This editorial by David D’Amato was published in The Hill on August 29th, 2019.
Earlier this month, a group of 181 CEOs, including those of many of the country’s largest and most influential companies, signed a statement signaling commitment to the betterment of society and to “an economy that serves all Americans.”
This short “Statement on the Purpose of a Corporation” reflects the idea that today big business must drive at more than just increasing the stock price. It must also lead in protecting the natural environment, enriching the lives of employees and deliver value to consumers.
Defining the purpose of a corporation is no small task, the statement’s concision notwithstanding, but its sunny words belie a rather less noble history.
The modern corporation, as we know it today, was born of state power. It was chartered specifically as a vessel for a variety of anti-competitive special privileges. The earliest corporations furthermore operated in an environment shaped decisively by state power, both hard and soft.
Lorraine Talbot, an expert on corporations and corporate law, explains: “Early corporations, created by the granting of a charter, were exercises in inequality and an unfree economy. Indeed, inequality was the very virtue of such incorporations, as charters were granted in order to elevate the economic and legal rights of the corporation in question above those of their actual and potential competitors.”
Talbot points to the East India Company as an example, noting that its charter from the government “granted it monopoly trading rights, covering the whole of the East Indies.”
To read the rest of this article at its original source please click HERE.