Fair Questions: What is the Purpose of Corporations?

In a recent article from the Washington Post, a less common view of the purpose of corporations is discussed.  This view proposes that the purpose of a corporation is not simply to make a profit; profit is a condition of its existence rather than a purpose.  An analogy might be food for a human being.  Food is not the purpose of the existence of a human being, but going without it is likely to be detrimental to that person’s health and eventually lead to death.  This view is put by Pope John Paul II this way, “…the purpose of a business firm is not simply to make a profit, but is to be found in its very existence as a community of persons who in various ways are endeavoring to satisfy their basic needs, and who form a particular group at the service of the whole of society.”  This view is in tension with the views of many others (both neoliberals and their opponents), which hold that the function of corporations is solely to generate a profit for those who have a stake in the company.  To be fair, people who hold this view tend to believe that profit-seeking has many ancillary benefits to the community, so it’s not as if their view is entirely cold and calculating.

One of the consequences of this view as put forth in the article applies to one of the pivotal concerns around the cases being heard together before the Supreme Court, Sebelius v. Hobby Lobby Stores and Conestoga Wood Specialties v. Sebelius.  If a corporation is a person rather than merely a profit-making machine, what rights might it have in a legal sense?  What are the consequences if it does have certain rights?  As SCOTUSblog points out, potentially disastrous consequences are invoked whether it does or does not have them in this case.   Those consequences are invoked by justices on both sides of the political spectrum as well as by wacky old Kennedy in the lonely middle.

So what could we do if ruling in favor or against the plaintiff has serious problems?  How could we get out of this trap without collapsing our legal system in a fireball reminiscent of the Hindenburg?

I tend to think that companies should stop offering health insurance as compensation in general.  I think it would be beneficial to both the employees and the employers to offer a roughly equivalent amount in monetary compensation instead of purchasing health insurance on their behalf. The employees would have greater opportunities to find coverage that actually met their specific needs, and employers would be able to drop some of the administrative costs of managing the health insurance issues for their employees without lowering their pay.  This also allows companies to decide their purpose more freely, hopefully in a more people-centered way and in a less greed-centered way.

As a gigantic added Bonus, it avoids this whole mess of either conscripting companies into paying for things they find morally objectionable or allowing companies to refuse to pay for necessary treatments which are against their religious beliefs.  Which one you think is happening usually just depends on whether you agree with those beliefs or not, of course.

That said, I suspect that many folks would simply prefer to blame the other party for the problem no matter how the case comes out rather than trying to implement an actual solution.  That whole constructive solutions thing is just not very appealing when you can shout a lot at the people who don’t agree with you and feel self-righteous.

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One Response to Fair Questions: What is the Purpose of Corporations?

  1. Pingback: The Problem with Problem-Solving: Collaborative or Systematic? | Isorropia

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