Magazine article New Internationalist

The Invisible Friend: Investors Are Irresponsible. Corporations Are Amoral. Harry Glasbeek Puts Two and Two Together

Magazine article New Internationalist

The Invisible Friend: Investors Are Irresponsible. Corporations Are Amoral. Harry Glasbeek Puts Two and Two Together

Article excerpt

Investors are irresponsible. Corporations are amoral. Harry Glasbeek puts two and two together.

PUBLICLY TRADED corporations: they are everywhere. They talk to us. They support political causes, parties and politicians. They sponsor opera, ballet, theatre, tennis, football, hospitals and universities. They are renaissance operations. They employ us. They sack us. They maim and kill us. They ravage and rape our physical and spiritual environments. They are the embodiment of capitalism. They protect capitalists from being held to account.

The legal architecture of the Anglo-American corporation ensures crimes can be and will be committed on behalf of the rich. This corporate veil is woven to hide the rich from our gaze - behind this veil they do us harm and render our numerical majority relatively impotent.

Once wealth-owners contribute capital to a firm, they incorporate as a legal corporation, and they are then given a certificate (ie stocks) that gives them the right to participate in the appointment of the directors and managers who are to deploy the now `collectivized' capital so as to maximize profits. The registered corporation is deemed to be a separate legal person, acting in its own right. The contributors who hold the certificates are entitled to share in the profits according to the number they own and may vote at some decision-making meetings about corporate policy. They are also entitled to share in any property left over after the corporation ends business and has paid all its debts. They have traded their property-owning status over their capital for the privilege of limited liability. This means simply that, should the corporation be unable to pay for any damages done or debts incurred while chasing profits, these shareholders cannot be personally called upon to make further contributions. Their only financial risk is the potential loss of their initial investment - a very limited risk when dealing with large publicly traded corporations. If things don't look good, the owner of the certificate can sell it at any time.

Legal fictions

This is how it works. According to legal fiction, once a venture is registered as a corporation, a new property-owning and investing `person' is created. This is the investors' `invisible friend'. The harms inflicted by the venture can then be attributed to this new `person' (ie the corporation), not to individual investors. This corporate `person' is separate from the shareholders who stand to benefit from its profit-chasing activities. Shareholders are protected from fiscal losses in a way that no other market actor could hope for. They are also rendered legally immune from any wrongful, illegal and criminal acts the corporation might commit in their search for profits. They are like children who can claim, with perfect legality, `It wasn't me!',

Children often invent invisible friends to take the blame when they misbehave. But kids grow up and, as they mature, they are taught to take responsibility for their own conduct. Not so for the titans of capitalism who continue to blame their `invisible friend' (ie the corporation) who commits crimes on their behalf. This is how the corporation is designed in law to create a class of legally irresponsible profit-maximizers. They have no reason to care about the way in which profits are garnered by their creature, the corporation. Indeed, there is an incentive to have the corporation act wrongfully, illegally and criminally if that pays!

But despite the pretence that a corporation is a real person, unlike you and I it has no physical, corporate body that can think and act. Live human beings have to do that for it. But when they think and act on behalf of their corporate bodies, they can claim that they are not acting as people in their own right, but as the corporation. It's a short step to the claim that they are not personally responsible for any thinking and acting that might do harm and/or breach a law. …

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