What Companies Are For

And once a corporation takes on the roles of government, it naturally needs to be protected from competition lest the essential government functions it provides get threatened.

We shouldn’t be demanding more from our corporations, we should be demanding less. Companies should produce goods and services at the highest quality for the lowest price, and let free citizens choose between them - and if the goods for sale are subpar - let the same free citizens start their own competitor.

History is a never ending see-saw, and we are now sawing back towards protectionism, big government, and less freedoms for the individual. At the very least it will once more teach painful lessons to a new generation that doesn’t remember the past.

One of the checks and balances that we have worsened since 911 is the division of powers. No group had a monopoly on many aspects of your life and so you could “shop around” if things got bad.

And this is why you need antitrust laws. I need an option to use another provider if this one is treating me unfairly for dystopian or other reasons.

Or change the structure of corporations in practice to many more cooperatively owned and democratically operated businesses. In this way, the actions of the corporations will much more reflect the needs of the people instead of reflecting the needs of an elite board of directors. And in that world, the government only needs to do things like provide legal support for new cooperatives, laws that allow/require employees to purchase the company via right of first refusal laws, etc. Obviously moving control from elite company owners to government bureaucrats is not going to be much better for society.

IMO if companies were structured more democratically (co-ops) you wouldn't need as much regulation (long view taken by workers more often than short term profit), and therefore smaller government.

Win - win.

The check on corporations is competition. Don't like what they do, take your business elsewhere.

The huge problem is that this check isn't really working, because the FTC is asleep at the wheel. We have anti-monopoly laws on the books; they exist to ensure that consumers have adequate degrees of choice and companies have a check on blatantly abusive behavior. It's time to start enforcing them.

Break up giant corporations and prevent them from gaining a stranglehold on the market and much of the need for government regulation goes away.

Corporations (or really, their staff) end up policing things because nobody else wants to do the work. You don't see governments volunteering to handle all the flagged posts on Facebook.

Really well said. If you think of it as a --social-- capital enterprise, every part of the chain can benefit. Like other social entanglements, though, there is a need to break them up from time to time.

If the stakeholders don't include the environment, it's still possible to justify polluting as long as it's not in the backyard of stakeholders.

To me, any corporation considering stakeholders to be anything less than all living beings is a myopic & potentially dangerous organization. It also won't be prepared to take on extraterrestrial customers without making a major cultural shift, should aliens ever present the opportunity.

> The modern business corporation is not just an investment vehicle

When has that changed? When was what you wrote, last time, not true, and why?

I don't necessarily disagree with you, but for sake of argument I think one difference between corporations and social institutions is that no one owns social institutions.

This is mostly only true for the tech bubble. Living in Europe, I felt like most people just went in to work to do 'a job'. The notion of it being their company, that they had an integral role in making something, that notion was absent.

Obviously it frustrated me quite a bit, but perhaps that allows them to dissociate themselves from the job and make it less of their identity.

Although a corporation is soulless entity, the people working in an organization are not. I'm fairly certain that the corporations I've worked for technically had only shareholder value optimization as an objective, but that doesn't mean that the managers treated me unkindly. I was given leniency with partial days off, working from home and leisure time when things were slow. The managers wanted to make me happy because they wanted me to continue to work there. Also my job consisted of problem solving which required a creative element that cannot be extracted by force. The same is true for the corporations I do business with (e.g. fast food restaurants have to obligation to give me free water)

For that reason, I don't think there needs to be an explicit statement of maximizing stakeholder well being.

I'm not surprised that many managers and business owners like this idea, as it gives them more flexibility, but that's not necessarily a good thing. It allows them to finance pet projects, grow bureaucracy and overall be immune from business concerns.

> sole focus on the investor does not, on the long run, lead to good outcomes for the investor.

This is something that the market can sort out, isn't it? Amazon is famous for being customer-focussed, not shareholder-driven, and they dominate the industries they compete in -- to the benefit of their shareholders. Nobody needs to pass a law telling companies not to focus on short-term shareholder gains if companies that do are naturally out-competed.

Nothing here is "contrary to the theory of shareholder maximization" in any way.

> As such, corporations are best structured and operated with the wellbeing of all involved stakeholders.

Grammar notwithstanding, the same goes for this statement. It is not clear that a focus on stakeholders benefits stakeholders. Maybe healthy, profitable and competitive companies better serve employees and consumers in the long run than companies that directly optimise for those people.

I've never considered that to be honest. Why do you think a separate legal system is necessary? What additional laws would these executives be subject too that say an employee or executive of a small private business not have to comply with?

It’s not going to go over well. Many people believe there’s different enforcement of the law for rich and poor. I expect it will promptly backfire when you actually introduce something like that unless executives suddenly get a reputation for being poor people. You would need to build a ton of trust and everyone will watch it closely for clickbait fuel.

Even if this somehow cracks down harder on execs than the current system, it could also be seen as a separate track to justice for rich people.

Would this apply only to executive when they are directly aware of or actively encouraged/engaged in illegal activity?

What I wonder about when people suggest these things is what happens if a CEO takes every procedure possible to ensure the company he or she runs is engaged in no illegal behavior, but illegal behavior still occurs?

To an extent this does exist in the form of the listing requirements for NYSE, NASDAQ etc. Matt Levine has talked previously about how the coupling between "higher standards of operating", "selling your shares to the public" and "being listed on a specific exchange" are kind of weirdly conflated at the moment and there's no particular reason they all need to be linked in such a manner.

How do you define liberty? there seem to be a lot of competing definitions of liberty.

What liberty is there to be found in the hierarchical private firm?

I'm certainly not at liberty to do aught but what my manager commands, nor he but what his commands, and so on.

I'm not sure it's possible to have liberty without prosperity. If the only way someone can provide for their needs is to conform then they don't have liberty. This is probably even more the case as it becomes less and less realistic for people to go off and provide for themselves (e.g. by homesteading).

I would disagree. Conditions keep changing. keeping to the sectors you mentioned. Tesla and electric cars are clearly examples of innovation that was favoured by external elements (e.g growing concerns for climate / environment, increase of pollution in urban areas). In laundry detergents (and also personal care) , the big companies are racing to acquire small brands that were faster than them to go to market with more natural cleaning products (less chemicals, no parabens, traceable / sustainable ingredients...). Large Consumer Goods (P&G, Nestle...) companies are facing a backlash by consumers that are shifting to more local / smaller companies. This is more difficult in the automotive industry (there are some massive investment in assets that are simply impossible for companies that are not well funded). EDIT: I can not think of one segment where there are less products today than there were 30 years ago. Even when companies become fewer, they don't stop expanding and innovating the portfolio. The penalty for doing so would be either some competitor selling the same for less or selling something better.

Just take a look at the poor broadband provision in the US to see the effects of low competition. Given a chance companies will become fat and lazy and disregard their customers.

I would think that this comment could have been made in any point in history and a lot of people would agree.

I just watched a documentary on Henry Ford - in his time making cars was a “solved” problem - you’d have various highly trained and talented teams of craftsmen that would build a car using simple but versatile tools. It all worked rather well in europe and america, and is a model that has been around throughout most of human history - a “proven and reliable way” to do things.

And here comes Ford and invents mass production as we know it by applying principles already present in the military to the civilian sector. Not precisely new but applied and perfected in a different area. Changed the world.

Today I can see similar changes - people from the software world disrupting traditional industries by applying new methods learned in a different field. Sure a lot of the time they fail spectacularly and get the “I told you so” treatment, but there are some notable winners. Look at what Elon is doing for example.

So I’m rather hopeful to be honest - there is so much stress, unhappiness and efficiency problems present in the world, that I really doubt we’ll run out of things to do anytime soon.

When there seems to be little room for innovation it generally means we need to "refactor the tech tree", i.e. find a technology that qualitatively replaces the incumbent ones instead of making marginal improvements.

The current narratives for autos is self driving cars and more walkable/bikable urban design. For laundry detergent there's probably textile innovation that makes them require less/no washing. Etc.

What parts of the economy do you think can't innovate?

> I mean, from autos to laundry detergent there seems to be very mature products and little room for innovation.

Telsa would beg to differ. They popularized the idea that an electric vehicle was even possible, and now you can but not only a Tesla, but other EVs like the Hyundai Kona.

Then you've got things like self-driving, which automakers are scrambling to be the first to crack.

Or consider the various safety features. My car will yell at me if I get too close to the vehicle in front of me, or if I try to back out of a parking spot and the radar detects someone coming my way, or if what my hands are doing to the steering wheel makes the computer think I'm starting to doze off. All of these are relatively recent innovations.

Markets and free competition don't have to be synonymous with capitalism (private ownership of economic resources). I think that's a historical accident. The recent book "radical markets" has examples, such as common ownership self-assessed tax (cost) where nobody owns any private property, each person rents everything they use from society, rates are set by competitive market mechanisms, and rent is redistributed. Just one extreme example.

This puts a twist on "corporations are people" - that they can die or be killed ;)

I would say the superpower is even greater. If you’re a mom and pop business, you can die — we will protect you so that like, your children’s children’s children aren’t still paying your debts. And if you’re a small or mid cap company you can also die but the timelines are a little different. Large cap companies I think house a unique placement because they shouldn’t regularly be going to 0, and some level of backstopping may be strategically necessary. I think the reason for making that “design tradeoff” if you will, is that in return you gain a wider spectrum on investment risk tolerances that makes the market stronger. And there’s also great utility in the real-world consequences, I think the auto bailout proved you could make a good investment for the taxpayer, for workers, and for the shareholders. The real world is a different place from the textbook so anything dogmatic sets off alarm bells for me that we are maybe leaving money on the table out of a sense of a form of religiosity.

Disagree. A competitive market cannot really exist without profit motive. We can have capitalism without monopolies and global corporatism, it just requires a little regulation.

I'm not saying profit motive is the only thing that drives corporations, but it's like breathing is to living creatures.

Many "pure capitalists" would argue that you only achieve competitive capitalism through "pure capitalism." The idea applies a cynical view to human nature but is interesting none the less. The idea can be boiled down to one simple point; everything can be bought for the right price. If there is a governing body that has the power to regulate any and every business then it only follows that the biggest of those businesses have every resource and incentive to guide regulation to enforce their monopolies.

We may think about these as backroom deals between senators and lobbyists but I'd argue that you actively participate in such deals by just sitting in front of your TV or surfing the web. In America the biggest governing body is voters.