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May 19, 2013
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Whose Corporations? Our Corporations!Posted on Apr 7, 2012
By Ken Jacobsen, AlterNet (Page 2) This holistic declaration was echoed, albeit in more specific and practical terms, by the chairman of another massive US corporation, Johnson & Johnson, during World War II. In his 1943 “Credo,” a somewhat modified version of which can be found on the company’s Web site today, Robert Wood Johnson II identified five distinct constituencies and established an order of priority in which they would be served by his firm. Johnson & Johnson’s “first responsibility,” he wrote, was to its customers: “the doctors, nurses, hospitals, mothers, and all others who use our products.” In second place came employees; in third, management; and in fourth, “the communities in which we live.” The interests of the stockholders, the corporation’s “fifth and last responsibility,” appear subordinate in his mind both to the firm’s sound operation, which depends on attention to the interests of the other constituencies, and to its long-term welfare:
A Shift in Accountability By 1978 the era of deregulation had begun and signs had appeared that corporate attitudes were shifting. In that year another GE chief executive, Reginald H. Jones, wrote that the “central principle of the present system is that a director’s accountability is to the owners of the enterprise.” Having set aside the broader visions of corporate duty held by his GE predecessor Young and by Johnson, Jones in effect moved the firm’s responsibility to its shareholders from last on the list to first: “If this principle is abandoned, if other corporate constituencies are placed on a plane with shareowners, if directors are required to represent directly the interests of nonshareowner groups…there will be no clear measure of directors’ responsibility because there will be no clear consensus on primary corporate goals.” Advertisement
The dawn of Ronald Reagan’s presidency found the corporate community on the fence. The “Statement on Corporate Responsibility” issued in October 1981 by the Business Roundtable, which groups the CEOs of the largest US firms, recognizes six constituencies – customers, employees, communities, society at large, suppliers, and shareholders – as forming the “web of complex, often competing relationships” within which corporations operate. It accepts the idea that “shareholders have a special relationship to the corporation” but doesn’t allow their interests to trump all others:
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By mrfreeze, April 11, 2012 at 5:16 pm Link to this comment
D.R. Zing - I’m glad you enjoyed Mr. Kunstler….he always says provocative and thought-provoking things. I sincerely hope “someone” (young, middle-aged, etc..) comes up with solutions to our problems.
Report thisBy D.R. Zing, April 11, 2012 at 3:47 pm Link to this comment
Hi mrfreeze,
I enjoyed the link and cannot disagree with your
observations. We are a wired and Borged society.
Still, many in the Occupy Wall Street movement are
young. And many of the young kids living with
their parents who go out on their own soon realize
their opportunities are diminishing.
Yes. There are those in denial, those who will still
get jobs but for the majority things are not looking
good and things are not likely to end well.
They are the generation likely to face
starvation in the prime of their lives. I know that
sounds apocalyptic but some of the best minds in
science are at this time predicting a collapse of the
ecosystem supporting human life will occur
by 2050, if not sooner.
We are seeing the beginning of it now with global
climate change. We shall see more in the future:
droughts, floods, snow storms, tornadoes, hurricanes
—all the things that scientists have been
predicting as a consequence of climate change. Most
ominously, the coral reefs in the the oceans are
dying. When they die, hundreds of millions of people
will lose their food supply.
Right now, twelve-year-olds are reading The
Hunger Games, while twenty-somethings are either
involved in The Occupy Movement or silently
sympathizing with it. They realize their parent’s
generation squandered precious time and resources
and it is the younger generation who will pay.
It’s important to remember, too, that Ronald Reagan
was able to capture the young conservatives in the
1980s precisely because things were looking up. Jobs
were plentiful. Corporations were just beginning to
consolidate in to megalithic entities. The economy
and its people were still benefiting from FDR’s New
Deal. The ecosystem, while ravaged at the time, was
not in the process of collapsing. All that has
changed.
Young people are distracted, not stupid. They become
aware that free speech does not exist; that privacy
does not exist; that we are in a state of perpetual
war; that the opportunities of their parents and
grandparents do not exist; that the next few decades
are likely to be bleak; that the intellectual
resources of this country, particularly in the
executive branch of government, are misplaced and
focused on the wrong the threats, which is to say
the executive branch is obsessed with terrorism
and largely oblivious to the forces of nature
that are gathering to kick our ass. Our youth
become aware of all these facts and, yes, they
get pissed off.
The next few decades will be most interesting indeed.
Wealth, luxury and opportunity are wasted on the rich
and elderly.
It will be our young people who figure out what to do
Report thisand how to change our systems to survive the
coming hell on earth.
By mrfreeze, April 11, 2012 at 7:35 am Link to this comment
D.R. Zing - I enjoyed reading your “quibble.” Yet, I can’t exactly agree with you that anyone in this country is actually pissed-off enough to do anything about our current situation (i.e. total corporate domination in just about everything).
I’d think differently if I didn’t see just about everyone walking down the street with a f**king hand-held-device (their tricorders…..thanks Rodenberry)or observe EVERYONE texting in the grocery lines (the kids as well as the grannies). Some days I feel as if I’m witnessing “Borg-lite,” as everyone runs around madly worrying if they’re going to upset the collective….
I thought you might appreciate James Howard Kunstler’s most recent rant about student loans…...something a lot of young people should REALLY be pissed about.
http://kunstler.com/blog/2012/04/strange-jubilee-1.html
Report thisBy D.R. Zing, April 11, 2012 at 7:24 am Link to this comment
I like this article quite a lot. It offers good
history, something we need. I agree with its premise
and conclusion.
A quibble:
The notion that the law imposes a duty to
“maximize shareholder value” – a phrase capturing the
notion that profits are mandatory and it is the
shareholders who are entitled to them – is so readily
accepted these days because it jibes perfectly with
assumptions about economic life that constantly come
down to us from business and political leaders, from
academia, and from the preponderance of the media.
It is unlikely to occur to anyone under the age of
40 to question this idea . . .
Uh, that last part I highlighted in bold is bullshit.
You need to hang out with more young people, sir.
They’re pissed off. Many of them feel—and
rightfully so—that they are the contestants in
The Hunger Game. And they know who makes the
rules of the game: corporations.
Only thing I would add is we need to stop or slow
down large corporate mergers and acquisitions. They
sap all the money from the company, result in
layoffs, kill the talent that built the smaller
company, are bad for customers and, to repeat, they
take all the money and put it in banker’s and
executive’s pockets, leaving the rest of us holding
our something or other. From Microsoft, to airlines, to
the news media, to record companies—mergers result in
shite for customers, employees, artists, and the economy
at large.
Stop the mergers, break up the too-big-to-fail companies,
Report thisrestart the economy.
By heterochromatic, April 9, 2012 at 11:57 pm Link to this comment
——Ten years from now you can look back on calling a
perfect stranger stupid and
repulsive and eat crow——-
lster that same night I looked back on calling your
idea stupid and repulsive…....and regret only my
restraint in describing it.
perfect stranger? very far from perfect DS…..and
were you not such an asshole you wouldn’t think
yourself any great intellect.
see in ten years….woodpusher.
Report thisBy Dr_Snooz, April 9, 2012 at 10:57 am Link to this comment
(Unregistered commenter)
I appreciate you challenging the stated goal by many
corporations of “maximizing shareholder value.” But
honestly, no corporation really believes this. The de
facto guiding principle is maximization of the CEO’s
and his cronies’ pay and bonuses. They will drive the
corporation in disastrous directions if it increases
their pay. When it all blows up, they jump from the
burning building, deploying their golden parachutes
on the way down.
I’m not sure if it’s better to challenge their stated
arguments or to reveal the truth behind the lies they
spout.
Thanks for your critique either way.
Report thisBy John Steinsvold, April 9, 2012 at 10:00 am Link to this comment
An Alternative to Capitalism (if the people knew about it,
they would demand it)
Several decades ago, Margaret Thatcher claimed:
“There is no alternative”. She was referring to capitalism.
Today, this negative attitude still persists.
I would like to offer an alternative to capitalism for the
American people to consider. Please click on the following link.
It will take you to an essay titled: “Home of the Brave?”
which was published by the Athenaeum Library of Philosophy:
http://evans-
experientialism.freewebspace.com/steinsvold.htm
John Steinsvold
“Insanity is doing the same thing over and over and
Report thisexpecting a different result.”
~ Albert Einstein
By heterochromatic, April 9, 2012 at 8:57 am Link to this comment
DS——placating the Kochs is not the same as capping a random CEO… your
calling for a terror campaign is no less fucked up than anything anyone could
suggest. the law of the jungle doesn’t turn out well…especially when you want to
fight the folks with all the money and weapons.
Report thisecven should you prevail, what do you then have?
By kazy, April 9, 2012 at 7:51 am Link to this comment
(Unregistered commenter)
prisnersdilema excellent idea. Have you thought of ever writing your reps on this idea? Not that it would make a difference, but it’s worth a try.
Report thisBy DonSchneider, April 9, 2012 at 6:28 am Link to this comment
To heterochromatic , you keep placating the Koch and Coors of the world and see
Report thiswhere we end up . Like the old song lyrics “Wishing and hoping and planning”.... !
You can wish in one hand, and crap in the other and see which one fills up first
Ten years from now you can look back on calling a perfect stranger stupid and
repulsive and eat crow, till then remember you could just keep your mouth closed
and appear a fool instead of opening it and removing all doubt. You would do
well to read a little before making such proclamations ! I would suggest Richard
Wolf on Capitalism, then move into Dahrendorf for an introduction.You’ll at least
be on firm enough ground to begin a discussion. Our discussion can go no
further, since it has always been a firm policy of mine to ignore the unprepared.
You are attempting to bring your pea-shooter intellect into a battle you should
back away from with grace.
By heterochromatic, April 8, 2012 at 5:15 pm Link to this comment
EZ——excellent link. thank you.
Report thisBy heterochromatic, April 8, 2012 at 2:04 pm Link to this comment
DonSchneider——not only a repulsive comment, but a stupid one as well.
after the second one, there would be enough security guards to prevent the third.
change your tune and bad luck to you till then.
Report thisBy DonSchneider, April 8, 2012 at 12:50 pm Link to this comment
If a few random CEO’s were to have some really really bad luck, perchance those
Report thisstill standing would have reason to pause for thought ?
By balkas, April 8, 2012 at 11:58 am Link to this comment
turning once again to abecedarianism or even pedestrianism, we can see clearly—- no
Report thismatter how much the Twenty-or-so-percentage of people try to obnubilate or sweep
under the rug what can be seen with naked eye—that those who do least or even no
harm to bears, suffer today the most from the hand of the TWENTY PERCENT.
and nearly every researcher, ‘liberal’, ‘progressive’, politician, ‘teacher’, MSM
editor/columnist, judge, bankster, army echelon, cia/fbi agent, policeperson, doctor,
lawyer, actor, singer, musician, ‘scientist’, in US rejects what the eye tells himher and
resorts to theorizing.
By berniem, April 8, 2012 at 8:41 am Link to this comment
Yo, beachboy! Admit it, you’re really chromeys lil bro., ain’t ya? Or maybe you’re “Da Chrome” hisself using an alias ‘cause you’ve managed to bore everyone stiff with your inane former incarnation! FREE BRADLEY MANNING & TIM DeCHRISTOPHER!!!!!
Report thisBy balkas, April 8, 2012 at 4:28 am Link to this comment
cut these endless studies and just note that US system of life is founded on
Report thisthe right of a person to control another.
and the controllers/owners of vast numbers of people, races, and peoples
unite in order that that system not only remains but also gets stronger.
and it does this via THEIR CONGRESS, army, cia, fbi, judiciary, education,
media, w.h, education.
hey folks, guns don’t kill people; corporations don’t control people—-
people control people!!
THEY OWN YOU, said george carlin. so, throw off that yoke!
By mrfreeze, April 7, 2012 at 9:57 pm Link to this comment
The reason why corporations are not nor will they ever be “socially responsible”:
Maximize shareholder value!
As long as Milton Friedman’s mantra is accepted as doctrine and human nature is all about greed & self-interest, what exactly can be done?
Report thisBy berniem, April 7, 2012 at 5:29 pm Link to this comment
Corporations should be given life spans and allowed to “pass away” after their purposeful and clearly defined existence has been achieved. So, also, should they be limited in scope and function and not permitted to diversify into conglomerate or expand beyond strictly drawn boundaries. All of their boards of directors should be comprised of at least 50% of the labor force with full decision making authority in all areas including, especially, the hiring and compensation of ceo’s, and other managerial staff. I’m sure there are many more ideas out there to bring these “persons” to heel but I offer these as at least a modest proposal! FREE BRADLEY MANNING & TIM DeCHRISTOPHER!!!!!
Report thisBy prisnersdilema, April 7, 2012 at 3:54 pm Link to this comment
I have always thought that one of the best ways to make corporations more ethical
is to require that their CEO’s, and board of directors be licensed, by the states in
which they do business. Licensing could require training in ethics, and periodic
psychological evaluations to check for evidence of mental issues.
Society, requires licensing and ethical standards for almost all of it’s professional
class, doctors, lawyers… etc. Licensing, CEO’s would not be much different.
The state could then mandate ethical standards, and revoke licensure for violation.
This could create a means, by which CEO’s could not move from one corporation
to the next wrecking lives, exporting jobs overseas, while escaping any
responsibility for their actions.
Executives like Warren Anderson, former head of Union Carbide, who murdered
Report thisthousands of people in Bhopal India, by removing safety controls as a cost cutting
measure, could be prevented from ever running a business again.
By EmileZ, April 7, 2012 at 1:02 pm Link to this comment
@ Richard Friedman
Some states are or have set up corporate charters which mandate social responsibility.
Legislative Initiatives Encourage Corporate Social Responsibility
http://osbsustainablefuture.org/home/section-newsletter/20103fall6wolfstone/
Report thisBy Richard Friedman, April 7, 2012 at 12:32 pm Link to this comment
The article is wrong. Of course, corporations must
obey the laws and pay their creditors; otherwise they
will be subject to fines and collection suits. But
the directors owe their fiduciary duty to the
shareholders. That is why corporations should be
attempting to maximize profits.
The real problem is that in many cases directors have
not done their job and let the managers reap benefits
wholly out of line with their achievements.
Directors also have not balanced short term gain
against the long term welfare of the shareholder
base.
All this happens because shareholders are passive and
Report thischanging, while the directors hire and deal with
managers on a personal basis. There is no easy
solution to the problem. I wish I could tell you I
had one, but I don’t. I do know the writer’s
analysis is not helpful.