Money makes the world go around. But what sort of thing is money? Bits of paper and metal? An elaborate set of IOUs to be redeemed with more IOUs?
What is it
Corporations are recognized as persons in the eyes of the law. But if they are persons, they would seem to be pathologically self-interested persons, driven by nothing but the desire for their own further aggrandizement. John and Ken ask how we can cope with such persons in our midst with Lawrence Mitchell from the George Washington University Law School.
Corporations are artificial persons. They can enter into contracts and make profits, but it does not make sense for them to love and hate. Why are they persons? John thinks they sound like creatures owned by the stockholders. The shareholders have limited liability for the corporation's actions. Ken introduces Lawrence Mitchell, professor of law at George Washington University. Are corporations an American idea? The business corporation was a 19th century development, mainly created in western Europe. Mitchell thinks that corporations are value neutral. They have one goal: to maximize shareholder profit. Is it relevant where corporations produce jobs?
Are externalities negative by definition? There are positive externalities. The ideas of limited liability and maximizing shareholder profit are not intrinsic to the concept of a corporation. Corporations have always been juridical persons. They received constitutional rights because of a Supreme Court case in the 1870's. Can we create artificial consciences for artificial persons? German law requires corporations to act for the public good. Mitchell points out that corporations are directed by the consciences of the board of directors. Mitchell points out that corporations are run in the best interests of the corporation, not to maximize shareholder profits.
Should shareholder liability be reduced so they bear more of the moral burden? Mitchell says that modern methods of investing increase shareholder apathy to everything except profit. Would increased liability reduce incentive to invest? Mitchell says that that claim is empirically false. How can corporations be value neutral? Should corporations be allowed to get involved with elections since they only have one goal?
- Sixty Second Philosopher (Seek to 49:55): Ian Shoales runs through the history of corporations, covering ancient Rome, the East India Tea Company, and the monarchy of England.