Hacker News Reader

Comment by hliyan | Hacker News Reader

Oddly enough, I was just in the process of writing the following in an adjoining window for a blog post:

"The modern business corporation is not just an investment vehicle, but is also an integral part of civilization. We spend as much has half our waking hours working within these organizations, tend to find purpose in them and make many of our social relationships through them, so it is not incorrect to consider them social institutions, not unlike school or marriage. As such, corporations are best structured and operated with the wellbeing of all involved stakeholders.

One can think of a corporation as being built on three pillars: the investors, the employees and the customers, with employees as the conduit that connect investors and customers. Contrary to the theory of shareholder value maximization, sole focus on the investor does not, on the long run, lead to good outcomes for the investor."

View on HN

> 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.

But They are clearly not employee focused, which is half of that social equation and most of the “half your waking hours” comment.

More and more they are “customer-focussed” in the sense that cheetahs are antelope-focused. The way Facebook and Google have turned out.

They provide valuable jobs, otherwise employees wouldn't agree to it

So did slavers, or parents wouldn't have agreed to sell them their children.

Yes, children can be put in a more productive environment thanks to this

They provide shitty jobs for a lot of desperate people. If we don't work towards a world with good working conditions, we won't work in good conditions.

Improving conditions has a cost. Would you rather see them unemployed?

Paying them more and having Bezos and the other people at the top of Amazon not be rich enough to buy entire countries is an option, too.

A level playing field would be better. As is bosses of companies a being paid huge multiples of what their employees can expect to earth

false choice. I would rather see the profits to shareholders reduced sufficiently to pay for fair working conditions.

Actually I lied. I would rather see a network of cooperatively owned companies replace Amazon where all workers in that system have good jobs, no one is a billionaire, and money spent stays more local.

What’s stopping you build it then? Bezos built his vision, now it’s your turn!

I’m working on it.

Great! Good luck

> They provide shitty jobs for a lot of desperate people.

I know many millionaire employees of Amazon.

I’m not talking about every employee. I’m talking about certain jobs amazon offers that are anti-human.

That is assuming those employees aren't desperate for work. Had we adequate social welfare, or a glut of unfulfilled good jobs, I might agree, but when your choice is "die or work at the level we want", they aren't really given a real choice.

This is incredibly naive (or disingenuous?). When the alternative is just not having a job people will take a lot of shit, that doesn't mean it's okay.

And if the company didn't exist they wouldn't have the option of having that job. How is it not beneficial to have the company to those people?

Good thing that theres plenty of other options on the scale between uncaring capitalist monster and no company at all.

The more filters you add to companies the fewer successful ones you'll have. Filtering out companies from our current selection would leave you with fewer of them, not more.

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.

Every good (ie. efficient) regulator of a system must model that system.

Corporations are poor regulators of the environment because they do not model the environment. These slow-moving AI aren't being designed with the environment as part of their model and we're seeing the impact of this all over the world.

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.

Speaking as a German, it's really curious that Americans are so emotionally attached to their companies (which Germans mostly aren't), but they also switch companies way more often whereas Germans tend to stick with a job unless it's outright horrible.

Great observation. My thinking is that management cultivates emotional attachment to work as a means of motivation, which is important to productivity, which is important for growth. Until your comment, it did not even occur to me that being emotionally attached to your profession may not be a good idea. Worth thinking about.

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.

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.

Without disagreeing with you:

> Although a corporation is soulless entity

A corporation (like any large group of people) certainly has a "mind of its own" as an emergent property, so calling it "soulless" is kind of odd (unless you have a narrower definition of "soul" than I do).

It would have been odd if corporations were democratically run and had internal mechanisms for reflecting the values and aspirations of the large group of people that work for it.

At a traditional corporation however the emergent "mind of its own" is there but it is effectively only influenced by the minuscule group of people who control it. And in this sense it is soulless in the same way that an army is soulless.

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.

That would be one of the pillars. The investors. The link of obligation being the contract of ownership.

The links to the other pillars being the contract of purchase (customers) and the contract of employment (employees).

I guess social institutions have just one pillar (the customers).

This is a very interesting idea that I hadn't really considered before.

Under this system would it still be possible to fire people without cause? Would there be some mechanism to share profits with the employees? Without those I think it would still be a situation where some of the stakeholders are more "first class" than others.

I use companies like docker containers to protect assets.

I think that actually it's quite relevant to consider that social institutions actually are owned (in the practical sense, not in the legal one) by someone, and that it matters by whom and how they are owned.

Yes, there's the common scenario of social institutions that are owned (controlled, funded, etc) by the whole community they're serving. But there are cases also of important social institutions (for example, education) "owned" by particular subgroups of that community e.g. the various historical examples of key social functions being performed by churches, or funded by particular wealthy individuals for their community, or social institutions implemented by a foreign government/elite for the locals (both in the case of conquests and colonial empires) - in which case the ownership mattered quite a lot; because in this case the social institutions run for the local people weren't controlled by the locals and were significant instruments of political and social influence and control by the "owners" of these social institutions. Which has interesting parallels with the current megacorps controlling much of the information flow.

> 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?

Reply on news.ycombinator.com