"The penalty good men pay for indifference to public affairs is to be ruled by evil men." attributed to Plato

"Bad men need nothing more to compass their ends, than that good men should look on and do nothing." attributed to Edmund Burke

Let's between us make the world a better place.

Sunday, 10 April 2011

Companies are driven by profit and growth not by human values

On 5th April I explained a serious flaw in our economics - the way that loans are made out of fiat money - i.e. created out of nothing!!

Edward Cahn has observed of this phenomenon that: ‘Money has taken on a life of its own: its function is to produce for the sake of reproducing – regardless of the impact on the health of the human community… increasingly what we are witnessing in the world’s money markets looks more and more like cancer.’1 Now cancer is of course dangerous and often fatal, requiring unpleasant treatments along the way.
As with Cahn’s analogy to cancer of the world’s largely artificial money markets, so according to David Korten the publicly traded limited liability company is best described as ‘a pool of money dedicated to its self replication’, and he also likens this to a cancer cell in the body growing inexorably without regard for its host or its own future. Both are destined towards destruction.2 They must adapt or die. The problem is that companies are driven to maximize profit for the ultimate benefit of the shareholders and directors, and the shareholders and directors are totally disassociated from the workers. There is too often no account taken of human values in the equation. What is more, the flow of wealth is all one way, normally out of the community where the business is transacted, as shareholders will almost always live elsewhere. This bleeds the community where the business is situated and for that reason alone cannot be a good thing.
Even worse, in the large corporation the chairman can defend his company’s actions by saying that they were what the shareholder wanted. In fact the directors have a legal duty to maximize profit for the shareholders! Peter Challen has called this  3 ‘killing from behind a desk’ or ‘personal aspirations suppressed by institutional arrogance’, there being a clear conflict between what we actually do and what we would like others to think that we do.

A moment's pause tells us that there is something wrong here - it is not just, equitable or fair whichever way you look at it. It is certainly no way to heal the world!! So what do we do about it? There are better options, and I will come back to explore these in later posts.

1. Cahn, Edgar S., No More Throw-Away People: The Co-Production Imperative Washington D.C.: Essential Books, 2000, p. 68.

2. David Korten, Living Economies for a Living Planet. http://livingeconomiesforum.org/i-intro

3. Peter Challen, 2005 Exposing Corporate and Money Autocracy to Public Scrutiny as Major Threats to the Global Commons http://www.sustecweb.co.uk/past/sustec13-2/exposing_corporate.htm (From It’s Simpol ! -- The Simultaneous Policy News, W i n t e r 2 0 0 4 / 0 5

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