The Purpose of a Corporation
August 20, 2019 7:26 AM Subscribe
Nearly 200 chief executives, including the leaders of Apple, Pepsi and Walmart, tried on Monday to redefine the role of business in society — and how companies are perceived by an increasingly skeptical public. Breaking with decades of long-held corporate orthodoxy, the Business Roundtable issued a statement [PDF]on “the purpose of a corporation,” arguing that companies should no longer advance only the interests of shareholders. Instead, the group said, they must also invest in their employees, protect the environment and deal fairly and ethically with their suppliers. Shareholder Value Is No Longer Everything, Top C.E.O.s Say [NYT]
Move Over, Shareholders: Top CEOs Say Companies Have Obligations to Society [WSJ]
Maybe CEOs Are Fed Up With Shareholders [Bloomberg]
Not everyone is on board with a major business lobby’s new definition of corporate purpose [Quartz]
CEOs are America's new politicians [Axios]
Move Over, Shareholders: Top CEOs Say Companies Have Obligations to Society [WSJ]
Maybe CEOs Are Fed Up With Shareholders [Bloomberg]
Not everyone is on board with a major business lobby’s new definition of corporate purpose [Quartz]
CEOs are America's new politicians [Axios]
Words are cheap.
Indeed, also 30 pieces of silver and all that.
posted by RolandOfEld at 7:46 AM on August 20, 2019
Indeed, also 30 pieces of silver and all that.
posted by RolandOfEld at 7:46 AM on August 20, 2019
Paying some taxes would be nice, otherwise POSIWID tells us corporations exist only to externalize their costs.
posted by scruss at 7:46 AM on August 20, 2019 [29 favorites]
posted by scruss at 7:46 AM on August 20, 2019 [29 favorites]
Alternate title: "Who's Afraid of Elizabeth Warren?"
I mean, honestly, this is Jamie Dimon trying to get ahead of the tsunami of hate coming his way as more and more people hear Warren's message and her plan to tax the uber-rich.
posted by pjsky at 7:47 AM on August 20, 2019 [29 favorites]
I mean, honestly, this is Jamie Dimon trying to get ahead of the tsunami of hate coming his way as more and more people hear Warren's message and her plan to tax the uber-rich.
posted by pjsky at 7:47 AM on August 20, 2019 [29 favorites]
So, which of these CEOs went back to work on Tuesday with a plan to have a board of directors that is elected not just by shareholders but by employees, environmental protection groups, and/or suppliers? As long as shareholders can elect all or the majority of the directors (who in turn hire/fire the CEO), the ultimate purpose of the corporation is whatever the shareholders say it is. What the CEO might say to the contrary is just cheap words, indeed.
posted by mbrubeck at 7:51 AM on August 20, 2019 [37 favorites]
posted by mbrubeck at 7:51 AM on August 20, 2019 [37 favorites]
Words are cheap indeed.
Also wasn't this how corporations were supposed to work pre-neoliberalism? (Not that they did, just that it's how they were supposed to.)
Innovation!
posted by Fish Sauce at 7:52 AM on August 20, 2019
Also wasn't this how corporations were supposed to work pre-neoliberalism? (Not that they did, just that it's how they were supposed to.)
Innovation!
posted by Fish Sauce at 7:52 AM on August 20, 2019
FWIW, Artificial Legal Entities, like Corporations are created by The State, and The State can clearly say, "You have an obligation to provide clear benefits to The People as part of your purpose of existing"
posted by mikelieman at 7:54 AM on August 20, 2019 [22 favorites]
posted by mikelieman at 7:54 AM on August 20, 2019 [22 favorites]
Despite the expected cynicism, this is an interesting effort. One area where there will be tensions is the legal arena. Curious if any legal experts here on MeFi tell us how existing patterns of 'shareholder rights' lawsuits might influence this...
posted by PhineasGage at 7:55 AM on August 20, 2019 [3 favorites]
posted by PhineasGage at 7:55 AM on August 20, 2019 [3 favorites]
[ sniffs air ] .... is that .... fear?
posted by seanmpuckett at 7:58 AM on August 20, 2019 [29 favorites]
posted by seanmpuckett at 7:58 AM on August 20, 2019 [29 favorites]
Indeed, actions, not words. Though interesting at least that they're starting to read the tea-leaves and are becoming concerned enough to start marketing a "Let's work towards no longer strip-mining our employees and environment" path.
Luckily for them, should be easy for most of these big companies to follow through, Amazon is aboard on this one, so lets look at their numbers: 250,000 workers-- with a swipe of a pen everyone could get a $3/hr raise and only cost the company 1.5 billion of their 2.6 billion net income from last year.
I hope I have enough time to make a 'YOU'RE AWESOME AMAZON' banner, if I order the items via Prime-- and I rush, I might just be able to get it done before the pay-rises hit, right?
posted by Static Vagabond at 7:59 AM on August 20, 2019 [3 favorites]
Luckily for them, should be easy for most of these big companies to follow through, Amazon is aboard on this one, so lets look at their numbers: 250,000 workers-- with a swipe of a pen everyone could get a $3/hr raise and only cost the company 1.5 billion of their 2.6 billion net income from last year.
I hope I have enough time to make a 'YOU'RE AWESOME AMAZON' banner, if I order the items via Prime-- and I rush, I might just be able to get it done before the pay-rises hit, right?
posted by Static Vagabond at 7:59 AM on August 20, 2019 [3 favorites]
I will believe this when my pay goes up faster than the CEO's. I am not holding my breath.
posted by Dip Flash at 8:07 AM on August 20, 2019
posted by Dip Flash at 8:07 AM on August 20, 2019
Yeah, good luck with all that, and enjoy trying to keep your jobs as hedge funds and activist shareholders shove you out of a job over a penny of share of earnings you didn't deliver them.
At least you'll have your three houses to lick your wounds in.
posted by dw at 8:09 AM on August 20, 2019 [1 favorite]
At least you'll have your three houses to lick your wounds in.
posted by dw at 8:09 AM on August 20, 2019 [1 favorite]
This is garbage "unions aren't necessary" rhetoric.
posted by Groundhog Week at 8:25 AM on August 20, 2019 [17 favorites]
posted by Groundhog Week at 8:25 AM on August 20, 2019 [17 favorites]
Yeah, all large corporations have operated like amoral sociopaths since the dawn of human history, lifting their boots off the throats of workers only when threatened by regulation or armed mobs, and in fact the very institution of capitalism basically demands that they do so or be beaten and eventually subsumed by competitors, but this time... THIS TIME, they're actually for-real serious about giving that all up and becoming benevolent entities. Nothing to see here, folks... Bezos will divide up his fortune among his warehouse employees, Walmart will become a nonprofit who uses its profit engine to fund soup kitchens and employment training, and every hedge fund in New York will voluntarily shut down because they're not maximizing public utility.
Or maybe someone's PR department decided to have their CEO talk to the NYT for a puff-piece intended to stave off the guillotines for another year, now that a populist progressive with very popular plans for corporate regulation and wealth redistribution is polling at the top of the Dem ticket.
Definitely one of those two things.
posted by Mayor West at 8:32 AM on August 20, 2019 [19 favorites]
Or maybe someone's PR department decided to have their CEO talk to the NYT for a puff-piece intended to stave off the guillotines for another year, now that a populist progressive with very popular plans for corporate regulation and wealth redistribution is polling at the top of the Dem ticket.
Definitely one of those two things.
posted by Mayor West at 8:32 AM on August 20, 2019 [19 favorites]
https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
What has always struck me is that at least one (founding) CEO wanted to run his company for the benefit of employees and customers and was forbidden from doing so by the Supreme Court of the United States!
posted by The Ted at 9:00 AM on August 20, 2019 [9 favorites]
What has always struck me is that at least one (founding) CEO wanted to run his company for the benefit of employees and customers and was forbidden from doing so by the Supreme Court of the United States!
posted by The Ted at 9:00 AM on August 20, 2019 [9 favorites]
Laughed when I heard an NPR piece on this - if these ghouls were so concerned, they wouldn't have collectively spent decades pouring gas on the fire. This is just laying the groundwork for denial and obfuscation when we hit the transition point from "decaying middle class" to the feudal America they're busily building behind the screen of lies like these.
posted by ryanshepard at 9:05 AM on August 20, 2019 [3 favorites]
posted by ryanshepard at 9:05 AM on August 20, 2019 [3 favorites]
This Charles Stross essay continues to be scorchingly relevant.
Dude, you broke the future
posted by MrVisible at 9:09 AM on August 20, 2019 [11 favorites]
Dude, you broke the future
posted by MrVisible at 9:09 AM on August 20, 2019 [11 favorites]
The Dimons of the corporate sector probably see that governments are ceding more of their oversight and power to businesses, which is a profit opportunity. I'd like to believe that they see that the world's environment is on the verge of ecological collapse, which is bad for business, but I am not hopeful that they will act in time.
posted by They sucked his brains out! at 9:38 AM on August 20, 2019 [1 favorite]
posted by They sucked his brains out! at 9:38 AM on August 20, 2019 [1 favorite]
We should just make corporations get royal charters again.
posted by Ray Walston, Luck Dragon at 10:20 AM on August 20, 2019
posted by Ray Walston, Luck Dragon at 10:20 AM on August 20, 2019
We should just make corporations get royal charters again.
Do you want corporate America bowing to Trump even than they already are? Because that's how you do it...
Or do you mean from the British monarchy, still? Huh. That would be interesting...
posted by ropeladder at 10:32 AM on August 20, 2019 [1 favorite]
Do you want corporate America bowing to Trump even than they already are? Because that's how you do it...
Or do you mean from the British monarchy, still? Huh. That would be interesting...
posted by ropeladder at 10:32 AM on August 20, 2019 [1 favorite]
This is a thing that companies want employees and customers to believe is true. That's different from it being true, and it's different from being a thing that sure, would be nice, but is not in any way implemented or mandated with metrics and reinforcement from the top and so never happens.
posted by Lyn Never at 10:57 AM on August 20, 2019 [1 favorite]
posted by Lyn Never at 10:57 AM on August 20, 2019 [1 favorite]
Great, so all 200 of them dropped their tax avoidance strategies and are repatriating all foreign earnings to the US?
No? Then this means fuckall.
posted by T.D. Strange at 11:09 AM on August 20, 2019 [3 favorites]
No? Then this means fuckall.
posted by T.D. Strange at 11:09 AM on August 20, 2019 [3 favorites]
"Be the change you want to see in the world. "
-- ancient corporate motivational slogan
posted by klanawa at 11:21 AM on August 20, 2019
-- ancient corporate motivational slogan
posted by klanawa at 11:21 AM on August 20, 2019
Or do you mean from the British monarchy, still? Huh. That would be interesting...
I'm talking the actual queen here
posted by Ray Walston, Luck Dragon at 11:46 AM on August 20, 2019
I'm talking the actual queen here
posted by Ray Walston, Luck Dragon at 11:46 AM on August 20, 2019
Anand Giridharadas is all over this on Twitter.
"I’m not being facetious. My DMs are open. If you’re a CEO who signed that statement and have plans to seriously change your tax practices, stop using obscure foreign islands and double Dutch sandwiches, etc., ping me. I don’t expect it, though."
"Voluntary pledges didn’t end child labor, sweatshops, 18-hour workdays, elderly penury, noxious air, poisoned rivers, toxic financial products or much besides. Why do we trust them to end an age of corporate greed and vast inequity?"
posted by dnash at 11:48 AM on August 20, 2019 [12 favorites]
"I’m not being facetious. My DMs are open. If you’re a CEO who signed that statement and have plans to seriously change your tax practices, stop using obscure foreign islands and double Dutch sandwiches, etc., ping me. I don’t expect it, though."
"Voluntary pledges didn’t end child labor, sweatshops, 18-hour workdays, elderly penury, noxious air, poisoned rivers, toxic financial products or much besides. Why do we trust them to end an age of corporate greed and vast inequity?"
posted by dnash at 11:48 AM on August 20, 2019 [12 favorites]
So basically these guys are saying, "now that I've got mine, what we did was wrong, and nobody else should be allowed to do it." I don't see any of them offering to give any of their "hard-earned" money back, or did I miss that? I didn't think so.
posted by qurlyjoe at 1:52 PM on August 20, 2019
posted by qurlyjoe at 1:52 PM on August 20, 2019
I see that my old company (that signed the doc) is ahead of the curve in not caring about shareholder value -
last five years, stock has dropped 35%
CEO made 17 million dollars in 2017, and got a raise to 33 million for 2018
posted by meowzilla at 1:57 PM on August 20, 2019
last five years, stock has dropped 35%
CEO made 17 million dollars in 2017, and got a raise to 33 million for 2018
posted by meowzilla at 1:57 PM on August 20, 2019
https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
What has always struck me is that at least one (founding) CEO wanted to run his company for the benefit of employees and customers and was forbidden from doing so by the Supreme Court of the United States!
posted by The Ted at 4:00 AM
Hah that story about Ford gets even better. Have you ever heard of the Ford Foundation?
The history of how the Ford Foundation started is quite funny. This organization has been one of the most powerful and influential charities for the last 60 years in the US, and today it still gives away half a billion dollars a year in support of social justice goals. The Ford Foundation has consistently worked to pull US politics and policies towards the left.
It all started due to high inheritance taxes at the time - the government would take 70% of what you wanted to pass down to your children. This meant that when Henry Ford died, his family would lose control of the company.
His solution was to split the company shares into 95% non voting shares (class A) and 5% voting shares (class B). He would donate all the class A shares to a charitable foundation called the Ford Foundation and his family would retain just 5% of the class B shares. This allowed his family to retain 100% control of the company, even though 95% of its value was given away to charity.
The charity soon had a mind of its own and started pursuing a Leftist and social justice agenda. Henry Ford's son resigned from the board of the charity in disgust, he thought the charity should be using its influence to promote a capitalist agenda, lol.
When you have a large amount of money, you can influence the entire course of the country - for example, by pouring millions of dollars into legal aid for supporting minorities, worker rights or environmental concerns, you are able to win court cases and set precedent in law in the Supreme Court, changing the course and future of the nation.
The government even tried to outlaw the kind of influence that the Ford Foundation was wielding, restricting its ability to give money away charitably.
posted by xdvesper at 3:49 PM on August 20, 2019 [9 favorites]
What has always struck me is that at least one (founding) CEO wanted to run his company for the benefit of employees and customers and was forbidden from doing so by the Supreme Court of the United States!
posted by The Ted at 4:00 AM
Hah that story about Ford gets even better. Have you ever heard of the Ford Foundation?
The history of how the Ford Foundation started is quite funny. This organization has been one of the most powerful and influential charities for the last 60 years in the US, and today it still gives away half a billion dollars a year in support of social justice goals. The Ford Foundation has consistently worked to pull US politics and policies towards the left.
It all started due to high inheritance taxes at the time - the government would take 70% of what you wanted to pass down to your children. This meant that when Henry Ford died, his family would lose control of the company.
His solution was to split the company shares into 95% non voting shares (class A) and 5% voting shares (class B). He would donate all the class A shares to a charitable foundation called the Ford Foundation and his family would retain just 5% of the class B shares. This allowed his family to retain 100% control of the company, even though 95% of its value was given away to charity.
The charity soon had a mind of its own and started pursuing a Leftist and social justice agenda. Henry Ford's son resigned from the board of the charity in disgust, he thought the charity should be using its influence to promote a capitalist agenda, lol.
When you have a large amount of money, you can influence the entire course of the country - for example, by pouring millions of dollars into legal aid for supporting minorities, worker rights or environmental concerns, you are able to win court cases and set precedent in law in the Supreme Court, changing the course and future of the nation.
The government even tried to outlaw the kind of influence that the Ford Foundation was wielding, restricting its ability to give money away charitably.
posted by xdvesper at 3:49 PM on August 20, 2019 [9 favorites]
Alternate title: "Who's Afraid of Elizabeth Warren?"
Eh, not really. The biggest change that would likely happen is people like me would wake up on Warren's inauguration day to find out we actually work for a company based in London/Singapore/Vancouver/wherever. I work with all those places anyway, so I wouldn't even notice.
Also, there is a lot that has to happen between "Warren becomes POTUS" and "the livelihoods of a good portion of a million highly compensated employees getting destroyed". And in those things, there is lots of opportunity to put resources to preventing it. It's pretty amazing that people believe that the same people buying small houses for $2M-$3M are just going to sit around and let a President Warren come in take away what puts food on their tables.
posted by sideshow at 3:50 PM on August 20, 2019
Eh, not really. The biggest change that would likely happen is people like me would wake up on Warren's inauguration day to find out we actually work for a company based in London/Singapore/Vancouver/wherever. I work with all those places anyway, so I wouldn't even notice.
Also, there is a lot that has to happen between "Warren becomes POTUS" and "the livelihoods of a good portion of a million highly compensated employees getting destroyed". And in those things, there is lots of opportunity to put resources to preventing it. It's pretty amazing that people believe that the same people buying small houses for $2M-$3M are just going to sit around and let a President Warren come in take away what puts food on their tables.
posted by sideshow at 3:50 PM on August 20, 2019
Before: Responsible to the shareholders.
After: Responsible for all and sundry.
The Dimons of the corporate sector probably see that governments are ceding
This is what this looks like to me; just instead of 'ceding' I could go on a rant about 'unworthy to rule', 'discarded the Mandate of Heaven', and 'disgusting packs of grifters, war criminals, and reality TV rejects'...
Look at the drafter's quote, he absolutely just says it: “There were times when I felt like Thomas Jefferson,” Mr. Gorsky said in an interview.
Jefferson's prose was def. better though.
Blackrock and Vanguard are in on it, that's like 10% of the shareholders right there. (Vanguard, in some kind of capitalist plot, is owned by the very same funds its clients invest in.)
posted by save alive nothing that breatheth at 9:50 PM on August 20, 2019
After: Responsible for all and sundry.
The Dimons of the corporate sector probably see that governments are ceding
This is what this looks like to me; just instead of 'ceding' I could go on a rant about 'unworthy to rule', 'discarded the Mandate of Heaven', and 'disgusting packs of grifters, war criminals, and reality TV rejects'...
Look at the drafter's quote, he absolutely just says it: “There were times when I felt like Thomas Jefferson,” Mr. Gorsky said in an interview.
Jefferson's prose was def. better though.
Blackrock and Vanguard are in on it, that's like 10% of the shareholders right there. (Vanguard, in some kind of capitalist plot, is owned by the very same funds its clients invest in.)
posted by save alive nothing that breatheth at 9:50 PM on August 20, 2019
They are being honest this time. They never really gave a rat's ass about shareholder value and now they admit it. All they ever cared about was how much money they could put in their own pockets. That is the only agenda and it has not changed one bit.
posted by Metacircular at 10:11 PM on August 20, 2019 [2 favorites]
posted by Metacircular at 10:11 PM on August 20, 2019 [2 favorites]
No one who buys a $2M house is worried about "putting food on the table".
posted by maxwelton at 4:02 PM on August 21, 2019
posted by maxwelton at 4:02 PM on August 21, 2019
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