i.e., shareholders, in control of the economy, as opposed to some other group?'
I think the answer to this rephrased question is slightly more complex, although it does also boil down to 'Yes'. Businesses are required by law to prioritise shareholder returns. Insofar as the government could change the law, but doesn't, the answer to your question again must be 'Yes'.
But, while that law does exist, it's not the only law. All governments do, in practice, constrain what businesses can and can't do, and therefore do effectively restrict the theoretical profits a shareholder can make. Many governments also protect the existence and activities of groups like trade unions, which are often seen as running counter to the interests of shareholders. In this case, while I still think that basically the answer to your question is 'Yes', we can safely add a 'but', as in, '... but that's not ALL that governments do'.
There's another angle here, which is that many or even most people in the developed world are at least partially or indirectly shareholders and, therefore, capitalists. If you have a savings account or a pension, you own shares through your bank/pension provider. So, some might argue that keeping capitalists/shareholders 'on top' actually benefits nearly everyone. I don't quite buy this, but it's worth considering.
I think I could probably add further points and caveats here (e.g., tax policy might benefit 'the rich' who tend largely to also be 'the capitalists/shareholders') but I think I've said as much as I can without repeating myself.
Of course. That's who the government works for. That's who pays them, lobbies them. Gives them sweet luxury vacations. Laws are written by the ultra wealthy.
“the government” can be referring to many groups unless you believe in a secret world order.
Well yes , the govt means govt of respective country / states , although they are so similar that I dont want to name specific country !
Can you share some examples of the laws?
For example , increase in the percentage of the employees companies can hire and fire , without serving a notice or any amount paid to them , increased the work week hours here close to 50, made policies so that companies can save money at expense of employee health etc !
Hahahaha umm yeah it does. This is kind of why a lot of people have some issues with the whole capitalism thing. It's not good for anyone but capitalists.
Mostly so.
I think the short answer is basically, yes, but in the context of your specifics I look at it as a little more complex than that, though still, yes.
The first nuance, though I'm not sure how important this distinction is, is that I don't think there's a cohesive entrenched in stone and detailed policy that says "keep capitalist interests on top". I think it's a consequence of the system where despite safeguards to try and keep it in check like democracy, the concentration of wealth leads inexorably to influence and power. This means if there is a real or even just perceived threat, some strong economic headwinds on the horizon perhaps, if somebody has to eat shit, the owners of capital are going to make damn sure it isn't them. It doesn't matter if the consequences for them would be mild in relative terms compared to the unshielded masses, they won't have it it's selfish and repugnant but then perhaps possibly to an extent understandable, it's just human nature to use the resources at your disposal to ensure the best outcome for yourself and while by and large we do also have pro-social instincts, if you have a situation where some can opt not to experience a downturn and others don't get that choice then you're going to see what we see, they use their influence to make sure they don't suffer anything and they steer governments to this end.
Another nuance and a less understandable and more sinister one, but one which I definitely believe is happening, is that given point number 1, exceptional circumstances prevail and a public mood of acceptance is more likely to develop and be exploited. Rich people with significant business interests that would benefit from relaxed labour laws will lobby to erode such laws at all times and tend gradually to succeed anyway, but when you have crisis, lobbyists don't let them go to waste and they harness them to accelerate their permanent agenda. Sometimes crisis are invened, moral panics deliberately whipped up to allow an agenda to be pushed through but sometimes they're real crisis and "exceptional circumstances" really do prevail which is particularly insidious since they can take this moral license and mood of acceptance to push well past what's necessary or fair and usually weasel a way to keep the "temporary" changes in place ever after even when the exigencies have long passed.
My third and final point, for nuance is a devilish one because it can be interwoven nicely in to points 1 and 2 to justify terrible things. As I say, I don't think there's a secret evil plan amongst governments specifically to protect capitalist interests above social interests, but I do think governments are more beholden to them and also that sometimes circumstances mean the state has to step in to protect and shield segments of society against crisis. While you and I and many would probably think that it ought to be the more vulnerable and less wealthy that need that protection, for the sake of intellectual honesty I should at least acknowledge the justification they might make for instead protecting capital. It's not how I look at things, but I should imagine if pushed in to a corner where they have to acknowledge that that is indeed what they're doing this is what your government might say. "We have to protect the interests of corporations and capitalists because they are the economic engines of our society and the source of our welfare and prosperity. If we let them suffer, or even fail, the social consequences would be far greater than if we didn't protect them at the expense of the working class because it will worsen the impact of a crisis across the board for all". They'll claim that the crisis that you'd think would mean workers need more protection are in fact the very reason that they should be fired more easily because they'll frame labour laws ironically as a kind of bourgeois indulgence that can be tolerated in times of plenty but will burden corporations too much in times of crisis. I really don't agree with this idea but it is important to know what the supposed logic is to help at least prevent the exploitation of crisis in light of a well meaning mood of public acceptance.