Sounds neutral to the layman while legitimizing the "brushing under the rug" of all the sins possible without severe legal recourse. Then promptly followed by some hand waving that really puts the you-know-what in fiduciary, Mr. Potter.
Friedman's assumption was that regulations work towards social/general good so a company can just focus on maximizing shareholder value within existing law and that combination would keep everything OK. However, in practice regulation was often faulty so the maximization of shareholder value often led to many negative internal and external effects. It's like applying machine learning trained at times of plenty to times of crisis.
Originally governments didn't just give out corperations whilly-nilly so if you weren't doing something that benefited the public you just didn't get one.
Which really wasn't a big deal since you could always do business as yourself although you (and not the corporation) also got liability then.
I am reluctant to say I am glad a comment has been down voted, because I am wary of mob mentality, but in this case I am very glad this comment has been so thoroughly down voted.
If I remember anything from my high school social studies class, the reason was the ability to spread investment risk across multiple investors while also shielding the investors and employees from some personal legal liability. I think I even remember that companies/corporations predate stock exchanges.
> Remember that companies/corporations predate stock exchanges.
While not definitive, ChatGPT says that:
> The idea of organizing a group of people to work towards a common goal for profit or mutual benefit has evolved over centuries. The modern concept of a company, with legal structures and formalized business practices, has its roots in the emergence of capitalism during the Industrial Revolution in the 18th and 19th centuries.
Wikipedia doesn't have a history section on it's page for company, but it says this:
> By 1303, the word company referred to trade guilds. Usage of the term company to mean "business association" was first recorded in 1553, and the abbreviation "co." dates from 1769.
You can tweak your definition by the means you'd like, but I think an honest assessment would be at this point to say they were concurrent.
A company isn't the same as a corporation. A corporation is a legal privilege granted by the government to give a company legal personhood. Thus the word "corporation", from latin "corpus", signifying that the state considers this specific company to be a single, legal body.
Corporations aren't a free market concept, it's a way for the state to give special protections to certain companies that need it for some prosocial reason.
Basically, the original idea is, a corporate charter is granted to create a corporation, which acts on behalf of its shareholders (who the government trusts, have some worthy interest in mind).
Yup companies exist to make money, people work jobs to make money, investors invest to make money, we all just really love to move $s around from one bank to another or trade pretty green bills. No other reason nah.
Doesn’t this fundamentally guarantee the enshittification of every company driven this way?
If you must grow by x% every year, and infinite growth is impossible, you begin shoving more and more low quality ads into your search results, partake in more legally and ethically grey activities, and eventually rupture?
Are there any examples of large corporations that have said, “we make billions in profit each year. We’re going to focus on maintaining that enormous success. We’re not going to focus on growth.” (I can already hear the spreadsheet squinting logic about how growth is necessary for some reason)
No, I don't see that it does. Basically the idea is that a company should operate in a way that is beneficial to its owners (shareholders). This is what any sole proprietorship or partership also does. Growth is not the only way to measure that. Many companies do focus on maintaining success and return value to the owners by paying dividends. Driving the company to failure by relentlessly cutting costs in the name of "growth" is not in the interests of the owners.
> We’re going to focus on maintaining that enormous success. We’re not going to focus on growth.” (I can already hear the spreadsheet squinting logic about how growth is necessary for some reason)
Where is Xerox going to get the money to do R&D to not be obviated? Replace Xerox with any other business.
All the businesses obviated by spreadsheets, mobile networks, smartphones, GPS? Maintaining success is continuing to make bets and moving forward, and bets require money. More money means bigger bets.
Another example, you have two businesses, one with a 5% profit margin (because they feel like 5% is enough), one with a 10% profit margin. The one with 10% profit margin is going to be able to continue renovating the business, upgrading the facility, buying more land, hiring better employees with higher payrates.
What will happen to the 5% profit margin business? Do you think customers will keep rewarding them (assuming the 10% profit margin business is worth the additional marginal cost)? You can insert restaurant, hotel, retail store, etc in here.
Note that having a higher profit margin is not the only way to survive, having a lower profit margin to better compete on price and gain market share is another way too. Balancing the two and delivering the right product at the right price for your customers is the key skill, but it’s a moving target.
The issue is that this leads into Dutch Disease. When a single tulip bulb can buy you a house, why bother becoming a carpenter? Society needs carpenters way more than it needs tulip growers.
That 10% growth rate may or may not be factoring in some externalities that the 5% growth has to
There are numerous reasons for companies to exist. Off the top of my head I can think of a few. To provide goods to populations. To provide services for populations. To give the owner something to do. To perpetuate themselves. To provide something to do for employees. To do something an individual can’t.
None of these require investors. There are countless businesses that can be started that don’t even require a significant outlay of capital.
On top of that there are differing philosophies that might suggest investors should be last in line for benefits from a business. I could make a strong argument that society allows businesses to exist and as such society should benefit first and foremost. Businesses typically fail to exist without employees, so I could argue employees should come before investors.
Please don’t perpetuate the naive notion that investors are somehow more important than anything else. I am a dyed in the wool capitalist and while I tend to highly value profitability, even I don’t believe shareholder value is some sacred edict.
I think its more because they are in a commoditized business that is also in a shrinking market. People don't print much anymore and their cash cow is directly related to printing. It really doesn't matter who is running the place when you're selling horse supplies and the majority of people are now driving cars.
Didn't have to be that way. At one point they had the gui & mouse when the rest of the world was using paper tape for computer I/O. It's all about vision & execution.
Apple commercialized what Xerox PARC was heading towards. But a decade later they were on the ropes. Doing things right one time doesn't guarantee longevity.
Tim Cook is also a brilliant strategist at using Apple's strength with suppliers. For example, Apple has first dibs on TSMC's cutting edge process. But even gambles he lost, like making huge sapphire crystals for screens and maybe even phone bodies, are daring and innovative.
A DE Shaw hire has a much, much higher probability of being technically inclined than a McKinsey hire. You probably are not going to find the “finance bros” you are thinking of at DE Shaw.
This is what happens when all you think about, all you focus on, is returns to investors. You spreadsheet the shit out of everything.